internal_revenue_service department of the treasury number release date index number re washington dc person to contact telephone number refer reply to cc psi b09-plr-137129-02 date date legend decedent date taxpayer state state statute marital trust a marital trust b dollar_figurex dear this is in response to your date letter and subsequent correspondence requesting a ruling concerning the federal estate and gift_tax treatment of the proposed severance of a_trust into two trusts and your subsequent renunciation of your interest in one of the severed trusts the facts submitted and the representations made are summarized as follows decedent died testate on date survived by his spouse taxpayer pursuant to the provisions of article vii of decedent’s will decedent’s residuary_estate is being held in trust for the benefit of taxpayer during her lifetime taxpayer is to receive all the net_income from the trust at least quarter-annually the trustees of the trust also have the authority to distribute trust principal for the maintenance and support plr-137129-02 of taxpayer upon taxpayer’s death the remaining assets of the trust are to be distributed in equal shares to decedent’s children each child will receive his or her share of the trust assets free of the terms of the trust provided the child has attained the age of at the date of taxpayer’s death shares passing to a child under the age of will be held in further trust and distributed outright to the child at the earlier of the child attaining the age of or five years elapsing since the taxpayer’s death article vii further authorizes the estate’s personal_representatives to elect that any part or all of the trust assets qualify for the marital_deduction for federal estate_tax purposes in accordance with this provision the decedent’s estate elected on decedent’s estate_tax_return to treat the property held in trust for taxpayer as qualified_terminable_interest_property qtip pursuant to sec_2056 of the internal_revenue_code pursuant to article x of decedent’s will the trustees have all the duties powers and responsibilities granted trustees under state trust administration law under state statute the trustees may sever any trust on a fractional basis into two or more separate and identical trusts unless expressly provided to the contrary in the trust instrument each separate trust must be held and administered under identical terms and conditions as the trust from which it was severed the trustees now propose to file a petition requesting the court’s authorization under state law to divide the trust into two separate and distinct trusts marital trust a and marital trust b marital trust a will be funded with dollar_figurex of the trust assets marital trust b will be funded with the remaining assets of the trust both marital trust a and marital trust b will be administered by the trustees and governed by the original terms and conditions of the trust in accordance with state law once the trust is divided into marital trust a and marital trust b taxpayer proposes to renounce her entire_interest in marital trust a the following rulings have been requested if taxpayer renounces her entire_interest in marital trust a taxpayer will not be deemed to have made a gift of the property in marital trust b under sec_2519 if taxpayer renounces her entire_interest in marital trust a the value of taxpayer’s income_interest in marital trust b will not be valued at zero under sec_2702 if taxpayer renounces her qualified income_interest in marital trust a no part of the trust’s property deemed transferred under sec_2519 will be included in plr-137129-02 taxpayer’s gross_estate under sec_2044 law sec_2044 provides that the value of the gross_estate shall include the value of any property in which the decedent had a qualifying_income_interest_for_life sec_2044 provides that sec_2044 applies to any property if a deduction was allowed with respect to the transfer of such property to the decedent under sec_2056 and sec_2519 did not apply with respect to a disposition by the decedent of part or all of such property sec_2056 allows an estate_tax_marital_deduction for qualified_terminable_interest_property qtip under sec_2056 the term qualified_terminable_interest_property means property that passes from the decedent in which the surviving_spouse has a qualifying_income_interest_for_life and to which the qtip_election under sec_2056 applies sec_2056 provides that the surviving_spouse has a qualifying_income_interest_for_life if the surviving_spouse is entitled to all the income from the property payable annually or at more frequent intervals and no person has a power to appoint any part of the property to any person other than the surviving_spouse during the surviving spouse's life sec_2501 imposes a tax on the transfer of property by gift by an individual under sec_2502 the gift_tax imposed under sec_2501 is the liability of the donor sec_2511 provides that the tax imposed by sec_2501 shall apply whether the transfer is in trust or otherwise whether the gift is direct or indirect and whether the property is real or personal tangible or intangible sec_25_2511-2 provides that the gift_tax is a primary and personal liability of the donor is an excise upon his act of making the transfer is measured by the value of the property passing from the donor and attaches regardless of the fact that the identity of the donee may not then be known or ascertainable sec_2512 provides that where property is transferred for less than adequate_and_full_consideration in money_or_money's_worth the amount by which the value of the property exceeds the value of the consideration is deemed a gift and shall be included in computing the amount of gifts made during the calendar_year sec_2519 provides that any disposition of all or part of a qualifying_income_interest_for_life in any property to which sec_2519 applies is treated as a transfer of all interests in the property other than the qualifying_income interest sec_2519 provides that sec_2519 applies to any property if a deduction was allowed with respect to the transfer of such property to the donor under sec_2056 section plr-137129-02 a provides that if a donee spouse makes a disposition of all or part of a qualifying_income_interest_for_life in any property for which a deduction was allowed under sec_2056 the donee spouse is treated for purposes of chapter sec_11 and sec_12 of the code as transferring all interests in property other than the qualifying_income interest if donee spouse makes a disposition of part of a qualifying_income_interest_for_life in trust corpus the spouse is treated under sec_2519 as making a transfer subject_to chapter sec_11 and sec_12 of the entire trust other than the qualifying_income_interest_for_life therefore the donee spouse is treated as making a gift under sec_2519 of the entire trust less the qualifying_income interest including that portion of the trust corpus from which the retained income_interest is payable a transfer of all or a portion of the income_interest of the spouse is a transfer by the spouse under sec_2511 sec_25_2519-1 provides that the amount treated as a transfer under sec_2519 upon a disposition of all or part of a qualifying_income_interest_for_life in qualified_terminable_interest_property is equal to the fair_market_value of the entire property subject_to the qualifying_income interest determined on the date of the disposition including any accumulated income and not reduced by any amount excluded from total gifts under sec_2503 with respect to the transfer creating the interest less the value of the qualifying_income interest in the property on the date of the disposition the gift_tax consequences of the disposition of the qualifying_income interest are determined separately under sec_25_2511-2 sec_2702 provides that solely for the purpose of determining whether a transfer of an interest in trust to or for the benefit of a member_of_the_transferor's_family is a gift and the value of such transfer the value of any interest in such trust retained by the transferor or any applicable_family_member as defined in sec_2701 shall be determined as provided in sec_2702 sec_2702 provides that the value of any retained_interest which is not a qualified_interest as defined in sec_2702 shall be treated as being zero and the value of any retained_interest that is a qualified_interest as defined in sec_2702 shall be determined under sec_7520 under sec_25_2702-2 the term retained means held by the same individual both before and after the transfer in trust ruling pursuant to state law and the representations made herein marital trust a and marital trust b will be separate trusts for all purposes from the effective date of the court’s order therefore taxpayer’s renunciation of her entire_interest in marital trust a will not result in a transfer under sec_2519 of any of the assets of marital trust b plr-137129-02 ruling pursuant to state law and the representations made herein marital trust a and marital trust b will be separate trusts for all purposes from the effective date of the court’s order as a result taxpayer's interest in marital trust a will be separate and distinct from her interest in marital trust b therefore when taxpayer renounces her entire_interest in marital trust a taxpayer’s interest in marital trust b is not treated as a retained_interest for purposes of sec_2702 accordingly taxpayer’s renunciation of her entire_interest in marital trust a will not result in taxpayer's interest in marital trust b being valued at zero under sec_2702 ruling when taxpayer renounces her qualified income_interest in marital trust a she will be deemed to have made a transfer of all of the property of marital trust a other than her qualifying_income interest under sec_2519 sec_2044 provides that the value of taxpayer’s gross_estate shall include the value of any property in which taxpayer had a qualifying_income_interest_for_life sec_2044 provides that sec_2044 does not apply to any property if sec_2519 applies to the disposition of part or all of that property prior to taxpayer’s death therefore pursuant to sec_2044 the property taxpayer is deemed to have gifted under sec_2519 will not be included in taxpayer’s gross_estate the rulings contained in this letter are based upon information and representations submitted by 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 taxpayer the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-137129-02 a copy of this letter should be attached to any gift estate or generation-skipping_transfer_tax returns that you may file relating to these matters 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 yours by melissa c liquerman melissa c liquerman branch chief branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter for sec_6110 purposes


internal_revenue_service number release date index number -------------------------------------------------------- ---------------------------------------------- ------------------------ -------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------------- id no ------------- telephone number -------------------- refer reply to cc psi b01 plr-132994-11 date legend x --------------------------------------------------- ------------------------------------------------------------ state d --------- ----------------- dear --------------- this responds to a letter dated date submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts according to the information submitted x was incorporated on d under the laws of state x intended to be treated as an s_corporation effective d but the form_2553 election by a small_business_corporation was not timely filed accordingly x requests a ruling that it will be treated as an s_corporation effective d law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective sec_1362 provides that if an s election is made within the first two and one-half months of a corporation’s taxable_year then the corporation will be treated as an s plr-132994-11 corporation for the year in which the election is made sec_1362 provides that if the election is made after the first two and one-half months of a corporation’s taxable_year then the corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if no election is made pursuant to sec_1362 or if made the election is made after the date prescribed for making such an election and the secretary determines there was reasonable_cause for the failure to timely make the election then the secretary may treat such election as timely made for such taxable_year and effective as of the first day of that year x did not file a timely election to be treated as an s_corporation under sec_1362 effective d x has however established reasonable_cause for not making a timely election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and representations made and provided that x otherwise qualifies as a subchapter_s_corporation we conclude that x will be recognized as an s_corporation effective d if within days from the date of this letter x submits a properly completed form_2553 with a copy of this letter attached to the appropriate service_center 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 specifically no opinion is expressed or implied concerning whether x otherwise qualifies as an s_corporation for federal tax purposes this rule is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent sincerely joy c spies joy c spies acting senior technician reviewer office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes


department of the treasury internal_revenue_service washington d c date cc ebeo br2 tl-n-7384-98 number release date uilc internal_revenue_service national_office field_service_advice memorandum for district_counsel cc from branch chief cc ebeo br2 subject field_service_advice this field_service_advice responds to your memorandum dated date field_service_advice is not binding on examination or appeals and is not a final case determination this document is not to be cited as precedent legend city state issue whether members of advisory boards appointed by the city are officers under state law for purposes of sec_3401 of the code conclusion whether the members of the advisory boards are officers under state law is properly determined by district_counsel if the board members are determined to be officers for federal_income_tax withholding purposes it does not automatically follow that they are employees fica tax purposes for fica tax purposes the service must determine whether the board members are common_law employees facts acting under authority granted by state statute the city council appoints citizens to several advisory boards including the the city pays the board members for each meeting attended the city does not withhold income taxes from payments it makes to the board members nor does the city withhold or pay oasdi or medicare_tax from the payments the city issues a form_1099 to each board member who receives dollar_figure or more in a calendar_year the board members are not participants in the city’s employee_pension_plan law and analysis sec_3401 of the code provides that the term wages means all remuneration other than fees paid to a public official for services performed by an employee for his employer sec_31_3401_a_-2 of the employment_tax regulations provides that authorized fees paid to public officials such as notaries public clerks of courts sheriffs etc for services rendered in the performance of their official duties are excepted from wages and hence are not subject_to_withholding however salaries paid to such officials by the government or by a government agency_or_instrumentality are subject_to_withholding sec_31_3401_a_-2 provides that amounts paid to precinct workers for services performed at election booths in state county and municipal elections and fees paid to jurors and witnesses are in the nature of fees paid to public officials and are therefore not subject_to_withholding sec_3402 provides that every employer making a payment of wages shall deduct and withhold federal income taxes sec_3401 provides that the term employee includes an officer employee or elected official of the united_states a state or any political_subdivision thereof or any agency_or_instrumentality of any one or more of the foregoing sec_31_3401_c_-1 of the employment_tax regulations provides in part that the term employee includes officers and employees whether elected or appointed of the united_states a state or any political_subdivision thereof or any agency_or_instrumentality of any one or more of the foregoing under sec_1402 for purposes of the self-employment compensation act seca the term trade_or_business generally does not include the performance of the functions of a public_office an exception exists for a public_office that is compensated solely on a fee basis under revrul_74_608 1974_2_cb_275 the exception applies only with respect to fees received directly from the public sec_1 c of the income_tax regulations provides guidance on the types of positions that are considered to be a public_office this section provides in part that the term public_office includes any elective or appointive office of a state or its political subdivisions further this section provides that for example a governor a mayor the secretary of state a county commissioner a judge a justice of the peace a county or city attorney or a notary public perform the services of a public_office revrul_61_113 1961_1_cb_400 considers whether individuals serving as members of a hearing board_of an air pollution control district are performing the functions of a public_office the members are appointed by the county board_of supervisors take an oath of office hold public hearings and submit their decisions to the county they are not under the control and direction of the county board_of supervisors or any other body their compensation is based upon the number of meetings they attend the ruling concludes that the board members’ services constitute the performance of the functions of a public_office and therefore do not constitute a trade_or_business under sec_1402 whether the board members are officers under sec_3401 is determined by reference to local law analysis of local law is properly handled by the office of district_counsel however we provide the following information on the employment_tax consequences if it is determined that the board members are officers under local law if the board members are determined to be officers under local law then sec_3401 provides that they are employees for income_tax_withholding purposes however fees paid to a public official are not wages subject_to income_tax_withholding moreover whether the board members are officers under sec_3401 does not affect whether they are employees for oasdi or medicare fica tax purposes rather whether the board members are employees for fica purposes is determined based upon the common_law standard sec_3121 notwithstanding that a worker is an employee under the common_law the taxpayer may be entitled to relief from employment_taxes under sec_530 of the revenue act of we wish to draw your attention to two provisions under sec_530 that were added by section of the small_business job protection act of sbjpa pub_l_no first sec_530 provides that the availability of the safe harbors is not dependent upon the worker otherwise being an employee based upon this provision the service has taken the position that the first step in a worker-classification case is to determine whether the taxpayer is entitled to relief under sec_530 second sec_530 provides that the industry practice safe_harbor under sec_530 shall not require a reasonable showing of the practice of more than percent of the industry we note this provision because taxpayers often claim reliance on industry practice as a reasonable basis for treating a worker as a nonemployee for further information on sec_530 and worker-classification see the training materials on employee versus independent_contractor status independent_contractor or employee training rev tpds 84238i if sec_530 relief is not available a state_or_local_government employer will be subject_to fica with respect to a common_law_employee unless the employee is a member of a qualified retirement_system or some other exception applies sec_3121 under sec_3121 to be excluded from the fica the employee must be a participant in a plan it is not enough that the employer maintains a plan for further information see publication federal-state reference guide social_security coverage and fica reporting by state and local_government employers case development hazards and other considerations the guidelines under the state and local_government compliance initiative provide that prospective treatment is the preferred approach to gaining taxpayer compliance if you have any further questions please call the branch telephone number jerry e holmes branch chief associate chief_counsel employee_benefits exempt_organizations


t c memo united_states tax_court philip cullen petitioner v commissioner of internal revenue respondent docket no filed date philip cullen pro_se horace crump for respondent memorandum findings_of_fact and opinion wherry judge this proceeding was commenced under sec_6015 for review of respondent’s determination that petitioner is not entitled to relief from joint_and_several_liability for with respect to a joint tax_return filed with mary cullen ms cullen the issues for decision are whether petitioner is eligible for relief from joint_and_several_liability under sec_6015 whether petitioner is eligible for relief from joint_and_several_liability under sec_6015 and whether respondent abused his discretion in denying petitioner’s request for relief from joint_and_several_liability under sec_6015 findings_of_fact some of the facts have been stipulated and the stipulated facts and accompanying exhibits are by this reference incorporated in our findings at the time the petition in this case was filed petitioner resided in navarre florida background petitioner and ms cullen were married but living separately during the calendar_year and were divorced in date during their separation ms cullen lived in a travel trailer situated next door to the marital residence petitioner and ms cullen filed a joint form_1040 u s individual_income_tax_return for the year although both petitioner and ms cullen have some college- level education it was petitioner who collected and organized the financial records required to prepare their joint federal_income_tax returns during their marriage the tax_return unless otherwise indicated all section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure signed and filed without duress by petitioner and ms cullen was prepared by a professional tax_return_preparer employed by petitioner and utilizing information furnished by petitioner ms cullen’s employment ms cullen to the personal knowledge of petitioner at the time their joint federal_income_tax return was prepared and filed had worked for tgy sitters inc of pensacola florida tgy during and on cross-examination by respondent’s counsel petitioner testified and the court so finds as follows q a q a mr cullen did you have actual knowledge that your wife worked during yes i did were you aware that she worked at tgy sitters i was the form 1099-misc miscellaneous income issued to ms cullen for by tgy indicated nonemployee compensation_for that year of dollar_figure however because petitioner did not have the form_1099 and had not been informed by ms cullen of the exact amount of income she had received from tgy petitioner did not take any steps to ensure information concerning such income was provided to the tax_return_preparer consequently this compensation was not reflected or included in the joint tax_return filed for financial affairs during the early years of their marriage petitioner and ms cullen maintained a joint bank account with a single checkbook at sunshine bank in pensacola florida however during petitioner deposited his monthly income in a checking account in his name at regions bank petitioner also testified and the court so finds that during ms cullen did not deposit her money into his regions bank account he assumed that she had her own separate checking account petitioner did not benefit from any of ms cullen’s tgy income since they did not live together at any time during or after petitioner was left with all of their joint unpaid bills when ms cullen moved out of their home and their divorce decree did not address who was obligated to pay the taxes as to the tax due on ms cullen’s dollar_figure of income petitioner just assumed that she ms cullen was taking care of her own business he did not however verify this because he contended he couldn’t get a hold sic of her although she was living in the trailer next door request for sec_6015 relief because of the dollar_figure of unreported income respondent determined an income_tax deficiency and statutory additions with respect to petitioner and ms cullen’s tax_year neither petitioner nor ms cullen contested the statutory_notice_of_deficiency and respondent assessed the tax_deficiency and statutory additions thereafter petitioner sought relief under sec_6015 on date respondent mailed to petitioner a final notice advising him that his requested sec_6015 relief had been denied and that if he wished to contest this determination he must file a petition with the u s tax_court within days this court’s jurisdiction to review petitioner’s claim for relief is conferred by sec_6015 which allows a spouse who has requested relief from joint_and_several_liability to contest the commissioner’s denial of relief by filing a timely petition in this court petitioner filed a timely petition with this court on date on date respondent filed an answer to petitioner’s petition and a certification under rule b as amplified by 115_tc_118 the certification confirmed that respondent had notified ms cullen that petitioner had filed a claim for relief from joint_and_several_liability and that she could intervene despite the notice ms cullen has not intervened in this case i contentions of the parties opinion petitioner contends that he is eligible for relief from joint_and_several_liability under sec_6015 c or f for the tax_liability and statutory additions in essence petitioner contends he is now divorced and did not live with ms cullen during or thereafter the income responsible for the tax_deficiency and statutory additions was all his wife’s income while he knew she had tgy income for she would not tell him the amount of the income he did not benefit from the income and it would be inequitable and a financial hardship for him to have to pay the tax and statutory additions due on her income other than the issue of equity respondent did not seriously challenge any of these contentions nevertheless respondent argues that petitioner is not eligible for relief under either sec_6015 or c respondent also asserts that there was no abuse_of_discretion in denying equitable relief from joint_and_several_liability for any portion of the unpaid tax or statutory additions under sec_6015 respondent’s principal basis for these conclusions is that petitioner by his own admission had actual knowledge of the unreported tgy income at the time the joint federal_income_tax return was signed and filed ii general rules married taxpayers may normally elect to file a joint federal_income_tax return sec_6013 after making the election each spouse is fully responsible for the accuracy of the return and jointly and severally liable for the entire tax due for that year sec_6013 114_tc_276 a spouse requesting spouse may however seek relief from joint_and_several_liability by following procedures established in sec_6015 sec_6015 except as otherwise provided in sec_6015 petitioner bears the burden_of_proof rule a 118_tc_106 affd 353_f3d_1181 10th cir sec_6015 provides three potential paths of relief from joint_and_several_liability if certain statutory requirements are met first sec_6015 allows for traditional relief from joint_and_several_liability following the model of former sec_6013 second sec_6015 provides for an allocation of liability for a deficiency as if the spouses had filed separate returns third sec_6015 confers discretion upon the secretary to grant equitable relief in situations where relief is unavailable under sec_6015 or c iii relief under sec_6015 sec_6015 provides sec_6015 procedures for relief from liability applicable to all joint filers -- in general --under procedures prescribed by the secretary if-- a a joint_return has been made for a taxable_year petitioner has not contended that sec_7491 applies to this case b on such return there is an understatement_of_tax attributable to erroneous items of individual filing the joint_return c the other individual filing the joint_return establishes that in signing the return he or she did not know and had no reason to know that there was such understatement d taking into account all of the facts and circumstances it is inequitable to hold the other individual liable for the deficiency in tax for such taxable_year attributable to such understatement and e the other individual elects in such form as the secretary may prescribe the benefits of this subsection not later than the date which i sec_2 years after the date the secretary has begun collection activities with respect to the individual making the election then the other individual shall be relieved of liability for tax including interest penalties and other_amounts for such taxable_year to the extent such liability is attributable to such understatement apportionment of relief--if an individual who but for paragraph c would be relieved of liability under paragraph establishes that in signing the return such individual did not know and had no reason to know the extent of such understatement then such individual shall be relieved of liability for tax including interest penalties and other_amounts for such taxable_year to the extent that such liability is attributable to the portion of such understatement of which such individual did not know and had no reason to know understatement--for purposes of this subsection the term understatement has the meaning given to such term by sec_6662 the requirements of sec_6015 are stated in the conjunctive accordingly a failure to meet even one of them prevents a requesting spouse from qualifying for relief 119_tc_306 affd ___ fed appx ___ 6th cir there is no dispute that petitioner satisfies subparagraphs a b and e of sec_6015 b nor is there any doubt that petitioner does not satisfy subparagraph c under this requirement the individual seeking relief under sec_6015 must establish that in signing the return he or she did not know and had no reason to know that there was an understatement attributable to the erroneous items of the other spouse sec_6015 115_tc_183 affd 282_f3d_326 5th cir here petitioner candidly acknowledged that when signing and filing the joint tax_return he knew of his wife’s unreported tgy income consequently petitioner is ineligible for relief under sec_6015 notwithstanding the individual’s knowledge or reason to know of some part of the understatement sec_6015 permits the individual to qualify for relief as to the remainder of the understatement such relief is available if the individual establishes that in signing the return he or she did not know and had no reason to know the extent of the understatement sec_6015 in that case the individual will be relieved of liability for tax to the extent that such liability is attributable to the portion of such understatement of which such individual did not know and had no reason to know sec_6015 where a taxpayer seeks to establish a lack of knowledge as to an item giving rise to an understatement_of_tax the taxpayer must show that he acted as a reasonably prudent person and where called for inquired as to the facts of that item in order to determine its proper tax treatment 872_f2d_1499 11th cir affg tcmemo_1988_63 butler v commissioner t c pincite where as here a taxpayer on notice that his spouse had unreported income but not the exact amount of income fails to fulfill a duty_of inquiry that taxpayer will ordinarily be charged with either actual or constructive knowledge of the tax_return deficiency 992_f2d_1256 2d cir affg tcmemo_1992_228 demirjian v commissioner tcmemo_2004_22 cohen v commissioner tcmemo_1987_537 stating that the provisions providing relief from joint_and_several_liability are designed to protect the innocent not the intentionally ignorant see also sec_1_6015-3 income_tax regs deliberate effort to avoid learning about the item may with other factors be tantamount to actual knowledge because the entire tax_deficiency in this instance arises as a result of ms cullen’s unreported tgy income petitioner knew or had reason to know of the entire tax_deficiency and is therefore ineligible for any relief under sec_6015 iv relief under sec_6015 sec_6015 limits the liability of a taxpayer such as petitioner who is no longer married and who makes the appropriate election in relevant part sec_6015 provides sec_6015 procedures to limit liability for taxpayers no longer married or taxpayers legally_separated or not living together -- election -- c election not valid with respect to certain deficiencies -if the secretary demonstrates that an individual making an election under this subsection had actual knowledge at the time such individual signed the return of any item giving rise to a deficiency or portion thereof which is not allocable to such individual under subsection d such election shall not apply to such deficiency or portion this subparagraph shall not apply where the individual with actual knowledge establishes that such individual signed the return under duress as noted previously petitioner had actual knowledge of ms cullen’s unreported tgy income when the joint tax_return for was signed and filed petitioner also testified on cross- examination that he did not suffer any verbal or physical abuse from ms cullen thus the court concludes that petitioner knew or had reason to know that there was an understatement_of_tax on the joint tax_return that it was not signed under duress and that sec_6015 relief is not available see jonson v commissioner t c pincite iv relief under sec_6015 this court has jurisdiction to review the denial of equitable relief 114_tc_324 butler v commissioner supra pincite the court’s precedent indicates it reviews respondent’s denial of relief to determine whether respondent abused his discretion by acting arbitrarily capriciously or without sound basis in fact 122_tc_32 butler v commissioner supra pincite petitioner has failed to make that showing here sec_6015 provides as follows sec_6015 equitable relief --under procedures prescribed by the secretary if-- taking into account all the facts and circumstances it is inequitable to hold the individual liable for any unpaid tax or any deficiency or any portion of either and relief is not available to such individual under subsection b or c the secretary may relieve such individual of such liability as discussed above petitioner satisfies the requirement of sec_6015 that relief is not available under subsection b or c we turn then to the equitable test of sec_6015 pursuant to the authority granted in sec_6015 respondent has prescribed procedures to use in determining whether a spouse qualifies for relief under sec_6015 the factors listed in those procedures have been applied by this court 120_tc_137 at the time that petitioner filed his petition date those procedures were found in revproc_2000_15 2000_1_cb_447 revproc_2000_15 sec_4 c b pincite lists seven threshold conditions that must be satisfied before respondent will consider a request for relief under sec_6015 the threshold conditions are as follows the requesting spouse filed a joint_return for the taxable_year for which relief is sought relief is not available to the requesting spouse under section b or c respondent’s determination was subject_to revproc_2000_ 2000_1_cb_447 because it was in effect when respondent’s appeals officer evaluated petitioner’s request and when respondent issued the notice_of_determination revproc_2000_15 supra superseded notice_98_61 1998_2_cb_756 effective date revproc_2003_61 2003_32_irb_296 date superseded revproc_2000_15 2000_1_cb_447 for requests for relief under sec_6015 pending on date for which no preliminary determination_letter had been issued as of that date and for requests for relief filed on or after that date the requesting spouse applies for relief no later than two years after the date of the service’s first collection activity after date with respect to the requesting spouse the liability remains unpaid no assets were transferred between the spouses filing the joint_return as part of a fraudulent scheme by such spouses there were no disqualified assets transferred to the requesting spouse by the nonrequesting spouse if there were disqualified assets transferred to the requesting spouse by the nonrequesting spouse relief will be available only to the extent that the liability exceeds the value of such disqualified assets for this purpose the term disqualified_asset has the meaning given such term by sec_6015 and the requesting spouse did not file the return with fraudulent intent respondent did not contest that petitioner met the seven threshold conditions revproc_2000_15 sec_4 c b pincite then provides that where a reported joint_return liability is unpaid relief under sec_6015 will ordinarily be granted if three tests are satisfied that section is not applicable here however since the unpaid tax_liability was not reported on the filed joint tax_return if relief under section dollar_figure of the revenue_procedure is not available revproc_2000_15 sec_4 c b pincite provides factors that the commissioner will consider in deciding whether to grant relief under sec_6015 revproc_2000_15 sec_4 and c b pincite establishes a partial list of four positive factors which if present the commissioner weighs in favor of relief and if absent are treated as negative factors this section of the revenue_procedure also lists two other positive factors which if present weigh in favor of relief and if absent are neutral and two additional negative factors which if present weigh against granting relief and if absent are neutral one of these solely negative factors however has been interpreted by this court also to carry positive weight if absent such that we in essence view five factors as being either positive or negative ewing v commissioner supra pincite ferrarese v commissioner tcmemo_2002_249 the list of factors is not intended to be exhaustive other factors may be considered and no one factor is necessarily conclusive nonetheless some factors are more important than others an important factor absent other unusually strong countervailing factors may when all factors are weighed appropriately dictate the ultimate result as interpreted by this court the five positive or negative factors as pertinent here are i the requesting spouse would or would not suffer economic hardship if relief were denied ii the unpaid tax_liability is or is not attributable to the requesting spouse iii the requesting spouse had or did not have reason to know of the item giving rise to the deficiency iv the requesting spouse did or did not significantly benefit beyond mere support from the unpaid liability or the taxable_income which created it and v the nonrequesting spouse had or did not have a legal_obligation per the divorce decree to pay the tax_liability provided that if neither spouse has the specified obligation this factor is neutral the two additional potentially positive factors are i whether the requesting spouse is divorced or separated from the nonrequesting spouse and ii whether the requesting spouse was abused by the nonrequesting spouse the additional potentially negative factor is whether the requesting spouse has made a good_faith effort to comply with federal_income_tax laws following the taxable_year for which relief is requested in this case factors in petitioner’s favor include that he is divorced that the liability is solely attributable to his former spouse’s unreported income and that he did not significantly benefit from the unreported income the other factors are not helpful to petitioner economic hardship for instance is defined as inability to meet reasonable basic living_expenses sec_301_6343-1 proced admin regs although petitioner introduced some evidence that payment of the tax would cause him economic hardship in light of his claimed dollar_figure annual income and obligation to pay his and ms cullen’s nontax debts incurred prior to their divorce he introduced no evidence as to his current_assets and or net_worth other than months of bank statements in petitioner likewise introduced no evidence of his basic living_expenses or other current debts that would show he could not pay his current reasonable basic living_expenses although petitioner testified that he had a fixed income for of approximately dollar_figure per month the bank statements reflect monthly deposits of between dollar_figure and dollar_figure the record does not explain the source of the additional deposited funds or the apparent discrepancies of dollar_figure to dollar_figure per month in petitioner’s deposits versus his claimed monthly income petitioner’s inconsistency on this point further weighs against him see ogonoski v commissioner tcmemo_2004_52 the other three factors are neutral to petitioner there was no spousal abuse the decree of divorce did not assign the legal_obligation to pay the federal_income_tax at issue to either spouse and there was no evidence introduced at trial that petitioner had not made a good_faith effort to comply with the federal tax laws after of the factors weighing against relief the most important is present here and is the primary reason we deny petitioner’s requested relief that factor is petitioner’s actual knowledge when signing under penalty of perjury and filing the joint tax_return that it did not include or otherwise report taxable_income for earned by his wife from tgy the court rejects as not credible petitioner’s testimony that he could not contact his wife despite the fact she lived next to him in the travel trailer and signed their joint tax_return to find out either the amount of her tgy income or whether she had reported it to their tax_return_preparer sec_6013 explicitly provides that if a joint_return is made the tax shall be computed on the aggregate income and the liability with respect to the tax shall be joint_and_several the filing of a joint_return may afford taxpayers significant benefits in the form of lower taxes than would be the case if they elected to file separately therefore unless relief is authorized by sec_6015 each spouse should be held liable for the tax due on a joint tax_return in some cases this court may afford sec_6015 relief even though the requesting spouse had knowledge of the tax_deficiency or failure to pay the tax when the return was signed and filed see eg foor v commissioner tcmemo_2004_54 concluding that a multitude of favorable factors overcame the taxpayer’s knowledge that the tax shown due would not be paid revproc_2000_15 sec_4 c b pincite specifying that no single factor is determinative however petitioner’s favorable facts in this case are not sufficient to establish an abuse of respondent’s discretion the court shall sustain respondent’s determination denying sec_6015 relief to reflect the foregoing decision will be entered for respondent


significant index no department of the treasury internal_revenue_service washington d c tax exempt and overnment entities division oct tep aa al re dear this letter constitutes notice that the company’s requests for waivers of the minimum_funding_standard for the salaried and hourly plans for the plan years ending december have been granted subject_to the following conditions and the company provides the pension_benefit_guaranty_corporation pbgc’ with a copy of any ruling_request it makes under sec_412 of the - internal_revenue_code code within five business days of the date of the ruling letter the company makes contributions to the salaried and hourly plans in the amounts necessary to satisfy the minimum_funding_standard for each plan for the plan years ending december date of the contributions starting with the quarterly contributions due on date the company makes the required quarterly contributions to the salaried and hourly plans in a timely fashion while each of the plans is subject_to waivers of the minimum_funding_standard for this purpose the total amount of each quarterly contribution will be determined in accordance with sec_430 and sec_430 of the code and can be comprised of several installments made prior to the respective due_date of the quarterly contribution including interest to the actual and december by through the company makes contributions to the salaried and hourly plans in amounts sufficient to a meet the minimum_funding requirements for each of the plans for the plan years ending december date through respectively without applying for a waiver of the minimum_funding_standard and b maintain credit balances equal to the outstanding balance of the amortization bases with respect to the waived amounts that are established and maintained under either sec_412 of the code as in effect prior to the pension_protection_act of ppa or sec_430 of the code as in effect after ppa as applicable if the service determines that pre-2008 funding waiver amortizations are not ‘plan years the carried over as a separate amortization base for post- company will make excess annual contributions to the salaried and hourly plans as if the waiver amortizations were carried over as a separate base such that the waivers will be paid off in five years the pre-funding balance shall be increased by these additional contributions and maintained until the end of the 5-year period at which time there must be an election to reduce the prefunding balance by the accumulated amount of the excess_contributions the company will a make its best efforts to cease benefit accruals for participants in the hourly plan effective with the termination of the collective bargaining agreement on date and b if the company and the union can reach an agreement to cease benefit accruals under the hourly plan provide a copy of the plan amendment ceasing benefit accruals under the hourly plan to the service and to the pbgc using the fax numbers or addresses below and the company provides proof of payment of all contributions described above in a timely manner to the service and to the pbgc using the fax numbers or addresses below information must be provided to both of the service and to of the pbgc or other individuals designated by the respective agencies using the addresses or fax numbers below internal_revenue_service ep classification commerce st dal dallas tx fax pension benefit guaranty gcerporation disc k street n w washington dc fax your authorized representative agreed to these conditions in a letter dated date if any one of these conditions is not met the funding waivers for the salaried and hourly plans for the plan years ending december retroactively null and void and ' are these conditional waivers have been granted in accordance with sec_412 of the code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa for each plan for the plan_year ending december the amount of the conditional waiver is equal to the contributions that would otherwise be required to reduce the balance in the funding_standard_account of the salaried and hourly plans to zero for each plan for the plan_year ending december conditional waiver is the amount of the minimum_required_contribution for the plan_year not taking into account the amount described in sec_412 of the code as in effect after ppa ' the amount of the the company manufactures edible collagen casings for a variety of foodservice applications it is owned by the holding_company which is in turn owned by the parent company the salaried plan is a non-contributory defined_benefit_plan the salaried plan covers all employees of the company hired before date excluding leased employees and employees covered by a collective-bargaining contract the pian was amended effective date to close participation to employees hired on or after date and to cease benefit accruals the hourly plan is a non-contributory defined_benefit_plan covering employees represented by the union pursuant to a collective-bargaining agreement with the union the current collective bargaining agreement with the union runs through date the company began to experience a financial hardship in early when its largest u s customer reduced its purchases after switching to a new technology that does not use the product manufactured by the company to respond to the reduc demand for its products the company froze all new hiring shut down one-quarter of its production lines and laid off both salaried and hourly employees this resulted in a significant reduction in fixed and variable expenses but the company was still forced to borrow dollar_figure additional million from foreign banks reaching the credit limit with its lenders and an million for the parent company to keep its operations running the company feels that it'is in a position to effect a recovery in the near future by concentrating on new products and increasing its customer base trials of a new product have begun with its largest customer and the company is certain that it will meet the customer's qualification requirements in the near future foreign sales have increased as a result of the company’s efforts to expand its presence in those markets and domestic sales continue to grow for certain of the company's products the company expects to be operating at full capacity in the near future because the parent company is confident that the company's financial difficulties are temporary the parent company provided a capital infusion of dollar_figure date million to the company on the company has also resumed funding both the salaried and hourly plans the company made contributions of dollar_figure plans to satisfy the first and second required quarterly payment for the plan years ending december the company has represented that it will also make the required contributions due on date and date furthermore the company has agreed to make a contribution equal to the amount necessary to fully amortize the funding waivers that it has requested approximately dollar_figure million if the funding waiver requests are granted on date and date to the it is clear from our analysis of the information submitted with the request that the company has suffered a substantial business hardship it also appears that the business hardship is temporary therefore the company's requests for waivers of the minimum furiding standard for the salaried and hourly plans for the plan years ending december have been granted subject_to the conditions described above and your attention is called to sec_412 of the code and sec_304 of erisa _ which describe the consequences that would result in the event either the salaried or hourly plans is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived funding deficiencies remain unamortized please note that any amendment to a profit sharing plan or any other retirement plans covering employees covered by either the salaried or hourly plan maintained by the company to increase the liabilities of those plans would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa similarly the establishment of a new profit sharing plan or any other retirement_plan by the company covering employees covered by either the salaried or hourly plan would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent we have sent a copy of this letter to the to the and to your authorized representative pursuant to a power_of_attorney on file in this office we suggest that you furnish a copy of this letter to the enrolled_actuary who is responsible for the completion of the schedule b if you require further assistance in this matter please contact sincerely yours bd fp andrew e zuckerman director employee_plans rulings agreements


number release date internal_revenue_service 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 ita b06 plr-128374-14 date date legend current accounting firm ---------------------------- common member -------------------------------- ------------------------ taxpayer taxpayer taxpayer taxpayer product clients industry date -------------------------------------------------------- ------ ----------------- ------------------------------------------------------------ ------ ----------------- --------------------------------------------------------- ------ ----------------- --------------------------------------------- ----- ----------------- --------------------------------------- ------------------------------------------------------- ----------------------------------------------------- ------------------------ plr-128374-14 date date year a year b year c dear ------------- ------------------------ ---------------------- ------- ------- ------- we received current accounting firm's letter of date which notes taxpayer taxpayer taxpayer and taxpayer request for an extension of time under sec_301_9100-1 of the procedure and administration regulations for each to file a form_970 application to use lifo inventory_method see also sec_301_9100-3 the following facts have been obtained from the above-referenced letter the accompanying affidavits and completed draft of a form_970 common member is a distributor of product to clients in the industry the common member is also a holding_company owning a percent capital interest in each of the operating companies taxpayer taxpayer taxpayer and taxpayer the common member acquired each company in taxable transactions pursuant to which the companies became disregarded single-member llcs of the common member on date common member acquired taxpayer taxpayer and taxpayer on date common member acquired taxpayer subsequent to the acquisitions the common member granted class b units representing profits interests to certain executives of those four acquired companies in exchange for services to be rendered to or for the benefit of the companies by the executives these profit interests were subject_to a five-year_vesting period and became partially vested during year a on the initial vesting dates of the class b units taxpayer taxpayer taxpayer and taxpayer began filing separate partnership returns in year a prior to the filings of partnership returns taxpayer taxpayer taxpayer and taxpayer were disregarded as separate entities and their activity was included in the partnership return of the common member for tax purposes common member adopted the lifo_method of accounting for it and its disregarded single-member llcs by filing a form_970 with its timely filed partnership return for year b common member also valued this inventory using the lifo_method for financial reporting purposes taxpayer taxpayer taxpayer and taxpayer continued to use the lifo_method when they filed their initial separate returns for year plr-128374-14 a taxpayer taxpayer taxpayer and taxpayer however did not file the necessary form 970s to properly make their elections to use the lifo_method taxpayer taxpayer taxpayer and taxpayer did check the box on line 9c of their forms 1125-a cost_of_goods_sold to adopt the lifo_method for year a and line 9d of the forms 1125-a indicated the amounts of closing_inventory computed under the lifo_method furthermore inventory has continually been valued using the lifo_method for both tax and financial reporting purposes by each entity since year a on date common member engaged current accounting firm to prepare the year c partnership returns for taxpayer taxpayer taxpayer and taxpayer it was then discovered that the necessary form 970s were not included with the year a as- filed first year partnership returns that had been prepared by a predecessor accounting firm sec_472 of the internal_revenue_code provides that a taxpayer may use the method provided in subsection b lifo inventory_method in inventorying goods specified in an application to use such method filed at such time and in such manner as the secretary may prescribe sec_1_472-3 of the income_tax regulations provides in relevant part that the lifo inventory_method may be adopted and used only if the taxpayer files with its income_tax return for the taxable_year as of the close of which the method is first to be used a statement of its election to use such inventory_method sec_301_9100-1 defines regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-1 provides in relevant part that the commissioner has discretion to grant a reasonable extension of the time to make a regulatory election under all subtitles of the code except subtitles e g h and i if the taxpayer has acted reasonably and in good_faith and if granting that relief will not prejudice the interests of the government sec_301_9100-3 provides the standards that the commissioner will use in determining whether to grant an extension of time to make a regulatory election it also provides information and representations that must be furnished by the taxpayer to enable the internal_revenue_service to determine whether the taxpayer has satisfied these standards the relevant standards are whether the taxpayer acted reasonably and in good_faith and whether granting relief would 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 requests relief under this section before the plr-128374-14 failure to make the regulatory election is discovered by the internal_revenue_service sec_301_9100-3 provides that a taxpayer will not be considered to have acted reasonably and in good_faith if the taxpayer seeks to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 at the time the taxpayer requests relief and the new position requires or permits a regulatory election for which relief is requested or if the taxpayer was informed in all material respects of the required election and related tax consequences but chose not to file the election furthermore a taxpayer ordinarily will not be considered to have acted reasonably and in good_faith if the taxpayer uses hindsight in requesting relief sec_301_9100-3 provides that the interests of the government are prejudiced if granting relief would result in a taxpayer having a lower tax_liability in the aggregate for all taxable years affected by the regulatory election than the taxpayer would have had if the election had been timely made taking into account the time_value_of_money similarly if the tax consequences of more than one taxpayer are affected by the election the government's interests are prejudiced if extending the time for making the election may result in the affected taxpayers in the aggregate having a lower tax_liability than if the election had been timely made sec_301_9100-3 provides that the interests of the government are ordinarily prejudiced if the tax_year in which the regulatory election should have been made or any taxable years that would have been affected by the election had it been timely made are closed by the period of limitations on assessment under sec_6501 before the taxpayer’s receipt of a ruling granting relief under this section on the basis of the facts representations and affidavits submitted we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly we hereby grant an extension of time for taxpayer taxpayer taxpayer and taxpayer to each file a form_970 for the year a this extension shall be for a period of days from the date of this ruling please attach a copy of this ruling to each form_970 filed pursuant to this private_letter_ruling request the rulings contained in this letter are based upon facts representations and affidavits submitted by current accounting firm on behalf of taxpayer taxpayer taxpayer and 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 specifically no opinion is expressed regarding the propriety of the lifo_method used by taxpayer taxpayer taxpayer or taxpayer plr-128374-14 this ruling is directed only to taxpayer taxpayer taxpayer and taxpayer who are requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to taxpayer taxpayer taxpayer and taxpayer 4’s authorized representative sincerely cheryl l oseekey senior counsel branch income_tax accounting enc copy of sec_6110 purposes


internal_revenue_service department of the treasury index number washington dc person to contact telephone number refer reply to cc dom p si plr-113949-98 date date number release date legend partnership a b c d e state date x y z m n r s t plr-113949-98 h i dear this letter responds to a letter dated date and supplemental correspondence that was submitted by your authorized representative requesting a ruling concerning the federal_income_tax consequences of a proposed contribution of property to a partnership the information submitted indicates that partnership is a state limited_partnership a b c and d are the general partners of partnership owning x percent of partnership collectively b and e own the remaining y percent of partnership as limited partners marketable_securities comprise more than z percent of partnership’s assets partnership’s five largest holdings are in unrelated issuers and represent from a high of m percent to a low of n percent of partnership’s total asset value a proposes to contribute a portfolio of assets the portfolio to partnership in exchange for a limited_partnership_interest the portfolio is composed of marketable_securities r percent money funds s percent and cash t percent as of date the five largest marketable_securities that a proposes to transfer represented less than percent of the total value of the portfolio and no one issuer represented more than percent of the total assets after the contribution partnership’s five largest holdings will be composed of stock of unrelated issuers ranging in value from a high of h percent to a low of i percent of partnership’s total asset value it has been represented that a will transfer a diversified portfolio of assets to partnership a portfolio of assets is diversified if it satisfies the requirements of sec_368 of the internal_revenue_code applying the relevant provisions of sec_368 in applying sec_368 government securities are included in determining total assets unless the securities are acquired to meet the requirements of sec_368 it has also been represented that a has no intent to transfer assets other than cash money funds or a diversified portfolio of assets to partnership plr-113949-98 the service has been requested to rule that the contribution of the portfolio to partnership will not be treated as a transfer to an investment_company within the meaning of sec_721 and sec_351 and no gain_or_loss will be recognized by a b c d e or partnership under sec_721 on the proposed contribution of the portfolio by a to partnership sec_721 provides that no gain_or_loss shall be recognized to a partnership or to any of its partners in the case of a contribution of property to the partnership in exchange for an interest in the partnership sec_721 provides that sec_721 shall not apply to gain realized on a transfer of property to a partnership that would be treated as an investment_company within the meaning of sec_351 if the partnership were incorporated sec_351 provides that no gain_or_loss is recognized if property is transferred to a corporation by one or more persons solely in exchange for stock_or_securities in such corporation and immediately_after_the_exchange the transferors are in control as defined in sec_368 of the corporation sec_351 provides that sec_351 does not apply to transfers of property to an investment_company after applying the law to the facts submitted and representations made we conclude that a’s transfer of the portfolio to partnership would not be treated as a transfer to an investment_company within the meaning of sec_351 if partnership were incorporated accordingly no gain_or_loss will be recognized by a b c d e or partnership from a’s contribution of the portfolio to partnership in exchange for a partnership_interest under sec_721 except as otherwise provided we express no opinion regarding the federal_income_tax treatment of the proposed transaction under any other provision of the code or regulations specifically no opinion is expressed regarding estate and gift_tax valuation issues that may arise regarding transfers_of_partnership_interests this letter is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent plr-113949-98 under the power_of_attorney on file in this office a copy of this letter is being sent to partnership’s authorized representative sincerely yours jeff erickson assistant to the branch chief branch office of assistant chief_counsel passthroughs special industries enclosure copy for sec_6110 purposes


department of the treasury internal_revenue_service washington d c tax exempt and government entities oivision mar uniform issue list tt ep 2a ts kke kaek kkk legend taxpayer a ira x amount a partnership p financial_institution y financial_institution z individual m dear kek ot kk ak kk kk wee this is in response to your request dated date as supplemented by correspondence dated date submitted on your behalf by your authorized representative in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code’ the following facts and representations have been submitted under penalty of perjury in support of the ruling requested ane page taxpayer a represents that he received a distribution from ira x totaling amount a taxpayer a asserts that his failure to accomplish a rollover of amount a within the day period prescribed by sec_408 of the code was due to financial_institution error taxpayer a further represents that amount a has not been used for any other purpose in date taxpayer a decided to invest a portion of ira x in a private equity partnership partnership p he discussed this transaction with a representative of partnership p individual m and was assured that the investment could be accomplished through his ira after taxpayer a’s discussion with individual m he informed financial_institution y where ira x was held that he intended to invest his ira in a private equity partnership on date financial_institution y processed the transfer of amount a to financial_institution z to be credited to partnership p as a trustee to trustee transfer although partnership p and financial_institution z accepted the transfer of amount a as a trustee to trustee transfer and recorded the owner of the investment as taxpayer a’s ira neither company advised taxpayer a about establishing a new ira at financial_institution z to hold amount a taxpayer a was unaware of the problem because his monthly statement from partnership p indicated that the investment was held in the name of his ira individual m represents that it was always the understanding of partnership p that taxpayer a intended to have amount a invested in a proper ira taxpayer a asserts that the failure to accomplish the rollover within the required 60-day rollover period was due to the fact that although partnership p and financial_institution z were fully aware that he intended to make the investment in an ira taxpayer a was provided with incorrect advice and improper paperwork in establishing a proper ira based on the facts and representations you request a ruling that the internal_revenue_service the service waive the day rollover requirement contained in sec_408 of the code with respect to the distribution of amount a sec_408 of the code provides that except as otherwise provided in sec_408 of the code any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if page s i ii the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such pian may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 of the code section d b of the code provides that sec_408 of the code does not apply to any amount described in sec_408 of the code received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 of the code from an ira which was not includible in gross_income because of the application of sec_408 of the code sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the rollover provisions of sec_408 of the code do not apply to any amount required to be distributed under sec_408 of the code sec_408 of the code provides that the secretary may waive the 60-day requirement under sec_408 of the code and d d of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer a is consistent with his assertion that his failure to accomplish a timely rollover was caused by the page improper advice and incorrect paperwork he received from partnership p and financial_institution z with regards to the requirements of establishing an ira to hold amount a therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount a from ira x taxpayer a is granted a period of days from the issuance of this ruling letter to into a rollover ira provided all other requirements of section contribute amount a d of the code except the 60-day requirement are met with respect to such contribution amount a will be considered a rollover_contribution within the meaning of sec_408 of the code this ruling does not authorize the rollover of amounts that are required to be distributed by sec_408 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent if you wish to inquire about this ruling please contact id at - please address all correspondence to se t ep ra t3 sincerely yours _ le theh ec - wee ---- ore ce laura b warshawsky manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose cc kkk


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 --------------------------------------- telephone number --------------------- refer reply to cc psi b02 plr-120517-08 date date legend x ------------------------------------------ ------------------------ state ------------- d1 -------------------------- dear --------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x by x’s authorized representative requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated in state on d1 it was intended that x elect s_corporation treatment effective d1 however a form_2553 election by a small_business_corporation was not timely filed for x sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective generally if an s election is made within the first two and one-half months of a corporation's taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made sec_1362 provides that if an s election is made after the first two and one-half months of a corporation's taxable_year then the corporation will not be plr-120517-08 treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making the election for the taxable_year or no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for such taxable_year and sec_1362 shall not apply based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation effective d2 accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective d2 within days following the date of this letter then such election will be treated as timely made for x's taxable_year beginning d2 a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed or implied as to the federal_income_tax consequences of the transaction described above under any other provision of the code specifically no opinion is expressed concerning whether x is in fact an s_corporation 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 the power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely bradford r poston senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


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 ita b07 plr-125604-07 date date ------------------------------------------------------------------- request for extension of time to file election re taxpayer state owner date firm firm date lmsb official ------------------------------------------------------------------------------------------------------------------ dear --------------- ------------------------------------------------------------------- ------------- --------------------------------------------- -------------------------- ---------------------- -------------------------- -------------------------- --------------------------------------------------------------------------------- this letter responds to a letter dated date submitted by taxpayer requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to make an election under sec_266 of the internal_revenue_code to capitalize investment_interest facts taxpayer is an s_corporation headquartered in state all of the outstanding_stock in taxpayer is owned by owner during the taxable_year ending on date taxpayer incurred investment_interest expense on a loan with respect to real_property that taxpayer reported to owner on owner's form schedule_k-1 this expense was not deductible by owner due to the investment_interest expense limitations under sec_163 of the code and adversely affected owner's at-risk basis in taxpayer taxpayer's timely filed federal_income_tax return for the taxable_year ending date was prepared by firm however owner's individual plr-125604-07 income_tax return for this period was prepared by firm who did not advise owner that taxpayer could make an election under sec_266 to capitalize the investment_interest expense because owner's personal income_tax situation had no effect on the preparation of taxpayer's corporate_income_tax return firm did not determine whether the investment_interest expense reported on the form schedule_k-1 issued to owner would be subject_to limitation instead firm relied upon owner who in turn relied on firm to advise firm that the investment_interest expense would be significantly limited on owner's personal income_tax return and that an election under sec_266 would be beneficial to owner during the taxable_year ending date firm was engaged for the first time to taxpayer requests for the taxable_year ended date an extension of time prepare owner's individual_income_tax_return for the previous taxable_year in the course of preparing owner's tax_return firm obtained a copy of owner's individual_income_tax_return for the taxable_year ending date and became aware of the situation firm advised owner at that time that taxpayer should make an election under sec_266 of the code and advised owner that taxpayer could have made such an election for the taxable_year ending date ruling requested pursuant to sec_301_9100-3 of the procedure and administration regulations to file an election under sec_266 of the code to capitalize investment_interest expense with respect to real_property law and analysis sec_266 of the code provides that no deduction shall be allowed for amounts paid_or_accrued for such taxes and carrying charges as under regulations prescribed by the secretary are chargeable to capital_account with respect to property if the taxpayer elects in accordance with such regulations to treat such taxes or charges as so chargeable with sec_266 of the code items enumerated in sec_1_266-1 may be capitalized at the election of the taxpayer thus taxes and carrying charges with respect to property of the type described in sec_1_266-1 are chargeable to capital_account at the election of the taxpayer notwithstanding that they are otherwise expressly deductible under provisions of subtitle a of the code no deduction is allowable for any items so treated sec_1_266-1 of the income_tax regulations provides that in accordance sec_1_266-1 of the regulations provides in part that the taxpayer may elect as provided in sec_1_266-1 to treat as chargeable to capital_account either as a component of original cost or other basis for the purposes of sec_1012 of the code or as an adjustment to basis for the purpose of sec_1016 in the case of real plr-125604-07 property whether improved or unimproved and whether productive or unproductive interest on a loan but not theoretical interest of a taxpayer using his own funds paid_or_incurred for the development of the real_property or for the construction of an improvement or additional improvement to such real_property up to the time the development or construction work has been completed sec_1_266-1 of the regulations provides that an election with respect to an item described in sec_1_266-1 is effective until the development or construction work described in that subdivision has been completed sec_1_266-1 of the regulations provides that if the taxpayer elects to capitalize an item or items under sec_266 of the code such election shall be exercised by filing with the original return for the year in which the election is made a statement indicating the item or items whether with respect to the same project or different projects which the taxpayer elects to treat as chargeable to capital_account under sec_301_9100-1 of the regulations the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301 to make a regulatory election sec_301_9100-1 through of the regulations 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 making elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 of the regulations provides that requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusions based solely on the facts and the representations submitted we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 of the regulations have been met accordingly taxpayer is granted calendar days from the date of this letter to file the election to capitalize the investment_interest to the real_property under sec_266 of the code with the irs national_office for the taxable_year ended date except as specifically ruled upon above no opinion is expressed or implied concerning the federal_income_tax consequences of the facts described above specifically no opinion is expressed or implied concerning whether taxpayer is eligible to capitalize the investment_interest expense at issue under sec_266 of the code plr-125604-07 this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to taxpayer’s authorized representatives a copy of this letter is also being sent to the lmsb official sincerely john p moriarty john p moriarty senior technician reviewer branch office of associate chief_counsel income_tax and accounting enclosures copy of this letter copy for sec_6110 purposes


id y department of the treasury internal_revenue_service appeals_office n los angeles street los angeles ca release number release date certified mail date date person to contact name employee d number telephone fax hours employer id number uniform issue fist uil ore exempt purposes as required for tax-exempt org anizations described ou do not qualify for exemption from federal_income_tax under rganization described in sec_501 dear this is a final adverse determination that y internal_revenue_code the code sec_501 as ano of the code we made the adverse determination for the following reasons you are not organized for one or m under sec_501 of the internal_revenue_code contributions to your organization are not deductib you're required to file federal_income_tax returns your form to the appropriate internal_revenue_service instructions by visiting our website at www irs gov forms-pubs or by we'll make this letter and the proposed adverse determin sec_6110 of the code after deleting certain identifying in mailing notice notice of intention to disclose please rev that show our proposed deletions if you disagre notice if you decide to contest this determination you can file of sec_7428 of the code in either i le under sec_170 of the code on forms u s_corporation income_tax return mail center per the form's instructions you can get forms and alling 800-tax-form ation letter available for public inspection under formation we provided to you in a separate iew the notice and the documents attached e with our proposed deletions follow the instructions in an action for declaratory_judgment under the provisions the united_states tax_court the united_states court of federal claims or - the united_states district_court for the district of columbia letter rev cataiog number 40683r you must file a petition or complaint in one of these three courts within days from the date we mailed this determination_letter to you contact the clerk of the appropriate court for rules and the appropriate forms for filing petitions for declaratory_judgment you can write to the courts at the following addresses united_states tax_court second street nw washington dc us court of federal claims us district_court for the district of columbia madison place nw washington dc constitution avenue nw washington dc note we will not delay processing income_tax returns and assessing any taxes due even if you file a petition for declaratory_judgment under sec_7428 of the code please refer to the enclosed publication how to appeal an irs determination on tax-exempt status for more information about the appeals process you also have the right to contact the taxpayer_advocate_service tas tas is an independent organization within the irs that can help protect your taxpayer rights tas can offer you help if your tax problem is causing a hardship or you've tried but haven't been able to resolve your problem with the irs if you qualify for tas assistance which is always free tas will do everything possible to help you visit www taxpayeradvocate irs gov or call tas assistance is not a substitute for established irs procedures such as the formal appeals process tas cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court if you have questidns contact the person at the top of this letter sincerely appeals team manager enclosures publication cc letter rev catalog number 40683r department of the treasury internal_revenue_service cincinnati oh legend b date of formation c state d organization dear date january - empioyer id number contact person id number contact telephone number contact fax number uil we considered your application_for recognition of exemption from federal_income_tax under sec_501 of the internal_revenue_code the code based on the information provided we determined that you don’t qualify for exemption under sec_501 of the code this letter explains the basis for our conclusion please keep it for your records issues do you qualify for exemption under sec_501 of the code no for the reasons stated below facts you were formed on b in the state of c as a professional_corporation you were formed and are controlled by d a sec_501 public charity you have a sole shareholder an individual employed and selected by d the relationship between you the sole shareholder and d shareholder shall hold the shares solely for the benefit of d and exclusively in furtherance of the charitable purposes of d d shall retain ultimate control_over your activities and finances and shall retain sole power and discretion is subject_to a shareholder control agreement the agreement provides that the sole your incorporation document states that your purpose is in pertinent part to carry on and conduct the business of practicing medicine and related_services pursuant to the laws of the state of c through individuals authorized by law to render such services it further states that you have the authority to issue shares of stock your incorporation document is silent regarding the disposition of your assets upon your dissolution you indicated that the state of c would not permit the required sec_501 purpose and dissolution language in your incorporation document so you included the required language in your by-laws there is a specific department in the state of c which is the licensing authority for all professional corporations that engage in the practice of medicine you later provided a printed email and an official rejection letter issued by the state of c’s licensing authority showing that the sec_501 purpose and dissolution language would not be accepted in your incorporation document because it violates the state of c’s business law law sec_501 of the code provides for the recognition of exemption of organizations that are organized and operated exclusively for religious charitable or other purposes as specified in the statute no part of the net_earnings may inure to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 states that in order to be exempt as an organization described in sec_501 of the code an organization must be both organized and operated exclusively for one or more of the purposes specified in such section if an organization fails to meet either the organizational_test or the operational_test it is not exempt sec_1_501_c_3_-1 provides that an organization is organized exclusively for one or more exempt purposes only if its articles of organization a limit the purposes of such organization to one or more exempt purposes and b do not expressly empower the organization engage otherwise than as an insubstantial part of its activities in activities that in themselves are not in furtherance of one or more exempt purposes sec_1_501_c_3_-1 holds that an organization is not organized exclusively for one or more exempt purposes unless its assets are dedicated to an exempt_purpose an organization’s assets will be considered dedicated to an exempt_purpose for example if upon dissolution such assets would by reason of a provision in the organization’s articles or operation of law be distributed for one or more exempt purposes application of law as stated in sec_1_501_c_3_-1 to qualify for exemption under sec_501 of the code an organization must be both organized and operated exclusively for purposes described in sec_501 your incorporation document states that you were formed for the business_purpose of practicing medicine your formation document does not limit your purposes to one or more exempt purposes as required by sec_1_501_c_3_-1 causing you to fail the organizational_test additionally your incorporation document does not have a dissolution provision as required by sec_1_501_c_3_-1 which also causes you to fail the organizational_test although your by-laws contain proper sec_501 language your by-laws are not your formation document because you are a corporation as a result you have not satisfied the organizational_test and are not exempt under sec_501 of the code letter rev catalog number 47630w conclusion based on the information submitted you fail the organizational_test therefore you do not qualify for exemption under sec_501 of the code if you don’t agree you have a right to file a protest if you don’t agree with our proposed adverse determination to do so you must send a statement to us within days of the date of this letter the statement must include your name address employer_identification_number ein and a daytime phone number acopy of this letter highlighting the findings you disagree with anexplanation of why you disagree including any supporting documents the law or authority if any you are relying on the signature of an officer director trustee or other official who is authorized to sign for the organization or your authorized representative e e e e e one of the following declarations for an officer director trustee or other official who is authorized to sign for the organization under penalties of perjury i declare that i examined this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete for authorized representatives under penalties of perjury i declare that i prepared this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete your representative attorney certified_public_accountant or other individual enrolled to practice_before_the_irs must file a form_2848 power_of_attorney and declaration of representative with us if he or she hasn’t already done so you can find more information about representation in publication practice_before_the_irs and power_of_attorney we'll review your protest statement and decide if you provided a basis for us to reconsider our determination if so we'll continue to process your case considering the information you provided if you haven't provided a basis for reconsideration we'll forward your case to the office of appeals and notify you you can find more information about the role of the appeals_office in publication how to appeal an irs decision on tax- if you don’t file a protest within days you can’t seek a declaratory_judgment in court at a later date because the law requires that you use the irs administrative process first sec_7428 of the code letter rev catalog number 47630w exempt status where to send your protest please send your protest statement form_2848 if needed and any supporting documents to the applicable address u s mail internal_revenue_service eo determinations quality assurance room p o box cincinnati oh street address for delivery service internal_revenue_service eo determinations quality assurance main street room cincinnati oh you can also fax your statement and supporting documents to the fax number listed at the top of this letter if you fax your statement please contact the person listed at the top of this letter to confirm that he or she received it if you agree if you agree with our proposed adverse determination you don’t need to do anything if we don’t hear from you within days we’ll issue a final adverse determination_letter that letter will provide information on your income_tax filing_requirements you can find all forms and publications mentioned in this letter on our website at www irs gov formspubs if you have questions you can contact the person listed at the top of this letter we sent a copy of this letter to your representative as indicated in your power_of_attorney sincerely stephen a martin director exempt_organizations rulings and agreements enclosure publication letter rev catalog number 47630w