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 corp b05 plr-161362-04 date march ------- ---------------------- ----------------------- ----------------------------------- legend old parent corp x ------------------------------------------------------------ corp y ------------------------------------------------------------------- ------------------------------------------------------------ taxable_year date a date b corp x official ---------------------------------------------------------------------- ----------------------------------------------------------------------- dear -------------- this letter responds to a letter dated date submitted on behalf of corp y requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election the extension is being requested for corp y and its subsidiaries to make an election to file a consolidated federal_income_tax return with corp y as the common parent under sec_1_1502-75 -------------------------- ----------------------- --------------------- plr-161362-04 of the income_tax regulations hereinafter referred to as the election effective for taxable_year additional information was received in a letter dated date the material information is summarized below corp x which has two subsidiaries had been a member of a consolidated_group which had old parent as the common parent on date a corp y purchased over percent of the stock of corp x from old parent thus a new affiliated_group that included corp x and its subsidiaries came into existence with corp y as the common parent an election under sec_1_1502-75 for the corp y affiliated_group to file a consolidated_return for taxable_year its first taxable_year was due on date b however for various reasons a valid election was not filed after the due_date for the election it was discovered that the election had not been filed subsequently this request was submitted under sec_301_9100-3 for an extension of time to file the election the period of limitations on assessment under sec_6501 of the internal_revenue_code has not expired for corp x’s corp y’s or any of their subsidiaries’ taxable years for which they want to make the election or for any taxable_year that would be affected by the election had it been timely filed sec_1_1502-75 provides that a group which did not file a consolidated_return for the immediately preceding_taxable_year may file a consolidated_return in lieu of separate returns for the taxable_year provided that each corporation which has been a member of the group during any part of the taxable_year for which the consolidated_return is to be filed consents to the regulations under sec_1502 if a group wishes to exercise its privilege of filing a consolidated_return such consolidated_return must be filed not later than the last day prescribed by law including extensions of time for filing the common parent’s return extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 sec_1_1502-75 therefore the commissioner has discretionary authority under sec_301_9100-3 to grant an extension of time for corp y and its subsidiaries to file the under sec_301_9100-1 the commissioner has discretion to grant a reasonable in this case the time for filing the election is fixed by the regulations ie sec_301_9100-1 through provide the standards the based on the facts and information submitted including the representations information affidavits and representations submitted by corp y and corp x plr-161362-04 election provided corp y and its subsidiaries acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government_official explain the circumstances that resulted in the failure to timely file a valid election the information establishes that the request for relief was submitted to the internal_revenue_service the service before the failure to make the election was discovered by the service and that the interests of the government will not be prejudiced if relief is granted see sec_301_9100-3 made we conclude that corp y and its subsidiaries have shown they acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly an extension of time is granted under sec_301_9100-3 until days from the date on this letter for corp y to file the election by filing a consolidated_return with corp y as the common parent and attaching a form_1122 for each of corp y’s subsidiaries for taxable_year in addition a copy of this letter should also be attached to the return subsidiaries’ tax_liability if any being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers’ tax_liability for the years involved a determination thereof will be made by the appropriate office of the service upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers’ tax_liability is lower sec_301_9100-3 we express no opinion as to whether in fact corp y and its subsidiaries qualify substantively to file a consolidated_return in addition we express no opinion as to the tax effects or any other tax consequences of filing the return or the election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or effects resulting from filing the return or the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-3 we relied on certain statements and representations made by corp y and corp x official however the appropriate service office should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-3 to file the election penalties and interest that would otherwise be applicable if any continue to apply k provides that it may not be used or cited as precedent the above extension of time is conditioned on the taxpayers' corp y's and its this letter is directed only to the taxpayer s who requested it section in accordance with a power_of_attorney on file in this office a copy of this letter is plr-161362-04 being sent to your authorized representative sincerely _ken cohen________ ken cohen senior technician reviewer branch office of associate chief_counsel corporate


t c memo united_states tax_court estate of lucille m horstmeier deceased mary e scott executor petitioner v commissioner of internal revenue respondent docket no filed date david be alms for petitioner william t derick for respondent memorandum opinion gale judge respondent determined a deficiency in federal estate_tax in the amount of dollar_figure the sole issue for decision’ is whether percent or percent of the value of certain real_property referred to as the the parties filed a stipulation of settled issues resolving the remaining issues - - glenview house is included in the taxable_estate of lucille m horstmeier background some of the facts have been stipulated and are so found we incorporate by this reference the stipulation of facts and the attached exhibits at the time the decedent lucille m horstmeier ms horstmeier died she resided in glenview tllinois at the time of filing the petition the executor mary eb scott ms scott resided in palatine illinois ms scott and ms horstmeier lived together for almost years before ms horstmeier’s death in they had met in date while ms horstmeier was vacationing in florida at that time ms horstmeier lived in skokie illinois with mae glassbrenner her business partner with whom she owned and operated an accredited proprietary business college ms scott a florida native was a student at st petersburg junior college in that state ms scott was and ms horstmeier wa sec_48 when they met ms horstmeier and ms scott’s relationship developed and in date or date they decided to live together in date ms scott left florida and moved to tllinois with the intention of attending the university of tllinois and living with ms horstmeier upon arriving in illinois ms scott moved in with a niece of ms horstmeier shortly thereafter ms scott and ms horstmeier decided to look for a condominium to move into together in march or date ms horstmeier purchased a condominium in skokie illinois and began living there with ms scott ms scott did virtually all of the housework and kept track of finances and bill paying for the couple the women lived in the condominium until date when it was sold thereafter they moved into a house in glenview illinois the glenview house the glenview house was purchased on date for dollar_figure all documents with respect to the glenview house show that ms horstmeier purchased the property in her name only ms horstmeier paid for the glenview house with a dollar_figure downpayment from her assets and a dollar_figure mortgage for which she alone was liable ms horstmeier deducted percent of the mortgage interest and real_estate_taxes with respect to the glenview house on the tax returns she filed from through at the time the glenview house was purchased ms scott did not have assets to contribute to the purchase_price nor did she have a regular source_of_income ms horstmeier was receiving an annual salary from the business college of approximately dollar_figure ms scott did virtually all the housework and continued to manage household finances for the couple she also performed all required maintenance maintenance work for the house was more extensive than that required for a condominium and because ms q4e- horstmeier had substantial responsibilities as co-owner and operator of the business college which left her less time for such duties ms scott assumed them in addition to providing the services associated with maintaining the glenview house ms scott also assisted ms horstmeier with her work at the business college without compensation during their first years residing together ms scott was a student and not gainfully_employed from through sometime in her parents paid her tuition she received money for her support during this period from her parents and from ms horstmeier in ms scott purchased a porsche automobile which required monthly payments of dollar_figure as well as maintenance sometime in ms scott began to work at a wendy’s franchise and received compensation of an unspecified amount she filed her first federal_income_tax return with respect to the tax_year in january of ms scott began to receive compensation_for her work at the business college she began receiving an hourly wage and eventually received dollar_figure per week in the spring of ms scott and ms horstmeier bought a 20-acre parcel of real_property in wisconsin they each contributed to the downpayment of approximately dollar_figure and the property was originally titled in both their names ms scott - made all of the monthly mortgage payments and after the payments were completed they decided to title the property solely in ms scott’s name the records of ms scott’s personal checking account from date through date which was her only checking account during the period indicate the only checks she wrote for household expenses before were modest and sporadic ’ beginning in she wrote monthly checks generally exceeding dollar_figure for electric bills beginning in late she regularly wrote substantial checks to ms horstmeier which were recorded as for bills by the late 1980’s the business college was experiencing financial difficulties from through ms horstmeier periodically lent money to the college as of date the outstanding balance on these loans was dollar_figure to fund these loans ms horstmeier used proceeds from a home equity credit line secured_by a second mortgage in the glenview house ms scott was opposed to the use of the home eguity loan proceeds for the business college ms horstmeier was diagnosed with pancreatic cancer in date and was advised by her doctors that her condition was probably terminal in date using the proceeds from her there was one check written to ms horstmeier for mortgage in before the purchase of the glenview house pension at the business college she paid off the home equity loan secured_by the glenview house ms horstmeier died on date in her will the glenview house is not mentioned specifically it passed to ms scott as the residuary beneficiary of a_trust to which ms horstmeier bequeathed her assets not required for estate administration ms scott was appointed executor of the estate in date ms scott filed a claim in the circuit_court of cook county illinois county department probate division the claim sought a 50-percent tenancy-in-common interest in the glenview house the claim stated inter alia as follows a that the decedent ie ms horstmeier and claimant ie ms scott would share the expenses regarding residence including but not limited to mortgage real_estate_taxes capital improvements day to day maintenance and any other improvements agreed to be made by the parties b that the decedent would regquire the claimant to pay dollar_figure of dollar_figure which represented of the downpayment made on the purchase of the home per year commencing in the year that in fact the decedent and claimant have shared the expenses as agreed and also decedent each year a dollar_figure payment was required required no payment and made a gift in the amount of dollar_figure to claimant the probate_court approved the claim in doing so the court did not pass upon the merits or the underlying facts of the claim and no person with an adverse_interest to ms scott’s contested or consented to the claim - in date the glenview house was sold for dollar_figure on date ms scott filed the federal estate_tax_return for the estate on the estate_tax_return ms scott included percent of the value of the glenview house dollar_figure in the gross_estate and deducted percent of the remaining mortgage note balance dollar_figure in the notice_of_deficiency respondent determined that percent of the value of the glenview house should have been included in the gross_estate dollar_figure less selling_expenses and that percent of the remaining mortgage note balance dollar_figure should have been deducted discussion in order to establish that ms horstmeier owned only percent of the glenview house at the time of her death petitioner argues that a resulting trust with respect to one-half of the property arose in favor of ms scott at the time the house was purchased thus petitioner argues under illinois law ms scott held the beneficial_interest in one-half of the glenview house and ms horstmeier held only bare_legal_title with respect to that half respondent argues that petitioner has failed to prove the facts necessary to establish the existence of a resulting trust we agree with respondent to decide whether a resulting trust arose we apply the law of the state of illinois w lhat constitutes an interest in --- - property held by a person within a state is a matter of state law 110_tc_297 citing 326_us_340 the issue in this case is a factual one the parties frame the question as being whether petitioner has proven that ms scott satisfied the factual requirements of a resulting trust if so a resulting trust arose in her favor and only one-half the value of the glenview house is includable in the taxable_estate a resulting trust arises when one person furnishes consideration for property and title is taken in the name of another person see fowley v braden n e 2d ill a resulting trust does not depend on contract or agreement but arises by operation of law to enforce the presumed intent of the person who furnishes consideration for the property see prassa v corcoran n e 2d ill we are aware that the supreme court of illinois has under certain circumstances refused to enforce equitable property rights between unmarried cohabitants on grounds of public policy see hewitt v hewitt n e 2d ill we are also aware that the illinois appellate court has interpreted hewitt to permit the enforcement of equitable property rights between unmarried cohabitants in some circumstances see spafford v coats n e 2d ill app ct but see ayala v fox n e 2d ill app ct however in the instant case respondent has not raised the issue of whether a resulting trust should be disallowed under illinois law on grounds of public policy because petitioner had no occasion to present pertinent evidence or argument on this question we do not consider it and address only the question of whether the factual requirements for a resulting trust have been satisfied kane v johnson n e 2d ill unless there is evidence that a gift was intended from the payor to the person taking title it is assumed that the payor intended to keep the beneficial interests of the property for which he or she paid see prassa v corcoran supra the fact that the payor borrowed from the person who took title does not prevent a resulting trust from arising see towle v wadsworth n e ill nor does the fact that the agreement with respect to the loan and purchase of the property was oral rather than written see id parol evidence may be used to prove a resulting trust see ill rev stat ch sec now ill comp stat west kohlhaas v smith n e 2d ill a resulting trust arises at the instant title is taken or not at all see prassa v corcoran supra the burden_of_proof is on the party seeking to establish a resulting trust and because recorded legal_title is being rebutted the standard of proof is clear convincing and unmistakable in re estate of wilson n e 2d ill a resulting trust will not be sustained where the evidence is doubtful or capable of reasonable explanation upon any theory other than the existence of a_trust kohlhaas v smith supra pincite petitioner has offered the claim filed by ms scott and the decision of the probate division of the circuit_court approving -- - the claim however the tax_court is not conclusively bound by a state trial_court adjudication of property rights or characterization of property interests when the united_states is not a party to the proceeding 54_tc_633 citing 387_us_456 rather we are to give the decision of the court proper regard commissioner v estate of bosch supra pincite as the parties have stipulated that the probate division of the circuit_court did not pass upon the merits or the underlying facts of ms scott’s claim in approving it we give little weight to that decision intent is critical in establishing a resulting trust see in re estate of wilson supra pincite although the requisite intent that the nominal owner is to hold legal_title as trustee for the supplier of consideration must exist when title is taken subseguent conduct of the parties is relevant to the extent it sheds light upon their intent see prassa v corcoran supra pincite thus we consider all of the facts and circumstances including subsequent conduct to determine whether petitioner has shown by clear_and_convincing evidence an intent that ms horstmeier hold legal_title to one-half of the glenview house in trust for ms scott petitioner alleges that ms scott and ms horstmeier agreed to purchase the glenview house jointly in equal shares according to petitioner although ms horstmeier supplied the downpayment and assumed the mortgage with respect to the purchase of the house ms horstmeier and ms scott agreed at the time of purchase that ms scott would repay her half of the downpayment and supply one-half of the monthly mortgage payments and taxes by providing all services required for the upkeep of the house however legal_title was placed solely in ms horstmeier’s name because petitioner contends as an administrator of a business college ms horstmeier did not want questions raised regarding the nature of her relationship with ms scott given its same-sex character and their substantial age difference in order to establish a resulting trust petitioner must prove by clear_and_convincing evidence that ms scott provided consideration for a one-half interest in the glenview house at the time of purchase see 832_f2d_1032 7th cir hanley v hanley n e 2d ill to prove consideration petitioner alleges there was an agreement between ms scott and ms horstmeier under which ms horstmeier would in effect lend the consideration for purchase of a one-half interest to ms scott with repayment to be made by ms scott through future services in towle v wadsworth supra the court found that an oral agreement between towle and wadsworth under which towle was to purchase and take title to property but treat half of the consideration paid as an advance to wadsworth was sufficient to establish a resulting trust in wadsworth’s favor for one-half of the property thus if petitioner establishes the existence of an agreement between ms scott and ms horstmeier covering ms scott’s consideration for the glenview house purchase it will be sufficient for us to find a resulting trust in ms scott’s favor ms scott testified that she and ms horstmeier had an agreement at the time of purchase that she could purchase one- half of the property by providing future services equal in value to the downpayment at the rate of dollar_figure per year plus interest and the monthly payments various witnesses who knew the couple including ms scott’s mother testified that it was their understanding that the two shared everything equally however none of these corroborating witnesses could testify regarding the specifics of the glenview house purchase according to ms scott’s own testimony however ms horstmeier wasn’t concerned at all whether ms scott contributed sufficient services which casts some doubt on whether there was a meeting of the minds between the two of them that ms horstmeier had lent to ms scott one-half of the consideration for purchasing the house with an expectation of repayment ms scott testified that she would not have entered into the living arrangement with ms horstmeier without an understanding that she would contribute her fair share her testimony that she - - did all the housework and house maintenance as well as keeping track of the couple’s finances was corroborated by several witnesses however at the time the glenview house was purchased and for over years thereafter ms scott was a student and did not have gainful employment she testified that her parents paid her tuition and that she received money from them and from ms horstmeier the record does not establish what proportions came from each ms scott’s purported obligation to repay one-half of the downpayment or dollar_figure in annual increments of dollar_figure plus interest would approximate dollar_figure to dollar_figure per month the monthly mortgage payment on the glenview house which included taxes was dollar_figure half of which was dollar_figure thus before accounting for any other housing costs such as utilities and out-of-pocket maintenance ms scott’s testimony would indicate that she had assumed obligations approximating dollar_figure per month in within a year of the house purchase and while still unemployed ms scott purchased a porsche obligating herself to monthly payments of dollar_figure the record demonstrates that ms scott’s living_expenses were being paid from until sometime in at least in part by ms horstmeier there is no record of any cash contribution toward household expenses by ms scott until the record provides some support for substantial contributions beginning in 1985--ie checks to ms horstmeier for bills --but this is too late to have much bearing on the parties’ intent at the time of purchase the court accepts ms scott’s testimony which is corroborated that she provided all of the services required to maintain the household including significant maintenance work obviously these services were valuable and benefited ms horstmeier nonetheless because ms horstmeier was providing ms scott with money for her living_expenses we believe the facts in this record are susceptible of another reasonable explanation namely that ms scott’s services in the 1970’s were repayment for her living_expenses including rent ms scott has not shown that the value of her services so exceeded both the money being given her by ms horstmeier and a fair market rent that the services must have been repayment for a half interest in the glenview house it is not unreasonable to interpret the services as reimbursement for living_expenses and rent rather than repayment of half the acquisition costs for the property certainly this interpretation is consistent with ms horstmeier’s retention of legal_title for nearly years while relinquishing it in other circumstances e with respect to the wisconsin property it is also consistent with ms scott’s contention that she would not have agreed to live with ms horstmeier without paying her fair share -- - also problematic for ms scott’s characterization of the arrangement regarding the glenview house are certain subsequent events in approximately years after the glenview house was purchased ms scott and ms horstmeier purchased land in wisconsin the property was titled jointly in both names this casts some doubt on the rationale offered for avoiding a joint title for the glenview house although concededly ms horstmeier may have been less concerned about appearances in another state in addition according to her testimony because ms scott made all of the payments on the wisconsin property ms horstmeier suggested when all payments had been made that the title be placed solely in ms scott’s name this was done this episode at least suggests that ms horstmeier and ms scott were prepared in some circumstances to adjust the legal_title to property to reflect their perceptions of the underlying equities of ownership much later starting in the late 1980’s ms horstmeier took out a second mortgage on the glenview house to secure a credit line and borrowed against it to provide funds to the business college she co-owned which was experiencing financial difficulties ms scott testified that she was strongly opposed to the use of the house to secure debt to benefit the college this exercise of exclusive control by ms horstmeier casts some -- - doubt on whether both parties considered ms scott a co-owner of the glenview house finally the claim filed by ms scott with the probate division of the illinois circuit_court states that ms scott was to pay ms horstmeier dollar_figure for one-half of the downpayment on the glenview house at a rate of dollar_figure per year starting in but that ms horstmeier made a gift in the amount of dollar_figure for each year that payment was required this representation to the probate_court is in apparent conflict with ms scott’s testimony in this case which was that she provided services in exchange for her half of the downpayment in our view this confusion regarding the downpayment is damaging to petitioner’s case given that the standard of proof fora resulting trust is clear convincing and unmistakable in re estate of wilson n e 2d pincite considering all the facts and circumstances we do not believe that petitioner has shown that a resulting trust arose under illinois law which requires clear_and_convincing evidence to support such a finding indeed the illinois supreme court has held that a resulting trust does not arise where the evidence is doubtful or capable of reasonable explanation upon any theory other than the existence of a_trust kohlhaas v smith n ebe 2d pincite the infirmities in petitioner’s theory --the confusion regarding the downpayment ms horstmeier’s encumbrance of the house despite ms scott’s disapproval the two women’s willingness to take joint title to another property when each contributed to the downpayment----are cumulative and considered together cast doubt on the factual support for a resulting trust in this case as noted earlier another reasonable explanation of the evidence is available it would appear that ms scott’s contribution of services and cash towards the glenview house and the couple’s mutual expenses may have grown over time although the record remains unclear on this point in any event these later actions have less probative value regarding the parties’ intentions at the time title was taken in ms horstmeier’s name for the foregoing reasons we conclude that ms horstmeier’s estate included the entire value of the glenview house to reflect the foregoing decision will be entered under rule


id office uilc cca_2012090609011237 --------- number release date from -------------------- sent thursday september am to --------------------- cc ------------ subject re tefra question the answer is not clear but i think you are probably correct i am not sure it makes any difference however the ------- claims to the extent they relate to partnership items may be deemed partner-level aar's if they petition the ------- claims the partnership items would convert to nonpartnership_items under section b a ii


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-134810-11 date date legend taxpayer date1 date2 date3 date dollar_figurea dollar_figureb dear ------------------ ------------------------------------------------------------------- -------------------------- ---------------------- --------------------- ----------------- --------------- --------------- this letter responds to a letter dated date requesting the consent of the commissioner of internal revenue to revoke taxpayer’s election under sec_168 of the internal_revenue_code not to deduct any 50-percent additional first year depreciation stimulus additional first year depreciation that was made on taxpayer’s federal_income_tax return for the taxable_year ended date1 facts taxpayer represents that the facts are as follows taxpayer is a c_corporation and has a calendar_year end taxpayer uses an overall accrual_method of accounting taxpayer is engaged in the business of researching developing and manufacturing drugs between date2 and date3 taxpayer placed_in_service dollar_figurea of qualified_property as defined in sec_168 before the application of sec_168 between date4 plr-134810-11 a date before date1 and date1 taxpayer placed_in_service dollar_figureb of qualified_property on its federal_income_tax return for the taxable_year ended date1 taxpayer made an election under sec_168 not to deduct the stimulus additional first year depreciation for all property placed_in_service in the taxable_year ended date1 however taxpayer also made an election to apply sec_168 for all eligible qualified_property placed_in_service between date4 and date1 taxpayer used an outside tax preparer to prepare its federal_income_tax return for the taxable_year ended date1 the outside tax preparer represents that the election statement to forego the stimulus additional first year depreciation under sec_168 was inadvertently attached to taxpayer’s federal_income_tax return for the taxable_year ended date1 because historically taxpayer has made such an election as a result of inadvertently attaching the sec_168 election statement to the federal_income_tax return for the taxable_year ended date1 taxpayer did not have any eligible qualified_property for purposes of the sec_168 election ruling requested taxpayer requests consent to revoke its election under sec_168 not to deduct the stimulus additional first year depreciation for all qualified_property placed_in_service during the taxable_year ended date1 law and analysis sec_168 amended by sec_103 of the economic stimulus act of pub_l_no 122_stat_613 date stimulus act allows a percent additional first year depreciation deduction stimulus additional first year depreciation deduction for the taxable_year in which qualified_property acquired by a taxpayer after is placed_in_service by the taxpayer before before in the case of property described in sec_168 or c section a of the housing and economic recovery act of pub_l_no 122_stat_2654 date housing act amended sec_168 by adding sec_168 to the code sec_168 provides that a corporation may elect to apply sec_168 the sec_168 election if the corporation makes the sec_168 election sec_168 further provides that for the corporation’s first taxable_year ending after date and for each subsequent taxable_year the corporation forgoes the additional first year depreciation deduction allowable under sec_168 for eligible qualified_property placed_in_service by the taxpayer the sec_168 election also requires that the taxpayer use the straight_line method_of_depreciation as the applicable_depreciation_method for all eligible qualified_property and increase its business_credit limitation under sec_38 and the alternative_minimum_tax amt credit limitation under sec_53 by the bonus_depreciation amount as defined in sec_168 and as determined under sec_5 of revproc_2008_65 i r b that is plr-134810-11 determined for that taxable_year and allocated to such limitation specifically sec_168 and iv provides in general that the corporation will be able to claim unused credits from taxable years beginning before date that are allocable to research expenditures or amt liabilities section dollar_figure of revproc_2008_65 provides that if a taxpayer makes both the sec_168 election and the election to apply sec_168 for all eligible qualified_property the taxpayer must apply sec_168 first any class of property as defined in sec_1_168_k_-1 of the income_tax regulations for which a sec_168 election has been made is not qualified_property under sec_168 nor eligible qualified_property under sec_168 sec_168 provides that a taxpayer may elect not to deduct the stimulus additional first year depreciation for any class of property placed_in_service during the taxable_year the term class of property is defined in sec_1_168_k_-1 sec_1_168_k_-1 provides that an election not to deduct the additional first year depreciation for a class of property that is qualified_property once made may be revoked only with the written consent of the commissioner of internal revenue to seek the commissioner’s consent the taxpayer must submit a request for a letter_ruling conclusion based solely on the facts and representations submitted we conclude that a revocation of taxpayer’s election not to deduct any stimulus additional first year depreciation for all eligible classes of property placed_in_service by taxpayer in the taxable_year ended date1 is permitted under sec_1_168_k_-1 accordingly taxpayer is granted calendar days from the date of this letter to revoke its election not to deduct any stimulus additional first year depreciation for all eligible classes of property placed_in_service by taxpayer in the taxable_year ended date1 the revocation must be made in a written_statement filed with taxpayer’s amended federal_income_tax return for the taxable_year ended date1 in addition a copy of this letter must be attached to such amended_return a copy is enclosed for this purpose except as specifically ruled upon above no opinion is expressed or implied concerning the tax consequences of the facts described above under any other provisions of the code specifically no opinion is expressed or implied on whether any item of depreciable_property placed_in_service by taxpayer in the taxable_year ended date1 is eligible for the stimulus additional first year depreciation deduction under sec_168 or is eligible qualified_property under sec_168 whether taxpayer has properly made the sec_168 election for the taxable_year ended date1 pursuant to revproc_2009_16 2009_6_irb_449 or whether taxpayer’s determination of the refundable tax_credits under sec_168 is proper plr-134810-11 this ruling is directed only to the taxpayer 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 our office we are sending a copy of this letter to taxpayer’s authorized representatives we are also sending a copy of this letter to the appropriate industry director lb_i sincerely kathleen reed kathleen reed chief branch office of associate chief_counsel income_tax and accounting enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc dom p si 1-plr-111679-00 date date legend x a b c date1 date2 date3 state pursuant to a power_of_attorney on file in this office this responds to a ruling_request dated date submitted on behalf of x which requests relief under sec_1362 of the internal_revenue_code facts x was incorporated on date1 under the laws of state at that time a and b were the shareholders of x on date2 b transferred all of b’s shares in x to c on date3 x redeemed all of a’s shares of x at this time c is the only shareholder of x a and b intended that x be treated as an s_corporation effective date1 but an s election was not timely filed 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 plr- sec_1362 provides in relevant part 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_corporation for the year in which the election is made under sec_1362 however if an s election is made after the first two and one-half months of a corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is filed sec_1362 provides that if no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to make such election timely then the secretary may treat such an election as timely made for such taxable_year and sec_1362 shall not apply x did not file a timely election to be treated as an s_corporation under sec_1362 effective on date1 x has however established reasonable_cause for not making a timely s election and is entitied to relief under sec_1362 conclusion based solely on the facts submitted and the representations made and provided that x otherwise qualifies as an s_corporation we conclude that x will be treated as an s_corporation effective date1 if x submits a form_2553 properly executed by a b and c to the relevant service_center within days from the date of this letter x should also submit a copy of this letter with 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 we express no opinion as to whether x is otherwise qualified to be an s_corporation this ruling is directed only to the taxpayer on whose behalf it was requested sec_6110 provides that it may not be cited or used as precedent sincerely yours christopher kelley acting assistant to the branch chief branch office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


t c summary opinion united_states tax_court norman villanueva petitioner v commissioner of internal revenue respondent docket no 18415-07s filed date norman villanueva pro_se brian a pfeifer for respondent dean special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case unless otherwise indicated subsequent 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 respondent determined a dollar_figure deficiency in petitioner’s federal_income_tax the issue remaining1 for decision is whether petitioner is entitled to itemized_deductions in an amount in excess of the standard_deduction background some of the facts have been stipulated and are so found the stipulation of facts and the exhibits received into evidence are incorporated herein by reference when the petition was filed petitioner resided in florida during petitioner worked in customer service as a handyman making various repairs for tenants he did not reside at the same location as the tenants thus he was required to travel to the tenants’ homes he also was not reimbursed by his employer quantum development for his expenditures instead he claimed dollar_figure in unreimbursed employee_expenses on his schedule a itemized_deductions before application of the 2-percent floor of sec_67 petitioner’s unreimbursed employee_expenses consist of dollar_figure for tolls dollar_figure for fuel dollar_figure 1petitioner presented neither evidence nor argument that he is entitled to his claimed dollar_figure deduction for a gaming loss petitioner is therefore deemed to have conceded the issue see 61_tc_311 mikalonis v commissioner tcmemo_2000_281 for clothes dollar_figure for repair dollar_figure for tires dollar_figure for computer and dollar_figure for auto insurance i burden_of_proof discussion the commissioner’s determinations in a notice_of_deficiency are presumed correct and the taxpayer bears the burden to prove that the determinations are in error rule a 290_us_111 but the burden_of_proof on factual issues that affect the taxpayer’s tax_liability may be shifted to the commissioner where the taxpayer introduces credible_evidence with respect to the issue and the taxpayer has satisfied certain conditions sec_7491 petitioner has not alleged that sec_7491 applies and he has neither complied with the substantiation requirements nor maintained all required records see sec_7491 and b accordingly the burden_of_proof remains on him ii unreimbursed employee_expenses sec_162 authorizes a deduction for all the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business but as a general_rule deductions are allowed only to the extent that they are substantiated sec_274 no deductions are allowed for gifts listed_property or traveling entertainment amusement or recreation unless substantiated taxpayers must keep records sufficient to establish the amounts of the items required to be shown on their federal_income_tax returns petitioner testified that he did not have any records or receipts to substantiate his deductions because he has moved to different homes he misplaced the box containing his receipts and records and he cannot find it right now because petitioner has provided no evidence that meets the substantiation requirements of sec_274 or sec_6001 and the regulations thereunder he is not entitled to his claimed 2the term listed_property is defined to include passenger automobiles and computers or peripheral equipment sec_280f iv 3specifically sec_274 requires taxpayers to substantiate their deductions by adequate_records or sufficient evidence to corroborate the taxpayer’s own testimony as to the amount of the expenditure or use the time of the expenditure or use the place of the expenditure or use the business_purpose of the expenditure or use and the business relationship to the taxpayer of the persons entertained or receiving the gift see sec_1_274-5t and b temporary income_tax regs fed reg date 4petitioner did not attempt to reconstruct his expenditures see 122_tc_305 sanderlin v commissioner tcmemo_2008_209 sec_1_274-5t temporary income_tax regs fed reg date if a taxpayer can establish that the taxpayer’s failure to produce an adequate record is due to the loss of the record through circumstances beyond the taxpayer’s control the taxpayer may substantiate a deduction by reasonable reconstruction of the expenditures deduction for unreimbursed employee_expenses respondent’s determination is sustained iii itemized_deductions taking into account the court’s determination and petitioner’s concession see supra note his remaining itemized_deduction is dollar_figure for state sales_taxes the dollar_figure is less than the dollar_figure standard_deduction for see revproc_2004_71 sec_3_10 2004_2_cb_970 the court assumes that petitioner would want the larger amount and therefore sustains respondent’s use of the standard_deduction see sec_63 george v commissioner tcmemo_2006_121 taxpayers may either elect the standard_deduction or elect to itemize deductions to reflect the foregoing decision will be entered for respondent


internal_revenue_service number release date index number - ------------------- ------------------------------ ----------------------------- ------------------------------- - department of the treasury washington dc person to contact ---------------------- id no ------------- telephone number --------------------- refer reply to cc psi b02 - plr-130074-03 date date x y z country date dear -------------- ------------------------ ein ---------------- ------------------------- ein ---------------- ----------------------------- ein ---------------- ----- --------------------------- this letter responds to your letter dated date and subsequent correspondence submitted on behalf of x y and z requesting a ruling that x y and z each be given an extension of time under ' of the procedure and administration regulations to file an election under sec_301_7701-3 the information submitted states that x is an entity formed under the laws of country y a wholly owned subsidiary of x is an entity formed under the laws of country z a subsidiary of y is an entity formed under the laws of country it was intended that x y and z each file form_8832 entity classification election effective on date however x y and z each inadvertently failed to file form_8832 sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as plr-130074-03 an association_taxable_as_a_corporation if all members have limited_liability unless the entity has a single member and makes an election to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 if the entity has more than one owner it may elect to be treated as a partnership pursuant to the rules in sec_301_7701-3 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date on which the form is filed sec_301_7701-3 provides that when elections under sec_301 c i for a series of tiered entities are effective on the same date the eligible entities may specify the order of elections on form_8832 under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including 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 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 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 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301 a based solely on the information submitted we conclude that x y and z each have satisfied the requirements of and as a result x y and z are each granted an extension of days from the date of this letter to make an entity classification election under sec_301_7701-3 each entity classification election should be made by filing form_8832 with the appropriate service_center additionally in accordance with sec_301_7701-3 the entities may specify the order of the elections of x y and z and may deem the order to be for instance from the bottom tiered entity to the top tiered entity on form_8832 a copy of this letter should be attached to each form_8832 a copy is enclosed for that purpose plr-130074-03 except as expressly provided herein no opinion is expressed or implied this ruling is directed only to the taxpayer s requesting it sec_6110 of concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter the internal_revenue_code provides that it may not be used or cited as precedent being sent to x pursuant to a power_of_attorney on file with this office a copy of this letter is sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division release number release date date date contact person identification_number telephone number employer_identification_number uil dear we have considered your ruling_request dated date concerning the tax consequences under internal_revenue_code i r c sec_501 and sec_511 related ta a proposed liquidation of your intellectual_property rights in several ipv4 addresses facts you are recognized as a tax-exempt supporting_organization under sec_501 of the code you are governed by and support the public university system in the state in which you are incorporated you provide research_and_development in the field of telecommunications and internet information_technology your exempt_activities included the initial research_and_development and operation of a non-profit telecommunications network serving your university system later extended to other tax-exempt non-governing affiliates including schools colleges libraries law enforcement non-profit hospitals several decades ago you received a distribution of several million ipv4 addresses which you use as part of your tax-exempt activities these ipv4 addresses were assigned to you to permit you to do your research_and_development work and to develop and build this network to serve the exempt educational and research mission of you and your governing members later extended to other tax-exempt non-governing affiliates your interest in these ipv4 addresses is the intellectual_property rights to use the addresses and assign these rights subject_to restrictions you represented that you have never characterized or used your ipv4 addresses as inventory in any sense and never had reason to reflect these addresses on your balance_sheet or property schedules addresses were and still are distributed to public private and governmental entities and individuals presently the internet corporation for assigned names and numbers icann a non-profit continues to distribute ipv4 addresses globally conducted via regional registries your region is governed by the american registry for internet numbers arin at the time of this distribution and continuing into the present pv4 distribution of ip addresses is you represented that the global supply of ipv4 addresses is finite and the supply of unallocated ipv4 addresses is diminishing due to increased demand for wireless internet communication in response ipv6 addresses are being phased-in to replace ipv4 addresses however ipv6 addresses are not backwards compatible to ipv4 addresses and thus devices with addresses on one version can only communicate with devices with addresses of the same version as such internet service providers who wish to immediately offer customers full functionality must use ipv4 addresses in addition to ipv6 addresses and will need to do so until some unknown future time you represented that of the ipv4 addresses that were distributed to you decades earlier you have several million addresses that you did not use and will not be able to use in your exempt_activities before the migration to ipv6 addresses therefore you propose to liquidate these unused ipv4 addresses you represented that although you would prefer to liquidate all your surplus addresses to a single buyer in a single transaction there are several legal and financial barriers described below that preclude a single-sale transaction any transfer of pv4 address must be approved by arin you represented that the arin review process is detailed and has several requirements one requirement of the arin review process is that the prospective transferee demonstrates to arin that they have a need for up to a month supply of the ipv4 address before arin will approve the transfer all transferees must adhere o arin rules and sign a service agreement with arin to this effect furthermore the transferor will be ineligible to receive any further ipv4 address allocations from arin for a month period after the transfer you represented that you have no intent or interest to acquire any additional pv4 addresses and even if you did the above described transfer restriction would preclude arin from assigning you any additional pv4 addresses in addition to the arin review process you represented that the lack of an established market for the sale of ip addresses is a barrier that makes it impossible to simply list and trade these addresses although information of two notable transfers of ipv4 addresses is publicly available because they were conducted by the united_states bankruptcy court you represented that generally little or no public information is released regarding ipv4 address sales other than limited registration information with arin as such you represented that you will utilize an outside firm that specializes in intellectual_property to locate and negotiate with prospective buyers for the liquidation of your ipv4 addresses and you will not engage in any marketing activity you represented that you will not undertake any_action to improve or develop you interest in the right to use the ipv4 addresses you propose to liquidate all transactions will be kept confidential under non-disclosure agreements rulings requested the ipv4 addresses are not property_held_primarily_for_sale to customers in the ordinary course of a trade_or_business regularly carried on by the taxpayer within the meaning of sec_512 that the income from the disposition of your ipv4 addresses does not constitute unrelated_business_income under sec_512 and is not subject_to unrelated_business_income taxation under sec_511 your disposition of the ipv4 addresses will not adversely affect your current sec_501 exempt status law r c sec_501 generally provides an exemption from federal income_taxation for any organization described in sec_501 r c sec_501 provides in part for the exemption of organizations that are organized and operated exclusively for educational_purposes no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 states that for an organization to be exempt under sec_501 it must be operated exclusively for one or more of the purposes specified in such section sec_1_501_c_3_-1 provides that an organization will be regarded as operated exclusively for an exempt_purpose only if accomplish gne or more of such exempt purposes specified in sec_501 an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose it engages primarily in activities which sec_1_501_c_3_-1 provides in part that an organization may meet the requirements of sec_501 although it operates a trade_or_business as a substantial part of its activities if the operation of such trade_or_business is in furtherance of the organization’s exempt_purpose and if the organization is not organized or operated for the primary purpose of carrying on an unrelated_trade_or_business as defined in sec_513 sec_512 defines unrelated_business_taxable_income as the gross_income derived by any organization from any unrelated_trade_or_business as defined in sec_513 regularly carried on by it less allowable deductions directly connected with the carrying on of such trade_or_business both computed with the modifications provided in sec_512 sec_512 excludes from the computation of unrelated_business_taxable_income all gains or iusses from the sale exchange or other_disposition of property other than a stock_in_trade or other_property of a kind which would properly be includible in inventory if on hand at the close of the taxable_year or b property_held_primarily_for_sale to customers in the ordinary course of the trade_or_business revrul_55_449 1955_2_cb_599 holds that the construction and sale of houses by a foundation otherwise exempt under sec_501 over a period of months for the sole purpose of raising funds for the support of a church constituted an unrelated_trade_or_business within the meaning of sec_513 because construction and sale of houses is a business of a kind ordinarily carried on for profit revrul_59_91 1959_1_cb_215 holds that where a taxpayer engages in extensive land development activities such as lot subdivision installation of utilities and paving streets all in order to facilitate the sale and derive the maximum proceeds from the disposition of the property the taxpayer is holding property for sale to customers in the ordinary course of trade_or_business in 143_f2d_468 5th cir the taxpayer owned acres of unimproved land used for grazing purposes to facilitate the sale of land the taxpayer subdivided the land into lots built streets installed storm sewers constructed gas and electric lines and undertook other activities of the kind usually carried out by a real_estate development company each year to lots were sold the court held that taxpayer was holding lots for sale to customers in the regular course of business in 7_tc_198 the taxpayer purchased platted land to use in his nursery business twelve years later the city built streets through the property that made it less useful for his business even though taxpayer made no active sales effort and made no improvements he sold and a half lots in one year the court opined that the sales were essentially made in the nature of a gradual and passive liquidation of an asset and not in the ordinary course of a trade_or_business in maat v riddell 383_us_569 86_sct_1030 the supreme court defined the standard to be applied in determining whether property is held primarily_for_sale_to_customers in the ordinary course of business the court interpreted the word primarily to mean of first importance or principally purpose is dominant by this standard ordinary_income would not result unless a sales in 195_f2d_714 the taxpayer initially purchased land not for resale to customers but throughout the years subdivided the land and resold parcels sporadically primarily as the market dictated the court indicated that the taxpayer engaged in continuous sales and concluded that the property was held primarily_for_sale_to_customers as part of the taxpayer's business the court stated that t here is no fixed formula or rule_of thumb for determining whether property sold by the taxpayer was held by him primarily_for_sale_to_customers in the ordinary_course_of_his_trade_or_business each case must in the last analysis rest upon its own facts there are a number of helpful factors however to point the way among which are the purposes for which the property was acquired whether for sale or investment and continuity and frequency of sales as opposed to isolated transactions in 60_tc_996 acq in result c b the tax_court held that a taxpayer who purchased parcels and sold parcels of undeveloped land over four years was not engaged in the trade_or_business of buying and selling land for purposes of sec_1221 the taxpayer utilized brokers to aid him in disposing of some of the land however neither the taxpayer nor the brokers ever sought out or solicited prospective buyers or advertised the properties for sale the court analyzed the following factors to determine that the taxpayer was not engaged in the operation of the trade_or_business of buying and selling land the purpose for which the property was acquired the frequency continuity and size of the sales the activities of the owner in the improvement and disposition of the property the extent of improvements made to the property the proximity of sale to purchase and the purpose for which the property was held same in adam and subsequent cases courts have found that no one of these factors is controlling but all are relevant to consider in determining whether the sale of property occurred in the regular course of a taxpayer’s trade_or_business analysis as an organization described under sec_501 you are exempt from federal_income_tax see r c sec_501 to maintain your tax-exempt status under sec_501 you must be operated exclusively for exempt purposes sec_1_501_c_3_-1 you will not be considered as operated exclusively for exempt purposes under sec_501 if you engage in a substantial amount of unrelated business activities sec_1_501_c_3_-1 and e an organization that holds property primarily_for_sale_to_customers in the ordinary course of a trade_or_business within the meaning of sec_512 is considered engaging in an unrelated business activity see also il r c sec_512 here you propose to liquidate your inteliectual property rights in several million ipv4 addresses the primary issue in this ruling is whether the liquidation of your ipv4 addresses will be treated as a sale of property_held_primarily_for_sale to customers in the ordinary course of a trade_or_business within the meaning of sec_512 whether property is held primarily_for_sale_to_customers in the ordinary course of an organization's trade_or_business is a facts and circumstances determination see 195_f2d_714 and 60_tc_996 acq in result c b in 383_us_569 86_sct_1030 the court interpreted the meaning of the word primarily to mean of first importance or principally you represented that you received your right to use several million ipv4 addresses several decades ago for use as part of your exempt_activities your exempt_activities included the initial research_and_development and operation of a non-profit telecommunications network serving your university system later extended to other tax-exempt non-governing affiliates including schools coieges libraries law enforcement non-profit hospitals however you are unable to utilize all your ipv4 addresses in your exempt_activities before the migration to ipv6 addresses therefore you propose to liquidate these unused addresses you represented that you would be inclined to liquidate your surplus ipv4 address to a single buyer in a single transaction however the legal and financial barriers would preclude such a single sale specifically arin restrictions the lack of an established market for ipv4 addresses and the huge volume of ipv4 addresses that you wish to liquidate would in essence preclude a single buyer you also represented that you have never characterized or used your ipv4 addresses as inventory in any sense and never had reason to reflect these addresses on your balance_sheet or property schedules when determining whether a taxpayer is holding property primarily_for_sale_to_customers in the ordinary course of its trade_or_business we consider the frequency continuity and size of sales we also consider the activities undertaken to improve the property the proximity of sale to purchase and the purpose for which the property was held during the taxable_year you have not improved any rights you hold in the ipv4 addresses the proposed sale of your ipv4 addresses is taking place several decades after you acquired them as donations and at all times you held these ipv4 addresses for use in your exempt_activities the long duration you held these ipv4 addresses the lack of tax classification of these addresses as inventory or property and your initial receipt of these addresses as part of your exempt_activities all indicate that you were not holding the property primarily_for_sale_to_customers in the ordinary course of its trade_or_business in both of these cases the taxpayers’ efforts your facts are distinguishable from those in revrul_55_449 supra in which a foundation constructed and sold houses over a period of months for the sole purpose of raising funds to support a church they are also distinguishable from the facts in 143_f2d_468 5th cir in which a taxpayer subdivided and developed property for the purpose of selling the property then sold lots in acquiring and developing the properties for sale suggested that they were holding the property primarily_for_sale_to_customers in the ordinary course of a trade_or_business in contrast your activities are similar to the taxpayer's activities in 7_tc_198 in which the court held that the taxpayer's activities were in the nature of a gradual and passive liquidation of an asset the liquidation of your ipv4 address is governed by a third-party arin whose approval is required and precludes you from selling your ipv4 addresses on terms solely of your choosing your ipv4 addresses were received by you for use in your exempt_activities and held for several decades you have no plans to develop or improve these rights you will utilize an outside firm specializing in intellectual_property to locate and negotiate with prospective buyers you will not engage in any marketing activity and you will not acquire any additional ipv4 addresses after the liquidation accordingly based on your representations under the primary purpose test of 383_us_569 86_sct_1030 and the facts_and_circumstances_test of 60_tc_996 acq in result c b we conclude that you do not hold your interests in ipv4 addresses primarily_for_sale_to_customers in the ordinary course of a trade_or_business therefore your liquidation of ipv4 addresses will not generate unrelated_business_taxable_income under sec_511 and sec_512 and will not adversely affect your exempt status under sec_501 conclusion your ipv4 addresses are not property_held_primarily_for_sale to customers in the ordinary course of a trade_or_business regularly carried on by the taxpayer within the meaning of sec_512 the income from the disposition of your ipv4 addresses does not constitute unrelated business income under sec_512 and is not subject_to unrelated_business_income taxation under sec_511 your disposition of the ipv4 addresses will not adversely affect your current sec_501 exempt status thus ruling will be made available for public inspection under sec_6110 after certain deletions of identifying information are made for details see enclosed notice notice of intention to disclose a copy of this ruling with deletions that we intend to make available for public inspection is attached to notice if you disagree with our proposed deletions you should follow the instructions in notice this ruling is directed only to the organization that requested it sec_6110 provides that it may not be used or cited by others as precedent this ruling is based on the facts as they were presented and on the understanding that there will be no material changes in these facts this ruling does not address the applicability of any section of the code or regulations to the facts submitted other than with respect to the sections described because it could help resolve questions concerning your federal_income_tax status this ruling should be kept in your permanent records if you have any questions about this ruling please contact the person whose name and teleprione number are shown in the heading of this letter in accordance with the power_of_attorney currently on file with the internal_revenue_service we are sending a copy of this letter to your authorized representative sincerely theodore r lieber manager exempt_organizations technical group enclosure notice