internal_revenue_service department of the treasury washington dc person to contact telephone number refer reply to cc psi 6-plr-116400-03 date date number release date index number 468a re revised schedule of ruling amounts taxpayer parent plant location commission a commission b fund independent engineer a prior schedule state dear this letter responds to the request of taxpayer filed date for a revised schedule of ruling amounts pursuant to sec_1_468a-3 of the income_tax regulations information was submitted pursuant to sec_1_468a-3 we understand the facts as submitted by taxpayer to be as follows the taxpayer is the operator and owns a percent joint and undivided_interest in the plant the plant is situated in location taxpayer files a consolidated federal_income_tax return with parent the plant's operating license expires on the allocable jurisdictional percentages for commission a is percent and for commission b percent for a total of percent these percentages may fluctuate slightly from year to year plr-116400-03 commission a in docket no effective approved rates to be included in taxpayer's cost of service for ratemaking purposes when determining the decommissioning costs to be included in cost of service commission a assumed that the plant will no longer be in a rate base as of as required by nuclear regulatory commission commission a also changed the depreciation_rate for the plant based upon a number of factors until in determining the amount of decommissioning costs for the plant included in taxpayer's cost of service commission a used an estimated cost of dollar_figure dollars as a base cost for decommissioning the entire plant with taxpayer's ownership share being dollar_figure dollars the cost is based upon the decommissioning study prepared by independent engineer a dated the base cost for decommissioning taxpayer's share of the plant was escalated at the rate of annually resulting in a total estimated future decommissioning cost of dollar_figure dollars the cost to decommission taxpayer's interest in the plant based upon the minimum financial assurance amount calculated pursuant to regulations of nuclear regulatory commission was dollar_figure dollars or dollar_figure dollars using the escalation rate prescribed by commission a's rate order in issuing the rate order commission a determined that the estimated future decommissioning cost for taxpayer's interest in the plant would be dollar_figure dollars by adjusting nuclear regulatory commission's minimum amount to reflect estimated costs of spent fuel disposal and that the fund would earn interest during the decommissioning period the assumed after-tax rate of return to be earned by amounts collected for decommissioning is commission a estimated this rate after taking into consideration the changes to sec_468a by the energy policy act of commission a projected decommission costs for the plant to be included in taxpayer's cost of service for ratemaking purposes through the projected amount that was included in taxpayer's cost of service in each taxable_year to which this ruling_request applies as approved by commission a is dollar_figure through for purposes of determining the amount of decommissioning costs to be included in cost of service commission a assumed that the plant will no longer be included in taxpayer's rate base as of pursuant to commission a's assumptions when determining the decommissioning costs to be included in cost of service the funding_period and the level_funding limitation period for the plant extends from through commission b's order issued with respect to the most recent commission b ratemaking proceeding did not specifically address nuclear decommissioning expenses accordingly deductions for decommissioning expenses associated with the portion of plr-116400-03 the plant dedicated to wholesale jurisdictions ie non-commission a are not included in taxpayer's proposed schedule of ruling amounts there are no pending proceedings before commission a or commission b that may result in an increase or decrease in the amount of decommissioning costs for the plant included in taxpayer's cost of service for ratemaking purposes the qualifying percentage for the fund as determined in the initial schedule of ruling amounts dated is the estimated period for which the decommissioning fund is to be in effect is years through and the estimated_useful_life of the plant is years through sec_468a of the internal_revenue_code provides that a taxpayer may elect to deduct the amount of payments made to a qualified nuclear decommissioning fund however sec_468a limits the amount_paid into the fund for any_tax year to the lesser_of the amount of nuclear decommissioning costs allocable to the fund that is included in the taxpayer's cost of service for ratemaking purposes for the tax_year or the ruling_amount applicable to this year sec_468a of the code provides that no deduction shall be allowed for any payment to the nuclear decommissioning fund unless the taxpayer requests and receives from the secretary a schedule of ruling amounts the ruling_amount for any_tax year is defined under sec_468a as the amount which the secretary determines to be necessary to fund that portion of nuclear decommissioning costs which bears the same ratio to the nuclear power plant as the period for which the fund is in effect bears to the estimated_useful_life of the plant this term is further defined to include the amount necessary to prevent excessive funding of nuclear decommissioning costs or funding of these costs at a rate more rapid than level_funding taking into account such discount rates as the secretary deems appropriate sec_468a of the code provides that a taxpayer shall be deemed to have made a payment to the nuclear decommissioning fund on the last day of the tax_year if the payment is made on account of this tax_year within ½ months after the close of the tax_year sec_1_468a-1 of the regulations provides that an eligible_taxpayer may elect to deduct nuclear decommissioning costs under sec_468a of the code an eligible_taxpayer as defined under sec_1_468a-1 is a taxpayer that has a qualifying interest in a nuclear power plant as defined under sec_1_468a-1 a qualifying interest is among other things a direct ownership_interest including an interest held as a tenant in common or joint tenant sec_1_468a-2 of the regulations provides that the maximum amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year shall not exceed the lesser_of the cost of service amount applicable to the plr-116400-03 nuclear decommissioning fund for such tax_year or the ruling_amount applicable to the nuclear decommissioning fund for such tax_year sec_1_468a-3 of the regulations provides that in general a schedule of ruling amounts for a nuclear decommissioning fund is a ruling specifying annual payments that over the tax years remaining in the funding_period as of the date the schedule first applies will result in a projected balance of the nuclear decommissioning fund as of the last day of the funding_period equal to and in no event more than the amount of decommissioning costs allocable to the fund sec_1_468a-3 bases the schedule of ruling amounts on the reasonable assumptions and determinations used by the applicable public_utility commission s in establishing or approving the amount of decommissioning costs to be included in the cost of service for ratemaking purposes taking into account amounts that are otherwise required to be included in the taxpayer's income under sec_88 of the code and the regulations thereunder each schedule of ruling amounts shall be based on the public_utility commission's reasonable assumptions concerning i the after-tax rate of return to be earned by the amounts collected for decommissioning ii the total estimated cost of decommissioning the nuclear power plant and iii the frequency of contributions to the nuclear decommissioning fund for a tax_year sec_1_468a-3 of the regulations permits the service to provide a schedule of ruling amounts identical to the schedule proposed by the taxpayer but no such schedule shall be provided by the service unless the taxpayer's proposed schedule is consistent with the principles and provisions of this section sec_1_468a-3 of the regulations provides that the ruling_amount specified in a schedule of ruling amounts for any taxable_year in the level_funding limitation period shall not be less than the ruling_amount specified in such schedule for any earlier taxable_year under sec_1_468a-3 the level_funding limitation period begins on the first day of the first taxable_year for which a deductible payment is made to the nuclear decommissioning fund and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes sec_1_468a-3 of the regulations provides that the funding_period for a nuclear decommissioning fund is the period that begins on the first day of the first taxable_year for which a deductible payment is made or deemed to be made to such nuclear decommissioning fund and ends the later of i the last day of the taxable_year that includes the estimated date on which decommissioning costs of the nuclear power plr-116400-03 plant to which the nuclear decommissioning fund relates will no longer be included in the taxpayer's cost of service for ratemaking purposes or ii the last day of the taxable_year that includes the estimated date on which the nuclear power plant to which the nuclear decommissioning fund relates will no longer be included in the taxpayer's rate base for ratemaking purposes sec_1_468a-3 of the regulations provides that the amount of decommissioning costs allocable to a nuclear decommissioning fund is the taxpayer's share of the total estimated cost of decommissioning the nuclear power plant multiplied by the qualifying percentage sec_1_468a-3 of the regulations provides that in general the total estimated cost of decommissioning a nuclear power plant is the reasonably estimated cost of decommissioning used by the applicable public_utility commission in establishing or approving the amount of these costs to be included in cost of service for ratemaking purposes sec_1_468a-3 of the regulations provides that a taxpayer's share of the total estimated cost of decommissioning a nuclear power plant equals the total estimated cost of decommissioning such plant multiplied by the taxpayer's qualifying interest in the plant sec_1_468a-3 of the regulations provides that the qualifying percentage for any nuclear decommissioning fund is equal to the fraction the numerator of which is the number of taxable years in the estimated period for which the nuclear decommissioning fund is to be in effect and the denominator of which is the number of taxable years in the estimated_useful_life of the applicable nuclear power plant sec_1_468a-3 of the regulations provides that if two or more public_utility commissions establish or approve rates for electric energy generated by a single nuclear power plant then the schedule of ruling amounts shall be separately determined pursuant to the rules of sec_1_468a-3 through e for each public_utility commission that has determined the amount of decommissioning costs to be included in the cost of service for ratemaking purposes for this plant under sec_1_468a-3 this separate determination shall be based on the reasonable assumptions and determinations used by the relevant public_utility commission and shall take into account only that portion of the total estimated cost of decommissioning that is properly allocable to the ratepayer whose rates are established or approved by the public_utility commission according to sec_1_468a-3 the ruling amounts plr-116400-03 for any_tax year is the sum of the ruling amounts for such tax_year determined under the separate schedules of ruling amounts sec_1_468a-3 of the regulations provides that the internal_revenue_service shall not provide a taxpayer with a schedule of ruling amounts for any nuclear decommissioning fund unless the public_utility commission that establishes or approves the rates for electric energy generated by the plant has determined the amount of decommissioning costs to be included in the taxpayer's cost of service for ratemaking purposes and has disclosed the after-tax rate of return and any other assumptions and determinations used in establishing or approving the amount sec_1_468a-3 of the regulations provides that any taxpayer that has obtained a schedule of ruling amounts must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline for the 10th taxable_year that begins after the taxable_year in which the most recent schedule of ruling amounts was received the first taxable_year to which the revised schedule of ruling applies shall be the 10th taxable_year that begins after the taxable_year in which the most recent schedule of ruling amounts was received sec_1_468a-3 of the regulations provides that a taxpayer is required to request a revised schedule of ruling amounts for a nuclear decommissioning fund if any public_utility commission that establishes or approves rates for the furnishing or sale of electric energy generated by a nuclear power plant to which the nuclear decommissioning fund relates a increases the proposed period over which decommissioning costs of such nuclear power plant will be included in cost of service for ratemaking purposes b adjusts the estimated date on which such nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes or c reduces the amount of decommissioning costs to be included in cost of service for any taxable_year the taxpayer's most recent request for a schedule of ruling amounts did not provide notice to the service of such action by the public_utility commission and in the case of a taxpayer that determines its schedule or ruling amounts under a formula or method obtained under sec_1_468a-3 the item increased adjusted or reduced is a fixed rather than a variable element of that formula or method sec_1_468a-3 of the regulations provides that any taxpayer that has previously obtained a schedule of ruling amounts can request a revised schedule of ruling amounts such a request must be made in accordance with the rules of sec_1_468a-3 the internal_revenue_service shall not provide a revised schedule of ruling amounts applicable to a tax_year in response to a request for a schedule of ruling plr-116400-03 amounts that is filed after the deemed deadline date for such tax_year we have examined the representations and data submitted by the taxpayer in relation to the requirements set forth in the code and the regulations based solely on these representations of the facts we reach the following conclusions taxpayer has a qualifying interest in the plant and is therefore an eligible_taxpayer under sec_1_468a-1 of the regulations commission a has determined the amount of decommissioning costs to be included in the taxpayer's cost of service for ratemaking purposes as required by sec_1_468a-3 of the regulations the taxpayer as one the owners of the plant has calculated its share of the decommissioning costs under sec_1_468a-3 of the regulations the taxpayer subject_to the jurisdiction of two or more public_utility commissions for ratemaking purposes has calculated the total decommissioning costs allocable to commission a as required by sec_1_468a-3 of the regulations the taxpayer has proposed a schedule of ruling amounts which meets the requirements of sec_1_468a-3 and of the regulations the annual payments specified in the proposed schedule of ruling amounts are based on the reasonable assumptions and determinations used by commission a and will result in a projected fund balance at the end of the funding_period equal to or less than the amount of decommissioning costs allocable to the fund pursuant to sec_1_468a-3 of the regulations taxpayer has determined that percent is the qualifying percentage the maximum amount of cash payments made or deemed made to the fund during any taxable_year is restricted to the lesser amount of the decommissioning costs applicable to such fund or the ruling applicable to this fund as set forth under sec_1_468a-2 of the regulations based on the above determinations we conclude that the taxpayer's proposed schedule of ruling amounts satisfies the requirements of sec_468a of the code plr-116400-03 approved schedule of ruling amounts tax years through commission a in estimating the cost for decommissioning the plant commission a changed the depreciation life of the plant to end in thus although taxpayer represents that commission a assumed that the plant will no longer be included in taxpayer's rate base for ratemaking purposes as of the submitted schedule of ruling amounts is premised in part on an expiration date of accordingly we are limiting the approved schedule of ruling amounts for commission a to a five-year period in order to prevent possible overfunding of the fund taxpayer must settle this issue with commission a prior to submitting a subsequent request for a revised schedule of ruling amounts approval of the schedule of ruling amounts is contingent on there being no change in the facts and circumstances known or assumed at the time the current ruling is issued if any of the events described in sec_1_468a-3 of the regulations occur in future years the taxpayer must request a review and revision of the schedule of ruling amounts generally the taxpayer is required to file such a request on or before the deemed payment deadline date for the first tax_year in which the rates reflecting such action became effective when no such event occurs the taxpayer must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline of the 10th tax_year following the close of the tax_year in which the most recent schedule of ruling amounts was received the approved schedule of ruling amounts is relevant only to those payments made to the fund payments allocable to any funds other than the fund cannot qualify for purposes of the deduction under the provisions of sec_468a of the code as stated earlier payments made to such fund can qualify only to the extent that they do not exceed the lesser_of the decommissioning costs applicable to such fund or the ruling amounts applicable to this fund in the taxable_year plr-116400-03 this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides it may not be used or cited as precedent pursuant to sec_1_468a-7 of the regulations a copy of this letter must be attached with the required election statement to the taxpayer's federal_income_tax return for each tax_year in which the taxpayer claims a deduction for payments made to the fund a copy of this letter is being sent to the industry director natural_resources lm nrc cc sincerely yours peter friedman senior technician reviewer branch office of associate chief_counsel passthroughs and special industries


number release date id office uilc cca_2009032014154757 ------------ from ------------------ sent friday date pm to ---------------------- cc subject re follow-up hi -------- this is the material that i was referencing to the legislative_history of the act and the act erta along with the material that you attached supports the denial of component cost_recovery of buildings assuming the components are not leasehold improvements -----------------


internal_revenue_service number release date index number --------------------------- ---------------------------------- ----------------------------------------------------- ----------------------------- in re --------------------------------------- ------------------ ---------------------------- ------------------------------------ do --- do --- 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 b02 plr-120712-04 date date ----------------------------------------------------------------------- --------------------------------------------------------- legend us parent ---------------------------------------------------------------------------- -------------------------------------------------------------------- sub --------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------- -------------------------------------------------------------------- foreign parent ---------------------------------- -------------------------------------------------------------------------------- governmental entity ------------------------------------------------------------------------------------- business a state x state y country z b dear ------------------ ------------------------------------------------ ------------- ------------- ------------- --------- ----- plr-120712-04 above referenced taxpayer additional information was submitted on date and date the information submitted for consideration is summarized below this letter responds to your date request for rulings on behalf of the us parent is a corporation organized under the laws of state x its wholly owned subsidiary sub is a state y corporation engaged in business a parent and sub intend to join in the filing of a consolidated_return foreign parent a business_entity organized under the laws of country z indirectly holds b percent of us parent’s issued capital foreign parent is ultimately owned in substantial part by governmental entity a public purpose entity established pursuant to legislation by country z the laws of a significant number of states prohibit the licensing of a company engaged in business a if it is owned or controlled financially or otherwise in substantial part by a foreign government or political_subdivision or an agency_or_instrumentality thereof collectively the government ownership statutes sub was advised by its legal counsel that by virtue of governmental entity’s substantial indirect ownership the government ownership statutes may be interpreted such that sub might not receive licenses in certain states in order to comply with the ownership statutes of state y us parent deposited its sub stock in an irrevocable voting_trust the relevant terms of the trust the trust agreement are as follows the trust was set up solely for the purpose of complying with government ownership statutes the trust will continue for ten years but may be terminated early with the consent of state y if the trust structure is no longer necessary the trust may be renewed at the end of the ten-year period the trust will have five trustees all appointed by us parent trustees cannot sell transfer or otherwise dispose_of sub shares except in the case of a merger consolidation or similar_business combination transaction involving sub in addition to insure that governmental entity neither owns nor controls sub for the purposes of the government ownership statutes governmental entity and us parent have made certain undertakings to state y in connection with the establishment of the voting_trust in the undertakings governmental entity committed not to directly or indirectly participate or seek to influence the voting trustees or sub’s board_of directors or officers in their oversight or management of sub sec_1504 of the code defines an affiliated_group as one or more chains of includible corporations connected through stock ownership with a common parent_corporation which is an includible_corporation but only if the common parent owns directly stock meeting the requirements of sec_1504 of the code in at least one of the other includible corporations and stock meeting the requirements of section plr-120712-04 a in each of the includible corporations except the common parent is owned directly by one or more of the other includible corporations sec_1504 of the code provides generally that the ownership of stock of any corporation meets the requirements of this paragraph if it a possesses at least percent of the total voting power of the stock of such corporation and b has a value equal to at least percent of the total value of the stock of such corporation in revrul_84_79 1984_2_cb_190 p transferred all of the stock of its wholly owned subsidiary s to a revocable voting_trust in order to satisfy faa regulations the trust agreement provided that the trustee had all voting power in the s stock but could not vote the s stock in favor of either a sale of substantially_all of s's assets or a dissolution of s without p's approval all dividends except for stock_dividends were to be paid directly to p the trustee could not dispose_of the s stock without p's approval additionally p could remove the trustee at any time without cause and could also amend_or_terminate the trust agreement at any time the revenue_ruling holds that p's dominion over the s stock is as complete as the dominion exercisable by one having both beneficial and legal ownership therefore p directly owns the s stock while the s stock is in trust from the facts submitted it is clear that even while the stock of sub is subject_to the trust agreement us parent retains all of its economic interests in sub us parent remains entitled to all dividends declared on the sub stock is entitled to the benefit of any appreciation of the stock and may sell or otherwise transfer all or a portion of its shares of sub through the sale of the trust certificates to a third party therefore the only issue remaining concerning sub's inclusion in the us parent affiliated_group involves us parent's voting rights in sub in the present arrangement us parent has given up its actual voting rights in sub to the trustees pursuant to the trust agreement however us parent appointed all of the initial trustees when considering all of the above factors along with the fact that the sub stock was made subject_to the trust agreement solely to satisfy state y regulations and that the initial trustees were appointed by us parent it is held as follows us parent will be considered the owner of all the outstanding sub stock for purposes of sec_1504 and the creation of the voting_trust and subsequent transfer of sub’s stock was not a disaffiliation event for purposes of the consolidated_return rules 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 plr-120712-04 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 a copy of this letter must be attached to any income_tax return to which it is relevant in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely gerald b fleming senior technician reviewer branch corporate


department of the treasury internal_revenue_service washington d c date cc intl br1 wta-n-102810-99 uilc number release date internal_revenue_service national_office field_service_advice memorandum for from w edward williams senior technical reviewer cc intl br1 subject 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 used or cited as precedent legend taxpayer year a year a-1 year a-2 year a-5 country b date c university d wta-n-102810-99 university e date f amount g amount h amount i amount j date k quantity l quantity m amount n date o issue s whether income that taxpayer received during year a from a teaching position in the united_states is exempt from u s taxation under the convention between the united_states of america and the kingdom of greece for the avoidance of double_taxation and the prevention of fiscal evasion with respect to taxes on income the treaty or the convention signed on date conclusion taxpayer’s income from teaching for year a may be subject_to u s taxation depending on whether the saving clause in the treaty applies to him the saving clause applies to citizens subjects residents or corporations of the united_states under the saving clause the united_states retains the right to tax these taxpayers as if the convention had not come into effect in such case taxpayer would be liable to the united_states for tax on his income from teaching because the treaty does not define resident the determination of whether taxpayer is a resident for purposes of the treaty is made under the internal_revenue_code_of_1986 as amended specifically under the substantial_presence_test of sec_7701 wta-n-102810-99 if taxpayer was an exempt_individual under clause ii or iii of sec_7701 for any two of the years from year a-5 through year a-1 as seems likely he will not be treated as an exempt_individual under clause ii for year a sec_7701 if the limitation in sec_7701 applies to taxpayer since the number of days that he was physically present in the united_states in year a quantity m exceed sec_183 days he would satisfy the numerical test for u s residency under sec_7701 if taxpayer is treated as a resident_of_the_united_states during year a the saving clause in the treaty would apply to him and he may not claim exemption under article xii from u s income_tax in year a on his remuneration for teaching at university e in the unlikely event that taxpayer was not an exempt_individual under clause ii or iii of sec_7701 for any two of the years from year a-5 through year a-1 and therefore the limitation of sec_7701 is inapplicable he may qualify as an exempt_individual for the days he was physically present in the united_states during year a that is as an exempt_individual the days he was physically present in the united_states would not be counted in the computation of the numerical test for residency in sec_7701 further if taxpayer was present in the united_states during year a for less than days and he had a tax_home in a foreign_country and had a closer connection to such foreign_country than to the united_states he will not be treated as meeting the numerical test of residency in sec_7701 sec_7701 if taxpayer is not treated as a resident_of_the_united_states during year a the saving clause of the treaty will not apply to him and provided he was a resident of country b just prior to entering the united_states to teach at university e he may claim exemption from u s income_tax under article xii on the remuneration he received from teaching at university e facts taxpayer is a citizen of country b he legally entered the united_states in date c as a four-year trainee at university d in date f he accepted a position as an instructor at university e on his year a 1040-nr-ez taxpayer reported his wages on line wages salaries etc as amount g and taxable_income of zero claiming exemption from taxation under the treaty he also requested a refund of amount h of previously withheld amounts subsequently taxpayer filed an amended_return for year a on which he reported wages exempted by treaty as amount i and claimed an individual exemption of amount j totaling amount g taxpayer completed the schedule accompanying the year a return and year a amended_return that is required of taxpayers claiming treaty benefits on the schedule taxpayer indicated that he was not subject_to tax in country b on his wta-n-102810-99 u s -earned income in addition he told irs personnel that he paid u s tax on his teaching income earned in the united_states and that he paid u s taxes during year a-5 through year a-1 while he was a trainee at university d in date k taxpayer told irs personnel that he was in the process of preparing a country b tax_return for year a that would include the teaching income taxpayer indicated on the schedule that he entered the united_states in date c on a j-1 visa and that he held a j-1 visa through year a under u s c sec_1101 the j-1 visa is an exchange visitor visa also on the schedule taxpayer estimated that he was present in the united_states for quantity l days in year a-2 quantity l days in year a-1 and quantity m days in year a based on the wages taxpayer reported on his original year a 1040-nr amount g the internal_revenue_service center computed his unpaid u s tax_liability for year a as amount n law and analysis under article xii of the treaty a resident of greece is exempt from u s income_tax on remuneration received from teaching in the united_states a professor or teacher who is a resident of one of the contracting states and who is temporarily present within the other contracting state for the purpose of teaching for a maximum period of three years in a university college or other educational_institution within the other contracting state shall be exempt from taxation by such other contracting state on his remuneration for such teaching for such period pursuant to article xiii of the treaty a resident of greece who is temporarily in the united_states for the purpose of study is exempt from u s income_tax on remuneration received from sources outside the united_states for the person’s maintenance or studies s tudents who are residents of one of the contracting states but who are temporarily present in the other contracting state exclusively for the purposes of study shall not be taxable by such other contracting state upon remittances received by them from sources without such other state for the purpose of their maintenance or studies however under the saving clause in the treaty the united_states retains the right to tax residents of the united_states as if the convention had not come into effect treaty article xiv provides notwithstanding any provision of the present convention each of the contracting states in determining the taxes including all surtaxes and wta-n-102810-99 complementary taxes of its citizens subjects residents or corporations may include in the basis upon which such taxes are imposed all items of income taxable under its revenue laws as though this convention had not come into effect thus notwithstanding article xii article xiv permits the united_states to deny treaty benefits to teachers who are residents under provisions of the code the treaty does not define the term resident_of_the_united_states therefore the term is defined under u s domestic law see article ii to determine whether an alien individual is a resident_of_the_united_states the rules of sec_7701 apply there are three tests for resident status under this provision the green_card_test the substantial_presence_test and a first-year election test if a non-u s citizen satisfies any one of these tests he will be treated as a resident for u s tax purposes if he satisfies none of these tests he will be taxed by u s authorities as a nonresident_alien since taxpayer does not have a green card and as far as we know did not make the first-year election to be treated as a resident the following discussion addresses only the substantial_presence_test the substantial_presence_test under the substantial_presence_test an alien will be treated as a resident for u s tax purposes if a he is physically present in the united_states on at least days during the subject tax_year and b the sum of the days he is physically present in the united_states during the subject tax_year plus one-third the number of days he is physically present in the united_states during the first preceding calendar_year plus one-sixth the number of days he is physically present in the united_states during the second preceding year equals or exceed sec_183 days sec_7701 however if he is physically present in the united_states for less than days during the subject tax_year and has a tax_home in a foreign_country to which he maintains a closer connection than he does to the united_states he will not be considered a u s resident sec_7701 based on taxpayer’s representation that he was present in the united_states for quantity m days in year a quantity l days in year a-1 and quantity l days in year a-2 taxpayer was a resident_of_the_united_states in year a under the numerical test in sec_7701 unless all or a portion of his days in the united_states are excluded for purposes of the numerical test for purposes of the substantial_presence_test not all days of actual presence in the united_states will count towards resident status that is any day that an individual is a qualifying teacher trainee student foreign_government-related_individual or professional athlete under sec_7701 would be excluded from days of presence in the united_states sec_7701 a qualifying student is any individual who is temporarily present in the united_states under a j q f or m visa wta-n-102810-99 subparagraph j q f or m of sec_101 of the immigration and nationality act and who substantially complies with the requirements for being so present sec_7701 for these purposes a teacher_or_trainee is any individual who is temporarily present in the united_states under a j or q visa subparagraph j or q of sec_101 of the immigration and nationality act and who substantially complies with the requirements for being so present sec_7701 further an individual is not treated as an exempt_individual under the substantial_presence_test in clause ii of subsection b a a teacher_or_trainee for the current_year ie year a if for any two calendar years during the preceding six calendar years such person was an exempt_person under sec_7701 teacher_or_trainee or iii student sec_7701 the determination of taxpayer’s u s tax_liability for year a depends on whether he was treated as a resident for u s tax purposes under the substantial_presence_test for year a since apparently he does not have a green card see sec_7701 the outcome of this fact-intensive test depends on the number of days that taxpayer is considered physically present in the united_states during the relevant time period since days present in the united_states on certain types of visas are exempt for purposes of the substantial_presence_test taxpayer’s year a visa status and that of prior years are relevant in determining his year a u s tax_liability however because as described below his visa status during year a and prior years is not entirely certain the following discussion addresses the relevant time periods pre- year a years and year a the various types of visas that taxpayer may have had and the consequences of each type if taxpayer was an exempt_individual for two of the six years immediately preceding year a on the schedule attached to his year a tax_return taxpayer indicated that he was in the united_states on a j-1 visa and was employed as a teacher at university e during year a under sec_7701 taxpayer’s days present in the united_states as a teacher under a j-1 visa would not be counted as days present in the united_states for purposes of the substantial_presence_test however such days would be counted as days present in the united_states if taxpayer was an exempt teacher or student in the united_states on a j or q visa for any two of the six years prior to year a see sec_7701 thus the outcome of the substantial_presence_test depends on taxpayer’s visa status during year a as well as on whether taxpayer was treated as an exempt_individual during any two of the six years immediately preceding year a see sec_7701 in the event that taxpayer was considered an exempt teacher or student for any two of the six years between year a-5 through year a-1 that is if he satisfied the requirements of subparagraph c or d of sub sec_7701 for two of the six wta-n-102810-99 years prior to year a all of his days present in the united_states during year a would be counted as days present in the united_states under the numerical test in sec_7701 under the numerical test taxpayer would be treated as a resident_of_the_united_states if he was physically present in the united_states under a j-1 visa for at least days during year a and the sum of the number of days that taxpayer was physically present in the united_states in year a plus one-third of the number of days he was physically present in the united_states during year a-1 and one-sixth of the number of days he was physically present in the united_states during year a-2 equals or exceed sec_183 days see sec_7701 however under the exception of sec_7701 if taxpayer was physically present in the united_states for less than days during year a and had a tax_home in a foreign_country to which he maintained a closer connection than he does to the united_states he would nonetheless not be treated as a u s resident under the substantial_presence_test see sec_7701 as a result the saving clause of the treaty would not apply to him and the article xii exemption may be available if taxpayer is subject_to the limitation in sec_7701 and he was physically present in the united_states for quantity m days in year a sec_7701 is inapplicable taxpayer states that he was in the united_states as a student during the period date c through date f article xiii of the treaty provides an exemption for students for remittances received from abroad while they are in the united_states as a student the availability of an exemption under article xii teachers and professors immediately following an exemption under article xiii depends on whether taxpayer had re-established residency in country b at the time the exemption was claimed an individual who is present in the united_states as a student may not claim an exemption as a teacher without having left the united_states and re-established residency before returning to the united_states the irs reached this conclusion in revrul_56_164 1956_1_cb_848 in which it was held that a resident of the netherlands could claim the benefits of the teacher exemption under the united states-netherlands treaty provided he was absent from the united_states for a period of at least one year and still met the requirements of the article during his second stint in the united_states that is absent re-established residency in the treaty partner country as discussed below a second exemption as a teacher is not permitted if the period for the second exemption immediately follows the cessation of entitlement to benefits under the student teacher article in revrul_89_5 1989_1_cb_353 which explicitly applies to the treaty the irs interprets article xii of the treaty as applying the rule that the exemption period for teachers begins on the individual’s date of arrival in the united_states for purposes of teaching thus the applicable authorities require taxpayer to have re-established residency in country b at the time the article xii exemption was claimed wta-n-102810-99 re-establishment of residency between consecutive exemptions must be more than inconsequential revrul_56_164 as discussed above in revrul_56_164 the irs found that a period of a year in the treaty partner country was required to re-establish residency for these purposes thus if taxpayer was present in the united_states as an exempt_individual under the treaty and did not re-establish residency in country b before returning to the united_states the exemption of treaty article xii may not be available to him if taxpayer was not an exempt_individual for two of the six years immediately preceding year a if taxpayer was not an exempt_individual under the substantial_presence_test during any two of the six years preceding year a and was in the united_states under a j-1 visa during year a to teach at university e it is likely that he would not be treated as a u s resident for year a this is because days present in the united_states under a j-1 visa are generally not counted for purposes of the substantial_presence_test see sec_7701 and e as such it is likely that taxpayer’s total days of presence in the united_states during year a would not reach the thresholds of the numerical test of sec_7701 for treatment as a u s resident specifically since taxpayer indicated on his year a return that he spent approximately days in the united_states during year a if he was here under a j-1 visa to teach at university e and was not an exempt_individual under the substantial_presence_test during any two of the six years preceding year a he would not be treated as being present in the united_states for days as required by sec_7701 thus he would not be treated as a u s resident for year a in such case the saving clause of the treaty would not apply to taxpayer and the exemption of article xii may be available to him allowing an exemption from u s taxation on his income from teaching for a maximum of three years however the availability of the exemption depends on whether taxpayer had re-established residency in country b at the time the exemption was claimed as discussed above that is an individual who is present in the united_states as a student may not claim an exemption as a teacher without leaving the united_states and re-establishing residency before returning to the united_states more information about taxpayer’s status between his time here as a student and as a teacher is needed to complete this analysis in sum it is likely that taxpayer was an exempt teacher or student for two of the six years preceding year a and as a result will not be treated as an exempt_individual under clause ii of sec_7701 for year a and will thus satisfy the numerical test for u s residency under sec_7701 as such the saving clause in the treaty will apply and taxpayer will not be able to claim exemption from u s income_tax in year a on his remuneration for teaching at university e under article xii wta-n-102810-99 in the unlikely event that taxpayer was not an exempt teacher or student for two of the six years preceding year a taxpayer would qualify as an exempt_individual for the days he was physically present in the united_states during year a in such case it is less likely that taxpayer would meet the numerical test for residency in sec_7701 if taxpayer does not meet this test the saving clause in the treaty will not apply to him further provided taxpayer was a resident of country b just prior to entering the united_states to teach at university e he would be able to claim exemption from u s income_tax under article xii on the remuneration he received from teaching at university e confirmation of taxpayer’s visa status during years a-5 through a-1 will facilitate determination of whether or not he was an exempt_individual during that time if you have any further questions please call the branch telephone number w edward williams senior technical reviewer cc intl br1


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi b1-plr-145983-01 date date legend x y llc date state this responds to your letter dated date submitted on behalf of llc requesting a ruling that llc be given an extension of time under sec_301_9100-3 of the procedure and administration regulations to elect to be treated as a corporation for federal tax purposes facts according to the information submitted x and y were validly organized companies under applicable state law y was the wholly owned subsidiary of x both were taxed as c corporations on date the following transactions were effectuated consecutively llc was formed under state law x then merged into llc with llc surviving the merger under state law llc represents that the merger qualified as a reorganization under sec_368 of the code immediately following that merger y was merged into llc in a transaction that llc represents as a tax free liquidation under sec_332 of the code although llc intended that it be taxed as a corporation for federal tax purposes as of date llc did not timely file an election form to be treated as an association and therefore taxable as a corporation for federal_income_tax purposes after llc realized that it had not timely filed an election form to be treated as an association_taxable_as_a_corporation it requested relief under sec_301_9100-3 law and analysis plr-145983-01 sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes a business_entity is an entity recognized for federal tax purposes that is not properly classified as a_trust under sec_301_7701-4 or otherwise subject_to special treatment under the code sec_301_7701-2 an eligible_entity with a single owner can elect either to be classified as an association and thus a corporation under sec_301 b or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that unless a domestic eligible_entity elects otherwise the entity is disregarded as an entity separate from its owner if it has a single owner to elect to be classified other than as provided in sec_301_7701-3 an eligible_entity must file form_8832 entity classification election with the designated service_center sec_301_7701-3 an election can be effective on the date specified on the form_8832 or on the date filed if no such date specified the effective date specified on the form_8832 cannot be more than days prior to the date the election is filed sec_301_7701-3 sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time to make an election 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 for 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_9100-3 conclusion based solely on the facts submitted and representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly llc is granted an extension of time of sixty days from the date of this letter to elect to be treated as an association for federal tax purposes effective date the election should be made by filing form_8832 with the appropriate service_center a copy of this letter should be attached to the election plr-145983-01 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 concerning whether any of the aforementioned transactions qualified as either a merger under sec_368 of the code or as a liquidation under sec_332 of the code 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 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer sincerely paul f kugler associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service national_office technical_advice_memorandum number release date third party contact none index uil no case mis no tam-103229-99 cc dom p si b8 district_director taxpayer’s name taxpayer’s address period involved n a date of conference none legend taxpayer on date the national_office issued a technical_advice_memorandum tam to the then district_director concerning the applicability of sec_4251 of the internal_revenue_code to amounts paid for certain audio conferencing services in accordance with dollar_figure of revproc_99_2 1999_1_irb_73 the service is revoking tam consistent with dollar_figure of revproc_99_2 the effective date of the revocation is date caveats a copy of this technical_advice_memorandum is to be given to taxpayer sec_6110 provides that it may not be used or cited as precedent in accordance with sec_6110 names addresses and taxpayer identifying numbers have been deleted


internal_revenue_service number release date index number 468a ------------------------------ --------------------------------------- -------------------------------- ---------------------------- ------------------------- re schedule of deductions revised schedule of ruling amounts ----------------------------------------------------- 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 b6 plr-108673-10 date date --------------------------------------------------------------------------------- legend taxpayer ------------------------------------------------------------------------------------------------------------- -------------------------------------------------- parent ----------------------------------------------------- plant ------------------------------------- location independent study -------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------ method commission a commission b commission c amount a amount b amount c total date x prior owner a prior owner b prior owner c year a ----------------------------------------------- -------------------------------------------- ---------------------------------------------------- ---------------------------------------------------------------- --------------- --------------- --------------- ----------------- -------------------------- ---------------- --------------------------- ----------------------------------- ------- plr-108673-10 year b year c year d year e year f year g year h year i year j year k year l year m ba fv x y a b c d e f g h i j k l m n o p q st-a st-b st-c ad-a ad-c year j total year b total fund director ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------------------- --------------------- ------------ --------- ---- ---- ---- -------- -------- ---- ---- ---- -------- -------- ------ ------ ---- ---- -------- ----- -------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- plr-108673-10 dear ---------------- this letter responds to your request dated date for an initial schedule of deduction amounts pursuant to sec_468a of the internal_revenue_code and sec_1_468a-8t of the temporary income_tax regulations and for a mandatory revised schedule of ruling amounts under sec_468a on date x taxpayer acquired ownership interests in plant together with the associated qualified nuclear decommissioning funds to reach p percent the service concluded that the acquisition satisfied the requirements of sec_468a and the regulations and that the qualified funds acquired by taxpayer maintained their qualified status in the hands of taxpayer the prior owners had been granted schedules of ruling amounts at various times taxpayer represents the facts and information relating to its request for rulings as follows taxpayer is a wholly-owned subsidiary of parent parent files a consolidated federal_income_tax return with its affiliated corporations including taxpayer taxpayer has a direct ownership_interest of p percent in plant the estimated base cost for decommissioning plant is based on an independent study and the proposed method of decommissioning the plant is method the operating license for plant will expire in year g in the past several public_utility commissions have established or approved rates for the furnishing or sale of electricity generated by plant including commission a commission b for one of the prior owners of plant and commission c however no public_utility commission currently specifically authorizes taxpayer to currently include decommissioning costs in taxpayer’s cost of service for ratemaking purposes therefore the taxpayer has based the request for the revised schedule of ruling amounts on the independent study the estimated cost of dollar_figureba year a dollars was used as a base cost for decommissioning the plant the estimated cost of decommissioning the plant in year g dollars is dollar_figurefv it is estimated that substantial decommissioning costs will first be incurred in year g and that decommissioning will be substantially complete at the end of year c the methodology used to convert the year a dollars to year g dollars was by escalating the estimated costs at an inflation rate of x percent to year g the assumed after-tax rate of return to be earned by the amount collected for decommissioning is y percent the funding_period for the fund extends through year g the termination_date of the operating license regarding the request for a schedule of deduction amounts taxpayer when it acquired plant and the associated qualified nuclear decommissioning funds on date x also stepped into the shoes of the prior owners in terms of those funds for prior owner a who had owned a percent of plant in a prior schedule of ruling amounts issued under sec_468a of the code as in effect prior to prior owner a represented plr-108673-10 that the funding_period for the plant extends from year f through year b and the level_funding limitation period for the plant extends from year f through year b the estimated period for which the fund will be in effect is b years year f through year b the estimated_useful_life of the plant is c years year e through year g thus percentage of the total estimated costs qualifying for deduction in the schedule of ruling amounts under prior_law was d percent for prior owner b who had owned f percent of plant the qualifying percentage for k percent of plant is determined under prior owner b’s representations regarding the funding_period and estimated_useful_life and l percent is determined under the representations of those items by prior owner c who had transferred l percent of plant to prior owner b in a previous transaction in a prior schedule of ruling amounts issued under sec_468a of the code as in effect prior to prior owner b represented that the funding_period for the plant extends from year h through year a and the level_funding limitation period for the plant extends from year h through year i the estimated period for which the fund will be in effect is g years year h through year j the estimated_useful_life of the plant is h years year e through year j thus percentage of the total estimated costs qualifying for deduction in the schedule of ruling amounts under prior_law was i percent for the l percent of plant transferred to prior owner b by prior owner c in a prior schedule of ruling amounts issued under sec_468a of the code as in effect prior to prior owner c represented that the funding_period and level_funding period for the plant extends from year h through year k the estimated period for which the fund will be in effect is m years year h through year b the estimated_useful_life of the plant is n years year l through year b thus percentage of the total estimated costs qualifying for deduction in the schedule of ruling amounts under prior_law was o percent sec_468a as amended by the energy tax incentives act of the act publaw_109_58 119_stat_594 allows an electing taxpayer to deduct payments made to a nuclear decommissioning reserve fund sec_468a limits the amount that may be paid into the nuclear decommissioning fund in any year to the ruling_amount applicable to that year prior to the changes made by the act the deduction was limited to the lesser_of the amount included in the utility’s cost of service for ratemaking purposes or the ruling_amount generally as a result only regulated utilities could take advantage of sec_468a the act amendment of sec_468a eliminated the cost-of-service limitation accordingly decommissioning costs of an unregulated nuclear power plant may now be funded by deductible contributions to a qualified nuclear decommissioning fund sec_468a provides that no deduction shall be allowed for any payment to the nuclear decommissioning fund unless the taxpayer requests and receives from the secretary a schedule of ruling amounts the ruling_amount for any_tax year is defined under sec_468a as the amount which the secretary determines to be plr-108673-10 necessary to fund the total nuclear decommissioning cost of that nuclear power plant over the estimated_useful_life of the plant this term is further defined to include the amount necessary to prevent excessive funding of nuclear decommissioning costs or funding of these costs at a rate more rapid than level_funding taking into account such discount rates as the secretary deems appropriate prior to the changes made by the act deductible contributions were limited to the amount necessary for an electing taxpayer to fund the plant’s post-1983 nuclear decommissioning costs determined as if decommissioning costs accrued ratably over the estimated_useful_life of the plant provided that the taxpayer elected to establish a fund in prior_law also did not allow a taxpayer electing to establish a fund later than to contribute to that fund any amount in excess of that amount necessary to fund the ratable portion of the plant’s nuclear decommissioning costs beginning in the year the fund is established sec_468a now allows a taxpayer to contribute to a nuclear decommissioning fund the entire cost of decommissioning the plant including both the pre-1984 amount that was denied under the law prior to the act as well as any amount attributable to any year after in which a taxpayer had not established a fund under sec_468a sec_468a provides that the deduction for the contribution of the previously-excluded amount is allowed ratably over the remaining useful_life of the nuclear plant sec_468a provides that a taxpayer shall be deemed to have made a payment to the nuclear decommissioning fund on the last day of a taxable_year if the payment is made on account of such taxable_year and is made within 2½ months after the close of the tax_year this section applies to payments made pursuant to either a schedule of ruling amounts or a schedule of deduction amounts sec_1_468a-1t a provides that an eligible_taxpayer may elect to deduct nuclear decommissioning costs under sec_468a of the code an eligible_taxpayer as defined under sec_1_468a-1t b of the regulations is a taxpayer that has a qualifying interest in any portion of a nuclear power plant a qualifying interest is among other things a direct ownership_interest sec_1_468a-2t b provides that the maximum amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year shall not exceed the ruling_amount applicable to the nuclear decommissioning fund for such taxable_year the limitation on the amount of cash payments for purposes of sec_1 468a- 2t b does not apply to any special transfer permitted under sec_1_468a-8t sec_1_468a-3t a provides that in general a schedule of ruling amounts for a nuclear decommissioning fund is a ruling specifying annual payments that over the tax years remaining in the funding_period as of the date the schedule first applies plr-108673-10 will result in a projected balance of the nuclear decommissioning fund as of the last day of the funding_period equal to and in no event more than the amount of decommissioning costs allocable to the fund sec_1_468a-3t a provides that to the extent consistent with the principles and provisions of this section each schedule of ruling amounts shall be based on reasonable assumptions concerning the after-tax rate of return to be earned by the amounts collected for decommissioning the total estimated cost of decommissioning the nuclear plant and the frequency of contributions to a nuclear decommissioning fund for a taxable_year under sec_1_468a-3t a the internal_revenue_service shall provide a schedule of ruling amounts identical to the schedule proposed by the taxpayer but no such schedule shall be provided by the service unless the taxpayer's proposed schedule is consistent with the principles and provisions of that section sec_1_468a-3t a provides that the taxpayer bears the burden of demonstrating that the proposed schedule of ruling amounts is consistent with the principles of the regulations and that it is based on reasonable assumptions that section also provides additional guidance regarding how the service will determine whether a proposed schedule of ruling amounts is based on reasonable assumptions for example if a public_utility commission established or approved the currently applicable rates for the furnishing or sale by the taxpayer of electricity from the plant the taxpayer can generally satisfy this burden_of_proof by demonstrating that the schedule of ruling amounts is calculated using the assumptions used by the public_utility commission in its most recent order in addition a taxpayer that owns an interest in a deregulated nuclear plant may submit assumptions used by a public_utility commission that formerly had regulatory jurisdiction over the plant as support for the assumptions used in calculating the taxpayer’s proposed schedule of ruling amounts with the understanding that the assumptions used by the public_utility commission may be given less weight if they are out of date or were developed in a proceeding for a different taxpayer the use of other industry standards such as the assumptions underlying the taxpayer's most recent financial assurance filing with the nrc are described by the temporary regulations as an alternative means of demonstrating that the taxpayer has calculated its proposed schedule of ruling amounts on a reasonable basis sec_1_468a-3t a further provides that consistency with financial_accounting statements is not sufficient in the absence of other supporting evidence to meet the taxpayer’s burden_of_proof sec_1_468a-3t b provides that in general the ruling_amount for any_tax year in the funding_period shall not be less than the ruling_amount for any earlier tax_year under sec_1_468a-3t c the funding_period begins on the first day of the first tax_year for which a deductible payment is made to the nuclear decommissioning fund and ends on the last day of the taxable_year that includes the last day of the estimated_useful_life of the nuclear power plant to which the fund relates plr-108673-10 sec_1_468a-3t c provides rules for determining the estimated_useful_life of a nuclear plant for purposes of sec_468a in general under sec_1_468a-3t c i a if the plant was included in rate base for ratemaking purposes for a period prior to date the date used in the first such ratemaking proceeding as the estimated date on which the nuclear plant will no longer be included in the taxpayer’s rate base is the end of the estimated_useful_life of the nuclear plant sec_1_468a-3t c i b provides that if the nuclear plant is not described in sec_1_468a-3t c i a the last day of the estimated_useful_life of the nuclear plant is determined as of the date the plant is placed_in_service under sec_1_468a-3t c i c any reasonable method may be used in determining the estimated_useful_life of a nuclear power plant that is not described in sec_1_468a-3t c i a sec_1_468a-3t d provides that the amount of decommissioning costs allocable to a nuclear decommissioning fund is the taxpayer's share of the total estimated cost of decommissioning the nuclear power plant sec_1_468a-3t d provides that a taxpayer's share of the total estimated cost of decommissioning a nuclear power plant equals the total estimated cost of decommissioning such plant multiplied by the taxpayer's qualifying interest in the plant sec_1_468a-3t e enumerates the information required to be contained in a request for a schedule of ruling amounts filed by a taxpayer in order to receive a ruling_amount for any taxable_year sec_1_468a-3t f provides that any taxpayer that has previously obtained a schedule of ruling amounts can request a revised schedule of ruling amounts such a request must be made in accordance with the rules of sec_1_468a-3t e the internal_revenue_service shall not provide a revised schedule of ruling amounts applicable to a taxable_year in response to a request for a schedule of ruling amounts that is filed after the deemed payment deadline date for such taxable_year sec_1_468a-8t a provides that under the provisions of sec_468a as described above a taxpayer may make a special transfer of cash or property to the nuclear decommissioning fund this special transfer is not subject_to the sec_468a limitation the amount of the special transfer is the present_value of the pre-2005 nonqualifying percentage of the estimated future costs of decommissioning the nuclear plant that was disallowed under sec_468a prior to the act sec_1_468a-8t a defines the pre-2005 nonqualifying percentage as equal to percent reduced by the sum of the qualifying percentage used in determining the taxpayer’s last schedule of ruling amounts for the fund under sec_468a as it existed prior to the act and the percentage transferred in any previous special transfer sec_1_468a-8t a provides that the taxpayer is not required to transfer the entire amount eligible for the special transfer in one year but must take any prior special plr-108673-10 transfers into account in calculating the pre-2005 qualifying percentage further pursuant to sec_1_468a-8t c a taxpayer making a special transfer in more than one year must request a new schedule of deduction amounts in connection with each special transfer sec_1_468a-8t b provides that the deduction for the special transfer is allowed ratably over the remaining useful_life of the nuclear plant under sec_1 468a- 8t b iii the deduction for property contributed in a special transfer is limited to the lesser_of the fair_market_value of the property or the taxpayer’s basis in the property under sec_1_468a-8t b the taxpayer recognizes no gain_or_loss on the special transfer of property the taxpayer’s basis in the fund is not increased by reason of the special transfer of property and the fund’s basis in the property transferred in the special transfer is the same as the transferee’s basis in that property immediately prior to the special transfer sec_1_468a-8t c provides that taxpayer may not make a special transfer to a qualified nuclear decommissioning fund unless the taxpayer requests from the irs a schedule of deduction amounts in connection with such transfer a request for a schedule of deduction amounts may be made in connection with a request for a schedule of ruling amounts but in such case the calculations for both the schedule of ruling amounts and the schedule of deduction amounts must be separately_stated as stated above prior to the changes made by the act deductible contributions were limited to the lesser_of the amount necessary to fund the plant’s post-1983 nuclear decommissioning costs or the amount necessary to fund the plant’s decommissioning costs for that portion of the plant’s estimated_useful_life for which a fund had been established under that prior_law prior owner a was allowed to contribute d percent of the amounts necessary to fully decommission a percent of the plant prior owner b was allowed to contribute i percent of the amounts necessary to fully decommission k percent of the plant and prior owner c was allowed to contribute o percent of the amounts necessary to fully decommission l percent of the plant sec_468a allows a taxpayer to contribute to the nuclear decommissioning fund the pre-1984 amount that was denied under the law prior to the act thus taxpayer is able to contribute the additional e percent of the amounts necessary to decommission the ownership share of plant acquired from prior owner a the additional j percent of the amounts necessary to decommission the k percent ownership share of plant acquired from prior owner b that had not been acquired from prior owner c and the additional q percent of the amounts necessary to decommission the l percent ownership share of plant acquired from prior owner b that had been acquired from prior owner c further the estimated_useful_life of plant as defined in sec_1 468a- 3t c i a and 468a-8t b ii ends in year b for the portion of plant acquired from prior owner a and the portion of plant acquired from prior owner b that had been acquired from prior owner c and in year j for the portion of plant acquired from prior owner b that had not been acquired from prior owner c plr-108673-10 we have examined the representations and information submitted by the taxpayer in relation to the requirements set forth in sec_468a and the regulations thereunder based solely upon these representations of the facts we conclude that with respect to the portion of plant acquired from prior owner a the taxpayer may make a special transfer of dollar_figurest-a in year j and may ratably deduct the amount contributed for the year j through year b tax years with respect to the k percent portion of plant acquired from prior owner b that had not been acquired from prior owner c the taxpayer may make a special transfer of dollar_figurest-b in year j and may deduct the amount contributed for the year j tax_year and with respect to the l percent portion of plant acquired from prior owner b that had been acquired from prior owner c the taxpayer may make a special transfer of dollar_figurest-c in year j and may ratably deduct the amount contributed for the year j through year b tax years as set forth below schedule of deduction amounts a percent portion k percent portion l percent portion ad-a ad-a st-b ad-c ad-c year year j year b total year j total year b total the special transfer amount stated above is the maximum amount permitted to be transferred to the fund under sec_468a if taxpayer transfers a lesser amount to the fund the taxpayer may deduct that lesser amount ratably over the period of years described above further in the event that taxpayer transfers a lesser amount for year j in order to make an additional special transfer in a later year including a special transfer of the difference between the special transfer amount stated above and the lesser amount transferred in year j taxpayer must request a new schedule of deduction amounts and in that request must take the year j transfer into account and recalculate the pre-2005 qualifying percentage in such request we note that if taxpayer elects to make a special transfer of property for all or a portion of this special transfer the amount of the deduction is the lesser_of the fair_market_value of the property transferred or the basis of the property in the hands of the taxpayer immediately prior to the transfer in either event the deduction of the taxpayer with respect to the property is limited to the taxpayer’s basis in the property plr-108673-10 we have examined the representations and information submitted by the taxpayer in relation to the requirements set forth in sec_468a and the regulations thereunder based solely upon these representations of the facts we reach the following conclusions pursuant to sec_1_468a-3t a taxpayer has met its burden of demonstrating that the proposed schedule of ruling amounts is consistent with the principles of the code and regulations and is based on reasonable assumptions taxpayer has a qualifying interest in the plant and is therefore an eligible_taxpayer under sec_1_468a-1t b of the regulations taxpayer as owner of the plant has calculated its share of the total decommissioning costs under sec_1_468a-3t d of the regulations the proposed schedule of ruling amounts was derived by following the assumptions contained in an independent commissioning study that taxpayer has represented is a standard type study used in the industry based on that representation taxpayer has demonstrated pursuant to sec_1_468a-3t a that the proposed schedule of ruling amounts is based on reasonable assumptions and is consistent with the principles of sec_468a and the regulations thereunder the maximum amount of cash payments made or deemed made to the fund during any_tax year is restricted to the ruling_amount applicable to the fund as set forth under sec_1_468a-2t b of the regulations based solely on the determinations above we conclude that the taxpayer’s proposed schedule of ruling amounts satisfies the requirements of sec_468a of the code we have approved the following revised schedule of ruling amounts the mandatory review date for this matter remains the same approved schedule of ruling amounts year a percent portion k percent portion l percent portion total dollar_figureamount a dollar_figureamount b dollar_figureamount c dollar_figuretotal each year year j through year m if any of the events described in sec_1_468a-3t f occur in future years the taxpayer must request a review and revision of the schedule of ruling amounts plr-108673-10 generally the taxpayer is required to file such a request on or before the deemed payment deadline date for the first taxable_year in which the rates reflecting such action became effective when no such event occurs the taxpayer must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline of the tenth taxable_year following the close of the tax_year in which the most recent schedule of ruling amounts was received except as specifically determined above no opinion is expressed or implied concerning the federal_income_tax consequences of the transaction described above specifically no determination is made whether the independent commissioning study conforms to industry standards and practices this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides 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 your authorized representative we are also sending a copy of this letter_ruling to the director pursuant to sec_1_468a-7t a a copy of this letter must be attached with the required election statement to the taxpayer's federal_income_tax return for each tax_year in which the taxpayer claims a deduction for payments made to the fund sincerely peter c friedman senior technician reviewer branch passthroughs special industries cc


t c memo united_states tax_court andrea j vuxta petitioner v commissioner of internal revenue respondent docket no filed date albert n peterlin for petitioner richard a stone for respondent memorandum findings_of_fact and opinion panuthos chief special_trial_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 with respect to unpaid tax_liabilities on certain joint returns filed with james s vuxta after concessions the issue for decision is whether respondent abused his discretion in denying petitioner’s request for relief under sec_6015 for taxable years and unless otherwise indicated all section references are to the internal_revenue_code in effect for the years in issue and rule references are to the tax_court rules_of_practice and procedure findings_of_fact this case was submitted fully stipulated pursuant to rule a all stipulated facts are found accordingly the attached exhibits are incorporated by reference petitioner petitioner contends that for the taxable years through the unpaid tax_liabilities total dollar_figure including interest and penalties respondent contends that for the same taxable years the unpaid tax_liabilities total dollar_figure which amount does not include interest penalties and payments after date petitioner requested relief from joint_and_several_liability for the taxable years through after respondent denied her request petitioner commenced an action for determination of relief only with respect to taxable years and and only under sec_6015 consequently we conclude that petitioner has abandoned any contention with respect to the other taxable years and to relief under sec_6015 and c see 114_tc_276 n respondent concedes that the issue of relief with respect to the unpaid tax_liability for is moot because the period of limitations on collection has expired under sec_6502 and was not tolled during the pendency of the bankruptcy proceeding described infra resided in middletown pennsylvania when she filed the petition herein during the years in issue petitioner was married to james s vuxta mr vuxta was a self-employed carpenter who operated his business as a sole_proprietorship petitioner was not involved in such business mr vuxta was the primary wage earner of their household petitioner and mr vuxta filed joint federal_income_tax returns for taxable years through the tax returns were prepared by mr vuxta petitioner did not review the tax returns before signing them relying upon mr vuxta’s preparation of such returns the tax_return was filed on date the tax_return was filed on date the tax_return was filed on date and the tax_return was filed on date the liabilities relevant to these tax returns remain unpaid the unpaid liabilities are solely and fully allocable to mr vuxta as indicated on the tax returns petitioner was a waitress she is a high school graduate on date petitioner and mr vuxta filed a bankruptcy petition in the united_states bankruptcy court for the middle district of pennsylvania the date of bankruptcy discharge is date mr vuxta died on date after his death petitioner received the proceeds of mr vuxta’ sec_401 plan on date respondent received petitioner’s form_8857 request for innocent spouse relief for taxable years through on date respondent received from petitioner a completed questionnaire for requesting spouse which contained the following question and petitioner’s answer after the return s was filed what efforts were made by you and your ex spouse to pay the tax upon information and belief my husband entered into payment plans respondent issued petitioner a final notice_of_determination notice dated date respondent determined that petitioner was not entitled to relief from joint_and_several_liability under sec_6015 c or f for taxable years through and the notice provided we did not grant relief because you did not establish a reasonable belief that tax would be paid at the time you signed the tax returns opinion generally married taxpayers may elect to file a joint federal_income_tax return sec_6013 after making the election each spouse generally 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 under sec_6015 a requesting spouse may seek relief from liability under sec_6015 or if eligible may allocate liability according to the provisions under sec_6015 if relief is not available under either sec_6015 or c then an individual may seek equitable relief under sec_6015 sec_6015 permits relief from joint_and_several_liability where it is inequitable to hold the individual liable for any unpaid tax or any deficiency or any portion of either petitioner contends that she is entitled to equitable relief under sec_6015 for taxable years through and that respondent erred in denying her request for such relief we have jurisdiction to review a denial of a request for equitable relief under sec_6015 114_tc_324 our review is not limited to respondent’s administrative record 122_tc_32 as indicated earlier respondent conceded that the issue of relief with respect to is moot except as otherwise provided in sec_6015 petitioner bears the burden_of_proof rule a 119_tc_306 to prevail petitioner must show that respondent’s denial of equitable relief from joint_and_several_liability under sec_6015 was an abuse_of_discretion 118_tc_106 affd 353_f3d_1181 10th cir 115_tc_183 affd 282_f3d_326 5th cir petitioner must demonstrate that respondent exercised his discretion arbitrarily capriciously or without sound basis in fact or law jonson v commissioner supra 112_tc_19 as directed by sec_6015 the commissioner has prescribed procedures in determining whether a spouse qualifies for relief under that subsection the applicable_provision is found in revproc_2000_15 2000_1_cb_447 we have upheld the procedures in reviewing a determination 120_tc_137 revproc_2000_15 sec_4 c b pincite provides seven threshold conditions that must be satisfied before the this revenue_procedure was superseded by revproc_2003_ which is effective either for requests for relief filed on or after date or for requests for relief pending on date for which no preliminary determination_letter has been issued as of date revproc_2003_61 sec 2003_32_irb_296 commissioner will consider a request for equitable relief under sec_6015 respondent concedes that these seven threshold conditions are satisfied in the present case revproc_2000_15 sec_4 provides circumstances under which equitable relief under sec_6015 will ordinarily be granted this section of the revenue_procedure only applies to cases where a liability reported on a joint_return is unpaid and where all three elements of revproc_2000_15 sec_4 need to be satisfied it appears from the record that at least one of these three elements is not satisfied specifically petitioner has not shown that she will suffer economic hardship if relief is not granted her debts were discharged in bankruptcy on date and petitioner received the proceeds of mr vuxta’ sec_401 plan after his death on date we therefore next consider the positive and negative factors set forth in revproc_2000_15 sec_4 in determining whether to grant relief section dollar_figure of this revenue_procedure makes clear that no single factor is to be determinative in any particular case that all factors are to be considered and weighed appropriately and that the list of factors is not intended to be exhaustive we first review each of the following six factors weighing against relief as listed under sec_4 c b pincite of the revenue_procedure a attributable to nonrequesting spouse the unpaid liabilities are solely and fully allocable to mr vuxta this factor is squarely in favor of petitioner b knowledge or reason to know if a requesting spouse knew or had reason to know that the reported liability would be unpaid at the time the return was signed this is an extremely strong factor weighing against relief revproc_2000_15 b with respect to the unpaid liabilities for the and taxable years petitioner knew or had reason to know that such liabilities would be unpaid at the time the respective returns were signed the bankruptcy case was still pending when petitioner and mr vuxta filed their joint federal_income_tax return for the taxable_year on date the filing of the return for the taxable_year on date preceded the filing of their bankruptcy petition on date only by a little over months petitioner indicated that she believed her husband had entered into payment plans for the unpaid tax_liabilities although it is unclear as to which taxable years the situation however is different with respect to the unpaid liability for the taxable_year more than months passed before the bankruptcy petition was filed the return was prepared by mr vuxta petitioner was not the primary wage earner and was not involved in mr vuxta’s business it does not appear from the record that petitioner knew or had reason to know that such liability would be unpaid at the time the return was filed on date c significant benefit the record is not clear as to whether petitioner has significantly benefited beyond normal support from the unpaid tax_liabilities d lack of economic hardship as we indicated earlier petitioner has not shown that she will suffer economic hardship if relief is not granted her debts were discharged in bankruptcy on date and petitioner received the proceeds of mr vuxta’ sec_401 plan after his death on date e noncompliance with federal_income_tax laws the record is devoid of any information regarding whether petitioner has not made a good_faith effort to comply with federal_income_tax laws in the tax years following the tax years to which the request for relief relates f requesting spouse’s legal_obligation the record is also devoid of any information regarding whether petitioner has a legal_obligation pursuant to a divorce decree or agreement to pay the liability counterbalancing the factors weighing against relief are the factors weighing in favor of relief we next review each of the following six factors as listed under revproc_2000_1 sec_4 to evaluate whether they serve as a makeweight for equitable relief under sec_6015 a marital status petitioner is separated or divorced from mr vuxta he died on date a year before petitioner made her request for relief from joint_and_several_liability this factor is squarely in favor of petitioner b economic hardship as we indicated earlier petitioner has not shown that she will suffer economic hardship if relief is not granted c abuse there is nothing in the record indicating that petitioner was subject_to abuse d no knowledge or reason to know as we indicated earlier petitioner knew or had reason to know that the reported liabilities for and would be unpaid at the time the corresponding returns were signed however it does not appear from the record that petitioner knew or had reason to know that the reported liability for would be unpaid at the time the return was signed e nonrequesting spouse’s legal_obligation as we indicated earlier the record is devoid of any information regarding whether petitioner has a legal_obligation pursuant to a divorce decree or agreement to pay the liability f attributable to requesting spouse as we indicated earlier the unpaid liabilities are solely and fully allocable to mr vuxta and this factor is squarely in favor of petitioner upon consideration of the entire record especially in light of the factors in revproc_2000_15 sec_4 we cannot conclude that there was an abuse_of_discretion in denying petitioner relief under sec_6015 for the and taxable years however we conclude that there was an abuse_of_discretion in denying such relief for the taxable_year and hold that petitioner should be relieved from liability for such taxable_year under sec_6015 an appropriate order and decision will be entered