internal_revenue_service number release date index number -------------------------------- ---------------------------------------- -------------------------- -------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------- id no ----------------- telephone number -------------------- refer reply to cc psi b04 plr-118956-16 date date decedent -------------------- spouse ---------------------- date -------------------------- date ---------------------- dear ------------------ this letter responds to your personal representative's letter of date and subsequent correspondence requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election under sec_2010 of the internal_revenue_code code portability election to allow a decedent's surviving_spouse to take into account that decedent's deceased spousal unused exclusion dsue amount facts decedent died on date survived by spouse date is a date after the effective date of the amendment to sec_2010 which provides for portability of a dsue amount to a surviving_spouse to obtain the benefit of portability of decedent's dsue amount to spouse decedent's_estate was required to file form_706 united_states estate and generation-skipping_transfer_tax return on or before the date that is months after decedent's date of death or the last day of the period covered by an extension plr-118956-16 decedent's form_706 was due on date but the estate did not file a form_706 to make the portability election the estate discovered its failure to elect portability after the due_date for making the election spouse as executor of decedent's_estate represents that the value of decedent's gross_estate is less than the basic exclusion amount in the year of the decedent's death and that during his lifetime decedent made no taxable_gifts as executor spouse requests an extension of time pursuant to sec_301_9100-3 to elect portability of decedent's dsue amount pursuant to sec_2010 law and analysis sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2010 provides that a credit of the applicable credit_amount shall be allowed to the estate of every decedent against the tax imposed by sec_2001 sec_2010 provides that the applicable credit_amount is the amount of the tentative_tax that would be determined under sec_2001 if the amount with respect to which such tentative_tax is to be computed were equal to the applicable_exclusion_amount on date congress amended sec_2010 effective for estates of decedents dying and gifts made after date to allow portability of a decedent's unused applicable_exclusion_amount between spouses tax relief unemployment insurance reauthorization and job creation act of pub_l_no sec_303 124_stat_3296 sec_2010 provides that the applicable_exclusion_amount is the sum of the basic exclusion amount and in the case of a surviving_spouse the dsue amount sec_2010 generally provides that the basic exclusion amount is dollar_figure to be adjusted for inflation annually after calendar_year sec_2010 defines the dsue amount to mean the lesser_of a the basic exclusion amount or b the excess of - i the applicable_exclusion_amount of the last deceased spouse of the surviving_spouse over ii the amount with respect to which the tentative_tax is determined under sec_2001 on the estate of such deceased spouse sec_2010 provides that a dsue amount may not be taken into account by a surviving_spouse under sec_2010 unless the executor of the estate of the deceased spouse files an estate_tax_return on which such amount is computed and makes an election on such return that such amount may be so taken into account the election plr-118956-16 once made shall be irrevocable no election may be made if such return is filed after the time prescribed by law including extensions for filing such return sec_2010 provides that the secretary shall prescribe regulations as may be necessary or appropriate to implement sec_2010 sec_20_2010-2t a of the estate_tax regulations as in effect on date provides that to allow a decedent's surviving_spouse to take into account that decedent's dsue amount the executor of the decedent's_estate must elect portability of the dsue amount on a timely-filed form_706 under sec_20_2010-2t a the due_date of an estate_tax_return required to elect portability is nine months after the decedent's date of death or the last day of the period covered by an extension if an extension of time for filing has been granted under sec_20_2010-2t a the portability election is made by timely filing a complete and properly prepared estate_tax_return unless the executor satisfies the requirements for the election not to apply in sec_20_2010-2t a i sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term statutory election means an election whose due_date is prescribed by statute the term regulatory election means an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute a request for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_30 b iii provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer failed to make the election because after exercising reasonable diligence taking into account the taxpayer's experience and the complexity of the return or issue the taxpayer was unaware of the necessity for the election the due_date for the portability election is prescribed by statute in the case of an estate required to file an estate_tax_return under sec_6018 see sec_2010 sec_6075 and plr-118956-16 a in the case of an estate that is not required to file an estate_tax_return under sec_6018 the due_date is prescribed by regulation see sec_20_2010-2t a see also sec_20_2010-2 and revproc_2014_18 2014_7_irb_513 sec_2 accordingly in the latter case a taxpayer may seek an extension of time to elect portability under the provisions of sec_301_9100-3 sec_6018 requires the filing of an estate_tax_return in all cases where the gross_estate exceeds the basic exclusion amount in effect under sec_2010 for the calendar_year which includes the date of death for purposes of this determination under sec_6018 the basic exclusion amount is reduced but not below zero by the sum of - a the amount of the adjusted_taxable_gifts within the meaning of sec_2001 made by the decedent after date plus b the aggregate amount allowed as a specific exemption under sec_2521 as in effect before its repeal by the tax reform act of with respect to gifts made by the decedent after date conclusion as executor spouse represents that based on the value of the gross_estate and taking into account any taxable_gifts decedent's_estate is not required to file an estate_tax_return under sec_6018 under these facts the commissioner has discretionary authority under sec_301_9100-3 to grant to decedent's_estate an extension of time to elect portability based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly we grant an extension of time of days from the date of this letter in which to elect portability under sec_2010 the election should be made by filing a complete and properly-prepared form_706 and a copy of this letter within days from the date of this letter to the cincinnati service_center at the following address internal_revenue_service cincinnati service_center m s 343g cincinnati oh for purposes of electing portability a form_706 filed by decedent's_estate within days from the date of this letter will be considered to be timely filed the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination if it is later determined that based on the value of the gross_estate and taking into account any taxable_gifts decedent's_estate is required to file an estate_tax_return pursuant to sec_6018 the commissioner is without authority under sec_301_9100-3 to grant to decedent's_estate an extension of time to elect portability and the grant of the extension referred to in this letter is deemed null and void plr-118956-16 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 this office a copy of this letter is being sent to your authorized representative sincerely associate chief_counsel passthroughs special industries by melissa liquerman melissa liquerman branch chief branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


-0430 department of the treasury internal_revenue_service washington d c aug government entities division tiep rac aaa re request for_the_use_of plan-specific substitute mortality tables for the plans comprising the following permissive group plan name plan number ein this letter is to inform you that your request to use substitute mortality tables for making computations under sec_430 of the internal_revenue_code the code for the plans in the permissive group has been granted with respect to the populations specified in this letter effective for a period of up to years beginning with the plan years commencing january sec_430 of the code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa your request has been granted in accordance with in granting this approval we have considered only the development of the substitute mortality rates and whether they sufficiently reflect the mortality experience of the applicable_plan populations accordingly we are not expressing any opinion as to the accuracy or acceptability of any calculations or other material submitted with your request permission is herby granted for plans in the permissive group to use the male and female substitute mortality rates shown in the tables below bargaining unit non-bargaining unit males age male sec_1 females females age bargaining unit males females non-bargaining unit males females bargaining unit age males - females non-bargaining unit females males bargaining unit age males females non-bargaining unit males females the above tables will be used for all bargaining and non-bargaining unit male and female participants respectively in the plans comprising the permissive group the above rates were developed based on an experience study period from date through date and were calculated using the karup-king method the base_year for the resulting tables is the internal_revenue_service has reviewed the substitute mortality rates and supporting information and has determined that based on the information submitted the rates sufficiently reflect the mortality experience of the applicable populations within the plan your attention is called to sec_430 of the code sec_303 of erisa and sec_1_430_h_3_-2 of the regulations which describe the circumstances in which the use of the substitute mortality_table will terminate before the end of the 10-year period described above in general the substitute mortality tables can no longer be used as of the earliest of the plan_year in which the plan fails to satisfy the requirements of paragraph h -2 c of the regulations requiring that the groups for which substitute mortality tables is used must have credible mortality experience the pian year in which the plan fails to satisfy the requirements of paragraph the second plan_year following the plan_year in which there is a significant h -2 d of the regulations regarding the requirement that other plans and populations in the controlled_group must use substitute mortality tables unless it can be demonstrated that they do not have credible mortality experience change in individuals covered by the plan as described in paragraph h -2 d ii of the regulations generally applicable when there is a change_of or more in the number of individuals in the population for which the substitute mortality_table is used the plan_year following the plan_year in which a substitute mortality_table used for a plan population is no longer accurately predictive of future mortality of that population as determined by the commissioner or as certified by the plan's actuary to the satisfaction of the commissioner and the date specified in guidance published in the internal_revenue_bulletin pursuant to a replacement of mortality tables specified under sec_430 and sec_1_430_h_3_-1 other than annual updates to the static mortality tables issued pursuant to h -1 a of the regulations this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent when filing form_5500 for the plan years for which the substitute mortality tables are used please note the information that is required to be attached to schedule sb actuarial information in accordance with the instructions to that form we have sent a copy of this letter to your authorized representative pursuant to a power_of_attorney on file in this office and to the ee sincerely and to the ' if you require further assistance in this matter please contact david m ziegler manager employee_plans actuarial group


internal_revenue_service department of the treasury washington dc index number number release date person to contact telephone number refer reply to cc dom p si - plr-122696-98 date date x a b d1 year year dear sir madam this letter responds to a letter dated date and subsequent correspondence written on behalf of x by its authorized representative requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 a and b the sole shareholders of x represent that they intended that x elect to be an s_corporation beginning year its first taxable_year a and b also represent that they mailed a form_2553 election by a small_business_corporation for x’s year taxable_year however the service has no record of a form_2553 for x a and b filed a form_1120s u s income_tax return for an s_corporation for x’s year taxable_year x closed its business in year and is no longer in existence a and b agree to amend their tax returns to be consistent with the treatment of x as an s_corporation sec_1362 of the code provides that if -- a an election under sec_1362 is made for any taxable_year after the monterey café inc date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x's first taxable_year accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective for its year taxable_year within days following the date of this letter then such election will be treated as timely made for x's year taxable_year a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was a small_business_corporation under sec_1361 of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely yours branch h grace kim assistant to the chief office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes monterey café inc


t c memo united_states tax_court kenneth o and april c butler petitioners v commissioner of internal revenue respondent docket no filed date kenneth o butler pro_se james r robb and joan s dennett for respondent memorandum findings_of_fact and opinion parr judge by separate notices of deficiency respondent determined deficiencies in and additions to petitioners' federal income taxes as follows kenneth o butler addition_to_tax year deficiency sec_6651 a dollar_figure dollar_figure big_number big_number big_number april c butler addition_to_tax year deficiency sec_6651 a dollar_figure dollar_figure big_number big_number big_number all section references are to the internal_revenue_code in effect for the taxable years in issue and all rule references are to the tax_court rules_of_practice and procedure unless otherwise indicated references to petitioner are to kenneth o butler the issues for decision are whether for the years in issue petitioners had unreported income we hold they did whether for the years in issue petitioners are liable for an addition_to_tax pursuant to sec_6651 we hold they are some of the facts have been stipulated and are so found the stipulated facts and the accompanying exhibits are incorporated herein by this reference at the time the petition in this case was filed petitioners resided in lubbock texas findings_of_fact petitioners did not file federal_income_tax returns for the years in issue petitioner is retired from the u s navy and currently works as a federal protection officer at the federal building in lubbock texas respondent based the determinations in this case on information received from third-party payors in addition petitioners have stipulated amounts of income that they received for the years in issue in the form of wages pension income nonemployee compensation and interest opinion the commissioner's determinations are presumptively correct and the taxpayer bears the burden of proving otherwise see rule a 290_us_111 petitioners do not challenge the facts on which respondent's determinations are based nor the calculation of tax instead petitioners argue that filing federal_income_tax returns violates their rights under the first fourth and fifth amendments to the u s constitution we now address their contentions in turn petitioners argue that filing federal_income_tax returns violates their right to free speech under the first amendment to the u s constitution noncompliance with the tax law is not protected by the first amendment see 775_f2d_1292 5th cir see also 53_f3d_799 7th cir affg 102_tc_137 845_f2d_794 8th cir 817_f2d_1400 9th cir 781_f2d_1043 4th cir 781_f2d_53 6th cir bhicher v united_states 774_f2d_27 lst cir 766_f2d_1288 9th cir 753_f2d_1208 n 3d cir 750_f2d_1101 lst cir 472_f2d_850 3d cir petitioner also testified that he is a born again christian while we accept that petitioner is sincere and dedicated to his religious beliefs it is well established that religious or moral objections grounded on the first amendment do not relieve petitioners from payment of any portion of their federal_income_tax the supreme court has held because the broad public interest in maintaining a sound tax system is of such a high order religious belief in conflict with the payment of taxes affords no basis for resisting the tax 455_us_252 see also 66_tc_367 affd without published opinion 566_f2d_1168 3d cir 65_tc_255 60_tc_942 35_tc_913 petitioners next mention that their fourth_amendment rights would be violated by filing federal_income_tax returns petitioners have not shown that the fourth_amendment has any relevance to these facts and we perceive no basis upon which it could finally petitioners argue that their fifth_amendment rights would be violated by filing federal_income_tax returns the fifth_amendment privilege_against self-incrimination protects an individual from being compelled to disclose information that could reasonably be expected to furnish evidence needed to prosecute the claimant for a crime see 406_us_441 341_us_479 the requirements that petitioners shall prepare and file their tax returns do not violate the fifth_amendment privilege_against self-incrimination see 274_us_259 457_f2d_369 9th cir affg per curiam 54_tc_1642 the fifth_amendment privilege applies when the possibility of self-incrimination is a real danger not a remote and speculative possibility see 406_us_472 797_f2d_936 11th cir 753_f2d_33 6th cir 742_f2d_171 5th cir 722_f2d_193 5th cir affg tcmemo_1983_20 712_f2d_195 5th cir affg per curiam tcmemo_1983_12 696_f2d_1234 9th cir affg 76_tc_1027 680_f2d_1268 9th cir at trial respondent stated that petitioner was not under criminal tax investigation accordingly petitioners’ claim of fifth_amendment protection is misplaced because they merely claimed the privilege without showing a danger of self- incrimination petitioners admit that for taxable years and they resided in texas a community_property_state for taxable years and petitioner testified that he and his wife lived and worked in washington state and oregon petitioners' time living in washington state is irrelevant to respondent's determinations as it is alsoa community_property_state in any event petitioners have not provided any evidence as to where and when they lived in oregon nor how that would affect their income_tax_liability for the years in issue accordingly respondent's deficiency determinations are sustained in addition respondent determined additions to tax under sec_665l a for failure_to_file timely returns for the years at issue sec_6651 provides for an addition_to_tax for failure_to_file a timely return the addition_to_tax is equal to percent of the amount_required_to_be_shown_as_tax on the return with an additional percent for each additional month or fraction thereof during which the failure_to_file continues not exceeding percent in the aggregate a taxpayer may avoid the addition_to_tax by establishing that the failure_to_file a timely return was due to reasonable_cause and not willful neglect see rule a 469_us_241 petitioners have not established that their failure_to_file timely returns was due to a reasonable_cause accordingly we sustain respondent's determinations on this issue for the foregoing reasons decision will be entered under rule


internal_revenue_service number release date index number ------------------------------------------------------------ ------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------ id no ----------------- telephone number ---------- refer reply to cc psi plr-128564-09 date november re ------------------------------------------------------------------------------------------------------------ ----------------------------- legend trustors original trust trust trust d trust e trust f trust g trustee successor trustee a b c d e f g h i j k l m court court --------------------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- --------------------------- -------- --------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------------------------------------------------------ --------------------------------------------------------------------------------- ---------------------------- -------------- ----------------------------- ---------------------------- ------------------------------ --------------------------- ---------------------- -------------------------- ------------------------ ----------------------------- ----------------------------- --------------------- ---------------------- ------------------------------ ------------------------- ----------------------------------------------------------- ------------------------------------------------------ plr-128564-09 settlement agreement state date date year year state statute state statute dear ---------------- -------------------------------------------------------------- ------------ --------------------------- ---------------- ------- ------- ----------------------------------------- ---------------------------------------------- this letter responds to your submission dated date requesting rulings on the income gift and generation-skipping_transfer_tax consequences of the proposed division of a_trust the facts submitted and the representations made are as follows on date in year which is prior to date trustors created an irrevocable_trust original trust for the benefit of the issue of a b and c ie their grandchildren and grandchildren’s issue a b and c are trustors’ children and are each referred to as the primary descendant on date pursuant to a settlement agreement court ordered original trust severed into three separate and equal trusts a_trust for the benefit of the issue of a a_trust for the benefit of the issue of b and a_trust for the benefit of the issue of c the trust created for the benefit of the issue of a_trust is the subject of this ruling date is prior to date trustee is the corporate trustee and currently the sole trustee of trust trust’s terms are identical to the terms of original trust except that where original trust refers to the issue of primary descendant each reference means solely the issue of a and the lineal_descendants of such issue the trustee of original trust received a ruling from the internal_revenue_service service concluding that the date division would not cause original trust or trust to lose its status as exempt from the generation-skipping_transfer_tax and that distributions from either trust would not be subject_to the generation-skipping_transfer_tax a has four children d e f and g and six grandchildren h i j k l and m trustors are deceased a is alive the pertinent terms of original trust and trust are as follows plr-128564-09 section ii requires the trustee to distribute trust income at least annually to the issue of the primary descendant provided however the trustee may accumulate trust income if it determines it is in the best interests of the beneficiaries after giving full consideration to the capital_gain throwback_rules contained in sec_669 of the internal_revenue_code as then in effect after the death of the primary descendant and all of his or her lineal_descendants the trustee must distribute income to trustors’ lineal_descendants in such proportions as determined by trustee in its sole discretion the trustee also has discretion to distribute principal to the primary decedent’s issue and upon the death of the primary descendant’s issue to the lineal_descendants of trustors pursuant to section iii trust unless terminated sooner will terminate immediately prior to the expiration of twenty-one years from and after the death of the last survivor of trustors and the issue of trustors’ parents living on date upon termination the trustee shall distribute the principal in equal proportions outright and free of trust to the persons then entitled to receive the net_income thereof or if no such persons exist then to trustor’s heirs section vi subsection b provides that trust is irrevocable and prohibits any portion of the trust principal or income to revert to trustors or trustors’ estates section vii subsection i provides that the corporate trustee may be removed by a majority vote of the individual trustees and the corporate trustee may resign by serving notice to a majority of the individual trustees if the corporate trustee ceases to be a trustee a successor corporate trustee must be named section vii subsection g states that trust is a contract under state law the assets of trust consist of cash marketable_securities a limited_partnership_interest and real_property when trust was created upon the division of original trust d e f and g requested trustee create four separate sub-accounts for each of the siblings and their respective descendants so that the assets other than the real_property could be separately managed accordingly since year except for the management of the real_property interests held by trust trustee has kept separate sub-accounts for each family line since trust’s inception in year a dispute arose among d e f and g regarding the administration of trust trustee petitioned court for instructions on whether state law authorizes trustee to divide trust to create a separate share for e and her lineal_descendants d f and g filed a complaint with court seeking to remove trustee as trustee of trust to end the litigation the parties entered into settlement agreement under the terms of settlement agreement trust will be divided into four separate trusts trust d a_trust for the benefit of d and her lineal_descendants trust e a_trust for the benefit of e and her lineal_descendants trust f a_trust for the benefit of f and her lineal_descendants and plr-128564-09 trust g a_trust for the benefit of g and his lineal_descendants collectively the separate trusts each separate trust has identical terms as trust except that where trust refers to the issue of the primary descendant and such issue’s lineal_descendants as beneficiaries such reference shall mean solely the particular family line for whom the separate trust is established each trust will receive a non-pro rata equal share of trust assets consisting of the assets held in that family member’s sub-account and one-fourth of all other assets except real_property not held in a sub-account trustee will partition the real_property pursuant to the parties’ agreement trust e will receive a fee simple interest that has an estimated value equal to one-fourth of the value of all of the real_property owned by trust and trusts d f and g will hold three-fourths of the value of all of the real_property owned by trust as tenants-in-common any outstanding line of credit from trustee’s institution will be satisfied by trust prior to the division any other debts of trust will be apportioned amongst separate trusts equally settlement agreement will be approved upon receipt of a favorable ruling from the service and the filing of an amended petition in court trustee will continue as trustee of trust e and successor trustee will serve as the corporate trustee and sole trustee of trusts d f and g state statute authorizes a trustee of a state trust to combine or divide a_trust provided that the trustee gives notice to the qualified beneficiaries and if the result does not impair rights of any beneficiary or adversely affect achievement of the purposes of the trust under state statute when distributing trust property or terminating or dividing a_trust a trustee has a power to make distributions in divided or undivided interests allocate particular assets in proportionate or disproportionate shares value the trust property for those purposes and adjust for resulting differences in valuation trustee represents that no additions have been made to the corpus of original trust or trust after date trustee successor trustee and the beneficiaries of trust d e f g h i j k l and m request the following rulings the proposed modification and division of trust into separate trusts constituting four separate and equal shares of trust the non-pro rata transfer of assets from trust to each such separate trust and the change_of trustees with respect to any such separate trust will not constitute an addition to or a modification of trust or any of the four separate trusts that would cause trust or any separate trust to lose wholly or partially its exempt status under sec_2601 and will not subject distributions from trust or any of the separate trusts to the generation-skipping_transfer_tax furthermore each plr-128564-09 separate trust will constitute a separate trust for purposes of determining the application of any generation-skipping_transfer_tax subsequent to the division of trust the proposed non-pro rata distribution of the assets of trust to the four separate trusts on an equal basis will not result in the realization of gain_or_loss to trust or to any separate trust or any beneficiary thereof under sec_61 or sec_1001 the proposed division of trust and non-pro rata distributions of assets to such separate trusts will not result in a transfer subject_to gift_tax under sec_2501 by trust or any of trust’s beneficiaries the basis of each asset received by each separate trust from trust will be the same as the basis which that asset maintained when held by the trust pursuant to sec_1015 the holding_period for each asset received by each separate trust from trust will include the same holding_period for that asset as held by trust according to sec_1223 each of the four separate trusts will constitute a separate trust for purposes of sec_643 ruling sec_2601 of the internal_revenue_code code imposes a tax on every generation- skipping transfer gst a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip under b a of the tax_reform_act_of_1986 and sec_26_2601-1 of the generation-skipping_transfer_tax regulations the gst tax provisions do not apply to any gst_trust as defined in sec_2652 that was irrevocable on date but only to the extent that the transfer is not made out of corpus added to the trust after date or out of income attributable to corpus so added sec_26_2601-1 provides rules for determining when a modification judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the gst tax under sec_26_2601-1 b or b will not cause the trust to lose its exempt status these rules are applicable only for purposes of determining whether an exempt trust retains its exempt status for gst tax purposes they do not apply in determining for example whether the transaction results in a gift subject_to gift_tax or may cause the trust to be included in the gross_estate of a beneficiary or may result in the realization of capital_gain for purposes of sec_1001 under sec_26_2601-1 a modification of the governing instrument of an exempt trust including a trustee distribution settlement or construction that does not satisfy paragraph b i a b or c by judicial reformation or nonjudicial reformation that plr-128564-09 is valid under applicable state law will not cause an exempt trust to be subject_to the provisions of chapter if the modification does not shift a beneficial_interest in the trust to any beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification and the modification does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided for in the original trust a modification of an exempt trust will result in a shift in beneficial_interest to a lower generation beneficiary if the modification can result in either an increase in the amount of a gst or the creation of a new gst a modification that is administrative in nature that only indirectly increases the amount transferred for example by lowering administrative costs or income taxes will not be considered to shift a beneficial_interest in the trust see sec_26 b i e example in this case original trust was irrevocable on date the service ruled that the division of original trust did not cause original trust or trust or distributions from either to be subject_to gst tax it has been represented that there have been no additions made to either original trust or trust after date in the instant case trustee has authority under state law to divide trust into separate trusts trustee has discretion to make non-pro rata distributions to the beneficiaries and trust provides for the resignation of trustees and appointment of successor trustees to end litigation the parties executed settlement agreement in which trust will be divided into separate trusts trusts d e f and g and assets will be allocated equally in a non-pro rata fashion to each separate trust further successor trustee will serve as trustee of trusts d f and g the division of trust into separate trusts will not shift a beneficial_interest in the separate trusts to any beneficiary who occupies a lower generation as defined in sec_2651 than the person who held the beneficial_interest prior to the division it will also not postpone or suspend the vesting absolute ownership or power of alienation of an interest in property for a period measured from the date of creation of the trust extending beyond the life of any issue of trustors in being at the date of creation of original trust plus a period of years accordingly based on the facts submitted and representations made we rule that the proposed modification and division of trust into separate trusts and the non-pro rata transfer of assets from trust to each such separate trust will not constitute an addition to or a modification of trust or any of the four separate trusts that would cause trust or any separate trust to lose wholly or partially its exempt status under sec_2601 and will not subject distributions from trust or any of the separate trusts to the gst tax the change_of corporate trustee for trusts d f and g is administrative in nature and is not considered to shift a beneficial_interest in trust accordingly based upon the facts submitted and the representations made we rule that the change_of corporate trustee will not constitute an addition to or a modification of trust or any of the separate trusts that would cause trust or any separate trust to lose wholly or partially its exempt status under sec_2601 and will not plr-128564-09 subject distributions from trust or any of the separate trusts to the gst tax furthermore based on the facts provided and the representations made we rule that the four separate trusts will constitute a separate trust for the purposes of determining the application of any gst tax subsequent to the division of trust ruling sec_61 defines gross_income as all income from whatever source derived under sec_61 gross_income includes g ains derived from dealings in property sec_1001 provides that the gain from the sale_or_other_disposition of property is the excess of the amount_realized over the adjusted_basis provided in sec_1011 for determining gain and the loss is the excess of the adjusted_basis provided in sec_1011 for determining loss over the amount_realized under sec_1001 the entire amount of gain_or_loss must be recognized except as otherwise provided sec_1_1001-1 of the income_tax regulations provides that except as otherwise provided in subtitle a of the code the gain_or_loss realized from the exchange of property for other_property differing materially either in_kind or in extent is treated as income or as loss sustained under sec_1_1001-1 the severance of a_trust occurring on or after date is not an exchange of property for other_property differing materially either in_kind or in extent if i an applicable_state_statute or the governing instrument authorizes or directs the trustee to sever the trust and ii any non-pro rata funding of the separate trusts resulting from the severance whether mandatory or in the discretion of the trustee is authorized by an applicable_state_statute or the governing instrument in the present case trust will be severed into four separate trusts on a non-pro rata basis the operating provisions of the separate trusts are the same as those of trust the proposed severance of trust is authorized under state law original trust and trust contain no provision contrary to the state law therefore the proposed severance is consistent with the criterion set forth in sec_1_1001-1 for an exchange of property for property not materially different in_kind or in extent under state law in terminating or dividing a_trust a trustee may make non-pro rata distributions in addition under the terms of original trust and trust the trustees are authorized to distribute trust principal or income on a non-pro rata basis the proposed non-pro rata severance of trust is authorized both under state law and under the terms of the trust accordingly the non-pro rata funding of separate trusts is consistent with the criterion set forth in sec_1_1001-1 for an exchange of property for property not materially different in_kind or in extent plr-128564-09 the severance of a_trust occurring on or after date is not an exchange of property for other_property differing materially in_kind or in extent if the severance satisfies the criteria set forth in sec_1_1001-1 the proposed severance of trust satisfies those criteria accordingly based on the facts provided and the representations made we rule that the severance does not constitute an exchange of property for other_property differing materially in_kind or in extent under sec_61 and sec_1001 ruling sec_2501 imposes a tax for each calendar_year on the transfer of property by gift during such calendar_year by an individual resident or nonresident sec_2511 provides that subject_to certain limitations the gift_tax applies whether the transfer is in trust or otherwise direct or indirect and whether the property transferred is real or personal tangible or intangible sec_2512 provides that if a gift is made in property the value thereof at the date of the gift will be considered the amount_of_the_gift sec_2512 states that where property is transferred for less than adequate_and_full_consideration in money or money’s worth the amount by which the value of the property exceeds the value of the consideration received shall be deemed a gift based on the facts submitted and the representations made the beneficial interests of the trust beneficiaries will not change as a result of the division of trust as described above accordingly based upon the facts provided and the representations made we rule that the division of trust into separate trusts will not cause trust or any beneficiary of trust to have made a taxable gift_for federal gift_tax purposes under sec_2501 ruling sec_1015 states that the basis in property acquired by a transfer in trust is the same as it would be in the hands of the grantor with adjustments for gain and loss recognized sec_1_1015-2 provides that in the case of property acquired after date by a transfer in trust other than a transfer in trust by gift bequest or devise the basis_of_property so acquired is the same as it would be in the hands of the grantor increased by the amount of gain or decreased in the amount of loss recognized to the grantor under the law applicable to the year in which the transfer was made sec_1_1015-2 applies the uniform basis principles in sec_1_1015-1 for determining basis_of_property where more than one person acquires an interest in property by transfer in trust plr-128564-09 under sec_1_1015-1 property acquired by gift has a single uniform basis although more than one person may acquire an interest in the property the uniform basis of the property remains fixed subject_to proper adjustment for items under sec_1016 and sec_1017 in this case neither sec_1001 nor sec_61 applies to the proposed transaction thus based upon the facts provided and the representations made we rule that the basis of each asset received by each separate trust will be the same as the basis of the assets in trust ruling under sec_1223 the taxpayer's holding_period for property however it is acquired includes the period for which the property was held by any other person if for the purpose of determining gain_or_loss from a sale_or_exchange the property has the same basis in whole or in part in his hands as it would have in the hands of the other person under sec_1015 the basis in each asset is the same in the hands of each separate trust as it is in the hands of trust accordingly based upon the facts provided and the representations made we rule that under sec_1223 the holding_period for each asset received by each separate trust from trust will include the period that the asset was held by trust ruling sec_643 provides that under regulations prescribed by the secretary two or more trusts shall be treated as one trust if such trusts have substantially the same grantor or grantors and substantially the same primary beneficiary or beneficiaries and the principal purpose of such trusts is the avoidance of the tax_imposed_by_chapter_1 of the code section b of the tax_reform_act_of_1986 provides that in the case of a_trust which was irrevocable on date sec_643 shall apply only to that portion of the trust which is attributable to a contribution to corpus after date sec_643 provides that in the case of any distribution_of_property other than cash to which an election under sec_643 applies i sec_643 does not apply ii gain_or_loss is recognized by the trust in the same manner as if such property has been sold to the distributee at its fair_market_value and iii the amount taken into account under sec_661 and sec_662 shall be the fair_market_value of such property sec_643 provides that an election under sec_643 applies to all distributions made by the trust during a taxable_year and is made on the return of the trust for such taxable_year plr-128564-09 sec_661 provides that in any taxable_year a deduction is allowed in computing the taxable_income of a_trust other than a_trust to which subpart b applies for the sum of the amount of income for such taxable_year required to be distributed currently and any other_amounts_properly_paid_or_credited_or_required_to_be_distributed for such taxable_year but such deduction shall not exceed the distributable_net_income dni of the estate_or_trust sec_1_661_a_-2 of the income_tax regulations provides that gain_or_loss is realized by the trust or estate or the other beneficiaries by reason of a distribution_of_property in_kind if the distribution is in satisfaction of a right to receive a distribution of a specific dollar amount of specific property other than that distributed or of income as defined under sec_643 and the applicable regulations if income is required to be distributed currently based on the facts and representations submitted we conclude that as long as the four resulting trusts created by the division of trust are each separately managed and administered they will be treated as separate trusts for federal_income_tax purposes based solely on the facts submitted and the representations made we conclude that the division will not be viewed as a distribution or termination under sec_661 nor as a distribution for purposes of sec_1_661_a_-2 and therefore will not result in the realization by trust or separate trusts or by any beneficiary of trust or separate trusts of any income gain_or_loss furthermore we conclude that trust’s distribution of assets to four separate trusts occurring as part of the proposed division will not cause trust or its beneficiaries to realize gain_or_loss provided that trust does not make an election under sec_643 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayers 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 your authorized representative the rulings contained in this letter are based upon information and representations submitted by the taxpayers 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 plr-128564-09 sincerely lorraine e gardner senior counsel branch passthroughs special industries enclosures copy for sec_6110 purposes


internal_revenue_service number release date index number ---------------------------------------- -------------------------------------------- --------------------------------- --------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------- id no ------------- telephone number --------------------- refer reply to cc psi b1 plr-137710-07 date april legend x ---------------------------------------- ------------------------ ------------------------------------------------------------------------- trust --------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ------------------------------ date -------------------------- date ----------------- date ---------------- year --------- dear ----------------- this letter responds to a letter dated date submitted on behalf of x requesting rulings related to the proposed transfer of x’s property to an entity exempt from tax facts x represents that x is a corporation that was formed on date under the laws of state x is engaged in the business of providing burial services to the public on a parcel of real_property owned by x x also owns certain buildings and equipment located on the parcel that are used in the provision of the burial services the parcel buildings and equipment are hereafter referred to as the cemetery property x also represents that plr-137710-07 the cemetery property is approaching its burial capacity as such x no longer markets burial lots to the public trust is a_trust that was formed by x on date x is the trustee of trust trust was created to ensure sufficient funding for the maintenance and upkeep of the cemetery property since the inception of trust x has periodically deposited certain sums with trust typically as plots were sold to the public throughout the years trust has distributed the amounts necessary to maintain the cemetery property to x amounts not distributed by trust have been invested by trust in a diversified portfolio of stocks bonds and other_securities x represents that it has treated trust as a separate trust since its formation that all amounts deposited with trust have been segregated from the other assets of x that distributions made from trust to x have been solely used to defray expenses_incurred in connection with the care and maintenance of the cemetery property and administrative expenses directly related to trust including investment management fees taxes and attorney fees that since year trust has filed trust tax returns and that such returns have reflected the gains and losses attributable to the trust and that at no time since the formation of trust has x included gains and losses from the trust on its corporate_income_tax returns recently x decided to divest itself from its burial services operations to accomplish this x proposes to transfer the cemetery property to a newly formed entity that will be exempt from tax under sec_501 of the internal_revenue_code the exempt cemetery_company the transfer described above is hereafter referred to as the proposed transfer the exempt cemetery_company will assume responsibility for maintaining the cemetery property and will not transfer any money or other consideration to x as part of the proposed transfer immediately following the proposed transfer x will resign as trustee of trust and an independent_trustee will be appointed effective date x made an election to be an s_corporation law and analysis sec_651 provides that in the case of any trust the terms of which provide that all of its income is required to be distributed currently and do not provide that any amounts are to be paid permanently set_aside or used for the purposes specified in sec_642 there shall be allowed as a deduction in computing the taxable_income of the trust the amount of the income for the taxable_year which is required to be distributed currently sec_661 provides that in any taxable_year a deduction is allowed in computing the taxable_income of a_trust other than a_trust to which subpart b applies plr-137710-07 for the sum of the amount of income for such taxable_year required to be distributed currently and any other_amounts_properly_paid_or_credited_or_required_to_be_distributed for such taxable_year but such deduction shall not exceed the distributable_net_income dni of the estate_or_trust sec_1_661_a_-2 of the income_tax regulations provides that gain_or_loss is realized by the trust or estate or the other beneficiaries by reason of a distribution_of_property in_kind if the distribution is in satisfaction of a right to receive a distribution of a specific dollar amount of specific property other than that distributed or of income as defined under sec_643 and the applicable regulations if income is required to be distributed currently sec_662 provides that there shall be included in the gross_income of a beneficiary to whom an amount specified in sec_661 is paid credited or required to be distributed by an estate_or_trust described in sec_661 the sum of the following amounts the amount of income_for_the_taxable_year_required_to_be_distributed_currently to such beneficiary whether distributed or not and all other_amounts properly paid credited or required to be distributed to such beneficiary for the taxable_year sec_642 provides in general that when the specific requirements of the section are met a cemetery perpetual_care_fund shall treat certain amounts distributed for the care and maintenance of gravesites as distributions solely for purposes of sec_651 and sec_661 with respect to the enactment of sec_642 the senate_finance_committee report states that since the taxable cemetery_company is not the beneficiary of the perpetual care trust fund the bill does not change the treatment of the receipt of such amounts by the taxable cemetery_company consequently such an amount is to continue to be taxable to the cemetery_company as ordinary_income sec_61 and is not to be treated as a_trust distribution in the hands of the cemetery_company sec_652 and sec_662 s rep no 94th cong 2d sess 1976_2_cb_553 in 282_f2d_225 5th cir the court held that a cemetery corporation was not a beneficiary of a cemetery perpetual care trust and that interest_income distributed to the corporation by the trust for the maintenance of cemetery grounds is treated as compensation_for services in the hands of the corporation under the trust documents and the authorities described above x is not a beneficiary of trust trust will continue to have the same grantor and the interests of the trust beneficiaries will not differ compared to their interests before the proposed transfer therefore the proposed transfer will not result in a distribution from or termination of trust under sec_661 and will not result in the realization by trust x or any beneficiary of trust of any income gain_or_loss attributable to trust plr-137710-07 x elected to be an s_corporation effective date at which time it owned the cemetery property thus to the extent the proposed transfer results in recognized_built-in_gain under sec_1374 attributable to the cemetery property the provisions of sec_1374 and the regulations thereunder shall apply except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code specifically no opinion is expressed on any other tax consequences arising from the transfer of the cemetery property to the exempt cemetery_company this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely audrey w ellis audrey w ellis senior counsel branch passthroughs special industries enclosures copy of this letter copy for sec_6110


apr 99g internal_revenue_service of ec ete4- be f499 national_office technical_advice_memorandum district_director taxpayer’s name taxpayer's address taxpayer's identification_number years involved conference legend taxpayer issue whether taxpayer may claim the credit under sec_45b of the code with respect to all tips received by its employees or is the credit limited to tips received in connection with its unrelated business activity facts taxpayer is a social_club exempt under sec_501 of it operates a country club with a private golf course the code and related amenities taxpayer has a large clubhouse where food and beverages are served to members and their guests paid_by the hour and also receive tips to the workers and are reported on taxpayer’s employment_tax returns fica and medicare_tax is also paid on the reported tips waitresses and busboys are the tips are allocated as part of the country club operation ql a taxpayer allows its members to sponsor private parties the income from these parties is reported as nonmember income on form 990-t exempt_organization business income_tax return has filed amended forms 990-t for fiscal years - to claim credit under sec_45b of the code for employer social_security and medicare taxes paid on employee tips calculated the credit based on all tips received by its employees rather than calculating the credit only on the tips received with respect to its unrelated business activity was carried back to the earlier years the excess_credit taxpayer taxpayer law and analysis sec_45b of the code describes a business_tax_credit allowable under sec_38 for the employer portion of fica tax paid on employee tips a sec_45b defines the credit in terms of the excess_employer_social_security_tax paid_or_incurred by the taxpayer sec_45b defines excess_employer_social_security_tax as any_tax paid_by an employer under sec_3111 with respect to tips received by an employee during any month to the extent those tips employee under sec_3121 tips are reported under sec_6053 and by which wages excluding tips paid_by the employer to the employee during that month are less than the total amount that would be payable with respect to that employment at the minimum wage rate applicable to the individual under section a of the fair labor standards act of determined without regard to sec_3 are deemed to have been paid_by the employer to an without regard to whether the b exceed the amount of that act sec_45b limits the tips that can be taken into account for purposes of sec_45b to those tips received from customers in connection with the providing delivering or serving of food or beverages for consumption if the tipping of employees delivering or serving food or beverages by customers is customary sec_45b disallows any deduction for any amount taken into account in determining the credit under sec_45b sec_45b allows a taxpayer to elect not for any taxable_year to claim the credit the sec_45b credit has the effect of limiting the employer's employment_tax liability to the amount that would be a due if the employee received only the minimum wage no matter how much the employee actually earned record and individual income_tax_liability are unaffected the employee’s earnings taxpayer has paid fica_taxes on all tips earned by its these tips meet the requirements of section sec_45b does not prohibit tax-exempt employees 45b b organizations from claiming the credit nor does it limit the credit the credit to fica_taxes associated with an unrelated business activity therefore taxpayer is allowed to calculate the sec_45b credit on the basis of all tips received by its employees not just the tips received in the unrelated business activity conclusion the credit provided under sec_45b of the code is an allowable credit against unrelated_business_income_tax the tax_credit is not limited to the taxes associated with the unrelated_trade_or_business activity respect to all tips received by taxpayer’s employees the credit may be claimed with igt


department of the treasury i n t e r n a l r e v e n u e s e r v i c e washington d c date cc ita b04 conex-158088-04 office_of_chief_counsel number info release date uil ----------------------------------------------- ----------------------------------------- -------------------------------- attention ------------------ dear ----------------- this letter is in response to your inquiry to ------------------- dated date on behalf of your constituents in ------------------------- homeowners in ----------- asked if they must include in income payments they receive from a corporation as reimbursement for the reduced market_value of their homes due to chemical contamination and if so how they should report these payments on their federal_income_tax returns in general payments from the corporation are not income to individual homeowners but represent a return_of_capital to the extent the recovery does not exceed a homeowner’s basis in the damaged property homeowners must therefore reduce their individual bases in the damaged property by the amount of the payment if however the recovery exceeds a homeowner’s basis in the damaged property the law considers any excess capital_gain taxpayers may elect to defer gain they receive for the partial destruction of property if they purchase other_property similar_or_related_in_service_or_use to the converted property within a specified period and meet the other requirements of sec_1033 of the internal_revenue_code if taxpayers make this election they recognize gain only to the extent that the amount_realized exceeds the cost of the replacement_property the irs has held that damage from chemical contamination that renders property unfit for its intended use is a destruction for purposes of sec_1033 thus taxpayers are eligible to make this election if the chemical contamination caused a partial destruction of the property under sec_1033 in addition taxpayers may exclude up to dollar_figure of gain on the sale of their principal residences if they meet the requirements of sec_121 of the code if the chemical contamination results in a partial destruction of the principal_residence taxpayers may exclude gain that they realize on the damage payments under sec_121 conex-158088-04 i hope this information is helpful if you have any further questions please call ------------ ----------- identification_number ------------- at -------------------- sincerely robert m brown associate chief_counsel income_tax and accounting


significant index number - department of thetreasury sol1sloo sec_1 internal_revenue_service washington d c tax_exempt_and_government_entities_division dec re plan no ein plan taxpayer dear this letter constitutes notice that approval has been granted for your request for a 5-year automatic_extension for amortizing the unfunded liabilities as of for the above-named plan which are described in sec_431 and sec_431 of the internal_revenue_code code and sec_304 and sec_304 of the employee_retirement_income_security_act_of_1974 erisa this extension is effective with the plan_year beginning this extension applies to the eligible amortization charge bases identified in your application submission the extension of the amortization periods of the unfunded liabilities of the plan was granted in accordance with sec_431 of the code sec_431 of the code requires the secretary to extend the period of time required to amortize any unfunded_liability of a plan for a period of time not in excess of years if the plan submits an application meeting the criteria stated in sec_431 the plan has submitted the required information to meet the criteria in sec_431 including a certification from the plan’s actuary that i absent the extension under subparagraph a the plan would have an accumulated_funding_deficiency in the current plan_year or any of the succeeding plan years ii the plan_sponsor has adopted a plan to improve the plan's funding status seer iii the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended and iv the notice required under paragraph a has been provided we have sent a copy of this letter to the manager ep classification in ' and to the manager ep compliance unit in y this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited by others as precedent if you require further assistance in this matter please contact id at sincerely yours cc david m ziegler manager ep actuarial group


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date number info release date conex-109607-10 uil the honorable paul e kanjorski member u s house of representatives rayburn house office building washington dc dear congressman kanjorski this letter responds to your inquiry dated date on behalf of your constituent - ------------------------------ --------------asked whether he may claim the first-time_homebuyer credit for the residence he purchased after transferring to ------------------------ ------ in date before the purchase --------------had never owned a house however his wife owned a principal_residence and occupied it until moving into the house that --------------purchased generally sec_36 of the internal_revenue_code the code provides a refundable_credit to first-time homebuyers for the purchase of a principal_residence a first-time_homebuyer is defined as any individual who has not had an ownership_interest in a principal_residence at any time during the three-year period before the date of the purchase of the home if married both spouses must be first-time homebuyers as of the date of the purchase sec_36 of the code if either spouse owned a principal_residence during the three years prior to purchase then neither spouse qualifies for the first-time_homebuyer credit sec_36 of the code provides a credit for certain long-term homeowners who bought a new principal_residence and who owned and used their former principal_residence for five of the eight years preceding purchase of the new home if married both spouses must have owned and used the same residence -------------cannot take the first-time_homebuyer credit if his wife owned a principal_residence in the three-year period before the purchase of their current residence -------- -------------cannot take the long-term homeowner credit if he did not own a principal_residence prior to the purchase conex-109607-10 i hope this information is helpful if you have any further questions please contact ------ -------------------or -----------------at -------------------- sincerely george j blaine associate chief_counsel income_tax accounting


internal_revenue_service number release date index number ---------------------- --------------------------------------- ------------------------------------------- ---------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------- id no ----------------- telephone number --------------------- refer reply to cc psi b01 plr-123783-16 date date legend x ------------------------ --------------------------------------------------- state date ------------- ------------------ dear ----------------- this responds to a letter dated date submitted on behalf of x requesting that the service grant x an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as an association_taxable_as_a_corporation for federal tax purposes effective on date facts according to the information submitted x was formed under the laws of state on date x represents that it is an entity eligible to elect to be treated as an association_taxable_as_a_corporation for federal tax purposes x intended to be treated as an association_taxable_as_a_corporation for federal tax purposes effective date however due to inadvertence x failed to timely file form_8832 entity classification election to elect to be treated as an association_taxable_as_a_corporation for federal tax purposes law and analysis plr-123783-16 sec_301_7701-3 provides in part 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 an eligible_entity with at least two members can elect to be classified as either an association or a partnership and an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that except as provided in sec_301_7701-3 unless the entity elects otherwise a domestic eligible_entity is i a partnership if it has two or more members or ii disregarded as an entity separate from its owner if it has a single owner sec_301_7701-3 provides in part that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 entity classification election with the service_center designated on form_8832 sec_301_7701-3 provides that an election made under sec_301_7701-3 will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed if an election specifies an effective date more than days prior to the date on which the election is filed it will be effective days prior to the date it was filed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than 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 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 the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government plr-123783-16 conclusion based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center to elect to be treated as an association_taxable_as_a_corporation for federal tax purposes effective date a copy of this letter should be attached to the form_8832 filed for x except as specifically set forth above we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the code this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office we are sending a copy of this letter to x's authorized representatives sincerely associate chief_counsel passthroughs special industries by laura c fields laura c fields senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes


internal_revenue_service number release date index number -------------------------- ------------------------------------------------------ ----------------------------------- ----------------- ---------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------------- -------------------------------------------------- telephone number -------------------- refer reply to cc psi b02 plr-145685-13 date date legend x --------------------------------- -------------------------------- y ------------------------------------------ -------------------------------- a ------------------------------------------------ ------------------------- b ----------------------------------- trust1 ---------------------------------------------------------- ------------------------------------------------------------- ----------------------------------- trust2 --------------------------------------------------------- ------------------------------------------------------------- ----------------------------------- state -------- date1 -------------------- date2 --------------------- date3 ------------------------- plr-145685-13 date4 -------------------------- date5 ------------- n ------------ dear ------------- this responds to a letter dated date submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations for x to make an election under sec_754 of the internal_revenue_code the information submitted states that x was formed as a limited_partnership under the laws of state on date1 and is treated as a partnership for federal_income_tax purposes y a corporation is the managing general_partner of x on date2 a who had owned n of the outstanding partnership interests of x died on date3 b a’s surviving_spouse was appointed as executor of a’s estate pursuant to a’s will a portion of a’s estate was transferred to trust1 and the balance was transferred to trust2 b was appointed as trustee for trust1 and trust2 the transfers of a’s interest in x to trust1 and trust2 on account of a’s death are events for which x could have made a sec_754 election but for which it failed to timely do so according to the information submitted x’s tax advisor was unaware that x was eligible to make an election under sec_754 on account of a’s death and did not advise x to make the election nor did the tax advisor make the election when preparing x’s return for the tax_year ending on date4 x discovered the failure to make the sec_754 election on date5 after it had hired a new tax advisor sec_743 provides in pertinent part that in the case of a transfer of an interest in a partnership by sale_or_exchange or upon the death of a partner a partnership with respect to which an election provided in sec_754 is in effect will increase the adjusted_basis of the partnership property by the excess of the basis to the transferee partner of his interest in the partnership over his proportionate share of the adjusted_basis of the partnership property or decrease the adjusted_basis of the partnership property by the excess of the transferee partner’s proportionate share of the adjusted_basis of the partnership property over the basis of his interest in the partnership sec_743 further provides that such increase or decrease shall constitute an adjustment to the basis of partnership property with respect to the transferee partner only plr-145685-13 sec_743 provides that the allocation_of_basis among partnership properties where sec_743 is applicable shall be made in accordance with the rules provided in sec_755 sec_754 provides that if a partnership files an election in accordance with regulations prescribed by the secretary the basis of partnership property shall be adjusted in the case of a distribution_of_property in the manner provided in sec_734 and in the case of a transfer of a partnership_interest in the manner provided un sec_743 such an election shall apply with respect to all distributions of property by the partnership and to all transfers of interests in the partnership during the taxable_year with respect to which such election was filed and all subsequent taxable years sec_1_754-1 of the income_tax regulations provides that an election under sec_754 to adjust the basis of partnership property under sec_734 and sec_743 with respect to a distribution_of_property to a partner or a transfer of an interest in a partnership shall be made in a written_statement filed with the partnership return for the taxable_year during which the distribution or transfer occurs for the election to be valid the return must be filed not later than the time prescribed by sec_1 e including extensions thereof for filing the return for such taxable_year sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than 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 provides that the term regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to make an election under sec_754 effective for x’s taxable_year ending on date4 the election should be made in a written_statement filed with the appropriate service_center for association with x’s tax_return for the taxable_year ending on date4 a copy of this letter should be attached to the election plr-145685-13 if the statutory period of limitation on assessment or filing a claim_for_refund has expired for any year subject_to this grant of late relief and as a condition of this late relief x must adjust the basis_of_property to reflect any additional_depreciation that would have been allowable under sec_743 if the sec_754 election had been timely made any depreciation deduction allowable for an open_year is to be computed based upon the remaining useful_life and using property basis as adjusted by the greater of any depreciation deduction allowed_or_allowable in any prior year had the sec_754 election been timely made except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the internal_revenue_code and the regulations thereunder 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 the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the ruling_request it is subject_to verification on examination in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely associate chief_counsel passthroughs special industries by _____________________________ bradford r poston senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes