t c memo united_states tax_court david franklin day and ronda ching day petitioners v commissioner of internal revenue respondent docket no 1770-12l filed date david franklin day and ronda ching day pro sese jonathan jiro ono and peter r hochman for respondent memorandum opinion gale judge pursuant to sec_6330 petitioners seek review of respondent’s determination to proceed with a proposed levy to collect unpaid unless otherwise indicated section references are to the internal_revenue_code_of_1986 as amended and in effect at all relevant times rule references are to the tax_court rules_of_practice and procedure income_tax additions to tax and interest for their and taxable years background this case was submitted fully stipulated under rule the stipulated facts are incorporated herein by this reference petitioners resided in hawaii when the petition was filed the income_tax respondent seeks to collect by levy was assessed in accordance with joint federal_income_tax returns petitioners filed for and and a form_870 waiver_of_restrictions_on_assessment_and_collection of deficiency in tax and acceptance of overassessment they executed consenting to the assessment of additional tax for on date respondent issued petitioners a letter final notice_of_intent_to_levy and notice of your right to a hearing levy notice informing them of respondent’s intent to levy on their property to collect their unpaid income_tax liabilities for and and of their right to a collection_due_process cdp hearing this was not the first collection action respondent had taken with respect to those liabilities respondent had previously issued petitioners a letter with respect to their tax_liability on date the account transcript for that year does not reflect that petitioners requested a cdp hearing with respect thereto additionally on date respondent filed a notice_of_federal_tax_lien continued on date petitioners mailed to respondent a form request for a collection_due_process or equivalent_hearing concerning the proposed levy for and thereon petitioners indicated that they disputed the proposed levy because it contains penalties and interest accumulated for months while the irs underwent an extraordinary delay in the processing of re- audited tax_year sec_2001 and sec_2002 by letter dated date settlement officer lora davis so davis of the internal_revenue_service irs appeals_office informed petitioners that their cdp hearing request was timely for taxable_year sec_2002 and and she scheduled a telephone conference for date to discuss the proposed levy the letter indicated that petitioners should contact so davis within days if they preferred to have a face-to-face conference at the appeals_office closest to their residence it also informed them that they needed to submit continued nftl with respect to petitioners’ unpaid income_tax liabilities for taxable_year sec_2001 sec_2002 and petitioners requested and received a cdp hearing in response to the notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 respondent sent them shortly after filing the nftl the determination resulting from that hearing was reviewed and sustained by this court see day v commissioner t c dkt no 11559-09l date bench opinion petitioners were not allowed a cdp hearing for because they were previously issued a levy notice for that tax_liability see sec_6330 sec_301_6330-1 q a-b4 proced admin regs financial information and comply with all return filing_requirements if they wanted her to consider an alternative to collection on date petitioners faxed a letter to so davis informing her that they were not prepared for the next day’s telephone conference and requesting instead a face-to-face conference with an appeals officer in honolulu additionally they objected to the exclusion of taxable_year from the cdp hearing and reasserted their complaint regarding the irs’ delay in processing re- audits of their and returns so davis called mr day on date to discuss petitioners’ request for a face-to-face conference she told him that petitioners would be granted a face-to-face conference if they submitted a form 433-a collection information statement for wage earners and self-employed individuals and filed their then-delinquent tax_return by date mr day questioned why it was necessary for petitioners to submit financial information in order to have a face-to-face conference when the issue they raised related to interest charged with respect to their and liabilities so davis informed him that there were no settlement officers stationed in hawaii and because the interest on the liability was only a small component of the amount subject_to the proposed levy she needed financial information in order to justify flying somebody in for a face-to-face conference she also advised mr day that if petitioners wanted to raise the issue of interest attributable to irs delays then they needed to submit a form_843 claim_for_refund and request for abatement and if they did that they could raise the issue for both and petitioners did not submit any of the requested information file a tax_return or submit a form_843 on date so davis faxed and mailed petitioners a letter informing them that they would not be allowed a face-to-face conference and that a determination would therefore be made on the basis of the materials in the administrative file she again advised them to submit a form_843 if they wanted to raise the issue of interest charged on account of irs errors and or delays and requested that they submit by date any further information they wanted her to consider on date mr day responded by faxing a letter to so davis in which he again requested a face-to-face conference in honolulu and challenged the irs’ right to impose conditions on allowing petitioners such a conference he also insisted that taxable_year be included in the cdp hearing because the irs processing delays petitioners were complaining of occurred after the irs completed re-audits of both and and therefore the relevant issues were inextricably intertwined mr day did not include a form_843 or any other materials with the letter nor did he specify the processing delays of which he complained on date so davis issued petitioners a notice_of_determination concerning collection action s under sec_6320 and or sustaining the proposed levy the notice_of_determination advised petitioners that the irs’ compliance with the legal and administrative requirements for the levy was verified by analyzing transcripts of their account with respect to the issues that petitioners raised during the hearing the notice concluded that taxable_year was properly excluded from the hearing because petitioners were issued a levy notice for that year on date and that petitioners were denied a face- to-face conference because they did not provide the information requested to qualify for such a conference finally the notice concluded that the proposed levy balanced the need for the efficient collection_of_taxes with the legitimate concern that the collection action be no more intrusive than necessary petitioners timely filed a petition for review of the determination the copy of the notice_of_determination in the record was issued to mr day however the parties have stipulated that the notice was issued to both petitioners discussion i collection hearing procedure sec_6330 requires that written notice be given to a person upon whose property the secretary intends to levy to collect an unpaid tax taxpayer advising him of the amount of the unpaid tax and of his right to a hearing if a hearing is requested the hearing is to be conducted by an officer_or_employee of the irs appeals_office who has had no prior involvement with respect to the unpaid tax at issue sec_6330 cdp hearings are informal and do not require the appeals officer_or_employee and the taxpayer to hold a face-to-face conference sec_301_6330-1 q a-d6 proced admin regs see also 115_tc_329 cropper v commissioner tcmemo_2014_139 at a cdp hearing may but is not required to consist of a face-to-face conference one or more written or oral communications between appeals and the taxpayer or the taxpayer’s representative or some combination thereof sec_301_6330-1 q a-d6 proced admin regs at the hearing the appeals officer shall obtain verification that the requirements of any applicable law or administrative procedure have been met sec_6330 the taxpayer may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy including offers of collection alternatives sec_6330 the taxpayer may also challenge the existence or amount of the underlying tax_liability if the taxpayer did not receive a statutory_notice_of_deficiency for such liability or did not otherwise have an opportunity to dispute the liability sec_6330 at the conclusion of the hearing the appeals officer must determine whether and how to proceed with collection and shall take into account the verification that the requirements of any applicable law or administrative procedure have been met the relevant issues raised by the taxpayer including where permitted challenges to the underlying tax_liability and whether any proposed collection action balances the need for the efficient collection_of_taxes with the legitimate concern of the taxpayer that the collection action be no more intrusive than necessary sec_6330 sec_6330 grants this court jurisdiction to review an appeals officer’s determinations in connection with a sec_6330 hearing where as here the validity of the underlying tax_liability is not at issue we review the appeals officer’s administrative determinations for abuse_of_discretion 114_tc_604 114_tc_176 an abuse_of_discretion occurs when the exercise of discretion is arbitrary capricious or without sound basis in fact or law 135_tc_344 112_tc_19 ii petitioners’ arguments petitioners raise three challenges to so davis’ determination to sustain the proposed levy they contend that so davis abused her discretion by excluding taxable_year from the cdp hearing failing to make a determination with respect to their interest abatement claim and denying their request for a face- to-face conference we will address each of these contentions in turn a taxable_year was properly excluded from the cdp hearing a taxpayer is entitled to only one hearing under sec_6330 with respect to the taxable_period related to an amount of unpaid tax for which a levy notice has been issued sec_6330 although the irs may issue more than one levy notice to the taxpayer regarding such tax period and unpaid tax a hearing is available only if requested by the taxpayer during the 30-day period after the first levy notice is issued sec_301_6330-1 q a-b2 q a-b4 proced admin regs see also 123_tc_1 aff’d 412_f3d_819 7th cir petitioners were first issued a levy notice with respect to their unpaid income_tax for on date therefore their date request for a cdp hearing was untimely for even though it was made less than days after the irs issued them a subsequent levy notice for that unpaid tax accordingly we conclude that so davis was not authorized to offer petitioners a cdp hearing for and the court does not have jurisdiction as to that year see orum v commissioner t c pincite b petitioners did not properly raise the issue of interest abatement during the cdp hearing petitioners argue that so davis abused her discretion by failing to consider their interest abatement claim they ask us to remand their case to appeals with instructions to make a determination on whether they are entitled to interest abatement for and this court will not consider sec_6330 issues that were not properly raised at the cdp hearing 129_tc_107 cf 131_tc_197 holding that we will review sec_6330 issues without regard to whether those issues were raised at the hearing an issue is not properly raised at a cdp hearing if the taxpayer fails to present any evidence to appeals with respect to the issue after being given petitioners’ account transcript for shows that the irs has not assessed additional tax an accuracy-related_penalty or an addition_to_tax for failure to timely file since issuing petitioners the levy notice on date see sec_301_6330-1 q a-d1 proced admin regs additional assessments of accrued interest do not entitle a taxpayer to another cdp hearing id a reasonable opportunity to do so sec_301_6330-1 q a-f3 proced admin regs see also giamelli v commissioner t c pincite on their request for a cdp hearing petitioners indicated that they disputed interest charged for and on account of irs processing delays and they reiterated that general allegation throughout the hearing however they never made a formal claim for interest abatement even though so davis informed them on at least two occasions that they needed to submit a form_843 in order to raise the issue of interest abatement for her consideration and that if they did so they could raise the issue for and a form_843 solicits specific information from taxpayers regarding the period for which they are seeking interest abatement the amount of interest they want abated and the reasons they believe that interest abatement is appropriate more than seven weeks passed between the time so davis first advised petitioners to file a form_843 and the date she issued the notice_of_determination yet they did not submit a form_843 or provide her with any information supporting an interest abatement claim given these circumstances we conclude that petitioners did not properly raise the issue of interest abatement during the cdp hearing and the court may not consider it see sec_301 f q a-f3 proced admin regs see also brecht v commissioner tcmemo_2008_213 c petitioners were not entitled to a face-to-face conference petitioners argue that so davis abused her discretion by refusing to hold a face-to-face conference with them despite their repeated requests in petitioners’ view it was unreasonable for so davis to require them to submit financial information in order to have a face-to-face conference because they were not seeking a collection alternative and their financial information was not relevant to the interest claim they asserted therefore they contend it was an abuse of her discretion to deny them a face-to-face conference after they failed to provide her with that information we disagree as discussed supra petitioners not only failed to provide so davis with the financial information she requested they also did not provide her with any information regarding the interest they disputed indeed the only issues they raised before so davis were whether taxable_year should be part of the hearing and whether they were entitled to a face-to-face conference because petitioners raised no specific dispute with the proposed levy offered no alternative to collection and were not in filing compliance we conclude that so davis did not abuse her discretion in deciding not to fly an appeals employee from the mainland to honolulu to meet face-to-face with petitioners see toth v commissioner tcmemo_2010_227 iii conclusion so davis did not abuse her discretion in sustaining the proposed levy therefore we conclude and hold that respondent may proceed with the levy that is the subject of the notice_of_determination at issue to reflect the foregoing decision will be entered for respondent


internal_revenue_service number release date index number ------------------------ ---------------------------- --------------------------------- re --------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------------------------------ telephone number ---------------------- refer reply to cc psi plr-132844-12 date date legend decedent decedent’s estate spouse spouse’s estate date date trust b marital trust property dollar_figurex dollar_figurey accountant state statute dear -------------- -------------- ----------------------------------------------------- -------------------------------------------------------------- ------------------------------------------------------------ ---------------------------- ------------------------ --------------------------------------------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------- --------------------------------------------------------------------- ------------------------------------------------------------------------ --------------- --------------------------------------------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------ ------------ -------------- ----------------------------- ------------------------------------------------------------- this letter responds to your authorized representative’s letter dated date and subsequent correspondence requesting an extension of time under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to sever a_trust pursuant to sec_26_2654-1 of the generation-skipping_transfer_tax regulations and make an election under sec_2652 of the internal_revenue_code plr-132844-12 facts decedent died on date spouse was the executrix of decedent’s estate spouse died on date pursuant to decedent’s testamentary dispositions the residue of his estate was to be divided into two trusts trust b and marital trust during spouse’s life trust b was to be held for the benefit of spouse and decedent’s children and grandchildren on spouse’s death the trust b corpus was distributable to or for the children and grandchildren the value of the property distributable to trust b was dollar_figurex the marital trust was to be held for spouse during her life on her death the remaining marital trust property was to be distributed to trust b the value of decedent’s property passing to the marital trust was dollar_figurey spouse engaged accountant a certified_public_accountant to prepare the form_706 united_states estate and generation-skipping_transfer_tax return for decedent’s estate accountant prepared the timely-filed return in which the executrix made a qualified_terminable_interest_property qtip_election under sec_2056 with respect to the marital trust property however the return did not include a severance of the marital trust reverse_qtip_election under sec_2652 or allocation of decedent’s gst_exemption in an affidavit accountant states that he failed to advise spouse of the availability of a severance and reverse_qtip_election on spouse’s death the executors of spouse's estate discovered that the marital trust was not severed a reverse_qtip_election had not been made and decedent's gst_exemption had not been allocated on the form_706 filed for decedent’s estate the marital trust instrument does not specifically provide for a severance of the marital trust however state statute authorizes a trustee to establish two or more separate trusts provided that the division will not materially impair the accomplishment of the trust purposes or the interests of any beneficiary to date there have not been any taxable terminations or taxable_distributions from the marital trust requested rulings you have requested an extension of time under sec_301_9100-1 and sec_301_9100-3 to i sever the marital trust into two separate trusts on a fractional basis one to be a gst exempt trust and the other a gst nonexempt trust as permitted under sec_26_2654-1 and ii make a reverse_qtip_election plr-132844-12 under sec_2652 with respect to the proposed gst exempt trust severed from the marital trust and a ruling that the automatic allocation rules of sec_2632 apply to cause the unused portion of decedent's gst_exemption to be allocated to the gst exempt marital trust 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_2056 provides that for purposes of the tax imposed by sec_2001 the value of the taxable_estate is determined by deducting from the value of the gross_estate an amount equal to the value of any interest in property that passes or has passed_from_the_decedent to the surviving_spouse under sec_2056 no deduction shall be allowed for an interest passing to the surviving_spouse if on the lapse of time on the occurrence of an event or contingency or on the failure of an event or contingency to occur the interest will terminate or fail and a an interest in such property passes or has passed for less than an adequate_and_full_consideration in money_or_money's_worth from the decedent to any person other than the surviving_spouse or the estate of such spouse and b if by reason of such passing such person or his heirs or assigns may possess or enjoy any part of such property after such termination or failure of the interest so passing to the surviving_spouse sec_2056 provides that in the case of qtip the property shall be treated as passing to the surviving_spouse for purposes of sec_2056 and no part of the property shall be treated as passing to any person other than the surviving_spouse for purposes of sec_2056 sec_2056 defines qualified_terminable_interest_property as property which passes from the decedent in which the surviving_spouse has a qualifying_income_interest_for_life and to which an election under sec_2056 applies sec_2056 provides that an election under sec_2056 with respect to any property shall be made by the executor on the return of tax imposed by sec_2001 the election once made is irrevocable under sec_2044 any property in which the decedent had a qualifying_income_interest_for_life and for which a deduction was allowed under sec_2056 is includable in the decedent's gross_estate plr-132844-12 sec_2601 imposes a tax on every generation-skipping_transfer gst sec_2631 as in effect on date provided that for purposes of determining the gst tax every individual shall be allowed a gst_exemption of dollar_figure adjusted for inflation that may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that once an allocation of gst_exemption is made it is irrevocable under sec_2632 any allocation by an individual of gst_exemption may be made at any time on or before the date prescribed for filing the individual's estate_tax_return including extensions sec_2632 as in effect on date provided that any portion of an individual's gst_exemption which has not been allocated within the time prescribed by sec_2632 shall be deemed to be allocated as follows - a first to property which is the subject of a direct_skip occurring at the individual's death and b second to trusts with respect to which the individual is the transferor and from which a taxable_distribution or a taxable_termination might occur at or after the individual's death sec_26_2632-1 provides in relevant part that a decedent's unused gst_exemption is automatically allocated on the due_date for filing form_706 to the extent not otherwise allocated by the decedent's executor on or before that date unused exemption is allocated pro_rata subject_to the rules of sec_26_2642-2 on the basis of the value of the property as finally determined for estate_tax purposes chapter value first to direct skips treated as occurring at the transferor's death the balance if any of unused gst_exemption is allocated pro_rata subject_to the rules of sec_26_2642-2 on the basis of the chapter value of the nonexempt_portion of the trust property to trusts with respect to which a taxable_termination may occur or from which a taxable_distribution may be made however no automatic allocation of gst_exemption is made to a_trust that will have a new transferor with respect to the entire trust prior to the occurrence of any gst with respect to the trust under sec_2652 and sec_26_2652-1 the individual with respect to whom property was last subject_to federal estate or gift_tax is the transferor of that property for purposes of chapter sec_2652 provides that in the case of any trust with respect to which a deduction is allowed to the decedent under sec_2056 the estate of the decedent may elect to treat all of the property in the trust for purposes of the gst tax as if the qtip_election had not been made this election is referred to as the reverse_qtip_election the consequence of a reverse_qtip_election is that the decedent remains for gst tax purposes the transferor of the marital trust for which the election is made as a result the decedent's gst_exemption may be allocated to the marital trust plr-132844-12 sec_26_2652-2 provides that the reverse_qtip_election is to be made on the return on which the qtip_election is made sec_26_2654-1 provides in part that the severance of a_trust that is included in the transferor's gross_estate or created under the transferor's will into two or more trusts is recognized for purposes of chapter if the governing instrument does not require or otherwise direct severance but the trust is severed pursuant to discretionary authority granted either under the governing instrument or under local law and a the terms of the new trusts provide in the aggregate for the same succession of interests and beneficiaries as are provided in the original trust b the severance occurs or a reformation proceeding if required is commenced prior to the date prescribed for filing the federal estate_tax_return including extensions actually granted for the estate of the transferor and c the new trusts are severed on a fractional basis if severed on a fractional basis the separate trusts need not be funded with a pro_rata portion of each asset held by the undivided trust the trusts may be funded on a nonpro rata basis provided funding is based on either the fair_market_value of the assets on the date of funding or in a manner that fairly reflects the net appreciation or depreciation in the value of the assets measured from the valuation_date to the date of funding sec_301_9100-1 through provide standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election under sec_301_9100-1 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 months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-3 provides that requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 must be made under the rules of sec_301_9100-3 requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted plr-132844-12 reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election in this case the executrix of decedent's_estate made an election under sec_2056 to treat the marital trust assets as qualified_terminable_interest_property and the marital trust's assets are includible in spouse's gross_estate under sec_2044 accordingly spouse is the transferor of the marital trust assets for gst tax purposes and decedent’s estate is precluded from allocating decedent's gst_exemption to marital trust assets however if decedent's_estate is granted an extension of time pursuant to sec_26_2654-1 to sever the marital trust into two trusts a gst exempt trust and a gst nonexempt trust and to make a reverse_qtip_election under sec_2652 with respect to the gst exempt trust decedent will be treated as the transferor of the gst exempt trust assets decedent's gst_exemption will be automatically allocated to the gst exempt trust it has been represented that decedent has sufficient gst_exemption to allocate to the gst exempt trust the allocation will be effective as of the decedent's date of death based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 and sec_26_2654-1 have been satisfied accordingly decedent’s estate is granted days from the date of this letter to sever the marital trust into a gst exempt trust and a gst nonexempt trust and to file a supplemental form_706 united_states estate and generation-skipping_transfer_tax return on which the reverse_qtip_election is to be made for the gst exempt trust the automatic allocation rules will then apply to cause decedent’s unused gst_exemption to be allocated to the gst exempt trust the supplemental form_706 should be filed with the internal_revenue_service center cincinnati ohio a copy of this letter should be attached to the return furthermore except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically no opinion is expressed or implied regarding whether the marital trust property satisfies the requirements for qualified_terminable_interest_property under sec_2056 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative 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 plr-132844-12 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 associate chief_counsel passthroughs special industries leslie h finlow senior technician reviewer branch office of associate chief_counsel passthroughs special industries enclosures copy for sec_6110 purposes


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc corp b03-plr-145512-01 date date legend parent subsidiaries foreign parent company officer tax professional date date date date we respond to a letter dated date submitted on behalf of parent requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election the extension is being requested for parent and subsidiaries to make an election to file a consolidated federal_income_tax return with parent as the common parent under sec_1_1502-75 of the income_tax regulations election effective for their taxable_year ending on date additional information was received in a letter dated date the material information submitted for consideration is summarized below parent and subsidiaries are domestic corporations with tax years ending on january and who use the accrual_method of accounting on date foreign parent formed parent to hold its interest in subsidiaries parent issued its stock to foreign plr-145512-01 parent in exchange for all of the stock of subsidiaries the election was due on date but for various reasons the election was not timely filed on or about date after the due_date for the election company officer and tax professional discovered that the election was not timely filed the statute_of_limitations on assessment under sec_6501 of the internal_revenue_code has not expired for parent’s or subsidiaries’ taxable_year for which they want to make the election or for any taxable_year that would be affected by the election sec_1_1502-75 provides that a group which did not file a consolidated_return for the immediately preceding_taxable_year may file a consolidated_return in lieu of separate returns for the taxable_year provided that each corporation which has been a member of the group during any part of the taxable_year for which the consolidated_return is to be filed consents in the manner provided in sec_1_1502-75 to the regulations under sec_1502 if a group wishes to exercise its privilege in filing a consolidated_return it must be filed not later than the last day prescribed by law including extensions of time for filing the common parent’s return under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election under all subtitles of the code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 in this case the time for filing the election is fixed by the regulations sec_1 a therefore the commissioner has discretionary authority under sec_301_9100-1 to grant an extension of time for parent and subsidiaries to file the election provided parent and subsidiaries show they acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by parent company officer and tax professional explain the circumstances that resulted in the failure to timely file the election the information also establishes that parent and subsidiaries relied on qualified_tax professionals that the tax professionals failed to make or advise parent and subsidiaries to make the election and that the government will not be prejudiced if relief is granted sec_301_9100-3 based on the facts and information submitted including the representations made we conclude that parent and subsidiaries have shown they acted reasonably plr-145512-01 and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly an extension of time is granted under sec_301_9100-1 until days from the date on this letter for parent to file the election by filing a consolidated_return for the year ending on date a copy of this letter should be attached to the return the above extension of time is conditioned on the taxpayers’ parent’s and subsidiaries’ tax_liability if any being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayer’s tax_liability for the year’s involved a determination thereof will be made by the director’s office upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers’ liability is lower sec_301_9100-3 we express no opinion with respect to whether parent and subsidiaries qualify substantively to file a consolidated_return in addition we express no opinion as to the tax effects or consequences of filing the return or the election late under the provisions of any other section of the code or regulations or as to the tax treatment of any conditions existing at the time of or effects resulting from filing the return or the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-1 we relied on certain statements and representations made by parent company officer and tax professional however the director should verify all essential facts moreover notwithstanding that the extension to file the election is granted under sec_301_9100-1 any penalties and interest that would otherwise be applicable still apply this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file in this office copies of this letter are being sent to your authorized representatives sincerely yours ken cohen senior technician reviewer branch office of associate chief_counsel corporate


internal_revenue_service number release date index number -------------------------- -------------------------- -------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------------- ---------------------------------------------------- telephone number --------------------- refer reply to cc ita b04 plr-141357-11 date march dear ---------------- this is in reply to your request for a private_letter_ruling under sec_61 and sec_108 of the internal_revenue_code regarding a planned reduction in the principal balance of and waiver of accrued interest on a debt secured_by stock in a company that you purchased from your -------- while the internal_revenue_service strives to be responsive to taxpayers’ inquiries regarding the tax treatment of transactions there are certain areas in which we are precluded from issuing letter rulings in a telephone conversation on date with paul lundberg your authorized representative shareen pflanz and i and representatives of the office of associate chief_counsel financial instruments and products explained that we cannot issue the requested rulings because they involve either issues clearly and adequately addressed by statute regulations decisions of a court or other authority published in the internal_revenue_bulletin or determinations that are primarily factual see dollar_figure of revproc_2012_1 2012_1_irb_1 and sec_4 of revproc_2012_3 2012_1_irb_113 because we cannot issue the requested private_letter_ruling we are closing our file on this case we will return the user_fee you submitted in a separate correspondence although we cannot issue a private_letter_ruling we hope that the following general information explaining the rules regarding discharge_of_indebtedness income under sec_61 sec_108 and sec_1001 is helpful to you you specifically asked if a reduction of the principal_amount of an installment note and a waiver of accrued interest on the installment note should be treated as a repurchase of a debt_instrument under sec_1_61-12 of the income_tax regulations generating cancellation of debt income you also asked whether any cancellation_of_indebtedness_income may be excluded from your income under the insolvency_exception of sec_108 plr-141357-11 sec_61 of the code provides that gross_income includes income_from_discharge_of_indebtedness sec_1_61-12 provides that income from the discharge_of_indebtedness may result from the repurchase of a debt_instrument the repurchase of a debt_instrument can come from the exchange under sec_1001 of a newly issued debt_instrument for an existing debt_instrument see sec_1_61-12 sec_1001 and the regulations thereunder apply to the exchange of a debt_instrument for a modified debt_instrument gain_or_loss is realized under sec_1_1001-1 when a debt_instrument is exchanged for an instrument that is materially different either in_kind or in extent the amount_realized on this disposition does not include amounts that are or would be if realized and recognized income from the discharge_of_indebtedness under sec_61 if the disposition is of property that secures a recourse_liability see sec_1_1001-2 a significant modification to a debt_instrument results in an exchange of the debt_instrument for an instrument that differs materially either in_kind or in extent see sec_1_1001-3 sec_1_1001-3 provides the rule for when a change in yield on a debt_instrument that provides for only fixed payments is considered a significant modification several examples of significant modifications are provided in sec_1 g including the following example of when a change in yield results from a change in principal sec_1_1001-3 example i a debt_instrument issued at par has an original maturity of ten years and provides for the payment of dollar_figure at maturity with interest payments at the rate of percent payable at the end of each year at the end of the fifth year and after the annual payment of interest the issuer and holder agree to reduce the amount payable at maturity to dollar_figure the annual interest rate remains pincite percent but is payable on the reduced principal ii in applying the change in yield rule_of sec_1_1001-3 the yield of the instrument after the modification measured from the date that the parties agree to the modification to its final maturity_date is computed using the adjusted_issue_price of dollar_figure with four annual payments of dollar_figure and a payment of dollar_figure at maturity the yield on the instrument after the modification for purposes of determining if there has been a significant modification under sec_1_1001-3 i sec_4 percent thus the reduction in principal is a significant modification if a modification of a debt_instrument results in discharge_of_indebtedness income under sec_61 then the amount of income recognized is calculated in accordance with sec_108 under sec_108 for purposes of determining income_from_discharge_of_indebtedness if a debtor issues a debt_instrument in satisfaction of indebtedness the debtor is treated as having satisfied the indebtedness with an amount of money equal to the issue_price of the instrument plr-141357-11 sec_108 provides that discharge_of_indebtedness income will be excluded from gross_income if the discharge occurs when the taxpayer is insolvent the amount excluded from gross_income by reason of the insolvency exclusion may not exceed the amount by which the taxpayer is insolvent see sec_108 for purposes of the insolvency_exception the code defines insolvent as the excess of liabilities over the fair_market_value of assets see sec_108 in addition whether the taxpayer is insolvent and the amount of insolvency is determined on the basis of the taxpayer’s assets and liabilities immediately before the discharge sec_108 provides that if income from the discharge_of_indebtedness is excluded from gross_income under sec_108 the amount excluded from income is applied to reduce the tax_attributes of the taxpayer as provided in sec_108 sec_108 requires the reduction of tax_attributes to be made in the following order a net operating losses b general business credits c minimum_tax credits d capital_loss carryovers e basis_reduction f passive_activity_losses and credit carryovers and g foreign_tax_credit carryovers under sec_108 however a taxpayer subject_to certain limitations may elect to apply the reduction in tax_attributes to the reduction under sec_1017 of the basis of the taxpayer’s depreciable_property finally sec_108 provides that no income is realized from the discharge_of_indebtedness if payment of the liability would have given rise to a deduction we hope this general information is helpful to you this general information_letter does not constitute a ruling see dollar_figure of revproc_2012_1 if you have any questions please contact ---------------------or me at ----- ------------- 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 michael j montemurro chief branch office of associate chief_counsel income_tax accounting cc


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-142868-13 date date legend x ----------------------------------------------------- ----------------------------------- b ------------------------------------------------------ ------------------------------- trust ----------------------------------------------------- ------------------------------------------------------------------------- trust ----------------------------------------------------- ------------------------------------------------------------------------- date date state --------------------------- ---------------------- ------- dear -------------------- this responds to a letter dated date and subsequent correspondence submitted on x’s behalf by x’s authorized representative requesting relief under sec_1362 of the internal_revenue_code facts plr-142868-13 according to the information submitted x was incorporated under the laws of state on date and elected to be treated as an s_corporation effective date b_trust and trust were shareholders of x on date x represents that trust and trust were eligible to be an esbt within the meaning of sec_1361 however the trustee of trust and the trustee of trust did not make an election under sec_1361 to treat the trust as an esbt therefore trust and trust were not permissible shareholders and x’s s_corporation_election was invalid x represents that the circumstances resulting in a failure_to_file esbt elections for trust and trust were inadvertent and were not motivated by tax_avoidance or retroactive tax planning x further represents that since date x and its shareholders have filed returns consistent with x having a valid s election x represents that trust and trust have at all times met the requirements of an electing_small_business_trust lastly x and its shareholders have agreed to make such adjustments consistent with the treatment of x as an s_corporation as may be required by the service law and analysis sec_1361 provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 defines a small_business_corporation as a domestic_corporation which is not an ineligible_corporation and which does not a have more than shareholders b have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual c have a nonresident_alien as a shareholder and d have more than class of stock sec_1361 provides that for purposes of sec_1361 an electing_small_business_trust esbt may be a shareholder sec_1361 provides that an esbt means any trust if i such trust does not have as a beneficiary any person other than an i individual ii an estate iii an organization described in paragraph or of sec_170 or iv an organization described in sec_170 which holds a contingent_interest in such trust and is not a potential_current_beneficiary ii no interest in such trust was acquired by purchase and iii an election under this subsection applies to such trust sec_1361 provides that an esbt shall not include i any qualified_subchapter_s_trust as defined in sec_1361 if an election under sec_1361 applies to any corporation the stock of which is held by such trust ii any trust exempt from tax plr-142868-13 under subtitle a and iii any charitable_remainder_annuity_trust or charitable_remainder_unitrust as defined in sec_664 sec_1361 provides that an election under sec_1361 shall be made by the trustee any such election shall apply to the taxable_year of the trust for which made and all subsequent taxable years of such trust unless revoked with the consent of the secretary sec_1_1361-1 provides that the trustee of the trust must make the esbt election by signing and filing with the service_center where the s_corporation files its income_tax return a statement that meets the requirements of sec_1_1361-1 sec_1_1361-1 provides that the trustee of an esbt must file the esbt election within the time requirements prescribed in sec_1_1361-1 generally within the 16-day-and-2-month period beginning on the day that the stock is transferred to the trust sec_1362 provides in relevant part that if an election under sec_1362 by any corporation was not effective for the taxable_year for which made determined without regard to sec_1362 by reason of a failure to meet the requirements of sec_1361 the secretary determines that the circumstances resulting in such ineffectiveness were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in such ineffectiveness steps were taken so that the corporation for which the election was made is a small_business_corporation and the corporation for which the election was made and each person who was a shareholder in such corporation at any time during the period specified pursuant to sec_1362 agrees to make the adjustments consistent with the treatment of such corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in such ineffectiveness such corporation shall be treated as an s_corporation during the period specified by the secretary conclusion based solely on the facts submitted and the representations made we conclude that x’s s_corporation_election was ineffective on date because the trustee of trust and the trustee of trust failed to make a timely esbt election we further conclude that the ineffectiveness of x’s s_corporation_election was inadvertent within the meaning of sec_1362 therefore x will be treated as an s_corporation effective date and thereafter provided that x’s s_corporation_election was otherwise valid and was not otherwise terminated under sec_1362 this ruling is contingent on the trustee of trust and the trustee of trust filing an effective esbt election effective date pursuant to the procedures set forth in plr-142868-13 m with the appropriate service_center within days of the date of this letter a copy of this letter should be attached to the esbt election accordingly x’s shareholders in determining their respective income_tax liabilities must include their pro_rata share of the separately_stated and nonseparately computed items of x as provided in sec_1366 make any adjustments to stock basis as provided in sec_1367 and take into account distributions made by x as provided by sec_1368 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically no opinion is expressed or implied on whether x was or is otherwise eligible to be treated as an s_corporation or whether trust or trust was or is otherwise eligible to be treated as an esbt 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 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


t c memo united_states tax_court james curtis brewer petitioner v commissioner of internal revenue respondent docket no filed date frank agostino lawrence brody jairo g cano and chrystal loyer for petitioner robert w mopsick for respondent memorandum findings_of_fact and opinion wells judge respondent determined a deficiency of dollar_figure in petitioner’s federal_income_tax for his tax_year during trial petitioner unless otherwise indicated section references are to the internal revenue continued conceded that his state tax_refund of dollar_figure is taxable and should be included in his taxable_income after petitioner’s concession the only issue that we must decide is whether petitioner is entitled to the first-time_homebuyer credit fthbc pursuant to sec_36 of dollar_figure for his tax_year findings_of_fact some of the facts and certain exhibits have been stipulated the parties’ stipulations of facts are incorporated in this opinion by reference and are found accordingly petitioner resided in new jersey at the time he filed his petition for at least the past years petitioner has been employed as an internal revenue_officer by the internal_revenue_service irs in edison new jersey i petitioner’s residences on date petitioner purchased a residential condo with one bedroom and one bathroom in staten island new york staten island property petitioner lived at the staten island property until date when he moved in continued code of as amended and in effect for the year in issue and rule references are to the tax_court rules_of_practice and procedure we round all monetary amounts to the nearest dollar remaining adjustments set forth by respondent in the notice_of_deficiency depend on a rule computation which we order below and need not be addressed in this opinion with armenia lorenzo ms lorenzo his significant other at that time at her home in elizabeth new jersey elizabeth property petitioner moved to the elizabeth property because he felt it was more convenient for his commute to his workplace and for ms lorenzo’s commute to her school both of which were in new jersey after he moved out of the staten island property during date petitioner did not return to reside there petitioner obtained a mailbox at the ups store no in edison new jersey ups mailbox petitioner used the ups mailbox to receive all of his mail because he thought that he previously had been a victim of mail theft and credit card fraud also during date petitioner obtained a new jersey driver’s license which listed the ups mailbox as his address petitioner attended church in new jersey at or about the time petitioner moved out of the staten island property during date katherine brewer ms brewer petitioner’s sister who is a student at new york city technical college in brooklyn moved into the staten island property ms brewer continued to reside at the staten island property through but did not pay rent to petitioner at any time from to petitioner eventually married ms lorenzo on date but divorced her before trial accordingly we continue to refer to her as ms lorenzo during date petitioner temporarily moved to brooklyn to live with his mother in brooklyn new york brooklyn property because of relationship problems with ms lorenzo petitioner and ms lorenzo resolved their problems and three months after moving to the brooklyn property petitioner returned to the elizabeth property on date petitioner and ms lorenzo purchased a single- family home in avenel new jersey avenel property in connection with the purchase petitioner’s realtor completed a form hud-1 uniform settlement statement form hud-1 and listed petitioner’s staten island property as the address of the borrower as of the date of trial petitioner continued to own the avenel property jointly with ms lorenzo ii petitioner’s tax returns for his tax_year petitioner filed a new york state part-year resident tax_return and a new jersey state part-year resident tax_return because he worked in new jersey but resided at both the staten island property and the elizabeth property during for his tax_year petitioner filed a new york state part-year resident tax_return and a new jersey state part-year resident tax_return because he worked in new jersey but resided at both the brooklyn property and the elizabeth property during on his federal_income_tax return petitioner listed the staten island property as his address and claimed deductions for real_estate_taxes and mortgage interest in connection with the staten island property for his tax_year petitioner filed only a new jersey state resident tax_return because he resided only at the elizabeth property during on his federal_income_tax return petitioner listed the ups mailbox as his address and claimed deductions for real_estate_taxes and mortgage interest in connection with the staten island property for his tax_year petitioner filed only a new jersey state resident tax_return because he resided only at the elizabeth property during on date petitioner and ms lorenzo filed a joint federal_income_tax return for their tax_year on their joint federal_income_tax return petitioner and ms lorenzo listed the avenel property as their address and claimed an fthbc pursuant to sec_36 of dollar_figure in connection with the purchase of the avenel property on date respondent sent petitioner a notice_of_deficiency determining that petitioner owed a deficiency of dollar_figure for his tax_year upon disallowance of petitioner’s claim of an fthbc on date petitioner timely filed a petition in this court opinion generally the commissioner’s determination_of_a_deficiency is presumed correct and the taxpayer has the burden of proving it incorrect rule a 290_us_111 sec_7491 provides an exception that shifts the burden_of_proof to the commissioner as to any factual issue relevant to a taxpayer’s liability for tax if the taxpayer introduces credible_evidence with respect to that issue and the taxpayer satisfies certain other conditions including substantiation of any item and cooperation with the government’s requests for witnesses documents other information and meetings sec_7491 see also rule a because we decide the factual issues in the instant case on the preponderance_of_the_evidence the allocation of the burden_of_proof is immaterial see 131_tc_185 sec_36 allows a credit for a first-time_homebuyer of a principal_residence a first-time_homebuyer is any individual if such individual and if married such individual’s spouse had no present ownership_interest in a principal_residence during the three-year period ending on the date of the purchase of the principal_residence to which this section applies sec_36 petitioner is eligible as a first-time_homebuyer if he did not have an ownership_interest in a principal_residence after date and before date see 138_tc_51 for purposes of the fthbc sec_36 provides that the term principal_residence has the same meaning as in sec_121 whether a taxpayer uses a property as his or her principal_residence depends upon all the facts and circumstances see sec_1_121-1 income_tax regs ordinarily the taxpayer’s principal_residence is the property the taxpayer uses during most of the year see id sec_1_121-1 income_tax regs provides principal_residence in addition to the taxpayer’s use of the property relevant factors in determining a taxpayer’s principal_residence include but are not limited to-- i the taxpayer’s place of employment ii the principal_place_of_abode of the taxpayer’s family members iii the address listed on the taxpayer’s federal and state tax returns driver’s license automobile registration and voter registration card iv the taxpayer’s mailing address for bills and correspondence v the location of the taxpayer’s banks and vi the location of religious organizations and recreational_clubs with which the taxpayer is affiliated respondent contends that petitioner was not a first-time_homebuyer because after date petitioner held an ownership_interest in the staten island property and used the staten island property as his principal_residence petitioner does not dispute that he had an ownership_interest in the staten island property after date but contends that the staten island property ceased to be his principal_residence when he moved to the elizabeth property during date accordingly the issue that we must decide is whether the staten island property was petitioner’s principal_residence pursuant to sec_36 and sec_121 at any time after date petitioner testified that he moved out of the staten island property and into the elizabeth property during date according to petitioner he moved to the elizabeth property because inter alia he could spend more time with ms lorenzo and both he and ms lorenzo found their daily commutes to be more convenient petitioner testified that he attended church in new jersey and that he obtained a respondent contends that petitioner’s staten island property was closer to his workplace than his elizabeth property indeed petitioner does not claim otherwise however petitioner claims that the commute to his workplace was more convenient from the elizabeth property while respondent may be properly pointing to the distance of the commute respondent fails to consider inter alia petitioner’s travel time accessibility to freeways traffic patterns and mass transit options and limitations from each of the two properties on the basis of the record we conclude that respondent’s contention is at best inconclusive of the issue of the convenience of petitioner’s commute from the respective properties new jersey driver’s license at or about the time of his move to the elizabeth property according to petitioner after he moved to the elizabeth property he allowed his sister ms brewer who is a student to reside rent free at the staten island property which had only a single bedroom and a single bathroom petitioner testified that he never returned to reside at the staten island property and but for a brief stay with his mother at the brooklyn property did not reside again in the state of new york petitioner married ms lorenzo on date and they jointly purchased the avenel property on date we may accept a taxpayer’s unverified testimony where we find it to be credible and persuasive 137_tc_159 see also teymourian v commissioner tcmemo_2005_232 wl at we decide whether a witness is credible on the basis of objective facts the reasonableness of the testimony and the demeanor and consistency of statements respondent contends that petitioner’s driver’s license is irrelevant because it was issued on date which was four years after the three-year period specified in sec_36 and the address listed on the driver’s license is the ups mailbox we disagree petitioner credibly testified that he obtained the new jersey driver’s license at or about the time he moved to the elizabeth property and that the driver’s license he produced at trial was issued on date because he had recently renewed the license moreover petitioner offered a plausible explanation for_the_use_of the ups mailbox as his address on his driver’s license to wit petitioner was potentially the victim of mail theft and credit card fraud and he exercised caution by not displaying his home address made by the witness 140_us_417 338_f2d_602 9th cir aff’g 41_tc_593 89_tc_105 ndollar_figure we find petitioner to be reasonable and honest and his testimony to be credible and persuasive we find petitioner’s explanations of the inconsistencies argued by respondent to be plausible and his testimony to be consistent with the evidence offered accordingly on the basis of the record we conclude that the staten island property was not petitioner’s principal_residence pursuant to sec_36 at any time after date in addition to the evidence to which respondent points respondent generally objects to petitioner’s testimony as self-serving and contends that petitioner’s testimony is undermined by his failure to call ms brewer ms lorenzo or his mother to testify on his behalf as well as his failure to produce bills and other documents listing the elizabeth property as his address we disagree we generally do not draw an adverse inference from a taxpayer’s failure to call any specific witness where the witness is equally available to both parties and neither party calls that witness at trial dunlap v commissioner tcmemo_2012_126 we note that petitioner testified that he could be dismissed from his position as a revenue_officer with the irs if he gave untruthful testimony wl at dang v commissioner tcmemo_2002_117 wl at petitioner’s family members and ms lorenzo were equally available to both parties but respondent failed to call any of them to testify accordingly we refrain from drawing an adverse inference that their testimony would be unfavorable to petitioner regarding petitioner’s failure to offer as evidence bills or other documents listing petitioner’s address as the elizabeth property petitioner credibly testified that he had no such documents because he directed all of his mail to the ups mailbox in order to prevent mail theft and credit card fraud which we conclude to be a viable explanation in the light of petitioner’s testimony regarding his previous experience as a victim of those crimes respondent also contends that petitioner indicated that the staten island property was his principal_residence when he listed that property as his address on his form hud-1 and on his federal_income_tax return we do not agree the form hud-1 does not indicate petitioner’s principal_residence because it required him to list only the address of the borrower and not his home address moreover petitioner did not complete his form hud-1 instead petitioner’s ms brewer petitioner’s sister was unavailable for trial because of her new employment realtor completed it on petitioner’s behalf in connection with petitioner’s purchase of the avenel property regarding petitioner’s federal_income_tax return we find that petitioner’s use of the ups mailbox which clearly cannot be a home as his address on his federal_income_tax return indicates petitioner’s general belief that the addresses listed on his federal_income_tax returns are not necessarily indicative of his principal_residence accordingly we conclude that neither the address listed on the form hud-1 nor the one listed on petitioner’s federal_income_tax return is conclusive as to petitioner’s principal_residence we find that the best evidence of petitioner’s principal_residence is his state tax_return filings from to for his and tax years petitioner filed both new jersey and new york tax returns because he spent some portion of each of the two years residing in each of the two states for his and tax years petitioner filed only a new jersey tax_return because he resided solely at the elizabeth property and worked in new jersey accordingly petitioner’s state in petitioner resided at the staten island property in new york and the elizabeth property in new jersey in petitioner resided at the brooklyn property in new york and the elizabeth property in new jersey petitioner testified that he filed a part-year resident new york tax_return because of his brief three-month residence at the brooklyn property and not because of his ownership of the staten island property tax_return filings indicate to us that after date the staten island property ceased to be his principal_residence for purposes of the fthbc respondent also contends that on his and federal_income_tax returns petitioner claimed deductions for real_estate_taxes and mortgage interest with respect to the staten island property and that this fact should be considered when evaluating whether the staten island property was petitioner’s principal_residence we decline to do so a taxpayer is entitled to deduct any interest_paid or accrued on acquisition_indebtedness or home_equity_indebtedness with respect to a qualified_residence sec_163 pursuant to sec_163 the term qualified_residence means i the principal_residence within the meaning of sec_121 of the taxpayer and ii other residence of the taxpayer which is selected by the taxpayer for purposes of this subsection for the taxable_year and which is used by the taxpayer as a residence within the meaning of sec_280a accordingly taxpayers may claim deductions for mortgage interest on real_property other than a principal_residence similarly taxpayers may claim a respondent also contends that the deductions on petitioner’s and federal_income_tax returns evidence petitioner’s ownership_interest in the staten island property respondent’s contention lacks merit as petitioner does not deny his ongoing ownership_interest in the staten island property deduction pursuant to sec_164 for any s tate and local and foreign real_property_taxes paid_or_accrued during the taxable_year there is no requirement for the real_property to be the taxpayer’s principal_residence even though the deductibility of the mortgage interest and real_estate_taxes is not in issue we note without deciding that it is possible that petitioner may be entitled to such deductions with respect to the staten island property regardless of whether the staten island property was his principal_residence accordingly we do not consider those deductions as being relevant to the issue of whether the staten island property was petitioner’s principal_residence on the basis of the foregoing we conclude that the staten island property was not at any time after date petitioner’s principal_residence for purposes of sec_36 consequently pursuant to sec_36 petitioner qualifies as a first-time_homebuyer and is entitled to the fthbc for his tax_year respondent acknowledges the same as he concedes that a taxpayer may claim mortgage interest and real_estate tax deductions with respect to real_property which is not the taxpayer’s principal_residence and thus that claiming these deductions alone would not disqualify that taxpayer from being considered a first- time homebuyer under section c however as stated above petitioner has conceded that his state tax_refund of dollar_figure is taxable and should be included in his taxable_income in reaching these holdings we have considered all the parties’ arguments and to the extent not addressed herein we conclude that they are moot irrelevant or without merit to reflect the foregoing decision will be entered under rule