internal_revenue_service number release date index number 468b 468b ------------------------------- ---------------------- -------------------------------------- -------------------------------------------- ---------------------------------------- in re -------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------------- ---------------------------------------------------- telephone number --------------------- refer reply to cc corp bo1 plr-142024-10 date march company sub sub subsidiaries newco creditor creditor --------------------------------------------------------------------- --------------------------------------- ------------------------------- ----------------------- --------------------------------------------------------------------- ----------------------- ------------------------------- ----------------------- 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--------------------------------------------------------------------- ------------------------- -- -------------------------- -- ------------------------------------ -- --------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- ------------------------------------------------- consent decree trust b administrator trust c agreement trust c monitor trust c administrator wind down assets plr-142024-10 loan b loan b litigation trust d administrator trust d agreement trust d beneficiaries fund reorganization agreement -- --------------------------------------------------------------------- --------------------------------------------------------------------- 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--------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- ------------------------- -- plr-142024-10 state a state b date date date date date date date date date date date a b c d e f ------------- -- ------------- -- ----------------- -- ------------------ -- ------------------ -- ---------------------- -- ---------------------- -- ------------------------- -- ------------------------- -- --------------------------------------------------------------------- --------------------------------------------------------------------- ----------------------------------------------------- -- -------------------------- -- -------------------------- -- ---------------- -- ---- -- ------------- -- ----- -- --------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- ----------------------------------------------------------- -- --------------- -- ---- -- plr-142024-10 g dear ---------------- --------------- -- this letter responds to your date letter requesting that we supplement a private_letter_ruling dated date plr-130073-09 the prior ruling the information submitted for consideration in this supplemental request and additional information submitted in subsequent correspondence is summarized below capitalized terms not defined in this ruling have the meanings assigned to them in the prior ruling the material facts as described in the prior ruling and in an earlier supplemental ruling dated date plr-135355-09 the first supplemental ruling are unchanged and are supplemented as stated below representations set forth in the prior ruling as modified by the first supplemental ruling and as modified herein are affirmed and are supplemented by the additional representations set forth below the rulings contained in this letter are based on facts and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process summary of supplemental facts overview company is a state a corporation and the common parent of an affiliated_group_of_corporations that files a consolidated federal_income_tax return on a calendar_year basis on date company and the subsidiaries filed for bankruptcy protection under chapter chapter of title of the united_states_code in the bankruptcy court on date sub and sub each a subsidiary of company also filed voluntary petitions for relief under chapter in the bankruptcy court the chapter proceedings of company and the subsidiaries along with the chapter proceedings of each of sub and sub collectively are referred to as the bankruptcy cases and company the subsidiaries sub and sub collectively are referred to as the debtors in connection with company’s bankruptcy proceeding the exchange was effected on date pursuant to an order of the bankruptcy court the prior ruling concludes that the transfer by company of substantially_all its assets to newco a corporation newly organized for purposes of the exchange in exchange for newco stock and other consideration together with the subsequent liquidation of company for plr-142024-10 federal_income_tax purposes that will occur no later than date will qualify as a reorganization under sec_368 the reorganization following the exchange the stock_options warrants and bonds previously issued by company the remaining company securities have remained outstanding subject_to resolution pursuant to the bankruptcy cases in the exchange creditor creditor and creditor received newco stock and warrants newco securities but no holder of the remaining company securities received newco securities in exchange for such holder’s interest in company pending the proposed transaction defined below in addition company’s liabilities not previously paid or assumed in the exchange remain outstanding subject_to resolution pursuant to the bankruptcy cases remaining claimholders the claims against company include i loan a ii publicly-traded bonds iii certain other obligations iv executory_contract rejection claims v item-related claims vi environmental liability claims vii product_liability claims viii other general unsecured obligations ix certain tax claims and x other litigation claims certain governmental units have claims against company that have priority over unsecured claims some of these priority claims originate from taxing authorities that have claims resulting from company’s pre-petition and post-petition activities the priority tax claims similarly certain persons have claims against company related to the administration of the bankruptcy cases the preservation of the debtors’ bankruptcy estates and the operation of the debtors’ businesses the administrative claims other priority claimants that are not properly classified as holding either priority tax claims or administrative claims are referred to herein as holding priority non-tax claims priority tax claims administrative claims and priority non-tax claims are collectively referred to herein as the priority claims in addition to the priority claims some company claimholders have claims that are secured_by real_estate or other specified_assets of the debtors the secured claims company has been named as a defendant in personal injury wrongful death and other related actions seeking recovery for damages allegedly caused by the presence of or exposure to item or item-containing products manufactured distributed and sold by company personal injury actions against company include tort claims for bodily injury sickness disease medical monitoring or other personal injuries personal injury item claims the environmental claims against the debtors relate to civil claims or causes of action by the u s certain states or commonwealths and claimant alleging liabilities under the comprehensive environmental response compensation and liability act cercla u s c sec_9601 et seq and environmental laws relating to the debtors’ owned properties machinery equipment and related personal_property that are subject_to an order requiring performance of an environmental action collectively the environmental claims specifically the environmental claims relate primarily to soil and groundwater contamination at a portion of the debtors’ approximately a industrial plr-142024-10 property sites that were previously used by the debtors to develop manufacture and sell products these claims represent the estimated costs to perform response removal investigation sampling remediation reclamation closure post-closure corrective action engineering controls institutional controls deed restrictions oversight costs and operation monitoring and maintenance activities the environmental actions with respect to the properties defined below to facilitate their disposition and to allow for productive use by others on date representatives of company’s unsecured creditors the unsecured creditors’ committee commenced the loan b litigation in the bankruptcy court pursuant to the loan b litigation the unsecured creditors’ committee seeks to recover more than dollar_figureb in payments to the lenders with respect to loan b there is currently a dispute between creditor and creditor on the one hand and the holders of general unsecured claims defined below on the other regarding which parties are entitled to any proceeds resulting from the loan b litigation as a result the terms of the liquidation plan described below address the rights of the parties under any resolution of such dispute the liquidation plan and the amended liquidation plans on date the liquidation plan the liquidation plan and the accompanying bankruptcy disclosure statement were filed with the bankruptcy court on date an amended liquidation plan the amended liquidation plan and an amended disclosure statement the amended disclosure statement were filed with the bankruptcy court on date the amended disclosure statement was approved by the bankruptcy court as a result the amended liquidation plan was submitted to the holders of claims against the debtors for approval and was approved a second amended liquidation plan the second amended liquidation plan will be submitted to the bankruptcy court for approval all relevant terms of the amended liquidation plan and the second amended liquidation plan are described herein once approved the bankruptcy court will issue an order confirming the liquidation plan as amended the confirmation order which will become effective shortly thereafter the effective date as described further below the liquidation plan as amended provides for the formation of four trusts trust a_trust b_trust c and trust d collectively referred to as the trusts to facilitate the completion of the bankruptcy cases notwithstanding that certain claims may take an extended period to resolve trust a_trust a will be formed on or prior to the effective date pursuant to the terms of the trust a agreement the liquidation plan as amended and the confirmation order to resolve and satisfy allowed claims consisting of item-related personal injury tort claims against company and its affiliates trust a will be established by order of the bankruptcy court and will remain subject_to its continuing jurisdiction trust a will be plr-142024-10 funded on the effective date or as soon thereafter as is reasonably practicable with cash newco securities and interests in trust c and trust d the trust a assets trust a will assume all liability and responsibility for all personal injury item claims and the debtors will have no further financial or other liability therefor any cash or trust a assets remaining in trust a after all of the personal injury item claims have been satisfied will be paid or transferred to an unrelated charitable_organization exempt from federal_income_tax under sec_501 the liquidation plan as amended and the trust a agreement provide for the designation of the trust a administrator the trust a administrator will be given the power to administer the trust trust a will remain under_the_jurisdiction_of_the_bankruptcy_court trust b_trust b will be formed on or prior to the effective date pursuant to the trust b agreement the consent decree the liquidation plan as amended and the confirmation order collectively the agreements the liquidation plan as amended and the trust b agreement provide for the designation of the trust b administrator the trust b administrator will be given the power to administer the trust trust b will remain under_the_jurisdiction_of_the_bankruptcy_court trust b will hold all of the real_property machinery equipment and related personal_property owned by the debtors each a property collectively referred to as the properties trust b will be funded on the effective date or as soon as is reasonably practicable thereafter with cash the properties all leases of manufacturing facilities with newco certain environmental insurance policies and associated collateral and all contracts related to the environmental work to be continued by trust b the trust b assets pursuant to the agreements trust b will be established to resolve and satisfy allowed claims related to environmental remediation liabilities including the performance of environmental actions at the properties the obligations of company sub and sub to provide future services or payments in conjunction with the environmental claims will be extinguished upon the transfer of the trust b assets by company sub and sub into trust b_trust b will be divided into six dedicated accounts account will be funded with the estimated minimum amount of funding for environmental actions account will be funded with a minimum amount of reserve funding to cover shortfalls in account account will be funded with amounts to be set_aside for long-term operations monitoring and maintenance omm activities associated with environmental actions beginning c years after the effective date account account and account will be further subdivided into separate subaccounts for each property account will provide backup funding for any of the properties where account and account have been exhausted and are not available to fund environmental actions for a property or where account has been exhausted and is not available to fund the required long-term omm plr-142024-10 activities with respect to a property account will also provide funding with respect to additional properties for which no funding has been allocated within account account or account and unforeseeable conditions are discovered which require funding to undertake environmental actions account will be funded with amounts necessary for the administration of trust b including the orderly wind-down of the properties account will provide backup funding to cover shortfalls in account subject_to certain limitations as to use account and account may not be used to fund any environmental actions any amounts remaining in account account account or account following completion of all environmental actions will be transferred to the fund any funds remaining in account will be transferred to creditor and creditor any funds remaining in account will be transferred to creditor trust c trust c will be formed on or prior to the effective date pursuant to the terms of the trust c agreement the liquidation plan as amended and the confirmation order trust c will be established by order of the bankruptcy court the liquidation plan as amended and the trust c agreement provide for the designation of the trust c monitor and the trust c administrator the trust c monitor and the trust c administrator will be given the power to administer the trust trust c will remain under_the_jurisdiction_of_the_bankruptcy_court trust c will be formed primarily to resolve and satisfy certain general unsecured claims that are in dispute as of the date that trust c is funded with newco securities which will occur no later than date the trust c funding date these claims consist of all unsecured claims against the debtors other than priority claims personal injury item claims environmental claims and d the general unsecured claims trust c will effectuate the orderly satisfaction of disputed general unsecured claims that become allowed claims following the trust c funding date resolved general unsecured claims through the distribution of newco securities to the holders of such claims in accordance with the terms of the liquidation plan as amended approved by the bankruptcy court on the trust c funding date trust c will assume all liability and responsibility for all general unsecured claims against the debtors prior to the trust c funding date for administrative convenience trust c will facilitate resolution of disputed general unsecured claims and the distributions by company of newco securities to holders of allowed general unsecured claims on or shortly after the effective date trust c will be funded with dollar_figuree cash the initial cash the amount of initial cash that will be transferred to trust c will be the amount estimated to be necessary to fund administrative expenses of the trust and if necessary to fund the payment of disputed priority claims or secured claims on the trust c funding date trust c will be funded with newco securities that have not been previously distributed by company final newco securities and trust c will continue to hold the remaining cash available to fund administrative expenses the remaining cash collectively the trust c assets in accordance with the terms of trust c and plr-142024-10 the trust c agreement the newco securities that are not distributed prior to the trust c funding date to holders of allowed general unsecured claims are intended to be held for distribution as disputed general unsecured claims are resolved except that certain newco securities may be sold in certain limited circumstances the trust c assets will not include any of the trust a assets trust b assets or trust d assets defined below if there are disputed priority claims or disputed secured claims remaining by the date of company’s dissolution company will transfer the wind down assets to trust c by such date to fund resolution of such disputed claims the trust c administrator will be responsible for winding down the affairs of company including filing final tax returns for company the beneficiaries of trust c will be the holders of allowed and disputed general unsecured claims and trust a certain beneficial_ownership interests in trust c will be represented by units the trust c units that will be distributed to holders of allowed general unsecured claims including claims that are allowed as of the effective date the initial allowed claims claims that are allowed after the effective date but on or prior to the trust c funding date the interim allowed claims and resolved general unsecured claims these trust c units will represent the contingent right to receive on a pro_rata basis newco securities that are not required for satisfaction of disputed general unsecured claims shortly after the effective date the company will transfer to trust c newco securities to satisfy initial allowed claims trust c will then transfer to each holder of an initial allowed claim its pro_rata share of i newco securities and ii trust c units in accordance with the terms of trust c and the trust c agreement the initial trust c distribution the amount of newco securities to be distributed to holders of initial allowed claims from trust c will be determined as prescribed in the liquidation plan as amended and the trust c agreement it is anticipated that approximately f percent of the newco securities to be transferred to trust c will be transferred to holders of initial allowed claims the transfer of the newco securities to trust c followed shortly thereafter by the transfer of such securities to the holders of initial allowed claims in the initial trust c distribution rather than a direct transfer by company to such claimholders is for administrative convenience only as the interim allowed claims are periodically allowed after the effective date but on or prior to the trust c funding date company will transfer to trust c newco securities to satisfy such claims trust c will transfer to each holder of an interim allowed claim its pro_rata share of newco securities and trust c units and to the holders of initial allowed claims any additional newco securities in accordance with the terms of trust c and the trust c agreement the interim trust c distributions the amount of newco securities to be distributed in the interim trust c distributions from trust c will be determined as prescribed in the liquidation plan as amended and the trust c agreement the transfer of the newco securities to trust c followed shortly thereafter by the transfer of such securities in the interim trust c distributions rather plr-142024-10 than a direct transfer by company to such claimholders is for administrative convenience only trust c will make subsequent distributions of newco securities and trust c units to holders of disputed general unsecured claims as those claims are allowed to the extent that trust c owns property other than cash designated for administrative expenses after the resolution of all disputed general unsecured claims such property will be distributed to holders of allowed general unsecured claims any cash designated for administrative expenses that is not used for administrative expenses during the resolution of all disputed general unsecured claims will be distributed to creditor and creditor in respect of loan a_trust d trust d will be formed on or prior to the effective date pursuant to the terms of the trust d agreement and the liquidation plan as amended trust d will be established by order of the bankruptcy court for the sole purpose of liquidating and distributing the assets transferred to it with no objective to continue or engage in the conduct_of_a_trade_or_business on date trust d will be funded with cash a contingent right to receive the proceeds if any from the loan b litigation and certain other residual assets if any the trust d assets the liquidation plan as amended and the trust d agreement provide for the designation of the trust d administrator the trust d administrator will be given the power to administer the trust trust d will remain under_the_jurisdiction_of_the_bankruptcy_court the trust d administrator will make continuing efforts to dispose_of the trust d assets will make timely distributions and will not unduly prolong the duration of trust d if any proceeds of the loan b litigation are received by company prior to date and to the extent it is agreed or determined that creditor and creditor do not have an interest in such assets pursuant to loan a then holders of allowed general unsecured claims will receive from company their pro_rata share of such proceeds after set-aside for disputed general unsecured claims net of any expenses_incurred by the debtors company will make subsequent distributions of the net_proceeds of the loan b litigation to holders of disputed general unsecured claims whose claims are subsequently allowed prior to date on date the remaining proceeds if any from the loan b litigation will be transferred to trust d the liquidation plan as amended and the trust d agreement require the trust d administrator to make annual distributions of any amount of cash proceeds from the trust d assets to the trust d beneficiaries however trust d may retain such amounts as are reasonably necessary i to meet claims and contingent liabilities and ii to maintain the value of the trust d assets during liquidation plr-142024-10 the liquidation plan as amended and the trust d agreement provide that the investment powers of the trust d administrator generally will be limited to those reasonably necessary to maintain the value of the assets and to further the liquidating purpose of trust d the liquidation plan as amended and the trust d agreement provide that the trust d beneficiaries will be treated as the grantors and owners of their respective shares of the trust d assets the liquidation plan as amended and the trust d agreement further provide that all parties will value the trust d assets consistently and will use such values for all federal_income_tax purposes the liquidation plan as amended and the trust d agreement provide that the trust d administrator shall file tax returns for trust d treating trust d as a grantor_trust pursuant to sec_1_671-4 of the income_tax regulations the liquidation plan as amended and the trust d agreement provide that for federal_income_tax purposes all parties including the debtors the trust d administrator and the trust d beneficiaries will treat the transfer of the trust d assets to trust d as i a transfer of the trust d assets directly to the trust d beneficiaries in partial satisfaction of their claims and to the extent trust d assets are allocable to disputed claims to the reserve established to hold trust d assets allocable to or retained on account of disputed general unsecured claims the trust d claims reserve followed by ii the transfer by such persons to trust d of such assets other than assets allocable to the trust d claims reserve in exchange for the beneficial interests in trust d dissolution of company company will continue to exist as a corporate entity after creation of the trusts but will dissolve no later than date company may provide transition support services to trust b_trust c and trust d if requested until such time as these trusts can fully assume their own administration in connection with the wind-down of the debtors company will transfer to trust c an amount necessary to fund the final stages of the wind-down supplemental transactions following the confirmation of the liquidation plan as amended unless specified otherwise the following steps the proposed transaction will occur on the effective date or as soon as practicable thereafter i on or prior to the effective date company will form trust a_trust b_trust c and trust d plr-142024-10 ii company will satisfy allowed administrative claims priority tax claims priority non-tax claims and secured claims as provided in the liquidation plan as amended iii company will transfer the trust a assets to trust a on the effective date or as soon as is reasonably practicable thereafter in connection with this transfer the personal injury item claims will be assigned to and indefeasibly vested in trust a company’s transfer of the trust a assets will be in complete settlement and satisfaction of its liabilities for the personal injury item claims iv company sub and sub will transfer the trust b assets to trust b on the effective date or as soon as is reasonably practicable thereafter in connection with this transfer the environmental claims will be assigned to and indefeasibly vested in trust b the transfer of the trust b assets to trust b by company sub and sub will be in complete settlement and satisfaction of their liabilities for the environmental claims v company will transfer the initial cash to trust c on or shortly after the effective date vi on the trust c funding date company will transfer the final newco securities to trust c and trust c will continue to hold the remaining cash in connection with this transfer the general unsecured claims will be assigned to and indefeasibly vested in trust c company’s transfer of the trust c assets will be in complete settlement and satisfaction of company’s liabilities for general unsecured claims vii on date the debtors will transfer the trust d assets to trust d viii trust a will sell the newco securities previously transferred by company trust a will resolve outstanding personal injury item claims by transferring a portion of the proceeds from the sale of the newco securities received by trust a as consideration to each holder of an allowed personal injury item claim as determined by the trust a agreement and the bankruptcy court ix trust b will receive and maintain custody of the properties manage the trust b assets and remediate the properties in accordance with the trust b agreement and applicable laws with any remaining funds to be transferred to creditor creditor and the fund as required by the trust b agreement and applicable laws trust b will pay the costs of a clean-up b restoration of environmental impairment and c remediation of other environmental problems associated with the properties x as soon as is reasonably practicable after the effective date the company will transfer newco securities to trust c and within g trust c will distribute to plr-142024-10 each holder of an initial allowed claim its pro_rata share of newco securities and trust c units other than those reserved for disputed claims xi on or prior to the trust c funding date company will periodically transfer to trust c newco securities to satisfy interim allowed claims and to make distributions to holders of general unsecured claims that have previously been allowed as disputed general unsecured claims are disallowed as soon as reasonably practicable after each such transfer but no more than g after such transfer trust c will distribute to each holder of such interim allowed claims its pro_rata share of newco securities and trust c units in accordance with the terms of trust c and the trust c agreement xii following the trust c funding date trust c will resolve outstanding disputed general unsecured claims and will distribute newco securities and trust c units in satisfaction of resolved general unsecured claims pursuant to the liquidation plan as amended and the trust c agreement each of which will be approved by the bankruptcy court xiii trust d if funded will prosecute and resolve the loan b litigation liquidate any residual assets and distribute to the trust d beneficiaries any proceeds therefrom xiv company’s transfer of the trust c assets to trust c and the trust d assets to trust d plus any distributions of proceeds of the loan b litigation prior to date will be in complete settlement and satisfaction of its obligation to satisfy the general unsecured claims xv if there are disputed priority claims or disputed secured claims remaining by the date of company’s dissolution the debtors will transfer the wind down assets to trust c and trust c will resolve such disputed claims xvi company will liquidate for federal_income_tax purposes no later than date supplemental representations company affirms the representations made in the prior ruling as modified by the first supplemental ruling and as modified by representation c below and makes the following supplemental representations regarding the proposed transaction with respect to the prior ruling a company is under_the_jurisdiction_of_the_bankruptcy_court in a case under the bankruptcy code and has been subject_to such jurisdiction at all times subsequent to date plr-142024-10 b company will transfer the newco securities to trust a and trust c in accordance with the reorganization agreement and the liquidation plan as amended which have or will have been approved by the bankruptcy court the reorganization agreement constitutes a plan_of_reorganization for purposes of sec_368 c company will liquidate as determined for federal_income_tax purposes no later than date d company will not transfer any newco securities to newco nor any party related to newco within the meaning of sec_1_368-1 as part of the proposed transaction with respect to trust a e trust a will be established in accordance with the liquidation plan as amended pursuant to the confirmation order of the bankruptcy court trust a will be established as a_trust under state law and will be administered by a person or persons to be confirmed by the bankruptcy court the bankruptcy court will retain jurisdiction over trust a with respect to any matter arising under or related to the liquidation plan as amended f trust a will be created pursuant to the liquidation plan as amended for the primary purpose as stated in the trust a agreement of assuming liabilities for personal injury item claims and paying the holders of such claims with no objective to continue or engage in the conduct_of_a_trade_or_business g pursuant to the liquidation plan as amended trust a will assume all of the debtors’ liabilities with respect to the personal injury item claims as of the date that trust a is funded the debtors will be discharged from and will have no responsibility or liability for any personal injury item claims h company will not have refund or reversion rights in trust a’s assets or income as defined in sec_1_468b-3 any cash or trust a assets remaining in trust a after all personal injury item claims have been satisfied will be paid or transferred to an unrelated charitable_organization exempt from federal_income_tax under sec_501 i neither company nor any related_person with respect to company within the meaning of sec_1_468b-1 will own any beneficial_interest directly or indirectly in the corpus or income of trust a j trust a will be funded with cash newco securities and an interest in trust c trust a will not be funded with amounts received by company from the settlement of insurance claims that are excludable from company’s gross_income plr-142024-10 k no portion of the amounts to be paid_by company to trust a will represent payments for pre-judgment or post-judgment interest l trust a will sell the newco securities it receives from company and will resolve outstanding personal injury item claims by transferring a portion of the proceeds from the sale of the newco securities received by trust a as consideration to each holder of an allowed personal injury item claim as determined by the trust a agreement and the bankruptcy court m any payment by trust a with respect to or in settlement of a personal injury item claim will be a payment of compensatory and punitive_damages on account of physical injury wrongful death or emotional harm to an individual that manifests itself before the date that trust a makes that payment and such payment will be made to satisfy the debtors’ liabilities for damage caused by the presence of or exposure to item or item-containing products n trust a will facilitate the debtors’ liquidation plan as amended o company will provide the statement described in sec_1 468b- e to the trust a administrator no later than date of the year following each calendar_year in which company makes a transfer to trust a such statement will be attached to company’s timely filed income_tax return for the year of each transfer p newco is not a related_person with respect to company within the meaning of sec_1_468b-1 with respect to trust b q trust b will be established in accordance with the liquidation plan as amended pursuant to the confirmation order of the bankruptcy court trust b will be established as a_trust under state b law and will be administered by an entity to be confirmed by the bankruptcy court the bankruptcy court will retain jurisdiction over trust b with respect to any matter arising under or related to the liquidation plan as amended r trust b will be created pursuant to the liquidation plan as amended for the primary purpose as stated in the trust b agreement of conducting environmental actions with regard to the properties and attempting to sell or transfer some of the properties in order to put them to productive or beneficial use with no objective to continue or engage in the conduct_of_a_trade_or_business s pursuant to the liquidation plan as amended trust b will assume all of the debtors’ liabilities with respect to the environmental claims as of the date that trust b is funded the debtors will be discharged from and will have no responsibility or liability for any environmental claims plr-142024-10 t the debtors will not have refund or reversion rights in trust b’s assets or income as defined in sec_1_468b-3 u neither company nor any related_person with respect to company within the meaning of sec_1_468b-1 will own any beneficial_interest directly or indirectly in the corpus or income of trust b v trust b will be funded with the cash the properties all leases of manufacturing facilities with newco certain environmental insurance policies and all contracts related to the environmental work to be continued by trust b_trust b will not be funded with amounts received by company from the settlement of insurance claims that are excludable from company’s gross_income w none of the costs associated with the performance of the environmental actions will be deductions allowed by sec_1_468b-2 x no portion of the amounts to be paid_by company to trust b will represent payment for pre-judgment or post-judgment interest y trust b will facilitate the debtors’ liquidation plan as amended z the debtors will provide the statement described in sec_1 468b- e to the trust b administrator no later than date of the year following each calendar_year in which the debtors make a transfer to trust b such statement will be attached to company’s timely filed income_tax return for the year of each transfer aa newco is not a related_person with respect to company sub or sub within the meaning of sec_1_468b-1 with respect to trust c bb following the trust c funding date none of the debtors nor any related_person with respect to the debtors within the meaning of sec_1_468b-9 will own at any time directly or indirectly any beneficial_interest in the corpus or income of trust c cc trust c will be established in accordance with the liquidation plan as amended pursuant to the confirmation order of the bankruptcy court the bankruptcy court will retain jurisdiction over trust c with respect to any matter arising under or related to the liquidation plan as amended dd trust c will be created pursuant to the liquidation plan as amended for the primary purpose as stated in the trust c agreement of resolving outstanding disputed general unsecured claims and distributing the trust c assets with no objective to continue or engage in the conduct_of_a_trade_or_business plr-142024-10 ee all of the assets contributed to trust c by company will be passive investment_assets ff pursuant to the liquidation plan as amended trust c will assume all of the debtors’ liabilities with respect to the general unsecured claims as of the trust c funding date the debtors will be discharged from and will have no responsibility for any general unsecured claim gg trust c will distribute newco securities in_kind to holders of allowed general unsecured claims hh as of the trust c funding date trust c will report all items of income gain deduction and loss in accordance with sec_1_468b-9 ii trust c will not receive or retain cash or cash equivalents in excess of a reasonable amount to meet claims and contingent liabilities including disputed claims or to maintain the value of the assets during liquidation jj the investment powers of the trust c administrator other than those reasonably necessary to maintain the value of the assets and to further the purpose of trust c will be limited to powers to invest in demand and time deposits such as short- term certificates of deposits in banks or other savings institutions or other temporary liquid investments kk the trust c administrator will make timely distributions and not unduly prolong the duration of trust c ll income company will not have refund or reversion rights in trust c’s assets or mm company will provide the statement described in sec_1 468b- g to the trust c administrator no later than date of the year following each calendar_year in which company makes a transfer to trust c such statement will be attached to company’s timely filed income_tax return for the year of each transfer nn the payment or distribution of money or property to or on behalf of a claimant or company by trust c will have been approved by the bankruptcy court oo trust c will not be a liquidating_trust within the meaning of sec_301_7701-4 pp trust c will hold the newco securities to be transferred to holders of initial allowed claims in the initial trust c distribution and the newco securities to be transferred to holders of interim allowed claims in the interim trust c distributions no longer than g plr-142024-10 qq the identity of the holders of initial allowed claims will be known as of the effective date and the identity of the holders of interim allowed claims will be known as of the date that company transfers to trust c the newco securities that will be transferred to such holders of interim allowed claims rr prior to the transfer of the newco securities from company to trust c the amount of newco securities to be distributed to a holder of an initial allowed claim in the initial trust c distribution will be determined as described in the liquidation plan as amended and the trust c agreement the specific amount of newco securities to be distributed to a holder of an initial allowed claim in the initial trust c distribution will be determined prior to the transfer of newco securities to trust c and will not change for any reason during the period that the newco securities are held by trust c including as a result of changes in the value of the newco securities between the effective date and the date of the initial trust c distribution ss prior to the transfer of the newco securities from the company to trust c the amount of newco securities to be distributed to holders of interim allowed claims from trust c will be determined as prescribed in the liquidation plan as amended and the trust c agreement the specific amount of newco securities to be distributed to a holder of an interim allowed claim in the interim trust c distributions will be determined prior to the transfer of newco securities to trust c and will not change for any reason during the period that the newco securities are held by trust c including as a result of changes in the value of the newco securities between the date that company transfers such newco securities to trust c and the date of the interim trust c distribution tt newco is not a related_person with respect to company within the meaning of sec_1_468b-9 uu company will not claim ownership of in whole or in part or a legal or equitable interest in the trust c assets immediately before and immediately after that property is transferred to trust c accordingly company will not be a transferor- claimant with respect to trust c within the meaning of sec_1_468b-9 with respect to trust d vv it is expected that the dispute between creditor and creditor on the one hand and the holders of general unsecured claims on the other regarding which parties are entitled to any proceeds resulting from the loan b litigation will be resolved prior to date ww trust d will be established in accordance with the liquidation plan as amended pursuant to the confirmation order of the bankruptcy court for the sole purpose as stated in the trust d agreement of liquidating the trust d assets with no objective to continue or engage in the conduct_of_a_trade_or_business plr-142024-10 xx trust d will be established as a_trust under state law and will be administered by an entity to be confirmed by the bankruptcy court and the bankruptcy court will retain jurisdiction over any matter arising under or related to the liquidation plan as amended yy in accordance with the liquidation plan as amended the amended disclosure statement and the trust d agreement the debtors the trust d administrator and the trust d beneficiaries will treat the transfer of the trust d assets to trust d as i a transfer of the trust d assets to the trust d beneficiaries in partial satisfaction of their claims and to the extent that trust d assets are allocable to disputed claims to the trust d claims reserve followed by ii the transfer by such persons to trust d of such assets other than such assets allocable to the trust d claims reserve in exchange for the beneficial interests in trust d zz in accordance with the liquidation plan as amended amended disclosure statement and the trust d agreement the debtors the trust d administrator and the trust d beneficiaries will treat the trust d beneficiaries as the grantors and deemed owners of the trust d assets other than any trust d assets allocable to the trust d claims reserve and will not elect to treat trust d other than any trust d assets allocable to the trust d claims reserve as a disputed_ownership_fund as defined in sec_1_468b-9 aaa as provided in the trust d agreement and the liquidation plan as amended the trust d administrator will file timely federal_income_tax returns for trust d except the trust d claims reserve as a grantor_trust pursuant to sec_1_671-4 bbb the liquidation plan as amended amended disclosure statement and the trust d agreement provide for consistent valuations of the trust d assets by the trust d administrator and the trust d beneficiaries and those valuations will be used for all federal_income_tax purposes ccc trust d will not hold any operating_assets of a going business a partnership_interest in a partnership that holds operating_assets or percent or more of the stock of a corporation with operating_assets ddd trust d will not receive transfers of listed stock_or_securities or other readily-marketable assets eee trust d will only receive or retain cash or cash equivalents in a reasonable amount as are sufficient to meet claims and contingent liabilities including disputed claims or to maintain the value of the trust d assets during liquidation plr-142024-10 fff the trust d administrator will make continuing efforts to dispose_of the trust d assets will make timely distributions and will not unduly prolong the duration of trust d supplemental rulings based solely on the information submitted and the representations set forth above we rule as follows the proposed transaction will not adversely affect the prior ruling or the first supplemental ruling both of which will remain in full force and effect with respect to the reorganization i the transfer of newco securities by company to trust c followed by the transfer of the newco securities by trust c to holders of initial allowed claims in the initial trust c distribution and ii the transfer of newco securities by company to trust c followed by the transfer of the newco securities by trust c to holders of interim allowed claims in the interim trust c distributions will be treated for federal_income_tax purposes as direct transfers by company of newco securities to the holders of initial allowed claims and to holders of interim allowed claims 324_us_331 revrul_67_448 1967_2_cb_144 revrul_90_95 1990_2_cb_67 no gain_or_loss will be recognized by company upon the transfers of such newco securities to holders of initial allowed claims and holders of interim allowed claims sec_361 and c no gain_or_loss will be recognized by company upon the transfer of newco securities to trust a and trust c sec_361 and c however company will recognize gain on the transfer of any appreciated_property other than newco securities to any company claimholder or the trusts as if such property had been sold by company at its fair_market_value at such time sec_361 sec_1001 sec_1_468b-3 sec_1_468b-9 if an initial allowed claim or an interim allowed claim qualifies as a security of company for federal_income_tax purposes no gain_or_loss will be recognized by a holder of such claim upon the receipt of solely newco securities in exchange therefor except that the holder may recognize ordinary_income to the extent that the consideration received is attributable to accrued but unpaid interest sec_354 if a holder of an initial allowed claim or an interim allowed claim that qualifies as a security of company for federal_income_tax purposes also receives money or other_property in exchange therefor the holder will recognize gain in an amount not in excess of the fair_market_value of such money or other_property on the relevant transfer date plr-142024-10 sec_356 no loss will be recognized by such company security holder sec_356 if an initial allowed claim or an interim allowed claim qualifies as a security of company for federal_income_tax purposes the adjusted_basis of the newco securities received by a holder of such claim will equal the adjusted_basis of such allowed claim in the hands of the holder immediately before the receipt of newco securities less the fair_market_value of any money or other_property transferred to the holder plus any gain recognized by the holder sec_358 the basis of money or other_property received by a holder of an initial allowed claim or an interim allowed claim will be the fair_market_value of such money or other_property sec_358 if an initial allowed claim or an interim allowed claim qualifies as a security of company for federal_income_tax purposes the holding_period of newco securities received by a holder of such claim will include the period during which the holder has held the allowed claim exchanged therefor provided such allowed claim was a capital_asset in the hands of the holder sec_1223 with respect to the tax treatment of trust a and company’s transfer thereto pursuant to the liquidation plan as amended trust a will constitute a qualified_settlement_fund a qsf within the meaning of sec_1_468b-1 because the three requirements of that section will be satisfied first trust a will be established pursuant to an order of and be subject_to the continuing jurisdiction of the bankruptcy court second trust a will be established to resolve or satisfy one or more contested or uncontested claims that have resulted or may result from a related series of events ie the manufacture distribution and sale of item-containing products and that have given rise to at least one claim asserting tort liability for personal injury or death third_trust a will be a_trust under state law accordingly trust a is a qsf and will be subject_to federal income_taxation as provided in sec_1_468b-2 the property transferred to trust a will be transferred by company to resolve or satisfy the liabilities for which trust a was established ie personal injury item claims therefore trust a will not recognize taxable_income gain_or_loss upon the receipt of property from company pursuant to the liquidation plan as amended sec_1_468b-2 plr-142024-10 the adjusted_basis of all property other than cash received by trust a from company under the liquidation plan as amended will be the fair_market_value of that property on the date transferred sec_1_468b-2 company must include in gross_income any distribution received from trust a including a deemed_distribution sec_1_468b-3 company will be entitled to deduct the amount of cash the fair_market_value of the newco securities and the fair_market_value of the interest in trust c transferred to trust a to resolve or settle liabilities described in sec_1 468b- c in the taxable_year in which such transfer occurs to the extent such liabilities were incurred in the ordinary course of company’s trade_or_business within the meaning of sec_162 and are not otherwise required to be capitalized pursuant to sec_263 or sec_263a sec_1_468b-3 sec_1_461-1 trust a will not be subject_to the information reporting requirements of sec_6041 with respect to payments it makes on or before date to holders of personal injury item claims on account of personal physical injuries or physical sickness of the claimant within the meaning of sec_104 other than with respect to punitive_damages with respect to the tax treatment of trust b and the transfer thereto by company sub and sub pursuant to the liquidation plan as amended trust b will constitute a qsf within the meaning of sec_1 468b- c because the three requirements of that section will be satisfied first trust b will be established pursuant to an order of and be subject_to the continuing jurisdiction of the bankruptcy court second trust b will be established to resolve or satisfy one or more contested or uncontested claims that have resulted or may result from a related series of events ie the development manufacture and sale of products and that have given rise to at least one claim asserting liability under cercla or arising out of a violation of law any obligation of company sub and sub to provide services or property will be extinguished upon the funding of trust b by company sub and sub third_trust b will be a_trust under state law accordingly trust b is a qsf and will be subject_to federal income_taxation as provided in sec_1_468b-2 the property transferred to trust b will be transferred by company sub and sub to resolve or satisfy the liabilities for which trust b was established ie environmental claims therefore trust b will not recognize taxable_income gain or plr-142024-10 loss upon the receipt of property from company sub and sub pursuant to the liquidation plan as amended sec_1_468b-2 the adjusted_basis of all property other than cash received by trust b from company sub and sub under the liquidation plan as amended will be the fair_market_value of that property on the date transferred sec_1_468b-2 company sub and sub will be entitled to deduct the amount of cash and the fair_market_value of non-cash property that they transfer to trust b to resolve or settle environmental claims in the taxable_year in which such transfer occurs to the extent such liabilities were incurred in the ordinary course of company sub and sub 2’s trade_or_business within the meaning of sec_162 and are not otherwise required to be capitalized pursuant to sec_263 and sec_263a sec_1_468b-3 sec_1_461-1 sec_1_461-4 company sub and sub must include in gross_income any distribution received from trust b including a deemed_distribution such as any excess funds transferred to creditor or creditor on behalf of the debtors sec_1 468b- f with respect to the tax treatment of trust c and company’s transfer thereto pursuant to the liquidation plan as amended effective on the trust c funding date trust c will constitute a disputed_ownership_fund within the meaning of sec_1_468b-9 first trust c will be established to hold money or property subject_to conflicting claims of ownership by holders of general unsecured claims second trust c is subject_to the continuing jurisdiction of the bankruptcy court third_trust c requires the approval of the bankruptcy court to pay or distribute money or property to or on behalf of a claimant transferor or transferor-claimant fourth trust c is not a qualified_settlement_fund under sec_1_468b-1 a bankruptcy_estate or part thereof resulting from the commencement of a case under title of the united_states_code or a liquidating_trust under sec_301_7701-4 effective on the trust c funding date trust c is a disputed_ownership_fund and all of the assets transferred to trust c by company will be passive investment_assets accordingly trust c will be subject_to taxation as a qsf for federal_income_tax purposes except for purposes of subtitle f as of the trust c funding date sec_1_468b-9 plr-142024-10 trust c will not recognize taxable_income gain_or_loss upon the transfer of property by company on the trust c funding date including the newco securities to trust c sec_1_468b-2 sec_1_468b-9 the adjusted_basis of all property other than cash received by trust c from company on the trust c funding date under the liquidation plan as amended will be the fair_market_value of that property on the date transferred sec_1_468b-2 sec_1_468b-9 company will be entitled to deduct the fair_market_value of the final newco securities transferred to trust c in the taxable_year of transfer other than any amounts to be transferred by trust c to trust a to the extent that such assets relate to liabilities arising out of general unsecured claims against company that were incurred in the ordinary course of company’s trade_or_business and would otherwise be deductible by company within the meaning of sec_162 and are not otherwise required to be capitalized pursuant to sec_263 or sec_263a sec_1 468b- d sec_1_461-1 company must include in gross_income any distribution received from trust c including a deemed_distribution such as any excess funds transferred to creditor or creditor on behalf of company except to the extent otherwise provided in sec_1_468b-9 sec_1_468b-9 with respect to the tax treatment of trust d and the debtors’ transfer thereto pursuant to the liquidation plan as amended trust d except for the trust d claims reserve will constitute a liquidating_trust within the meaning of sec_301_7701-4 except for the trust d claims reserve trust d will be treated as a grantor_trust for federal_income_tax purposes and the trust d beneficiaries will be treated as the owners of the trust d assets sec_671 and sec_677 caveats 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 in particular regarding ruling sec_24 and sec_25 if the terms of trust d is extended beyond years from the date of the creation of trust d by petition of the trustee trust d must request another letter_ruling to determine whether the extension of trust d's term will adversely affect the determination that trust d is a liquidating_trust under sec_301_7701-4 plr-142024-10 procedural matters this ruling is directed only to the taxpayers who requested 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 representatives a copy of this ruling letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their returns that provides the date and control number of the letter_ruling sincerely lisa a fuller chief branch office of associate chief_counsel corporate cc


internal_revenue_service number release date index number --------------------------- ------------------------------------------ ---------------------------------------------- ------------------------------ in re ----------------------------------------- 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 b05 plr-134273-15 date november legend taxpayer -------------------------------------------------- ------------------------------------------ project n -------------------- -- bin address ------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------- agency -------------------------------------------------------- dear ----------------- this letter responds to taxpayer’s authorized representative’s letter dated date requesting an extension of time pursuant to sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to make an election under sec_42 of the internal_revenue_code project consists of n buildings identified by bin address according to information submitted taxpayer through inadvertence failed to make an election under sec_42 intended for all n buildings in project for which forms were issued by agency consistent with taxpayer’s intent not to exclude from the eligible_basis of these buildings the proceeds of tax-exempt_bond obligations plr-134273-15 sec_42 provides that for purposes of sec_42 a new_building shall be treated as federally_subsidized for any taxable_year if at any time during such taxable_year or any prior taxable_year there is or was outstanding any obligation the interest on which is exempt from tax under sec_103 the proceeds of which are or were used directly or indirectly with respect to such building or the operation thereof sec_42 provides that a tax-exempt_obligation shall not be taken into account under sec_42 if the taxpayer elects to exclude from the eligible_basis of the building the proceeds of such obligation sec_42 provides that following the close of the first taxable_year in the credit_period with respect to any qualified_low-income_building the taxpayer shall certify to the secretary at such time and in such form and in such manner as the secretary prescribes such information as the secretary may require sec_301_9100-7t of the temporary procedure and administration regulations provides that the election under sec_42 must be made for the taxable_year in which the project is placed_in_service and shall be made in the certification required to be filed pursuant to sec_42 sec_301_9100-7t provides that an election under sec_42 is irrevocable 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 defines an election as an application_for relief in respect of tax and a regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make certain regulatory elections but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except e g h and i sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that applications for relief that fall within sec_301_9100-3 will be granted when the taxpayer provides sufficient evidence to establish that the taxpayer acted reasonably and in good_faith and that granting such relief will not prejudice the interests of the government sec_301_9100-3 provides when a taxpayer is deemed to have acted reasonably and in good_faith sec_301_9100-3 provides when the interests of the government are prejudiced sec_301_9100-3 provides that the taxpayer must provide evidence that satisfies the requirements of sec_301_9100-3 and b plr-134273-15 in the instant case based solely on taxpayer’s facts submitted and its representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been met accordingly taxpayer is granted an extension of time to make an election under sec_42 not to exclude from the eligible_basis of all n buildings in project identified by bin address the proceeds of tax-exempt_bond obligations by filing within days from the date of this letter amended forms that include this intended election the amended forms along with a copy of this letter are to be filed with the philadelphia service_center at the address provided for the service_center in that form a copy of this letter is enclosed for this purpose no opinion is expressed or implied regarding the application of any other provision of the code or regulations specifically we express no opinion on whether the forms were timely or correctly filed the effect of taxpayer’s election not to reduce basis under sec_42 for any closed_year or whether project otherwise qualifies for the low-income_housing tax_credits under sec_42 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 copies of this letter are being sent to taxpayer’s authorized representatives sincerely associate chief_counsel passthroughs special industries by _______________________ christopher j wilson senior counsel branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes 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 tege eb hw plr-146851-09 date april legend school board ----------------------------------------------------------- ---------------------------------------- district state medical plan dental plan -------------------- ------------- ------------------------------------------------------------------ ----------------------------------------------------------------- trust ---------------------------------------------------------- --------------------------------------------------------------- dear ---------- facts school board is a political_subdivision of state that operates and manages district’s public school system state’s constitution enables the legislature to create district school boards and under state’s revised statutes district school boards are established as bodies corporate school board administers and oversees the operations of public schools in district which includes the determination as to the number of schools to be opened and operated the hiring and termination of administrative personnel and teachers and fixing of salaries the budgeting of the use of tax funds to defray the cost of operating schools and the establishment of all policies with regard to the operation of public schools plr-146851-09 school board has adopted medical plan and dental plan plans which are offered to its current employees and its retired employees school board is the sole employer participating in plans school board pay sec_85 of the medical and dental insurance premiums for retired employees who are responsible for the remainder there are no pre-tax salary-reduction elections under the plans participants may not salary reduce to pay for any benefit neither plan permits a cash-out of unused amounts or conversion of unused sick leave or vacation days to retiree health benefits school board currently provides benefits only for individuals who qualify as a spouse or eligible dependent under sec_152 of the internal_revenue_code the code school board established trust to currently fund retiree health benefits trust was created and funded by school board solely for the benefit of retirees and their eligible spouses and dependents the parties to the trust agreement are school board and the trustee of trust upon termination of trust or either of the plans offered by school board trust funds shall be returned to school board trust assets are free from claims of creditors to fullest extent allowable under state law in no event will trust assets be transferred to an entity which is not a state a political_subdivision or an entity whose income is excluded from gross_income under sec_115 trust assets are to be used exclusively to pay for benefits provided by the plans and for the administration of trust private interests do not participate in the trust and no part of trust’s property may be diverted to purposes other than the exclusive benefit of the retirees and their eligible spouses and dependents school board has exclusive authority and discretion to manage and control the assets of the trust but will delegate investment management of trust’s assets to the trustee pursuant to the terms of the trust agreement school board represents that the purpose of trust is to vest in the trustee responsibility for the protection and conservation of trust property for the benefit of plan participants their spouses and dependents none of whom can share in the discharge of this responsibility for profit the members of trust’s board_of trustees include the district superintendent of schools the director of budget services and the three members of the school board’s budget and finance_committee the superintendent and director of business services are appointed by school board the board_of trustees meets annually and makes decisions by majority vote the board_of trustees may take no action which jeopardizes the exclusion of trust’s income from gross_income under sec_115 of the code and no part of the trust’s net_earnings can inure to the benefit of a member of the board_of trustees the members of the board_of trustees shall not engage in any acts of self- dealing and shall consistently maintain their fiduciary status with the trust and its beneficiaries plr-146851-09 law and analysis sec_115 of the code provides that gross_income does not include income derived from any public_utility or the exercise of any essential government function and accruing to a state or any political_subdivision thereof in revrul_77_261 1977_2_cb_45 income from an investment fund established under a written declaration of trust by a state for the temporary investment of cash balances of the state and its participating political subdivisions was excludable from gross_income for federal_income_tax purposes under sec_115 the ruling indicated that the statutory exclusion was intended to extend not to the income of a state or municipality resulting from its own participation in activities but rather to the income of a corporation or other entity engaged in the operation of a public_utility or the performance of some governmental function that accrued to either a state or municipality the ruling points out that it may be assumed that congress did not desire in any way to restrict a state’s participation in enterprises that might be useful in carrying out projects that are desirable from the standpoint of a state government and which are within the ambit of a sovereign to properly conduct in addition pursuant to sec_6012 and the underlying regulations the investment fund being classified as a corporation that is subject_to taxation under subtitle a of the code was required to file a federal_income_tax return each year in revrul_90_74 1990_2_cb_34 the service determined that the income of an organization formed funded and operated by political subdivisions to pool various risks casualty public liability workers’ compensation and employees’ health is excludable from gross_income under sec_115 of the code in revrul_90_74 private interests neither materially participate in the organization nor benefit more than incidentally from the organization school board is a political_subdivision of state that is enabled by state’s constitution and established pursuant to statute to carry out the essential government function of public education including the budgeting of the use of tax funds to defray the cost of operating schools and establishment of all policies with regard of operation of public schools school board offers medical and dental coverage to its retired employees providing health benefits to current and former employees constitutes the performance of an essential government function trust was established by school board to help fund the benefits offered its retired employees based upon revrul_90_74 and revrul_77_261 trust performs an essential_governmental_function within the meaning of sec_115 of the code plr-146851-09 no private interests participate in or benefit from the operation of trust any distribution of remaining funds in trust to participating retirees upon the dissolution of trust satisfies an obligation the participating employer has assumed with respect to providing health benefits to its employees the benefit to the participating employees is incidental to the public benefit see revrul_90_74 sec_61 of the code and sec_1_61-21 of the income_tax regulations provide that except as otherwise provided in subtitle a of the code gross_income includes compensation_for services including fees commissions fringe_benefits and similar items however sec_106 of the code provides that gross_income of an employee does not include employer-provided coverage under an accident_or_health_plan sec_1_106-1 of the regulations provides that the gross_income of an employee does not include contributions which his employer makes to an accident_or_health_plan for compensation through insurance or otherwise to the employee for personal injuries or sickness incurred by him his spouse or his dependents as defined in sec_152 the employer may contribute to an accident_or_health_plan either by paying the premium or a portion of the premium on a policy of accident_or_health_insurance covering one or more of his employees or by contributing to a separate trust or fund including a fund referred to in sec_105 which provides accident and health benefits directly or through insurance to one or more of his employees however if the insurance_policy trust or fund provides other_benefits in addition to accident or health sec_106 applies only to the portion of the contributions allocable to accident or health benefits coverage provided under an accident_and_health_plan to former employees and their spouses and dependents is excludable from gross_income under sec_106 see revrul_62_199 1962_2_cb_32 revrul_82_196 1982_2_cb_53 sec_105 provides that except as otherwise provided in sec_105 amounts received by an employee through accident_or_health_insurance for personal injuries or sickness shall be included in gross_income to the extent such amounts are attributable to contributions by the employer which were not includible in the gross_income of the employee or are paid_by the employer plr-146851-09 sec_105 provides that except in the case of amounts attributable to and not in excess of deductions allowed under sec_213 relating to medical_expenses for any prior taxable_year gross_income does not include amounts referred to in subsection a if such amounts are paid directly or indirectly to the taxpayer to reimburse the taxpayer for expenses_incurred by him for medical_care as defined in sec_213 sec_301_7701-1 of the procedure and administration regulations provides that the classification of organizations that are recognized as separate entities is determined under sec_301_7701-2 sec_301_7701-3 and sec_301_7701-4 unless a provision of the code provides for special treatment of that organization sec_301_7701-4 of the procedure and administration regulations provides that in general an arrangement will be treated as a_trust if it can be shown that the purpose of the arrangement is to vest in trustees responsibility for the protection and conservation of property for beneficiaries who cannot share in the discharge of this responsibility and therefore are not associates in a joint enterprise for the conduct of business for profit sec_6012 provides that every trust having for the taxable_year any taxable_income or having gross_income of dollar_figure or over regardless of the amount of taxable_income shall make a return with respect to income taxes under subtitle a based on the information submitted and representations made we conclude as follows the income of trust is derived from the exercise of an essential_governmental_function and will accrue to a state or a political_subdivision thereof for purposes of sec_115 accordingly trust’s income is excludable from gross_income under sec_115 of the code trust is classified as a_trust within the meaning of sec_7701 of the code and sec_301_7701-4 of the regulations trust is not required to file an annual income_tax return under sec_6012 of the code contributions paid to trust and payments made from trust pursuant to the plans which are used to pay for the accident or health coverage of retired employees their spouses and dependents as defined in sec_152 of the code are excludable from the gross_income of retired employees and retired employees’ spouses and dependents under sec_106 and sec_105 of the code plr-146851-09 no opinion is expressed concerning the federal tax consequences of trust or plans under any other provision of the code other than those specifically stated herein this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely harry beker branch chief health and welfare branch office of division counsel associate chief_counsel tax exempt government entities