department of the treasury employer_identification_number contact person - id number contact telephone number internal_revenue_service p o box cincinnati oh number release date date date legend program name employers names w name x y s quantity v quantity t dollars amount uil dear you asked for advance approval of your employer-related scholarship grant procedures under internal_revenue_code sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax you requested approval of your scholarship program to fund the education of certain qualifying students our determination we approved your procedures for awarding employer-related scholarships based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding employer-related scholarships meet the requirements of code sec_4945 as a result expenditures you make under these procedures will not be taxable also awards made under these procedures are scholarship or fellowship grants and are not taxable to the recipients if they use them for qualified_tuition_and_related_expenses subject_to the limitations provided in code sec_117 description of your request your letter indicates you will operate an employer-related scholarship program called x the purpose of x is to benefit the children of the employees of y by paying for tuition fees required books and equipment as well as room and board for eligible children y is letter catalog number 58264e composed of a few businesses in which your founder and president w owns at least a third of the stock he is also a director in each of the businesses you will award a maximum of s new grants per year all grants will be for t dollars for each year for up to four academic years you will announce your scholarship program by sending emails to each employee eligible children for the scholarship grants are natural children stepchildren and legally adopted children of y’s employees if an employee must be employed for some minimum period by y then the minimum period would not exceed three years a grant will not be terminated because the recipient's parent terminates employment with y subsequent to the awarding of the grant regardless of the reason for such termination of employment if a grant is awarded for one academic year the recipient must reapply for a grant to continue studies for subsequent years if a grant is awarded for a period of more than one academic year subject_to renewal the standards for renewal will be based solely upon non-employment-related factors requirement at the time the grant was first awarded no further employment will be required at the time of each renewal the course of study for which grants are available will not be limited to those that would be of particular benefit to either you or y if the parent met the employment moreover eligibility will not be related to any other employment related factors such as the employees’ position services or duties children of presidents or vice presidents are not eligible to apply in addition you will adopt written procedures to ensure no conflicts of interest arise the written procedures will list the policy of not providing scholarships to persons related to a member of the board or disqualified persons including substantial contributors and will be made available to all board members current disqualified persons and substantial contributors and any future disqualified persons or substantial contributors eligible applicants must also meet minimum standards for admission to the educational_institution for which grants are available students must be enrolled as full-time for initial grants and renewals a denied applicant does not have the right to apply for a grant in future years potential recipients are required to submit a detailed application including copies of their transcripts by the beginning of the calendar_year applications will be reviewed the following month and the recipients will be announced a short time later your board will conduct an initial review of all applications to determine if any applicant is related to a member of your board to any disqualified_person including a substantial_contributor since the board has access to all of the information to determine disqualified persons and or substantial contributors your board will make this determination on an individual basis prior to a substantive review of the applications by the selection committee letter catalog number 58264e in that regard a former employee of selection of grant recipients will be made by a committee consisting wholly of individuals totally independent and separate from you w and y either you or y will not be considered totally independent to the extent feasible the selection committee will consist of individuals knowledgeable in the education field or persons who otherwise have the background and knowledge to properly evaluate the potential of the applicants the final members of the selection committee have not yet been determined but you expect it to include individuals who possess graduate degrees one of whom is a retired professor selection of recipients will be based solely on substantial objective standards that are completely unrelated to the employment of the students’ parents by y and their lines of business such standards are but not limited to class standing prior academic performance performance on tests designed to measure ability and aptitude for higher education and recommendations from instructors or other individuals not related to the potential awardees the initial sole criterion that the selection committee will use to select recipients is whether the applicant is inthe top selection committee will rank students by highest-class standing in the event of a tie the selection committee will consider other standards as previous defined of their graduating high school class then the grants will be awarded solely in the order recommended by the selection committee the number of grants to be awarded may be reduced but may not be increased from the number recommended by the selection committee only the committee may vary the amounts of the grants awarded the selection committee will forward to you or y the names of the proposed recipients for the sole purpose of verifying the eligibility requirements and selection criteria used by the committee in considering the candidates and in making its selection any public announcement of the awards however will be made by the selection committee or by you and not by y you expect to make payment directly to an accredited school that the recipient will attend and not to the recipient individually if the funds are distributed to an educational_institution the financial aid or other appropriate office of the receiving educational_institution will administer and distribute the funds the educational_institution will be requested to take such actions as may be determined by you including possibly withholding disbursement of funds if the progress of the recipient is deemed unacceptable by you or the educational_institution if however you are required to make a payment to a grant recipient you will require that the recipient provide a report to ensure that the funds were used for the stated purposes you will notify the recipient that the funds may be applied to approved expenses at a qualifying education institution if such a report is not received you will withhold future funds and will attempt to recover the funds already paid letter catalog number 58264e the recipients are required to notify you immediately in the event they fail to maintain a satisfactory academic record or fail to meet other requirements sufficient to be classified as a student in good standing or otherwise cease to be enrolled full-time the recipients agree to restore to you immediately upon your request all funds not expended for educational expenses in accordance with the terms and conditions of the grant the recipients will furnish you with their current address telephone number and subsequent changes during the life of the grant if you discover that any grant funds have been misused by the recipient or anyone else you will investigate the potential misuse withhold funds during the investigation and seek recovery_of any misused funds scholarships are renewable as long as the recipients remain in the top recipients must notify you of their desire to receive a scholarship for the upcoming school year as well as provide you with proof of their class rank at the end of each academic year awarded a grant for the following year if the recipients are not in the top of their class they will not be of their class you will maintain records that include information used to evaluate the qualifications of potential recipients identification of recipients including any relationship to you whether the recipient is a disqualified_person etc the amount and purpose of each grant and all recipient reports and other follow-up data obtained in administering your program basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant the grant is a scholarship or fellowship subject_to code sec_117 the grant is to be used for study at an educational_organization described in code sec_170 revproc_76_47 1976_2_cb_670 sets forth guidelines to be used in determining whether a grant made by a private_foundation under an employer-related program to a child of an employee of the particular employer to which the program relates is a scholarship grant that meets the provisions of sec_117 of the code as that section read before the tax_reform_act_of_1986 if a private foundation's program satisfies the seven conditions set forth in sections dollar_figure through dollar_figure of revproc_76_47 and meets the percentage_test described in sec_4 the service will assume the letter catalog number 58264e grants meet the provisions of sec_117 as that section read before the tax_reform_act_of_1986 you have agreed that procedures in awarding grants under your program will be in compliance with sections dollar_figure through dollar_figure of revproc_76_47 without regard to the amendments to sec_117 made by the tax_reform_act_of_1986 in particular the selection of individual grant recipients will be made by a selection committee the members of which are totally independent and separate from the private_foundation the foundation’s creator and the relevant employer the grants will not be used as a means of inducement to recruit employees nor will a grant be terminated if the employee leaves the employer the recipient will not be restricted in a course of study that would be of particular benefit to the relevant employer or to the foundation section dollar_figure of rev_proc provides a percentage_test guideline it states in the case of a program that awards grants to children of employees of a particular employee the program meets the percentage_test if either of the following tests are met the number of grants awarded under that program in any year to such children do not exceed percent of the number of employees’ children who were eligible were applicants for such grants and were considered by the selection committee in selecting the recipients of grants in that year or the number of grants awarded under the program in any year to such children does not exceed percent of the number of employees’ children who can be shown to be eligible for grants whether or not they submitted an application in that year if the number of scholarships awarded exceeds the percentage thresholds of rev_proc the organization may still qualify under facts and circumstances if the primary purpose of the program is to educate recipients in their individual capacities such relevant facts and circumstances may include the likelihood that the program may be used for employee recruitment or to retain employees the independence of the selection committee standards for scholarship eligibility and selection limitations on the recipient's choice of course of study the number of grants available the number of children of employees who will be eligible for them the percentage of eligible children of employees applying for the grants who normally receive grants under the program and whether and how many grants are awarded to individuals who are not children of employees you have demonstrated that you meet the requirements of the facts_and_circumstances_test described in revproc_76_47 in support of that you anticipate v individuals will submit applications you will make no more than s new grants per year based on objective criteria which are completely unrelated to the employment of the student's parents by y and its line of businesses such standards include prior academic performance performance on tests designed to measure ability and aptitude for higher education and recommendations from instructors to further substantiate that you meet the facts_and_circumstances_test you are not funded by y as in traditional employer scholarship programs but by the individual w who created you more than two decades ago to fund specific scholarship programs at both the university and high school level x was created as a continuation of these programs in addition y pays competitive salaries based on local market standards and has excellent retention furthermore since you will maintain an independent awards committee will not limit the recipient's choice of study and will make no more than v letter catalog number 58264e awards per year it is concluded based on facts and circumstances that the primary purpose of your program is to educate recipients in their individual capacities and not as a means for employee retention or as a fringe benefit for y’s employees other conditions that apply to this determination e e e e e e this determination only covers the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures do not differ significantly from those described in your original request this determination applies only to you it may not be cited as a precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes to your program to the office of exempt_organizations at you cannot award grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives all funds distributed to individuals must be made on a charitable basis and further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 you should keep adequate_records and case histories so that you can substantiate your grant distributions with the irs if necessary we have sent a copy of this letter to your representative as indicated in your power_of_attorney please keep a copy of this letter in your records if you have questions please contact the person listed at the top of this letter sincerely holly o paz director exempt_organizations rulings and agreements letter catalog number 58264e


internal_revenue_service number release date index number ---------------------------- ----------------------------------------------------- --------------------------------- -------------------------- --------------------------------------- - department of the treasury washington dc person to contact ------------------------- id no ------------- telephone number --------------------- refer reply to cc fip b02 plr-147063-04 date --------------- ---------------------- -------------------------- ------------------------------------ -------------------------------------- legend taxpayer -------------------------------------------------------------- state a date date x dollar_figurea dollar_figureb date dollar_figurec dear ----------------- submission requesting a ruling on behalf of taxpayer the requested ruling concerns taxpayer’s ability to pay capital_gains dividends and thereby preserve a portion of its net_operating_loss nol for its taxable_year ended date this is in reply to a letter dated date and a subsequent ----------------------- --------------- --------------- --------------- for its taxable_year ended date taxpayer had a net_capital_gain of in forms issued to shareholders on date taxpayer designated dollar_figurec of its plr-147063-04 facts taxpayer is a state a corporation that elected to be taxed as a real_estate_investment_trust reit under sec_856 - of the internal_revenue_code effective date taxpayer is engaged in the business of x approximately dollar_figurea for the same taxable_year taxpayer generated a net_operating_loss of approximately dollar_figureb not taking into account taxpayer’s net_capital_gain distributions as capital_gain dividends for the taxable_year ended date taxpayer made no other distributions for the taxable_year ended date taxpayer represents that it had no accumulated_earnings_and_profits as calculated under sec_312 at the start of the taxable_year ended date furthermore taxpayer would not have had sufficient current_earnings_and_profits to treat as a dividend the amount that it designated as capital_gain dividends law and analysis a taxable_year equal at least percent of its real_estate_investment_trust_taxable_income for the taxable_year excluding any net_capital_gain reit taxable_income is defined in sec_857 as the taxable_income of the reit with certain specified adjustments under this definition net_capital_gain is included in determining reit taxable_income shareholders as a gain from the sale_or_exchange of a capital_asset held for more than one year sec_857 defines a capital_gain dividend as any dividend or part thereof which is designated by the reit as a capital_gain dividend in a written notice mailed to its shareholders at any time before the expiration of days after the close of its taxable_year if the aggregate amount designated as a capital_gain dividend is greater than the reit’s net_capital_gain for the taxable_year the portion of each distribution which shall be a capital_gain_distribution will only be that portion of the amount so designated which such net_capital_gain bears to the aggregate amount so designated sec_172 provides that a net_operating_loss is the excess of deductions allowed by chapter of the code over gross_income with respect to net losses of a reit sec_172 provides that the net_operating_loss for a reit’s taxable_year will be computed taking into account adjustments described in sec_857 other than the deduction for dividends_paid described in sec_857 sec_857 requires in part that a reit’s deduction for dividends_paid for sec_857 provides that a capital_gain dividend will be treated by plr-147063-04 sec_857 provides that for purposes of sec_172 if a reit pays capital_gain dividends during any taxable_year the amount of the net_capital_gain for such taxable_year to the extent such gain does not exceed the amount of such capital_gain dividends shall be excluded in determining the net_operating_loss for the taxable_year and the amount of the net_operating_loss of any prior taxable_year which may be carried through such taxable_year under sec_172 to a succeeding taxable_year with their other income or losses sec_857 as it then existed provided that for purposes of determining the amount of capital_gains dividends that could be paid the reit’s net_capital_gain could not exceed reit taxable_income for the taxable_year determined by taking into account the net_operating_loss_deduction but not the deduction for dividends_paid the tax_reform_act_of_1986 p l eliminated the aforementioned provision in sec_857 and added sec_857 in doing so the legislative_history indicates that prior to reits determined their taxable_income by combining capital_gains t he congress believed that a fundamental purpose for permitting conduit treatment of reits is to enable small individual investors the opportunity to invest in a professionally managed diversified portfolio of real_estate_assets hence congress believed that if a reit is required to offset its capital_gain income with net operating losses individual investors routinely are denied the benefit of capital_gain treatment that they would receive if they were able to hold real_estate_assets directly thus the act provides that reits may preserve the availability of capital_gains treatment even if they have net operating losses based upon the language of sec_857 and the legislative_history joint_committee on taxation general explanation of the tax_reform_act_of_1986 99th cong comm print underlying the statute taxpayer may designate all of its distributions for its taxable_year ended date as capital_gain dividends and thereby cause an amount of net_capital_gain equal to the designated capital_gain dividends to be excluded under sec_857 in determining its nols for the taxable_year other information except as specifically ruled upon above no opinion is expressed concerning any federal_income_tax consequences related to the facts herein under any other provisions plr-147063-04 of the code specifically we do not rule whether taxpayer will otherwise qualify as a reit under part ii of subchapter_m of chapter of the code this ruling is directed only to the taxpayer requesting it taxpayer should attach a copy of this ruling to each tax_return to which it applies sec_6110 of the code provides that this ruling may not be used or cited as precedent in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely william e coppersmith william e coppersmith chief branch office of associate chief_counsel financial institutions products


internal_revenue_service number release date index number -------------------------------------------- ---------------- ----------------------------------------- ----------------------------------------- ------------------------------- legend parent distributing 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 br plr-136182-14 date date -------------------------------------------- ------------------------------- ---------------------- ------------------------------------------------------------ ------------------------------ ------------------------------------------------------------------- distributing controlled disregarded_entity ------------------------------ ------------------------------- ---------------------- ------------------ ------------------------------------------------------------------- --------------------------------------------- ----------------------------------------------- partnership partner a partner b busine sec_1 --------------------------------- ----------------------------------------------- ---------------------- --------------------- ------------ --------------------------------------------------------------------------------------- ------------------------------------------------------------------------ plr-136182-14 ------------------------------------------------------------------ ----- --------------------------------------------------------------------- -- --------------------------------------------------------------------- -- ------------------------------------------------ ----------------------------------------------------------------------------------- ------------------------------------------------------------------------ -------------------------------------------------------- ------ -------------------- ------------------ --- --- --- ----------------------------- segment a year date date p q r s dear ----------- this letter responds to your date request submitted by your authorized representatives for a ruling under sec_355 the information provided in that letter and in later correspondence is summarized below the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by penalties of perjury statements executed by an appropriate party while this office has not verified any of the material submitted in support of the request_for_ruling it is subject_to verification on examination this letter is issued pursuant to section dollar_figure of revproc_2014_1 2014_1_irb_15 regarding one or more significant issues under sec_332 sec_351 sec_355 sec_368 or sec_1036 the ruling contained in this letter only addresses one or more discrete legal issues involved in the transaction this office expresses no opinion as to the overall tax consequences of the transactions described in this letter or as to any issue not specifically addressed by the ruling below facts plr-136182-14 parent is a privately held domestic_corporation and is the common parent of an affiliated_group_of_corporations that file a consolidated federal_income_tax return the parent group parent owns all of the membership interests in disregarded_entity a limited_liability_company that is disregarded as separate from parent for federal_income_tax purposes disregarded_entity owns all of the stock of distributing which owns all of the stock of distributing distributing and distributing are members of the parent group distributing owns a p economic_interest and a q voting interest subject_to special majority provisions relating to certain significant actions in partnership a limited_liability_company that is treated as a partnership for federal_income_tax purposes distributing 1’s economic and voting interest in partnership is in each case at least a one-third interest distributing also owns several subsidiaries the distributing subsidiaries all of which are members of the parent group distributing directly and through the distributing subsidiaries has been engaged in the active_conduct of busine sec_1 for more than five years on date partner a and partner b collectively the founders formed partnership and contributed to it assets used in the conduct of segment a a segment of busine sec_1 since year in exchange for all of the membership interests then comprised of classes a-1 a-2 and b in partnership on date the founders sold all of their class b membership interests in partnership to distributing in a taxable transaction at the time the class b membership interests represented an economic_interest in partnership of r and a voting interest in partnership of s in each case at least a one-third interest the management of partnership is vested exclusively in partnership’s board_of managers the board the founders have been delegated certain responsibilities with respect to the conduct of segment a subject_to the general oversight of the board notwithstanding such delegation the board generally has the authority to make management decisions and control the day-to-day conduct of segment a in order to enable the long-term growth and expansion of segment a as an independent business the parent group intends to raise capital through an initial_public_offering of stock of a newly-formed corporation that will be directly engaged in segment a to facilitate this initial_public_offering the following transactions have been proposed collectively the proposed transaction i partnership will acquire a portion of the founders’ interests in partnership after which partnership will either make an election under sec_301_7701-3 to be classified as a corporation controlled for federal tax purposes or a new corporation controlled will be formed into which distributing and the founders will contribute all of their partnership interests plr-136182-14 ii distributing will distribute all of its stock of controlled to distributing iii distributing will distribute all of its stock of controlled to disregarded_entity iv disregarded_entity will distribute all of its stock of controlled to parent and v parent will distribute all of its stock of controlled to its shareholders it is anticipated that the initial_public_offering of controlled stock will occur within one year of these distributions representations the parent group makes the following representations a b distributing owns and has owned since its acquisition of partnership on date a significant interest within the meaning of revrul_2007_42 i r b in partnership partnership has been engaged in the active_conduct of segment a throughout the period following distributing 1’s acquisition of its interest in partnership on date ruling based upon the facts and information submitted and the representations made we rule that distributing 1’s acquisition of segment a through its acquisition of the interest in partnership constitutes an expansion of distributing 1’s busine sec_1 within the meaning of sec_1_355-3 and does not constitute the acquisition of a new or different business sec_1_355-3 and revrul_2007_42 2007_28_irb_44 revrul_2003_38 2003_17_irb_811 and revrul_2003_18 2003_7_irb_467 caveats except as expressly provided herein no opinion is expressed or implied concerning the tax treatment of the proposed transaction under any provision of the code and regulations or the tax treatment of any condition existing at the time of or effects resulting from the proposed transaction that is not specifically covered by the above rulings procedural statements plr-136182-14 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 representatives a copy of this 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 return that provides the date and control number of the letter_ruling sincerely frances l kelly senior counsel office of associate chief_counsel corporate cc


department of the treasury internal_revenue_service washington d c sep tax_exempt_and_government_entities_division uniform issue list seit ep past legend taxpayer a ira b non-ira accountc non-ira account d financial_institution e financial_institution f financial_institution g amount dear this is in response to your letter dated date as supplemented by correspondence received on date and date in which you request through your authorized representative a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code’ the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a represents that she received a distribution equal to amount from ira b an individual_retirement_account ira described in sec_408 of the code taxpayer a asserts that her failure to accomplish a rollover of amount within the 60-day period prescribed by sec_408 was due to confusion regarding the status of ira b as a tax-deferred retirement account after she changed financial institutions taxpayer a owned ira b which was maintained by financial_institution e to his death taxpayer a’s husband had handled all of his and taxpayer a’s finances after his death taxpayer a was advised to transfer her accounts to another custodian where she would receive a better interest rate on date taxpayer a withdrew amount from ira b within days from the date of the withdrawal taxpayer a deposited amount into two non-ira accounts non- ira account c and non-ira account d which were maintained by financial_institution f and financial_institution g respectively prior taxpayer a believed that she had merely changed custodians taxpayer a discovered her mistake in february of when taxpayer a’s accountant informed taxpayer a that the date distribution from ira b was taxable taxpayer a represents that amount has not been used for any other purpose based on the above facts and representations taxpayer a requests a waiver of the 60-day rollover requirement with respect to the distribution of amount from ira b sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 sec_408 of the code provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money or any other_property is paid into an ira for the benefit of such individual not later than the 60th day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary_of_the_treasury may waive the 60-day requirement under sec_408 and sec_408 where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement revproc_2003_16 r b provides that the service will issue a ruling waiving the 60-day rollover requirement in cases where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the taxpayer in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information and documentation submitted are consistent with taxpayer a’s assertion that the failure to accomplish a rollover within the 60-day period prescribed by sec_408 was due to confusion regarding the status of ira b as a tax-deferred retirement account after she changed financial institutions therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount taxpayer a is granted a period of days from the issuance of this ruling letter to contribute amount into an ira account provided all other requirements of sec_408 except the 60-day requirement will be met with respect to such contribution amount will be considered a rollover_contribution within the meaning of sec_408 this ruling does not authorize the rollover of amounts that are required to be distributed by sec_408 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter_ruling is being sent to your authorized representative if you wish to inquire about this ruling please contact at please address all correspondence to se t ep ra t1 sincerely yours whitber carlton a watkins manager employee_plans technical group enclosures notice of intention to disclose deleted copy of this letter cc


internal_revenue_service number release date index number ------------------------------------- ----------------------- -------------------------------- re e 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 b04 plr-121339-16 date date legend decedent --------------------- --------------------------------------- --------------------------------------------------- spouse -------------------------------- date ------------------------ date ------------------- ------------------- dear --------- this letter responds to your representative’s letter of date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the portability election under sec_2010 of the internal_revenue_code code to allow a decedent's surviving_spouse to take into account that decedent's deceased spousal unused exclusion dsue amount the facts and representations submitted are as follows decedent died on date survived by spouse date is a date after the effective date of the amendment to sec_2010 which provides for portability of a dsue amount to a surviving_spouse to obtain the benefit of portability of decedent's dsue amount to spouse decedent's_estate was required to file form_706 united_states estate and generation-skipping_transfer_tax return on or before the date that is months after decedent's date of death or the last day of the period covered by an extension decedent's form_706 was due on date but the estate did not file a form_706 to make the portability election the failure to elect portability was discovered after the due_date for making the election spouse as the executor of decedent's_estate represents that the value of decedent's plr-121339-16 gross_estate is less than the basic exclusion amount in the year of decedent's death and that during her lifetime decedent made no taxable_gifts as executor spouse requests an extension of time pursuant to sec_301_9100-3 to elect portability of decedent's dsue amount pursuant to sec_2010 law and analysis sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2010 provides that a credit of the applicable credit_amount shall be allowed to the estate of every decedent against the tax imposed by sec_2001 sec_2010 provides that the applicable credit_amount is the amount of the tentative_tax that would be determined under sec_2001 if the amount with respect to which such tentative_tax is to be computed were equal to the applicable_exclusion_amount on date congress amended sec_2010 effective for estates of decedents dying and gifts made after date to allow portability of a decedent’s unused applicable_exclusion_amount between spouses tax relief unemployment insurance reauthorization and job creation act of pub_l_no sec_303 124_stat_3296 sec_2010 provides that the applicable_exclusion_amount is the sum of the basic exclusion amount and in the case of a surviving_spouse the dsue amount sec_2010 generally provides that the basic exclusion amount is dollar_figure to be adjusted for inflation annually after calendar_year sec_2010 defines the dsue amount to mean the lesser_of a the basic exclusion amount or b the excess of -- i the applicable_exclusion_amount of the last deceased spouse of the surviving_spouse over ii the amount with respect to which the tentative_tax is determined under sec_2001 on the estate of such deceased spouse sec_2010 provides that a dsue amount may not be taken into account by a surviving_spouse under sec_2010 unless the executor of the estate of the deceased spouse files an estate_tax_return on which such amount is computed and makes an election on such return that such amount may be so taken into account the election once made shall be irrevocable no election may be made if such return is filed after the time prescribed by law including extensions for filing such return plr-121339-16 sec_2010 provides that the secretary shall prescribe regulations as may be necessary or appropriate to implement sec_2010 sec_20_2010-2t a of the estate_tax regulations as in effect on date provides that to allow a decedent’s surviving_spouse to take into account that decedent’s dsue amount the executor of the decedent’s estate must elect portability of the dsue amount on a timely filed form_706 under sec_20_2010-2t a the due_date of an estate_tax_return required to elect portability is nine months after the decedent’s date of death or the last day of the period covered by an extension if an extension of time for filing has been granted under sec_20_2010-2t a the portability election is made by timely filing a complete and properly prepared estate_tax_return unless the executor satisfies the requirements for the election not to apply in sec_20_2010-2t a i sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term statutory election means an election whose due_date is prescribed by statute the term regulatory election means an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute a request for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted 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 the due_date for the portability election is prescribed by statute in the case of an estate required to file an estate_tax_return under sec_6018 see sec_2010 sec_6075 and sec_6018 in the case of an estate that is not required to file an estate_tax_return plr-121339-16 under sec_6018 the due_date is prescribed by regulation see sec_20_2010-2t a see also sec_20_2010-2 and revproc_2014_18 2014_7_irb_513 sec_2 accordingly in the latter case a taxpayer may seek an extension of time to elect portability under the provisions of sec_301_9100-3 sec_6018 requires the filing of an estate_tax_return in all cases where the gross_estate exceeds the basic exclusion amount in effect under sec_2010 for the calendar_year which includes the date of death for purposes of this determination under sec_6018 the basic exclusion amount is reduced but not below zero by the sum of -- a the amount of the adjusted_taxable_gifts within the meaning of sec_2001 made by the decedent after date plus b the aggregate amount allowed as a specific exemption under sec_2521 as in effect before its repeal by the tax reform act of with respect to gifts made by the decedent after date as executor spouse represents that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is not required to file an estate_tax_return under sec_6018 under these facts the commissioner has discretionary authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly we grant an extension of time of days from the date of this letter in which to elect portability under sec_2010 the election should be made by filing a complete and properly prepared form_706 and a copy of this letter within days from the date of this letter to the cincinnati service_center at the following address internal_revenue_service cincinnati service_center stop cincinnati oh for purposes of electing portability a form_706 filed by decedent’s estate within days from the date of this letter will be considered to be timely filed the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination if it is later determined that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is required to file an estate_tax_return pursuant to sec_6018 the commissioner is without authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability and the grant of the extension referred to in this letter is deemed null and void plr-121339-16 this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely associate chief_counsel passthroughs and special industries melissa c liquerman melissa c liquerman chief branch office of associate chief_counsel passthroughs special industries enclosure copy of letter for sec_6110 purposes


internal_revenue_service index number number release date department of the treasury washington dc person to contact telephone number refer reply to cc tege eoeg teb - plr-102575-00 date date legend issuer x bonds y bonds trustee original borrower date date date date date date date date date dollar_figurez borrower project bank a bank b bank c_corporation m dear you have requested a ruling on behalf of the issuer that a proposed new bond issue the new bonds will be treated as a current refunding_issue refunding the y bonds within the meaning of sec_1_150-1 of the income_tax regulations and sec_1313 of the tax_reform_act_of_1986 as amended the act you have also requested a ruling that the amount of the new bonds will not be treated as exceeding the outstanding amount of the y bonds for purposes of sec_1313 of the act facts the issuer issued the x bonds under the internal_revenue_code of the code to finance the construction of multifamily residential rental housing project the project to be owned by the original borrower the issuer issued the y bonds to current refund the x bonds the y bonds were issued as variable rate bonds secured_by a letter_of_credit issued by bank c the original letter_of_credit the y bonds were issued at par pursuant to an indenture of trust between the issuer and the trustee the indenture the proceeds of the y bonds were loaned to the original borrower pursuant to a loan agreement between the issuer and the original borrower the loan agreement the y bonds issued after the effective date of the act satisfied the transition rule for current refundings contained in sec_1313 of the act and accordingly are generally subject_to the code on date the project was acquired by the borrower on date bank a issued a letter_of_credit the letter_of_credit to replace the original letter_of_credit pursuant to a reimbursement agreement between the borrower and bank b the reimbursement agreement the letter_of_credit was issued by bank a on behalf of bank b due to the fact that bank b is an unrated entity bank a and bank b are affiliates owned by the same common parent the replacement of the original letter_of_credit with the letter_of_credit did not cause a reissuance of the y bonds under the reimbursement agreement the indenture and the loan agreement bank b is generally responsible for sending default notices to the trustee and for handling day-to-day matters relating to the administration of the letter_of_credit bank a is responsible for sending notices to the trustee relating to nonrenewals of the letter_of_credit the letter_of_credit was scheduled to expire on date although bank a was prepared to renew the letter_of_credit the borrower was negotiating for the purchase of a substitute letter_of_credit from corporation m the borrower took no action and did not intend to redeem whether by refunding or otherwise the y bonds under the terms of the letter_of_credit bank a was required to send a notice to the trustee that the letter_of_credit was going to expire and that the letter_of_credit was not going to be extended this notice was required to be sent at least ninety days prior to the expiration of the letter_of_credit on date an employee of bank a erroneously sent a notice of default the notice of default to the trustee with respect to the letter_of_credit the notice of default provided that pursuant to the terms of the letter_of_credit an event of default had occurred and was continuing and directed the trustee to declare a mandatory redemption of y bonds the notice of default was made using a form default notice attached to the letter_of_credit and was signed by an employee of bank a on behalf of bank b at no time during the term of the letter_of_credit was the borrower in default under the terms of the letter_of_credit or any other document relating to the letter_of_credit bank a had no authority to sign the notice of default on behalf of bank b the bank a employee who sent the notice of default misread the letter_of_credit the reimbursement agreement and related documents and erroneously attempted to notify the trustee of the nonrenewal of the letter_of_credit using the form default notice attached to the letter_of_credit neither the borrower the issuer nor bank b received a copy of the notice of default or otherwise knew of the notice of default to the contrary one week after the notice of default was sent the borrower received correspondence from bank a setting out the relevant time frames in connection with the replacement of the letter_of_credit this correspondence made no reference to the notice of default having been sent on date the trustee sent a notice of mandatory full redemption the redemption notice to the holders of the y bonds pursuant to the indenture indicating that the y bonds would be redeemed on date neither the borrower the issuer nor bank b received a copy of the redemption notice or otherwise knew of the redemption notice during this time the borrower continued to work with corporation m to obtain a new letter_of_credit for the y bonds at the same time bank a and bank b agreed to a short-term extension of the letter_of_credit in the event that a new letter_of_credit could not be obtained prior to the expiration of the letter_of_credit on date the borrower received a loan analysis from corporation m showing a proposed closing date for the substitute letter_of_credit of date a date prior to the expiration of the letter_of_credit on date the trustee executed the certificates for payment under the letter_of_credit the certificates these certificates provided that the trustee was making draws under the letter_of_credit to retire the y bonds on date the certificates were sent to the bank a employee who prepared the notice of default and thus bank a did not realize that this was a mistake neither the borrower the issuer nor bank b received a copy of the certificates or otherwise knew of the certificates on date the y bonds were retired with funds provided pursuant to the letter_of_credit bank a automatically debited the account of bank b for the amount drawn under the letter_of_credit bank b in turn automatically debited the account of the borrower for the amount drawn under the letter_of_credit causing the borrower’s account to be substantially overdrawn the next day an employee of bank b noticed that the borrower’s account was overdrawn the employee immediately contacted bank a to determine why a draw had been made on the letter_of_credit and learned of the erroneous notice of default the same day bank a sent an urgent notice to the trustee indicating that the notice of default was sent in error and requesting that the trustee attempt to retrieve the funds before the holders of the y bonds were paid the attempt was unsuccessful and the y bonds were redeemed subsequently bank b made a temporary loan to the borrower at an interest rate comparable to that borne on the y bonds to finance the costs of redemption of the y bonds on date the issuer adopted a resolution stating its intention and expectation to issue the new bonds to replace the y bonds the principal_amount and issue_price excluding pre-issuance accrued interest of the new bonds will be equal to the outstanding principal_amount of the y bonds immediately prior to redemption no new volume_cap will be obtained for the new bonds issuance costs relating to the new bonds are not expected to exceed dollar_figurez and will be paid_by either bank a the trustee or the borrower from funds that do not constitute tax-exempt_bond proceeds the terms of the new bonds will be identical to the terms of the y bonds law and analysis sec_103 and sec_141 to of the internal_revenue_code_of_1986 as added by sec_1301 of the act provide the rules for determining whether interest on a state_or_local_bond is tax exempt sec_1311 of the act provides the general_rule that the amendments made by sec_1301 apply to bonds issued after date sec_1313 of the act provides in general that the amendments made by sec_1301 shall not apply to any bond the proceeds of which are used exclusively to refund other than to advance refund a qualified_bond eg a bond issued before date if a the amount of the refunding_bond does not exceed the outstanding amount of the refunded bond and b i the average maturity of the issue of which the refunding_bond is a part does not exceed percent of the average reasonably expected economic life of the facilities being financed with the net_proceeds of such issue determined under sec_147 or ii the refunding_bond has a maturity_date not later than the date years after the date the qualified_bond was issued sec_1_150-1 provides definitions for all purposes of sec_103 and sec_141 to sec_1_150-1 generally defines refunding_issue as an issue of obligations the proceeds of which are used to pay principal interest or redemption price on another issue including the issuance costs accrued interest capitalized_interest on the refunding_issue a reserve or replacement fund or similar costs if any properly allocable to that refunding_issue sec_1_150-1 provides that in the absence of other applicable controlling rules under sec_1_150-1 the determination of whether an issue is a refunding_issue is based on the substance of the transaction in light of all the facts and circumstances in this case although the issuer will not actually use proceeds of the new bonds to pay debt service on the y bonds in light of all the facts and circumstances the substance of the transaction is that the new bonds will be a refunding_issue within the meaning of sec_1_150-1 the actions of the borrower indicate that there was no intent to redeem the y bonds with a draw on the letter_of_credit rather the borrower had intended to purchase a substitute letter_of_credit from corporation m and keep the y bonds outstanding the borrower had taken significant action to purchase a substitute letter_of_credit including discussing a possible extension of the letter_of_credit with bank b if the new letter_of_credit was not obtained prior to the expiration of the letter_of_credit even this eventuality was not expected to occur as borrower had received a loan analysis from corporation m indicating a closing date for a substitute letter_of_credit prior to the expiration of the letter_of_credit the erroneous notice of default was sent by bank a in an attempt to send a notice of nonrenewal of the letter_of_credit the nonrenewal of the letter_of_credit was contemplated by bank a as evidenced by their letter to the borrower sent after the notice of default setting forth the time frames in connection with the replacement of the letter_of_credit at no time was the borrower in default under the terms of the letter_of_credit or any other document relating to the letter_of_credit finally neither the issuer nor the borrower knew of the notice of default the redemption notice or the certificates prior to the redemption of the y bonds the new bonds will also be treated as a refunding_issue for purposes of sec_1313 of the act while by its terms the definition of refunding_issue contained in sec_1_150-1 applies only for purposes of sec_103 and sec_141 to there is no reason why a different definition should apply for purposes of sec_1313 of the act the reasons and concerns surrounding the distinction between new money and refunding transactions are the same for both the code and the act moreover the definition of refunding_issue contained in sec_1_150-1 is not inconsistent with any definition of refunding_issue in existence at the time the act was enacted see for example sec_1 e of the regulations removed by t d 1993_2_cb_13 at the amount of the new bonds will not exceed the outstanding amount of the y bonds for purposes of sec_1313 of the act one purpose of sec_1313 is to ensure that issuers are not able to issue additional bonds after the effective date of the act while avoiding the changes made by the act through the application of the current refunding exception accordingly in applying this rule the amount of the refunding bonds is to be determined by reference to the issue_price excluding pre-issuance accrued interest rather than the face_amount because the issue_price and not the face_amount represents the actual amount borrowed by the issuer in this case the issuer has represented that the issue_price excluding pre-issuance accrued interest of the new bonds will be equal to the outstanding principal_amount of the y bonds immediately prior to redemption conclusion based strictly on the information submitted and the representations made we conclude that the new bonds will be a current refunding_issue refunding the y bonds within the meaning of sec_1_150-1 and sec_1313 of the act and the amount of the new bonds will not exceed the outstanding amount of the y bonds for purposes of sec_1313 of the act except as specifically ruled above no opinion is expressed concerning this transaction under any other provision of the code or regulations thereunder no opinion is expressed about whether interest on the new bonds or the y bonds is excludable from gross_income of the holders under sec_103 of the 1986_code or the code in addition no opinion is expressed about whether the application of proceeds of tax-exempt_bonds to refinance an obligation other than a state_or_local_bond constitutes a refunding_issue within the meaning of sec_1_150-1 or sec_1313 of the act see for example sec_1_142-4 this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be cited as precedent sincerely yours assistant chief_counsel exempt_organizations employment_tax government entities by bruce m serchuk senior technician reviewer tax exempt bonds branch enclosure 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 psi 2-plr-101700-02 date date legend x date dear this responds to a letter dated date submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts x was incorporated on date the shareholders of x desired that x elect s_corporation treatment for x effective on date but the election to be treated as an s_corporation was not timely filed accordingly x requests a ruling that it will be treated as an s_corporation effective date law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective sec_1362 provides in relevant part that if an s election is made within the first two and one-half months of a corporation's taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made under sec_1362 however if an s election is made after the first two and one-half months of a corporation's taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is filed plr-101700-02 sec_1362 provides that if no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year and sec_1362 shall not apply x did not file an election to be treated as an s_corporation under sec_1362 x has however established reasonable_cause for not making a timely s election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and the representations made and provided that x otherwise qualifies as an s_corporation we conclude that x will be treated as an s_corporation effective date within days from the date of this letter x should submit a properly completed form_2553 with a copy of this letter attached to the relevant service_center except as specifically set forth above no opinion is expressed or implied as to the federal_income_tax consequences of the transaction described above under any other provision of the code specifically no opinion is expressed concerning whether x is in fact an s_corporation for federal tax purposes 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 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 matthew lay senior technician reviewer branch associate chief_counsel passthroughs and special industries enclosures copy of this letter 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 psi b02-plr-101898-01 date date x a b d1 year dear this responds to your letter dated date and subsequent correspondence written on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 of year a and b x’s shareholders represent that they intended for x to be treated as an s_corporation for federal tax purposes as of year x's first taxable_year x filed a form_1120s u s income_tax return for an s_corporation for its year taxable_year however a form_2553 election by a small_business_corporation was not filed for x for year sec_1362 provides that if a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make plr-101898-01 such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x’s first taxable_year accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective for its year taxable_year within days following the date of this letter then such election will be treated as timely made for x’s year taxable_year a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x's authorized representative sincerely yours jeanne m sullivan acting senior technician reviewer branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service director exempt_organizations rulings and agreements department of the treasury p o box cincinnati ohio release number release date date person to contact contact telephone numbers federal identification_number uil number dear in response to your request for a ruling that you are an exempt this is operating_foundation described in sec_4940 of the internal_revenue_code irc we previously held you to be j a ruling letter in a private_operating_foundation under irc you acquired ecologically significant in order to retain the rural character of you stated that you have been actively working to preserve open space environments and natural_resources property and maintained it a town and provide scenic beauty for the townspeople and an attractive habitat for wildlife you work to promote sound conservation practices for the public water resources wetlands animal and plant life local community as biological sciences recreational opportunities for individuals you stated that you have been conducting these activities to further your exempt purposes since stated that you acquired the first property in to with its history of the land and knowledge of land maintained by you has provided passive you have educated the you of your trustees are disqualified persons you stated that you are led by five than trustees are representative of the community because they hold numerous community positions on boards and committees you also stated that none of your officers are disqualified persons trustees and less than you stated that your no more sec_4940 provides that a private_foundation that qualifies as operating_foundation under sec_4940 from the excise_tax on net_investment_income imposed by sec_4940 for the taxable_year is exempt an exempt page sec_4940 provides that the term exempt_operating_foundation with respect to any taxable_year applies to any private_foundation if a b c such foundation i sec_4942 an operating_foundation as defined in irc such foundation has been publicly supported under sec_170 b a vi sec_302 such foundation was an operating_foundation as defined in sec_4942 for at least ten years or under of the tax_reform_act_of_1984 public law of january or a as at all times during the taxable_year such foundation i consists of individuals at least percent of whom are not disqualified individuals as defined in sec_4940 d b and and is broadly representative of the general_public the governing body of the d at no time during the year does such foundation have an officer who is a disqualified_person v of the income_tax regulations indicates that sec_1 a -9 e the governing body of the organization may be considered to represent a broad interest of the public if knowledge or expertise in the particular field or discipline in or appointed officials clergymen educators civic leaders or other such persons representing a broad cross-section of the views and interests of the community is composed of persons having special it and ending april we determined that you met all the based on the pertinent facts and law criteria required for classification as within the meaning of sec_4940 exempt_operating_foundation in any future taxable_year provided that you qualify as officer a disqualified_individual continues to be broadly representative of the general_public and all times at least percent of your directors are not disqualified persons for the taxable_year beginning may an a you will continue to be classified as at all times your governing body an exempt_operating_foundation a private_operating_foundation at no time is any c d b at please report to may consider the effect on this determination us any material changes in the pertinent facts so that we we will make this determination_letter available for public inspection under the provisions sec_6110 after we delete the information that would identify you please see the enclosed notice of intent to disclose and the enclosed version of this letter that shows the deletions if you page disagree with the deletions follow the instructions provided in the notice if you agree with the deletions take no further action under the provisions of sec_6110 other taxpayers may not cite this determination as legal precedent please keep a copy of this determination_letter in your permanent records sincerely robert choi director exempt_organizations rulings and agreements


t c summary opinion united_states tax_court matthew bell petitioner v commissioner of internal revenue respondent docket no 15546-16s filed date matthew bell pro_se albert b brewster ii for respondent summary opinion panuthos chief special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not 1unless otherwise indicated subsequent section references are to the continued reviewable by any other court and this opinion shall not be treated as precedent for any other case in a notice_of_deficiency dated date respondent determined a deficiency of dollar_figure in petitioner’ sec_2014 federal_income_tax and a sec_6662 accuracy-related_penalty of dollar_figure after a concession the issue for decision is whether petitioner is liable for the accuracy-related_penalty under sec_6662 for the year in issue background petitioner resided in california when the petition was timely filed petitioner received a bachelor’s degree in history during the year in issue petitioner worked as a sales representative for two separate companies petitioner received a form_w-2 wage and tax statement from each of his employers reflecting wages totaling dollar_figure for petitioner did not operate a sole_proprietorship have gross_receipts or pay any expenses relating to a business activity in continued internal_revenue_code code in effect for the year in issue we round monetary amounts to the nearest dollar 2petitioner conceded the determined deficiency for approximately three to five tax years before petitioner employed a tax_return_preparer for the preparation of his federal_income_tax returns in date petitioner sent pam williams the following email with the subject re matt bell’s w 2s regarding preparation of hi sec_2014 federal_income_tax return my friend jeremy fox referred me i told him that i have a tax guy - but he said you may be able to do better for me i think he said you could look this over and give me an estimate of what i would get back and then go from there please let me know thank you that same day ms williams responded via email as follows after taking a cursory glance at your w2’s i will be able to get you a refund of about dollar_figure my fee will be so approximately dollar_figure i would encourage you to see what your tax guy would be able to get you if you like what i can do better and you’re willing to pay my fee then let me know and i will proceed the way my fee works is since you’re a friend of jeremy’s you pay me after you get the refund that i say i can get you a form_1040 u s individual_income_tax_return dated date was timely electronically filed in petitioner’s name for the tax_year the 3the circumstances of the preparation and filing of petitioner’ sec_2010 form_1040 are not entirely clear the copy of the return in evidence is not signed and there is no reference to or signature by a paid return preparer petitioner asserts that the return preparer filed the return without providing him an opportunity to review the document and did not provide him a copy of a the return before or after it was filed despite this ambiguity the parties have stipulated that petitioner filed a form_1040 and respondent apparently accepted this document as continued form_1040 reported petitioner’s wages of dollar_figure attached to the form_1040 was a schedule c profit or loss from business under the business name sales lead generation for marketing companies the schedule c reported gross_receipts of dollar_figure and total expenses of dollar_figure resulting in a net_loss of dollar_figure the business loss of dollar_figure offset petitioner’s reported wages also attached to the form_1040 was a schedule a itemized_deductions claiming a deduction of dollar_figure for unreimbursed employee business_expenses petitioner’s return reflected a tax of dollar_figure withholding of dollar_figure and an overpayment of dollar_figure petitioner did not amend hi sec_2014 form_1040 in the notice_of_deficiency respondent disallowed dollar_figure of the deduction for unreimbursed employee business_expenses and dollar_figure of the deduction for schedule c expenses and imposed the accuracy-related_penalty petitioner filed a timely petition in which he asserted that he disagreed with the accuracy-related_penalty because the return was fraudulently prepared and filed by the tax_return_preparer without my consent as previously indicated petitioner does not continued petitioner’ sec_2014 form_1040 and made adjustments to it which are the subject matter of this opinion 4on the basis of this record this overpayment of dollar_figure was refunded to petitioner dispute respondents’s adjustments because he conceded that he did not have a business activity in and overstated his itemized_deductions petitioner attributes all of the inaccurate reporting on his return to his tax_return_preparer discussion sec_6662 and b and imposes an accuracy-related_penalty on any portion of an underpayment of federal_income_tax that is attributable to the taxpayer’s negligence or disregard of rules or regulations or substantial_understatement_of_income_tax an understatement of federal_income_tax is substantial if the amount of the understatement for the taxable_year exceeds the greater of of the tax required to be shown on the return for the taxable_year or dollar_figure sec_6662 the term negligence in sec_6662 includes any failure to make a reasonable attempt to comply with the code and any failure to keep adequate books_and_records or to substantiate items properly sec_6662 sec_1 b income_tax regs negligence has also been defined as the failure to exercise due care or the failure to do what a reasonable person would do under the circumstances see 92_tc_1 aff’d 925_f2d_348 9th cir see also 85_tc_934 the term disregard includes any careless reckless or intentional disregard sec_6662 the commissioner bears the burden of production with respect to a sec_6662 penalty sec_7491 if the understatement of income_tax for the year in issue is substantial the commissioner has satisfied the burden of producing evidence that the penalty is justified respondent met his burden because the amount of petitioner’s understatement for is substantial once the commissioner has met his burden the taxpayer may rebut the evidence that a sec_6662 accuracy-related_penalty is appropriate if he can demonstrate reasonable_cause for the underpayment and that he acted in good_faith with respect to the underpayment sec_6664 a determination of reasonable_cause and good_faith is made on a case-by-case basis taking into account all pertinent facts and circumstances including the taxpayer’s efforts to assess the proper tax_liability the knowledge and the experience of the taxpayer and any reliance on the advice of a professional such as an accountant sec_1_6664-4 income_tax regs generally the most important 5the amount of tax required to be shown on petitioner’ sec_2014 return is dollar_figure dollar_figure reported on return dollar_figure increase in tax ' dollar_figure this dollar_figure increase in tax is greater than dollar_figure which is greater than dollar_figure which is of dollar_figure see sec_6662 factor is the extent of the taxpayer’s effort to assess his or her proper tax_liability id the general_rule is that a taxpayer has a duty to file a complete and accurate tax_return and cannot avoid that duty by placing responsibility with an agent 469_us_241 88_tc_654 a taxpayer has an obligation to exercise d iligence and prudence and to read a tax_return that is prepared for him 144_tc_306 see also salloum v commissioner tcmemo_2017_127 at reliance on the advice of a professional however does not necessarily demonstrate reasonable_cause and good_faith sec_1_6664-4 income_tax regs reliance on the advice of a professional must be reasonable under the circumstances 990_f2d_893 6th cir aff’g donahue v commissioner tcmemo_1991_181 the advice must be based upon all pertinent facts and the applicable law and must not be based on unreasonable factual or legal assumptions sec_1_6664-4 and ii income_tax regs the advice cannot be based on an assumption that the taxpayer knows or has reason to know is unlikely to be true id subdiv ii a taxpayer cannot negate the accuracy-related_penalty through reliance on the promoter of a transaction or on other advisers who have a conflict of interest 471_f3d_1021 9th cir aff’g tcmemo_2004_269 see also pasternak v commissioner f 2d pincite 135_tc_199 94_tc_637 aff’d without published opinion 956_f2d_274 9th cir and aff’d without published opinion sub nom cowles v commissioner 949_f2d_401 10th cir a tax adviser who has a financial stake in the transaction has a conflict of interest pasternak v commissioner f 2d pincite canal corp v commissioner t c pincite a reasonably prudent person would investigate claims from his tax professional that are likely too good to be true pasternak v commissioner f 2d pincite quoting 92_tc_827 suspect tax savings should prompt a reasonable taxpayer to make a good-faith investigation allen v commissioner t c pincite roberson v commissioner tcmemo_1996_335 aff’d without published opinion 142_f3d_435 6th cir petitioner testified to the following regarding the preparation of hi sec_2014 form_1040 mr fox contacted him and encouraged him to hire ms williams as a tax_return_preparer he spoke with ms williams by telephone and emailed her copies of hi sec_2014 forms w-2 after receiving ms williams’ email he agreed to have her prepare hi sec_2014 form_1040 but he did not authorize her to file it ms williams did not provide a copy of the return for him to review before she filed it ms williams filed hi sec_2014 form_1040 without his signature or consent and he paid ms williams’ fee to support his assertions of reasonable_cause and good_faith petitioner asserts that he relied on mr fox’s and ms williams’ representations about ms williams’ knowledge and experience and that they convinced him that everything was legitimate petitioner concedes that ms williams’ promise of a dollar_figure income_tax refund seemed extremely high and that the amount raised a major red flag petitioner did not perform any research as to ms williams’ qualifications and relied solely on mr fox’s and ms williams’ representations which included a promise that he would not get audited 6petitioner did not allege in his petition that the form_1040 filed in his name was invalid because he did not sign it as previously discussed petitioner stipulated that he filed hi sec_2014 form_1040 and respondent processed it made adjustments and issued a notice_of_deficiency 7petitioner asserts that mr fox and ms williams represented that ms williams had worked for the internal_revenue_service irs and h_r block the court concludes that petitioner a college graduate with prior experience in filing his federal_income_tax returns did not make sufficient efforts to determine his proper tax_liability petitioner asserts that he did not request a copy of hi sec_2014 form_1040 before it was filed because i assumed i was going to receive it at some point and i never did petitioner also did not request a copy of hi sec_2014 form_1040 after he learned that it had been filed nor did he attempt to ascertain what was reported on his return petitioner further asserts that he did not see what was reported on his return until it was examined by the irs petitioner acknowledges that hi sec_2014 form_1040 reported a fictitious schedule c business and claimed overstated itemized_deductions and thus the return was based on facts and assumptions that were untrue these assertions do not reflect a good-faith effort to report the proper amount of tax_liability see sec_6664 boyle u s pincite pasternak v commissioner f 2d pincite stough v commissioner t c pincite metra chem corp v commissioner t c pincite salloum v commissioner at sec_1_6664-4 c i and ii income_tax regs petitioner also did not act as a reasonable person by failing to investigate ms williams’ assertions that she could obtain for him a dollar_figure income_tax refund which he admits was too good to be true the fact of ms williams’ arrangement to receive of his refund reflects her conflict of interest see hansen v commissioner f 3d pincite pasternak v commissioner f 2d pincite canal corp v commissioner t c pincite laverne v commissioner t c pincite allen v commissioner t c pincite roberson v commissioner tcmemo_1996_335 petitioner apparently accepted and cashed his refund check for dollar_figure less ms williams’ fee and did not concern himself with the accuracy of hi sec_2014 form_1040 for all the reasons stated herein we conclude that petitioner did not act with reasonable_cause and in good_faith see sec_1_6664-4 income_tax regs we further conclude that the underpayment is also due to negligence see sec_6662 c sec_1_6662-3 income_tax regs accordingly we sustain the accuracy-related_penalty we have considered all of 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 for respondent


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 ps b02 plr-151417-12 date date legend x --------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------- state ------------- natural resource ------------------------- natural resource ---------------------- product --------- product ------------------------------------------ product ------------- proce sec_1 ---------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ---------- proce sec_2 ---------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ----------------------------------------- dear --------------- this responds to your letter dated date submitted on behalf of x requesting a ruling concerning the qualifying_income exception to the publicly_traded_partnership rules of sec_7704 of the internal_revenue_code plr-151417-12 facts x is a publicly-traded corporation organized under the laws of state x represents that it intends to form a publicly_traded_partnership the partnership within the meaning of sec_7704 as part of an initial_public_offering of units in the partnership the partnership will be formed and organized as a limited_partnership under the laws of state x currently owns and operates facilities that process natural resource producing product x intends to convey these facilities to partnership x intends that partnership will process natural resource to produce product and that partnership will also process natural resource to produce product more specifically x intends that partnership will process natural resource using proce sec_1 product is produced as a product of proce sec_1 and is sold to third parties for use as in the production of products sold at retail product is produced as a byproduct of proce sec_1 and is sold for use in refineries additionally x intends that partnership will process natural resource into product using proce sec_2 these resulting compounds are then sold to manufacturers which further process them into other products sold at retail product is produced as a byproduct of proce sec_2 and is sold for use in refineries finally x intends that partnership will engage in the storage and transportation of product and product x represents that the partnership will not sell either product or product at the retail level x has requested a ruling that the gross_income that the partnership will earn from the processing sales storage and transportation of product and product will constitute qualifying_income within the meaning of sec_7704 law and analysis sec_7704 provides that a publicly_traded_partnership shall be treated as a corporation sec_7704 provides that the term publicly_traded_partnership means any partnership if interests in that partnership are traded on an established_securities_market or interests in that partnership are readily_tradable on a secondary market or substantial equivalent thereof sec_7704 provides that sec_7701 shall not apply to any publicly_traded_partnership for any taxable_year if such partnership met the gross_income requirements plr-151417-12 of sec_7704 for such taxable_year and each preceding_taxable_year beginning after date during which the partnership or any predecessor was in existence sec_7704 explains that a partnership meets the gross_income requirements of sec_7704 for any taxable_year if percent or more of the gross_income of such partnership for such taxable_year is qualifying_income sec_7704 provides that the term qualifying_income means income or gains derived from the exploration development mining or production processing refining transportation including pipelines transporting gas oil or products thereof or the marketing of any mineral_or_natural_resource including fertilizer geothermal_energy or timber sec_7704 further provides that for purposes of sec_7704 the phrase mineral_or_natural_resource is defined to mean any product of a character with respect to which a deduction for depletion is allowable under sec_611 except that such term does not include any product described in sec_613 or b conclusion based solely on the facts submitted and representations made we conclude that the gross_income that partnership will derive from processing natural resource into product and processing natural resource into product will be qualifying_income within the meaning of sec_7704 we further conclude that income derived by partnership from marketing storing and transporting product product and product will constitute qualifying_income within the meaning of sec_7704 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 including whether x meets the percent gross_income requirement of sec_7704 in any taxable_year for which this ruling may apply in addition no opinion is expressed or implied concerning whether any ownership structure discussed or referenced in this letter constitutes a partnership for federal tax purposes a copy of this 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 return that provides the date and control number of the letter_ruling 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 plr-151417-12 the material submitted in support of the request for rulings it is subject_to verification on examination in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely charlotte chyr senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc