department of the treasury washington dc third party communication date of communication month dd yyyy person to contact -------------------- id no ------------- telephone number --------------------- refer reply to cc intl b04 plr-107553-08 date date internal_revenue_service number release date index number ----------------------------- ------------------------- -------------------- ------------------------ ------------------- ---------------------------- --- ty ------- ty ------- dp fs acquiring_corporation country1 amount1 date1 date2 year1 ----------------------------------------------------------------------------------- ------------------------ ----------------------------------------------------------------------------------- --------------- -------------- ------------- ------------- ------------------ ------------------ ------- dear ----------------------------------- this replies to a letter dated date in which fs and dp request extensions of time under sec_301_9100-3 to satisfy the statement notice and withholding requirements of sec_1_897-2 and sec_1_897-2 the information submitted for consideration is substantially as set forth below dp had previously been a publicly held domestic_corporation the stock of which was purchased by acquiring_corporation on date1 in a tender offer prior to the tender offer fs a wholly owned country1 subsidiary of dp held approximately amount1 shares of dp which shares were not purchased by acquiring_corporation in its tender offer on date2 which is shortly after date1 when dp’s shares were no longer publicly traded plr-107553-08 dp redeemed its shares which were held by fs for notes fs treated the redemption as an exchange under sec_302 although dp claims that its shares were not us real_property interests within the meaning of sec_897 usrpis fs did not request a statement pursuant to sec_1_897-2 from dp confirming that dp’s shares were not usrpis accordingly dp did not provide such statement to fs and did not provide notice of the same to the internal_revenue_service pursuant to sec_1_897-2 fs and dp now seek relief under the provisions of sec_301_9100-1 and -3 for fs to request the applicable statement from dp and for dp to file the applicable notice late as required by sec_1_897-2 discussion sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the standards set forth in sec_301_9100-3 to make a regulatory election under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election as an election whose due_date is prescribed by a regulation a revenue_ruling revenue_procedure notice or announcement sec_301_9100-3 provides standards for extensions of time for making regulatory elections sec_301_9100-3 provides that requests for relief subject_to this section will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government in the present situation the statement and notice fall within the definition of a regulatory election therefore the commissioner has discretionary authority under sec_301_9100-1 to grant fs and dp extensions of time provided that fs and dp satisfy the standards set forth in sec_301_9100-3 based on the facts and circumstances of this case we conclude that fs and dp satisfy sec_301_9100-3 accordingly pursuant to sec_301_9100-1 and sec_301_9100-3 fs and dp are granted an extension of time until days from the date of this ruling letter to satisfy the statement notice and withholding requirements of sec_1_897-2 and sec_1_897-2 with respect to the distribution_of_property in redemption of stock treated as an exchange under sec_302 that occurred inyear1 plr-107553-08 the granting of an extension of time is not a determination that fs and dp are otherwise eligible to comply with the statement and notice requirements sec_301_9100-1 a copy of this ruling letter should be attached with the statement and the notice mailed to the irs this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent 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 accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely david b bailey assistant to the branch chief international branch


t c memo united_states tax_court michael g harvey and penny b harvey petitioners v commissioner of internal revenue respondent docket no filed date joel n crouch and sarah qureshi for petitioners rodney j bartlett for respondent memorandum opinion dinan special_trial_judge respondent determined that petitioner was liable for the following additions to tax for taxable_year dollar_figure under sec_6653 percent of the interest due on a dollar_figure deficiency under sec_6653 and dollar_figure under sec_6661 unless otherwise - - indicated section references are to the internal_revenue_code in effect for the year in issue the issues for decision are whether petitioners are liable for additions to tax for negligence under sec_6653 and whether petitioners are liable for the addition_to_tax for a substantial_understatement under sec_6661 the issues in this case concern the participation of petitioner husband mr harvey or petitioner as a limited_partner in yuma mesa jojoba ltd yuma mesa or the partnership ' some of the facts have been stipulated and are so found the stipulations of fact and the attached exhibits are incorporated herein by this reference petitioners resided in norman oklahoma on the date the petition was filed in this case ‘the underlying deficiency in this case is based upon a computational adjustment made by respondent in accordance with partnership level adjustments those adjustments were upheld by this court in cactus wren jojoba ltd v commissioner tcmemo_1997_504 in that case this court reviewed respondent’s determinations with respect to yuma mesa and a related partnership we held that the partnerships did not directly or indirectly engage in research or experimentation and that the partnerships lacked a realistic prospect of entering into a trade_or_business in upholding respondent’s disallowance of dollar_figure in research_and_experimental_expenditures claimed by yuma mesa we described the research_and_development agreement entered into by the partnership as mere window dressing designed and entered into solely to decrease the cost of participation in the jojoba farming venture for the limited partners through the mechanism of a large upfront deduction for expenditures that in actuality were capital contributions id mr harvey currently teaches international business and conducts research at the university of oklahoma he has received a bachelor’s degree in business administration marketing a master’s degree in business administration a second master’s degree in marketing research and a doctorate in marketing and international sociology however he has no tax background and his accounting background is limited to two accounting classes his teaching and writing encompass neither accounting nor tax petitioner wife ms harvey has received a bachelor’s degree in secondary education beginning in mr harvey was involved in the formation and operation of a business that reconditioned and then sold trucks he ran the business for a period of years after which time he became a minority shareholder until the business was terminated in during the year in issue mr harvey was a professor of international marketing at southern methodist university he was the sole_proprietor of a consulting business which generated dollar_figure in gross_receipts and a dollar_figure profit and he was the sole_proprietor of a trucking business separate from the business discussed above which generated dollar_figure in gross_receipts and a dollar_figure loss mr harvey’s introduction to jojoba occurred about through through discussions he had with two neighbors - these neighbors happened to be doctoral students of archaeology and anthropology who were conducting research related to the history of jojoba mr harvey was reacquainted with jojoba in by marlin peterson mr peterson a certified_public_accountant is petitioners’ accountant and has prepared their tax returns since around when mr harvey and mr peterson first discussed jojoba in date mr peterson was in the planning stages of the jojoba investment mr harvey discussed the investment with mr peterson when mr harvey met with him and another of his clients at a lunch which was both social and for the purpose of discussing tax matters after meeting with mr peterson mr harvey met with rick avery president of anderson- clayton food company mr avery had access to research which had been conducted relating to potential uses of jojoba in the food industry mr harvey learned from this meeting that the insufficient supply of jojoba was at least in part prohibiting its use in food products mr harvey then discussed jojoba with a health food store owner who provided him with materials relating to jojoba’s properties and uses mr harvey also obtained and carefully reviewed a copy of the private_placement memorandum distributed by the promoters of yuma mesa according to this document the partnership was organized to engage in research_and_development and thereafter participate in the marketing of the products of the jojoba - plant interests in the partnership were offered for dollar_figure each payable by cash of dollar_figure and a 4-year promissory note of dollar_figure bearing percent annual interest yuma mesa was organized as a limited_partnership with two co-general partners the general partners g dennis sullivan and william woodburn were lawyers the private_placement memorandum listed no experience of either outside the legal field yuma mesa was to enter into a research_and_development agreement with hilltop plantations inc hilltop which would in turn enter into a farming subcontract with its wholly owned subsidiary mesa plantations inc mesa hilltop was then to enter into an experimental agricultural lease with hilltop ventures a general_partnership with identical ownership as hilltop this lease was to be assigned to mesa upon completion of the research_and_development finally hilltop was to enter into a research_and_development management agreement with agricultural investments inc which was to be the manager of the project hilltop as well as mesa and hilltop ventures was controlled by four individuals these individuals were raymond h meinke president director and shareholder keith a damer vice president secretary director and shareholder mr peterson vice president treasurer director and shareholder and cecil r almand shareholder the three officer directors -- - of hilltop were all listed as certified public accountants with expertise in the tax field the private_placement memorandum listed no experience of any of the officer directors or shareholders which is relevant to the farming of jojoba the private_placement memorandum contained language specifically alerting investors to the planned deduction of the research_and_development costs as well as other tax risks involved in making an investment in the partnership the document also contained an opinion letter stating that the research_and_development agreement contained therein met the requirements of sec_174 potential investors were required to provide information concerning any previous experience in tax_shelter investments and the subscription agreement required investors to initial a statement that the investor had been advised to consult with an attorney concerning the tax consequences of the investment several weeks after meeting with mr peterson mr harvey decided to invest in the partnership mr harvey made his investment because he felt he had insider knowledge concerning jojoba and because he thought demand for the product was sufficient to meet a larger supply petitioner did not research the possible yield per acre of a jojoba plantation did not analyze production_costs did not independently investigate the available markets or means of transporting the jojoba to purchasers and did not make any financial projections regarding the product petitioner purchased two interests in yuma mesa on date he executed a subscription agreement a promissory note in the amount of dollar_figure and a partnership_agreement petitioner subsequently was issued a schedule_k-1 by the partnership which reflected a dollar_figure ordinary_loss for taxable_year on their joint federal_income_tax return for petitioners reported the following amounts of income and losses wages university dollar_figure interest business consulting big_number business trucking big_number royalties big_number yuma mesa partnership big_number s_corporation total income big_number in the years following his investment in petitioner received and reviewed financial statements and progress reports the reports were semiannual or guarterly and discussed the progress or problems at the sites at one point petitioner traveled to the plantation in yuma where he spent approximately days while there he spoke with individuals involved in the project to ascertain the progress being made and the outlook for the jojoba development the partnership failed in the private_placement memorandum provided projections of estimated cash expenditures and tax savings associated with investments in the partnership these projections adjusted to two interests together with petitioner’s actual cash expenditures are as follow cash expenditures tax savings year projected actual projected dollar_figure dollar_figure dollar_figure big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number big_number petitioners’ claimed loss from yuma mesa for taxable_year was disallowed in the computational adjustment which was made pursuant to the partnership level proceedings resulting in a dollar_figure deficiency respondent issued petitioners a statutory_notice_of_deficiency determining additions to tax under sec_6653 a and in the respective amounts of dollar_figure percent of the interest due on a dollar_figure deficiency and dollar_figure the first issue for decision is whether petitioners are liable for additions to tax for negligence under sec_6653 and sec_6653 imposes an addition_to_tax equal to percent of the underpayment_of_tax if any part of the underpayment is attributable to negligence or intentional disregard of rules or regulations sec_6653 provides for a further addition_to_tax equal to percent of the interest --- - due on the portion of the underpayment attributable to negligence or intentional disregard of rules or regulations negligence is defined as lack of due care or failure to do what a reasonable and prudent person would do under similar circumstances 62_f3d_1266 10th cir affg tcmemo_1993_607 petitioners argue that mr harvey was not negligent because he relied on the advice of a professional mr peterson reliance on professional advice may be a defense to the negligence penalties see id the advice must be from competent and independent parties not from the promoters of the investment see 94_tc_637 affd without published opinion sub nom cowles v commissioner 949_f2d_401 10th cir affd without published opinion 956_f2d_274 9th cir 91_tc_524 we hold that petitioner’s reliance on any advice’ from mr peterson was not reasonable because it was not from an independent source as such this reliance cannot be a defense to negligence the advice petitioner received from mr peterson was apparently only in the context of mr peterson’s preparation of petitioners’ tax_return mr harvey testified that he never discussed the tax implications of the investment with mr peterson -- - petitioners argue that reliance on an adviser who is a promoter may be reasonable under precedents from the court_of_appeals for the tenth circuit to which appeal lies in this case the first case petitioners cite is anderson v commissioner supra in anderson the taxpayer relied on both an investment adviser and an accountant in making his investment the court found that reliance on the investment adviser who received a commission for selling the investment to the taxpayer was reasonable under the circumstances of the case however the court stressed that the investment adviser was not affiliated with the corporation which had entered into the agreement with the taxpayers on the contrary the adviser was an independent insurance agent and registered securities_dealer who presumably would have received a commission on any investment he sold to the taxpayer see id pincite the second case petitioners cite is the unpublished opinion of gilmore wilson constr co v commissioner 166_f3d_1221 aftr 2d ustc par big_number 10th cir affg estate of hogard v commissioner tcmemo_1997_174 in that gilmore wilson constr co is an unpublished opinion of the court_of_appeals for the tenth circuit although unpublished decisions generally are not binding precedent in the tenth circuit and citation thereto is disfavored that court allows citation to such a decision where it has persuasive value with respect to a material issue that has not been addressed ina published opinion and it would assist the court in its disposition 10th cir rule gilmore wilson constr co continued case the taxpayers relied upon their accountant for investment advice following anderson the court noted that the fact that the accountant was entitled to receive compensation_for the taxpayers’ investment does not make that advice per se unreasonable the mere fact that the adviser received compensation_for taxpayers’ reliance on his advice does not turn him into a promoter whose advice cannot be considered independent gilmore wilson constr co v commissioner supra as in anderson the court noted that the accountant was not in any way affiliated with the partnerships related to the investment other than a personal investment in one of them in the case at hand unlike anderson and gilmore wilson constr co mr peterson was involved in yuma mesa from the planning stages through its operation he was a promoter of the partnership and was an officer and director of the corporation which entered into the research_and_development agreement with it mr peterson falls far outside the role of an adviser who simply received commissions from independent entities upon the continued was discussed by the court_of_appeals for the tenth circuit in accordance with its rule in 223_f3d_1206 n loth cir which was decided after the briefs were filed in this case the court in thompson however addressed the more limited question of whether a reliance instruction was warranted ie whether the district_court abused its discretion in instructing the jury that reliance on a professional was a defense to the negligence penalties id pincite sale of an investment rather he was integrally involved in the partnership and consequently petitioners’ reliance on any advice from him was not reasonable we are convinced that petitioner intended to make an actual investment in yuma mesa and not merely derive a tax_benefit therefrom petitioner for example performed some investigation into the potential of jojoba prior to investment monitored the investment after it was made and made payments to the partnership in an amount greater than the tax benefits expected to be derived we nevertheless find that petitioner was negligent within the meaning of sec_6653 with respect to taxable_year first despite petitioner’s substantial business background in both academia and the business world he did not make any financial projections for the investment and he did little to investigate the investment beyond a limited inquiry into the uses of and possible demand for jojoba second petitioner participated in an investment which was organized and promoted by tax lawyers and which involved warnings in the private_placement memorandum concerning tax risks and the need to obtain legal advice in addition petitioner claimed a dollar_figure ordinary_loss for despite the fact that he had invested only dollar_figure in cash in the partnership via a subscription agreement dated date such a disproportionate and accelerated loss should also have alerted petitioner to the need for outside advice regarding the propriety of its deduction despite these warnings petitioner was not concerned with the tax risks and consequently neither personally investigated the tax implications of the investment nor sought outside legal advice related to them instead he relied on mr peterson’s treatment of the loss when it came time to complete petitioners’ tax_return because we hold that petitioner was negligent and that petitioners’ reliance upon mr peterson was not reasonable we uphold respondent’s determination that petitioners are liable for the sec_6653 and additions to tax for negligence the second issue for decision is whether petitioners are liable for the addition_to_tax under sec_6661 for a substantial_understatement of tax sec_6661 as amended by the omnibus budget reconciliation act of publaw_99_509 100_stat_1951 provides for an addition_to_tax of percent of the amount of any underpayment attributable toa substantial_understatement_of_income_tax for the taxable_year a substantial_understatement_of_income_tax exists if the amount of the understatement exceeds the greater of percent of the tax reguired to be shown on the return or dollar_figure see sec_6661 b a generally the amount of an understatement is reduced by the portion of the understatement which the taxpayer shows is attributable to either the tax treatment of any item -- for which there was substantial_authority or the tax treatment of any item with respect to which the relevant facts were adequately disclosed on the return see sec_6661 b if an understatement is attributable to a tax_shelter_item however different standards apply first in addition to showing the existence of substantial_authority a taxpayer must show that he reasonably believed that the tax treatment claimed was more_likely_than_not proper see sec_6661 c ii second disclosure whether or not adequate will not reduce the amount of the understatement see sec_6661 b c i i petitioners do not argue that they had substantial_authority for claiming the loss nor do they argue that there was adequate_disclosure on the return we find that the record does not establish the presence of either the only argument petitioners make is that they acted with reasonable_cause and in good_faith in claiming the loss sec_6661 provides the secretary with the discretion to waive the sec_6661 addition_to_tax if the taxpayer shows he acted with reasonable_cause and in good_faith we review the secretary’s failure to waive the addition_to_tax for respondent argues in his brief that petitioners’ claimed loss for was clearly a tax_shelter_item despite the fact that the notice_of_deficiency stated that the underpayment is attributable to non-tax shelter items as a result of our findings we need not decide whether the tax_shelter provisions are applicable in this case -- - abuse_of_discretion see 58_f3d_557 10th cir affg tcmemo_1992_693 nothing in the record indicates petitioners requested a waiver for good_faith and reasonable_cause under sec_6661 in the absence of such a request we cannot review respondent’s determination for an abuse_of_discretion see id because petitioners have not established either that they had substantial_authority for their treatment of the partnership loss or that they adequately disclosed the relevant facts of that treatment we uphold respondent’s determination on this issue to reflect the foregoing decision will be entered for respondent


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to plr-115467-99 cc dom p si date date legend company shareholders state properties d1 plr-115467-99 d2 d3 x y z this letter responds to a letter dated date and subsequent correspondence by your authorized representative on behalf of company requesting a ruling that the rental income received by company from the properties is not passive_investment_income within the meaning of sec_1362 of the internal_revenue_code facts according to the information submitted company a subchapter_c_corporation with accumulated_earnings_and_profits was incorporated in state on d1 and elected under sec_1362 to be treated as an s_corporation effective d2 company which is owned by the shareholders is in the sole business of owning and operating commercial and residential rental real_estate the properties at the time company submitted its ruling_request it owned x properties the shareholders are also employees of company through its employees as well as through independent contractors company provides various services in its rental real_estate business in addition to the services provided to tenants company handles the usual marketing leasing and administrative functions involved in leasing and managing the properties for the fiscal_year ending d3 company received or accrued y in rents and paid_or_incurred z in relevant expenses on the properties company represents that it anticipates future figures to be consistent with the income and expense figures for prior periods law and analysis sec_1361 defines an s_corporation as a small_business_corporation for which an election under sec_1362 is in effect for the taxable_year sec_1362 provides than an election under sec_1362 shall be terminated whenever at any time after the first day of the first taxable_year for which corporation is an s_corporation such corporation ceases to be a small_business_corporation sec_1362 provides that an election under sec_1362 shall be terminated whenever the corporation has accumulated_earnings_and_profits at the close plr-115467-99 of each of consecutive taxable years and has gross_receipts for each of such taxable years more than percent of which are passive_investment_income any termination under this paragraph shall be effective on and after the first day of the first taxable_year beginning after the third consecutive taxable_year referred to above sec_1362 provides that except as otherwise provided the term passive_investment_income means gross_receipts derived from royalties rents dividends interest annuities and sales or exchanges of stock_or_securities sec_1_1362-2 of the income_tax regulations provides that rents does not include rents derived in the active trade_or_business of renting property rents received by a corporation are derived in an active trade_or_business of renting property only if based on all the facts and circumstances the corporation provides significant services or incurs substantial costs in the rental business generally significant services are not rendered and substantial costs are not incurred in connection with net leases whether significant services are performed or substantial costs are incurred in the rental business is determined based upon all the facts and circumstances including but not limited to the number of persons employed to provide the services and the types and amounts of costs and expenses_incurred other than depreciation after applying the relevant law to the facts submitted and the representations made we conclude that the rents company receives from the properties are not passive_investment_income under sec_1362 except for the specific ruling above no opinion is expressed or implied concerning the federal tax consequences of the facts of this case under any other provision of the code specifically no opinion is expressed regarding company's eligibility under sec_1361 to be an s_corporation further the passive_investment_income rules of sec_1362 are completely independent of the passive_activity rules of sec_469 unless an exception under sec_469 applies the rental_activity remains passive for purposes of sec_469 pursuant to a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative this ruling is directed only to the taxpayer who requested it according to sec_6110 of the code this ruling may not be used or cited as precedent sincerely yours william p o'shea chief branch office of the assistant chief_counsel passthroughs and special industries


office_of_chief_counsel department of the treasury i n t e r n a l r e v e n u e s e r v i c e washington d c date number info release date uil conex-125012-06 the honorable herb kohl united_states senator west mifflin street suite madison wi -------------------------------------- dear senator kohl this letter is in response to your inquiry dated ------------------- on behalf of your constituents ----------------------------- you have forwarded several letters from ----------- -- ----------------- raising various issues arising from an underlying concern that ----- ----------- --------------------------------------------------------------------------------------------------------------------- -- former employer has a practice of misclassifying workers they have asked why we have not taken any_action to prevent continued misclassification they have also raised questions about the handling of amended returns for the years ------- ------- and ------ as well as payments with respect to those returns we understand the latter issue is being addressed by the taxpayer advocate’s office and we will copy them on this letter the taxpayer_advocate_service provides an independent review of problems and issues that have not been resolved through normal channels on the issue of ----- ----------- -- former employer the internal_revenue_code prohibits the disclosure of confidential taxpayer information therefore i cannot discuss with third parties any_action we may or may not take regarding a particular taxpayer thus i am not able to address what actions we may have taken respecting ----- ----------- -- former employer i can however address the federal tax laws on worker status and i hope this information will be helpful the --------------- situation involves what is generally referred to as the form ss-8 process i am enclosing a copy of form ss-8 determination of worker status for purposes of federal employment_taxes and income_tax_withholding along with its general instructions for your reference a worker or business firm can request that we determine worker status by submitting a form ss-8 because the form ss-8 process usually involves both a worker and a firm one of whom is seeking consideration of a worker’s status we try to get information from each affected party therefore we give each party an opportunity to fill out and submit a form ss-8 based on the information they provide we make a determination on a worker’s status if a worker asks for the determination both the worker and the firm are considered to be the taxpayer and both are entitled to the determination this determination is binding on the irs for federal employment_tax purposes if a form ss-8 determination results in our re-classifying a worker as an employee we send the re-classified worker notice commonly asked questions when irs determines your work status is employee i am enclosing a copy of notice for your reference notice guides re-classified employees through the steps they must take to fully comply with the federal tax laws following a determination of their worker status usually re-classified employees must file amended income_tax returns in order to reflect their employee status this often requires re-classified employees to move deductions they originally claimed on schedule c which accompanied their original form_1040 to schedule a on an amended form_1040 generally schedule a deductions receive less favorable tax treatment than schedule c deductions a form ss-8 determination does not constitute an examination or audit of any federal tax_return either the worker or firm may disagree with the determination thus a firm might choose to continue treating workers as independent contractors even after the irs made a determination that the workers are employees of course as with any taxpayer the firm’s tax returns would be subject_to examination by the irs further an ss-8 determination may be limited to a single worker or may apply to a class of workers accordingly an ss-8 determination may not apply to all of a firm’s worker or classes of workers finally under certain circumstances the federal tax laws allow a firm to continue to treat certain workers as independent contractors the materials your office sent to us show that ----- ----------- participated in the form ss-8 process and we re-classified her as an employee therefore the -------------- amended their tax returns for the previous three years although the form ss-8 process may create some initial difficulty for a taxpayer the process is designed to ultimately resolve what can be a complicated issue worker status the form ss-8 process allows workers and firms to get a binding determination from us on the status of a particular worker in a manner that respects the interests of the worker the firm and sound tax_administration i am confident that participation in the ss-8 process has resolved the issue of ----- ---------- -- worker status and i regret that i am unable to address the -------------- other concerns i commend their patience and effort to comply with the federal tax laws macro form rev department of the treasury - internal_revenue_service if you have any questions please contact ------------------at ----- ------------- or me at ----- ------ ------------- sincerely nancy j marks division counsel associate chief_counsel tax exempt government entities enclosures cc --------------------------------------------------------------------- macro form rev department of the treasury - internal_revenue_service


id office uilc cca_2009110516582903 ------------- number release date from ----------------- sent thursday november pm to -------------------------- cc -------------------- subject cdp case where snod was returned to service unclaimed ------------- - if the record reflects that the service properly mailed the statutory notice taxpayers may challenge the existence or amount of their underlying liability during a cdp hearing if the taxpayer did not receive a statutory_notice_of_deficiency for the tax_liability or did not otherwise have an opportunity to dispute the tax_liability c b of deficiency to the taxpayer then a presumption of regularity delivery and receipt arises see eg 114_tc_604 bailey v commissioner t c memo see also generally 530_f2d_781 presumption of regularity supports official acts of public officials and in absence of contrary evidence courts presume they have properly discharged official duties i r c however when a statutory_notice_of_deficiency is returned to the service unclaimed the presumption of regularity delivery and receipt can be rebutted by credible testimony in tatum that denies receipt see eg tatum v commissioner t c memo a denial of receipt and evidence that the postal service returned the notice_of_deficiency after only one attempt at delivery was sufficient to rebut the presumptions of delivery and receipt if the recipient does not claim the certified mail within five days in contrast in cyan v commissioner t c memo a statutory_notice_of_deficiency was returned to the service unclaimed the service brought forth evidence that postal employees place a form_3849 in mailboxes to notify recipients of their receipt of certified mail the post office issues another form_3849 to the recipient the service also brought forth evidence that the stamps placed on the envelope returned to the service indicated the petitioner did not pick up the statutory_notice_of_deficiency after receiving two notifications to do so based on this evidence the tax_court found that the petitioner had refused delivery of the statutory_notice_of_deficiency and his refusal precluded him from challenging liability under sec_6330 id similarly when a statutory_notice_of_deficiency was returned to the service unclaimed with an envelope indicating that delivery had been attempted three times the tax_court found sec_6330 precluded the taxpayer from challenging his underlying liability during his cdp hearing casey v commissioner t c memo in your case if the taxpayer brings forward credible_evidence that he did not receive the statutory_notice_of_deficiency then the taxpayer may challenge his underlying liability during his cdp hearing this credible_evidence should be in addition to the fact that statutory_notice_of_deficiency was returned to the service as unclaimed offers no additional information to rebut the presumption of regularity delivery and receipt then sec_6330 precludes the taxpayer from challenging underlying liability during the cdp hearing if the taxpayer please let me know if you would like to discuss this further


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division apr uniform issue list tep ra tz f legend taxpayer ira x ira financial advisor a financial_institution b amount dear this is in response to your request dated date and supplemented by your date correspondence in which you request 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 represents that she received a distribution from ira x totaling amount taxpayer asserts that her failure to accomplish a rollover within the 60-day period prescribed by sec_408 of the code was due to an error made by financial advisor a taxpayer further represents that amount has not been used for any other purpose on date amount was distributed from ira x taxpayer deposited amount into her personal checking account on date taxpayer prepared a check from that account for amount reflecting taxpayer's intent to rollover amount the check was payable to financial_institution b for deposit into ira y financial advisor a provided taxpayer with the account number for the account to which amount was to be deposited taxpayer mailed the check to financial advisor a for deposit to ira y however the account number provided to taxpayer was for a non-qualified account instead of ira y the check was deposited on date to the non- qualified account taxpayer discovered the error after the 60-day rollover period had expired based on the facts and representations you request a ruling that the service waive the day rollover requirement contained in sec_408 of the code with respect to the distribution of amount sec_408 of the code provides that except as otherwise provided in sec_408 of the code 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 section of the code - sec_408 of the code defines and provides the rules applicable to ira i the entire amount received including money and any other_property i is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if rollovers _ 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 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 -of the code sec_408 of the code provides that sec_408 of the code does not apply to any amount described in sec_408 of the code 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 section - d a i of the code from an ira which was not includible in gross_income because of the application of sec_408 of the code 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 of the code do not apply to any amount required to be distributed under sec_408 of the code sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 of the code 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 2003_4_irb_359 date provides that 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 presented and documentation submitted by taxpayer including a written_statement from the president of financial advisor a admitting that financial advisor a provided taxpayer with the incorrect account number to include on taxpayer's check payable to financial_institution b causing amount to be deposited to a non-qualified account are consistent with her assertion that her failure to accomplish a timely rollover was caused by an error by financial advisor a therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount from ira x taxpayer is granted a period of days from the issuance of this ruling letter to contribute amount into an ira or other eligible_retirement_plan provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contribution the contribution of amount will be considered a rollover_contribution within the meaning of sec_408 of the code this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 of the code no opinion is expressed as to the tax treatment of the transaction described in this ruling under the provisions of any other section of either the code or regulations which may be applicable 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 if you wish to inquire about this ruling please contact at ’ please address all correspondence to se t ep ra t2 enclosures deleted copy of ruling letter notice of intention to disclose


t c summary opinion united_states tax_court quentin paul defore petitioner v commissioner of internal revenue respondent docket no 14248-03s filed date quentin paul defore pro_se james l may jr for respondent couvillion special_trial_judge this case was heard pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year at issue and all rule references are to the tax_court rules_of_practice and procedure respondent determined a deficiency of dollar_figure in petitioner’s federal_income_tax for the year the sole issue for decision is whether petitioner is entitled to relief from joint liability under sec_6015 for federal income taxes some of the facts were stipulated those facts with the exhibits annexed thereto are so found and made part hereof petitioner’s legal residence at the time the petition was filed was lancaster tennessee petitioner filed a timely federal_income_tax return jointly with his spouse debbie a defore ms defore on date on date petitioner and ms defore were divorced by a texas state court on date separate notices of deficiency were issued to petitioner and ms defore in which respondent determined a deficiency of dollar_figure in federal_income_tax for the year the sole adjustment in both notices of deficiency was the inclusion in gross_income of dollar_figure that was not reported on the joint federal_income_tax the deficiency included a determination by respondent that petitioner and his former spouse ms defore are liable for self-employment_tax on ms defore’s unreported income the forms 1099-misc miscellaneous income ms defore failed to include with her tax_return stated the amounts she received were nonemployment compensation thus making her liable for self- employment_tax petitioner bears the burden_of_proof on this issue and he did not contest respondent’s determination at trial therefore he is deemed to have conceded respondent’s determination as a result petitioner and ms defore’ sec_2001 tax_return will be adjusted to reflect a deduction for one-half of the self-employment_tax due for the year return this omitted income consisted of two information returns filed by third-party payors evidencing payments of nonemployee compensation to ms defore during the year one of the information returns was for payments by tjr partnership in the amount of dollar_figure and the other information_return was for payments by s g inc in the amount of dollar_figure petitioner filed a timely petition in this court ms defore has not petitioned this court petitioner’s sole position is that he is entitled to relief from joint liability under sec_6015 after the petition was filed petitioner filed with the internal_revenue_service form_8857 request for innocent spouse relief there is no indication in the record that respondent acted on this request respondent pursuant to rule and 115_tc_118 served notice of this proceeding on ms defore however ms defore has not intervened in this case nor did she testify at the trial petitioner was married to ms defore from until both are natives of texas and they resided in texas during their marriage petitioner was a pipe fitter and had been employed as such since prior thereto petitioner attended years of community college in alvin texas where he studied courses such as mechanical drafting agriculture and real_estate although he took the real_estate examination petitioner has never been employed in that capacity or in any of the fields he studied in college as a pipe fitter petitioner performed maintenance and construction work for a variety of heavy industrial plants paper mills steel mills and refineries such as exxon and shell ms defore was engaged in a variety of fields during her marriage with petitioner she attended high school through the 11th grade and then worked as a race horse jockey for years upon retirement ms defore worked on construction jobs with petitioner and held a few positions with various retailers before commencing work for a real_estate developer midway through the deficiency in the couple’ sec_2001 joint federal_income_tax return arose from ms defore’s performance of services for that real_estate developer darrell hall it appears that ms defore’s work for mr hall consisted largely of showing undeveloped lots to prospective buyers if a prospective buyer decided to purchase a lot the buyer would then return to the office with ms defore and select a house floor_plan because ms defore dealt only with undeveloped lots and not finished homes she did not need a real_estate license ms defore continued working for mr hall through the beginning of after which she worked for paul turner who owned three western stores in date ms defore left for as ms defore was not present at trial petitioner provided the only testimony concerning the nature of ms defore’s work for mr hall las vegas nevada with mr turner upon her return ms defore filed for divorce against petitioner although they had separated in date ms defore and petitioner met at an h_r block office the following april to prepare a joint income_tax return for each supplied income information to the h_r block representative who then prepared their return upon completion of the return petitioner glanced over it assumed ms defore had submitted all necessary information and signed the return petitioner and ms defore subsequently finalized their divorce in date petitioner’s agreed divorce decree also signed by ms defore states that any penalty resulting from the omission_of_income from the previous year’s tax_return shall be paid solely by the party who earned the omitted income petitioner was unaware of any problem with the tax_return until he received a notice_of_deficiency in date ms defore suggested to petitioner that they each pay half the deficiency however petitioner was unwilling to do so because the deficiency was attributable to the omission of ms defore’s income and her failure to present this information to the tax preparer at h_r block spouses who file a joint federal_income_tax return generally are jointly and severally liable for the payment of the tax_shown_on_the_return or found to be owing sec_6013 115_tc_183 affd 282_f3d_326 5th cir furthermore agreements between spouses with respect to how liability for tax deficiencies is to be shared are not binding on this court 78_tc_100 citing 39_tc_534 13_tc_397 affd per curiam 200_f2d_560 2d cir 12_tc_224 bonner v commissioner tcmemo_1979_435 ballenger v commissioner t c memo therefore one spouse is not relieved of liability merely because the other spouse agreed to be responsible ballenger v commissioner supra petitioner’s divorce decree therefore is not binding on the tax_court however relief from joint_and_several_liability is available to certain taxpayers under sec_6015 there are three avenues for relief available under this section-- sec_6015 c f neither party disputes that in this case the requirements of subparagraphs a b and e of sec_6015 have been satisfied the dispute is whether the requirements of subparagraphs c and d of sec_6015 have been met the first avenue for relief is sec_6015 under sec_6015 the court may grant a taxpayer full or apportioned relief from joint_and_several_liability for an understatement_of_tax on a joint_return if among other requirements the taxpayer establishes that he did not know and had no reason to know that the other spouse understated that spouse’s tax_liability on the return sec_6015 b petitioner asserts that he had no reason to know of the understatement attributable to ms defore’s income from mr hall because petitioner and ms defore did not maintain a joint bank account or commingle funds petitioner and ms defore divided responsibility for the household expenses each month between themselves and did not discuss finances or their mutual income with each other petitioner merely paid the bills he owed for any given month and retained the remainder of his paycheck ms defore did the same therefore petitioner asserts he had no reason to know how much income ms defore was earning from her work for mr hall the court disagrees ms defore submitted to the tax preparer at h_r block only one of three information returns she received for her work with mr hall during she included dollar_figure as profit from a sole_proprietorship exchange land co ltd ms defore’s claimed sole_proprietorship profit was actually compensation_for her work with mr hall ms defore received additional nonemployment compensation in the form of cash under two other company names dollar_figure from tjr partnership ltd and dollar_figure from s g inc both of which were affiliated with mr hall petitioner contends that ms defore worked solely for mr hall who paid her primarily in cash therefore petitioner believed all three companies who paid ms defore nonemployment compensation were controlled by mr hall the return did not include the income from tjr partnership and s g inc as reflected on the information returns issued by these entities a spouse has reason to know of an understatement of income if a reasonable prudent taxpayer in his position at the time he signed the return could be expected to know that the return contained the substantial_understatement 118_tc_106 citing 887_f2d_959 9th cir although petitioner did not know the exact amount of ms defore’s compensation he admitted he knew she worked for mr hall for the last months of furthermore ms defore worked solely for mr hall during those months and during that time ms defore continued paying her portion of the bills using the reasonable taxpayer standard the court concludes that petitioner had reason to know that ms defore earned more than dollar_figure in her months of working with mr hall therefore petitioner is denied relief under sec_6015 the second avenue for relief is sec_6015 sec_6015 affords proportionate relief to a spouse through petitioner did not testify as to the exact bills ms defore was responsible for allocation to the responsible_party to be eligible for relief under sec_6015 the individual seeking relief must no longer be married to or must be legally_separated from the individual with whom the tax_return was filed and must have elected the applicability of sec_6015 not later than years after the date on which collection activity began sec_6015 furthermore relief under sec_6015 is not available to a taxpayer if it is shown that the taxpayer had actual knowledge when signing the return of any item giving rise to a deficiency sec_6015 as previously discussed petitioner is divorced from ms defore his divorce was finalized before he requested relief from joint_and_several_liability also he filed a timely form_8857 request for innocent spouse relief to request relief therefore the last requirement petitioner is required to meet to be eligible for relief under sec_6015 is to prove he had no actual knowledge of the income item leading to the underpayment the court has concluded that petitioner had reason to know of ms defore’s omitted income however that does not mean petitioner actually knew of the omitted income 114_tc_333 martin v commissioner tcmemo_2000_346 petitioner testified that he and ms defore did not share a bank account they did not transfer money between each other but merely divided responsibility for monthly bills petitioner did not know how much or how often ms defore received payment from mr hall petitioner testified he had no earthly idea how much money ms defore received from mr hall in the court has no reason not to believe him moreover petitioner believed and knew that ms defore worked for mr hall however the record does not suggest a finding that petitioner knew that ms defore’s compensation_for her services for mr hall came from three separate sources petitioner believed that the one information_return ms defore presented to the income_tax_return_preparer reflected her sole earnings that year petitioner therefore had no actual knowledge that there were two undisclosed information returns from mr hall that would fully represent ms defore’s income for therefore petitioner qualifies for relief under sec_6015 thus the procedures in sec_6015 to allocate items between petitioner and ms defore apply for purposes of sec_6015 the item giving rise to the deficiency on a joint_return is allocated as if the individuals had filed separate returns sec_6015 since the understatement in tax is entirely attributable to ms defore’s omitted income it follows that the entire amount of the because the court has granted petitioner relief under sec_6015 it is not necessary to address whether petitioner also qualifies for relief under sec_6015 deficiency is allocated to her petitioner therefore is relieved of the entire amount of the deficiency reviewed and adopted as the report of the small_tax_case division decision will be entered for petitioner


from subject department of the treasury internal_revenue_service washington d c date office_of_chief_counsel number cc intl br presp-165857-01 release date uilc internal_revenue_service national_office technical assistance memorandum for milton l friedman appeals officer general appeals area ronald d pinsky acting director sb_se compliance area lindsey d stellwagen special counsel international cc sb was m grace fleeman assistant to the branch chief cc intl br1 refunds of tax withheld on social_security_benefits paid to certain agreen card holders this technical assistance memorandum clarifies this office s position with respect to refund claims filed by certain alien individuals living abroad who hold agreen cards issued many years ago by the immigration and naturalization service ains and who currently receive u s social_security_benefits from which tax is withheld by the social_security administration issue whether an alien individual who at one time was admitted to the united_states as a lawful permanent resident agreen card holder but would upon attempted re-entry into the united_states after a prolonged absence likely be found by the ins to have abandoned his or her status as a lawful permanent resident is entitled to a refund of u s income_tax withheld from u s social_security_benefits conclusion provided the alien individual s status as a lawful permanent resident has not been revoked or administratively or judicially determined to have been abandoned the individual may be entitled to a refund of some or all of the tax withheld from his or her social_security_benefits if i the individual files a u s income_tax return as a resident_alien ii the individual refrains from claiming any benefits as a resident of another country under an income_tax treaty to which the united_states is a party and iii the individual s tax_liability as a resident_alien is less than the amount that was withheld from the individual s social_security_benefits facts the taxpayers are alien individuals and residents of a foreign_country at one time they were admitted to the united_states as lawful permanent residents agreen card holders but they have not lived in the united_states for many years when they left the united_states they did not relinquish their green cards their green cards have never been revoked or administratively or judicially determined to have been abandoned however if they tried to re-enter the united_states the ins would likely make a retroactive determination that they had abandoned their green cards when they left the united_states the taxpayers are receiving u s social_security_benefits from which tax is being withheld by the social_security administration pursuant to sec_871 they claim that they should be treated as resident aliens for purposes of determining how their benefits are taxed by the united_states if the taxpayers are treated as resident aliens sec_86 will apply and a portion of their benefits or percent depending on their income level will be taxed at graduated rates on a net_basis if on the other hand the taxpayers are treated as nonresident_aliens sec_871 will apply and percent of the gross amount of their benefits will be subject_to a percent withholding_tax in the case of individuals who have little or no other income treatment as a resident_alien generally reduces the effective_tax_rate on their social_security_benefits from percent to percent law and analysis sec_7701 provides in relevant part that an alien individual who is lawfully admitted for permanent residence at any time during a calendar_year shall be treated as a unless otherwise indicated all references to asection are to sections of the internal_revenue_code_of_1986 as amended acode resident_of_the_united_states with respect to that calendar_year code ' b a i for purposes of sec_7701 an individual is a lawful permanent resident_of_the_united_states at any time if-- a such individual has the status of having been lawfully accorded the privilege of residing permanently in the united_states as an immigrant in accordance with the immigration laws and b such status has not been revoked and has not been administratively or judicially determined to have been abandoned code ' b an individual is a nonresident_alien if he is neither a citizen_of_the_united_states nor a resident_of_the_united_states within the meaning of sec_7701 code ' b b a green card holder may formally abandon his status by filing an ins form i-407 abandonment of lawful permanent resident status the ins has advised us that it also is possible that an alien s status as a permanent resident may cease without any formal judicial or administrative procedure under the immigration and nationality act an alien is a permanent resident if the alien has abeen lawfully accorded the privilege of residing permanently in the united_states as an immigrant in accordance with the immigration laws such status not having changed immigration and nationality act ' a u s c ' a emphasis added the alien s status may change by abandonment matter of huang i n dec bia abandonment occurs when the alien leaves the united_states for other than a temporary purpose id the intention to abandon permanent residence may be inferred from the length and purpose of the alien s absence the retention of ties to the united_states and other factors that a given case may present id the ins has advised us that there may not be a formal determination that an alien has abandoned his permanent residence unless and until the alien tries to return to the united_states claiming to be a permanent resident thus for purposes of the immigration laws a determination of abandonment may not take place until many years after the actual abandoning act this reflects the fact that the ins does not need to know the alien s status until he tries to return to the united_states for tax purposes however it is clear that congress intended an alien to be treated as a lawful permanent resident under sec_7701 until there has been a formal determination that his status had been abandoned the act defines alawful permanent resident to mean an individual who has the status of having been lawfully accorded the privilege of residing permanently in the united_states as an immigrant in accordance with the immigration laws if such status has not been revoked or administratively or judicially determined to have been abandoned therefore an alien who comes to the united_states so infrequently that on scrutiny he or she is no longer legally entitled to permanent resident status will be a resident for tax purposes the purpose for this requirement of revocation or determination is to prevent aliens from attempting to retain an apparent right to enter or remain in the united_states while attempting to avoid the tax responsibility that accompanies that right joint comm on taxation general explanation of the revenue provisions of the deficit_reduction_act_of_1984 98th cong 2d sess congress recognized that an individual who would be treated as a resident_alien under sec_7701 might be treated as a nonresident_alien under the so-called atie- breaker rules of the income_tax treaties to which the united_states is a party the legislative_history makes it clear that congress did not intend for sec_7701 to override any treaty obligations of the united_states the conferees do not intend that the conference agreement override treaty obligations of the united_states for example an alien who is a resident_of_the_united_states under the new statutory definition but who is a resident of a treaty partner of the united_states and not a resident_of_the_united_states under a united_states income_tax treaty will be eligible for the benefits that the treaty extends to residents of the treaty partner h_r rep no 98th cong 2d sess consistent with the legislative intent the regulations issued under sec_7701 allow individuals who would be resident aliens under sec_7701 but nonresident_aliens under an income_tax treaty to claim benefits under the treaty as nonresident_aliens however if such individuals elect to claim treaty benefits they will be treated as nonresident_aliens for purposes of computing their u s tax_liability coordination with income_tax treaties b a consistency requirementb application the application of this section shall be limited to an alien individual who is a dual_resident_taxpayer pursuant to a provision of a treaty that provides for resolution of conflicting claims of residence by the united_states and its treaty partner a adual resident taxpayer is an individual who is considered a resident_of_the_united_states pursuant to the internal laws of the united_states and also a resident of a treaty country pursuant to the treaty partner s internal laws if the alien individual determines that he or she is a resident of the foreign_country for treaty purposes and the alien individual claims a treaty benefit as a nonresident of the united_states so as to reduce the individual s united_states income_tax_liability with respect to any item_of_income covered by an applicable tax_convention during a taxable_year in which the individual was considered a dual_resident_taxpayer then that individual shall be treated as a nonresident_alien of the united_states for purposes of computing that individual s income_tax_liability under the provisions of the internal_revenue_code and the regulations thereunder including the withholding provisions of sec_1441 and the regulations under that section in cases in which the dual_resident_taxpayer is the recipient of income subject_to_withholding with respect to that portion of the taxable_year the individual was considered a dual_resident_taxpayer treas reg ' b -7 a a dual_resident_taxpayer may elect not to claim treaty benefits and to file returns as a resident_alien see treas reg ' b -7 e ex consistent with the foregoing rules an alien individual living abroad may be entitled to a refund of some or all of the u s tax withheld on social_security_benefits for a taxable_year pursuant to sec_871 if the individual establishes all of the following the individual has a green card that has been neither revoked nor administratively or judicially determined to have been abandoned to the extent required under u s law the individual files a u s income_tax return for the taxable_year as a resident_alien and reports his or her worldwide income the individual has not claimed benefits for the taxable_year under an income_tax treaty as a nonresident_alien and the individual s tax_liability for the taxable_year as a resident_alien is less than the amount of tax that was withheld from his or her social_security_benefits as in the case of any refund claim the burden is on the individual to establish that he or she is entitled to a refund 284_us_281 the service_center may delay payment of the refund while it asks the individual for additional information in support of his or her refund claim case development hazards and other considerations we have discussed this issue with the associate area_counsel in washington that office is concerned about the possibility that the service may be denying refunds improperly in some cases if an individual establishes that all the criteria set forth above are satisfied the refund should not be denied if one of these cases were litigated the service would be unable to prevail solely on the grounds that the individual had not lived in the united_states for many years and would upon attempted re-entry to the united_states likely be found by the ins to have abandoned his or her status as a lawful permanent resident a taxpayer who prevails in one of these cases may be entitled to interest that has accrued with respect to the refund and costs including attorneys fees code and if you have any questions please call m grace fleeman assistant to the branch chief branch office of the associate chief_counsel international


internal_revenue_service number release date index number ----------------- ------------------------------------------------------------ ------------- ------------------------------------------------ ------------------------------ --------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ----------------- telephone number --------------------- refer reply to cc psi b01 plr-131688-13 date date legend x ------------------------------------------ ------------------------------------------------- y ----------------------------------------------- state ------------- dear -------------- this letter responds to a letter dated date submitted on behalf of x by x’s authorized representatives requesting a ruling under sec_7704 of the internal_revenue_code facts x is a limited_partnership organized under the laws of state following an initial_public_offering interests in x are expected to be listed and traded on a nationally recognized exchange thus x will be a publicly-traded partnership within the meaning of sec_7704 x’s affiliate y provides a full suite of ------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ---------- services to customers engaged in the oil and natural_gas industry x intends to acquire y’s ----------------------------------------------------------------------------------------------------- -----------business including customer contracts ------------------------------ plr-131688-13 -------------------services --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------is an essential element in oil_and_gas production processing and transportation ------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------ a portion of the ----------------- contracts ----------------------------------------------------------------- -------------------------------------------------------- ------------------ agreements ------------------- ------------------------------------------------------------------------------ y is obligated to provide substantial services -------------------------------- in most cases y is required to---------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- -------------------------------------------------- ---------------------services --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- plr-131688-13 y’s --------------------business is conducted pursuant to agreements ----------------------------- ------------------------------------------------------------------------------- ------------------------- agreements under the terms of the ---------------------agreements y is obligated to provide substantial services -------------------------------- in most cases y is required to --- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ------------- ----------------------------services --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------under agreements ---------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------- --------------------- agreements ------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------ law and analysis sec_7704 provides that except as provided in sec_7704 a publicly_traded_partnership will 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 the substantial equivalent thereof sec_7704 provides that sec_7704 does not apply to a publicly_traded_partnership for any taxable_year if such partnership meets the gross_income requirements of sec_7704 for the taxable_year and each preceding_taxable_year beginning after date during which the partnership or any predecessor was in existence sec_7704 provides in relevant part that a partnership meets the gross_income requirements of sec_7704 for any taxable_year if percent or more of the gross_income of the partnership for the taxable_year consists of qualifying_income plr-131688-13 sec_7704 provides that the term qualifying_income includes income and 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 and timber conclusion based solely on the facts submitted and the representations made we conclude that gross_income derived by x from the provision of ----------------------------------services ------ --------------------services and ----------------services ------------------------------------------------- -------------- as described above to customers engaged in the production processing and transportation of oil and natural_gas constitutes qualifying_income pursuant to sec_7704 ------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------ except as expressly provided herein no opinion is expressed or implied concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter in particular no opinion is expressed as to whether x meets the percent gross_income requirement of sec_7704 in any taxable_year for which this ruling may apply this ruling is directed only to the taxpayer requesting it however in the event of a technical_termination of x under sec_708 the resulting_partnership may continue to rely on this ruling in determining its qualifying_income under sec_7704 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 sincerely david r haglund david r haglund chief branch office of the 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 psi b01 plr-140077-05 date date --------------------------- ----------------- legend x --------------------------------------------------- y ---------------------------------------------------- country date date dear ------------- ------------------------ ------------------------ --------- this is in response to a letter dated date requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election to treat y as an entity disregarded as separate from its owner for federal tax purposes under sec_301_7701-3 facts according to the information submitted and representations made within the request x is the ultimate owner of an affiliated_group of entities among this affiliated_group is y which is an entity that was formed under the laws of country on date x acquired y x timely made a sec_338 election relating to its acquisition of y due to inadvertence a form_8832 entity classification election to treat y as an entity disregarded as separate from its owner effective date was not filed plr-140077-05 law and analysis sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally unless the entity makes an election to be treated otherwise a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability if a foreign eligible_entity has only one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 if a foreign eligible_entity has more than one owner it may elect to be treated as a partnership pursuant to the rules in sec_301_7701-3 sec_301_7701-3 further provides that an entity classification election must be filed on form_8832 entity classification election and can be effective up to days prior to the date the form is filed or up to months after the date on which the form is filed sec_301_7701-3 provides that an election made under sec_301_7701-3 will be effective on the date specified by the entity on form_8832 or on the date filed if no date is specified on the election form the effective date specified on form_8832 cannot be more than days prior to the date on which the election is filed and cannot be more than months after the date on which the election is filed if a purchasing_corporation makes an election under sec_338 regarding an acquired subsidiary an election under sec_301_7701-3 for the acquired subsidiary can be effective no earlier than the day after the acquisition_date within the meaning of sec_338 under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election with a deadline prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election 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 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 plr-140077-05 conclusion based solely upon the information submitted we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result an extension of days from the date of this letter is granted to elect to treat y as disregarded as an entity separate from its owner for federal tax purposes effective date the entity classification election should be made by filing form_8832 with the appropriate service_center a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter except as expressly provided herein no opinion is expressed or implied this ruling is directed only to the taxpayer s requesting it sec_6110 of the internal_revenue_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 sincerely letter will be sent to your authorized representative enclosures copy of this letter copy for sec_6110 purposes william p o’shea associate chief_counsel passthroughs and special industries


department of the treasury washington dc person to contact ----------------------------------------------------- --------- telephone number --------------------- refer reply to cc psi - plr-143517-05 date december internal_revenue_service number release date index numbers - ---------------------------------- ---------------------------- ---------------------- ------------------------- --------------------- ---------------------------- x ------------------------------------ ------------- ---- country d1 --------------------- ------------------------ this letter responds to a letter dated date and subsequent dear ----------------- correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations for x to file an election to be treated as a disregarded_entity for federal tax purposes on d1 pursuant to the laws of country x has a single owner that has limited_liability as defined in sec_301_7701-3 x intended to elect to be a disregarded_entity for federal tax purposes effective d1 however x inadvertently failed to timely file a form_8832 entity classification election the information submitted states that x a private limited_company was formed sec_301_7701-3 provides that an eligible_entity may elect to be sec_301_7701-3 provides guidance on the classification of a foreign sec_301_7701-3 provides that an election under sec_301_7701-3 sec_301_7701-3 provides that for purposes of sec_301_7701-3 a sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 eligible_entity for federal tax purposes under sec_301_7701-3 except as provided in sec_301 b unless it elects otherwise a foreign eligible_entity is classified as an association if all members have limited_liability member of a foreign eligible_entity has limited_liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member classified other than as provided in sec_301_7701-3 by filing form_8832 with the service_center designated on form_8832 will be effective on the date specified on form_8832 or on the date filed if no such date is specified on the form the effective date specified on form_8832 cannot be more than days prior to the date the form is filed and cannot be more than months after the date on which the form is filed 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 a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register making certain elections determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government requirements of sec_301_9100-3 have been satisfied as a result x is granted an sec_301_9100-2 provides the rules governing automatic extensions of time for sec_301_9100-1 provides that the commissioner has discretion to grant a based on the facts submitted and representations made we conclude that the sec_301_9100-3 sets forth the standards the commissioner will use to extension of time of days from the date of this letter to file form_8832 and elect to be treated as a disregarded_entity for federal tax purposes effective d1 a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose the federal tax consequences of the transaction described above under any other provision of the code sec_6110 provides that it may not be used or cited as precedent except as specifically set forth above no opinion is expressed or implied as to this ruling is directed only to the taxpayer on whose behalf it was requested in accordance with the power_of_attorney on file with this office a copy of this sincerely letter is being sent to x’s authorized representative enclosures copy of this letter copy for sec_6110 purposes heather c maloy associate chief_counsel passthroughs and special industries


internal_revenue_service number release date index number ----------------------------------- ------------------------------- ---------------------------------- -------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------------- id no ------------ telephone number -------------------- refer reply to cc psi b01 plr-140151-14 date december legend x ------------------------------------------------- ----------------------------------- state date -------------- ---------------- a -------------------------------------------------- -------------------------------------- b -------------------------------------------------- --------------------------------- dear ----------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations for x to file an entity classification election to be classified as a partnership for federal tax purposes facts the information submitted states that x is a limited_liability_company formed under the laws of state on date x has two owners a and b x is not classified as a corporation under sec_301_7701-2 or a and b intended for x to be classified as a partnership effective on date however x did not timely file form_8832 entity classification election electing to be treated as a partnership for all relevant years x a and b filed their returns consistent with x being a partnership plr-140151-14 x represents that it acted reasonably and in good_faith x also represents that granting the relief requested will not prejudice the interests of the government law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes elections are necessary only when an eligible_entity does not want to be classified under the default classification or when an eligible_entity chooses to change its classification sec_301_7701-3 provides that unless the entity elects otherwise a domestic eligible_entity is a partnership if it has two or more members sec_301_7701-3 provides that to elect to be classified other than as provided in sec_301_7701-3 an eligible_entity must file form_8832 entity classification election with the designated service_center under sec_301_7701-3 this election can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards that the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides rules for requesting extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to make an election to be plr-140151-14 treated as a partnership for federal tax purposes effective date x must make the election by filing a properly executed form_8832 with the appropriate service_center a copy of this letter should be attached to the form except as specifically set forth above we do not express or imply any opinion concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the 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 x’s authorized representative sincerely associate chief_counsel passthroughs special industries by david r haglund david r haglund chief branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes cc