office_of_chief_counsel internal_revenue_service memorandum number release date cc tege eoeg et1 postn-125741-08 uilc date date to director submission processing cincinnati oh attn entity unit from office of division counsel associate chief_counsel tax exempt government entities subject railroad_retirement_tax_act status in accordance with the coordination procedure established between the service and the railroad retirement board rrb the rrb has provided us with its opinion that the following business ceased to be an employer under the railroad retirement act and the railroad unemployment insurance act effective -------------------- ------------------------------------------- ------------------------------ ---------------------------------- ---------------------------------- we have reviewed the opinion of the rrb and based upon the information submitted to us by the rrb we also conclude that -------------------------------------------ceased to be an employer under the railroad_retirement_tax_act not later than -------------------- the date its certificate of dissolution was filed by the state we note that the opinion indicates that the -------------------------------------had not reported compensation to the rrb from the year ------- postn-125741-08 the company ceased operations some time before ---------------------but the exact date is unknown please take the appropriate action regarding this business cc _____________________________ janine cook


internal_revenue_service number release date index number ------------------------ -------------------------------- ----------- --------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc ita plr-133760-08 date january year x ------- year y ------- accountant -------------------------- law firm ----------------------------- dear ----------------- this responds to your letter requesting an extension of time under sec_301_9100-1 and -3 of the procedure and administration regulations to make a late election to include net capital_gains from the disposition of property_held_for_investment in investment_income under sec_163 and sec_163 of the internal_revenue_code for year x facts your letter states that you had net_capital_gain income in year x as a result of the sale of investment_property held in pass-through entities accountant prepared your tax_return for year x but did not advise you to make an election under sec_163 accountant was unaware that the capital_gain resulting from the sale of the pass- through entities’ property constituted investment_income in year y law firm reviewed the return for year x and discovered that an election had not been made under sec_163 law firm advised you to seek an extension of time to make a late election applicable law plr-133760-08 sec_163 provides that in the case of a taxpayer other than a corporation the amount allowed as a deduction for investment_interest shall not exceed the net_investment_income of the taxpayer for the taxable_year sec_163 defines investment_income in general as the sum of i gross_income from property_held_for_investment other than gain taken into account under clause ii i ii the excess if any of i the net gain attributable to the disposition of property_held_for_investment over ii the net_capital_gain determined by only taking into account gains and losses from dispositions of property_held_for_investment plus iii so much of the net_capital_gain referred to in clause ii i as the taxpayer elects to take into account under this clause sec_1_163_d_-1 of the income_tax regulations provides that the election under sec_163 must be made on or before the due_date including extensions of the income_tax return for the taxable_year in which the net_capital_gain is recognized sec_301_9100-3 of the procedure and administration regulations generally provides extensions of time for making regulatory elections for this purpose sec_301_9100-1 defines the term regulatory election to include an election whose deadline is prescribed by a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-3 provides that requests for extensions of time for regulatory elections will be granted when the taxpayer provides evidence including affidavits described in the regulations 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 sec_301_9100-3 states that a taxpayer will be deemed to have acted reasonably and in good_faith if the taxpayerb i requests relief before the failure to make the regulatory election is discovered by the service ii inadvertently failed to make the election because of intervening events beyond the taxpayer's control iii failed to make the election because after exercising due diligence the taxpayer was unaware of the necessity for the election iv reasonably relied on the written advice of the service or v reasonably relied on a qualified_tax professional and the tax professional failed to make or advise the taxpayer to make the election plr-133760-08 the affidavits presented show that you acted reasonably and in good_faith having reasonably relied on accountant a qualified_tax professional who failed to make or advise you to make the election furthermore the affidavits presented show that after exercising due diligence you were unaware of the necessity for the election in addition you requested relief before the failure to make the regulatory election was discovered by the service under sec_301_9100-3 a taxpayer will not be considered to have acted reasonably and in good_faith if the taxpayer-- i seeks to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 at the time the taxpayer requests relief taking into account sec_1_6664-2 of the income_tax regulations and the new position requires a regulatory election for which relief is requested ii was informed in all material respects of the required election and related tax consequences but chose not to file the election or iii uses hindsight in requesting relief if specific facts have changed since the original deadline that make the election advantageous to a taxpayer the service will not ordinarily grant relief you are not seeking to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 at the time relief is requested you were not informed in all material respects of the required election and its related tax consequences furthermore you are not using hindsight in requesting relief you have represented that specific facts have not changed since the original deadline that make the election advantageous to you sec_301_9100-3 provides in part that the interests of the government are prejudiced if granting relief would result in the taxpayer having a lower tax_liability in the aggregate for all taxable years affected by the election than the taxpayer would have had if the election had been timely made taking into account the time_value_of_money sec_301_9100-3 provides in part that the interests of the government are ordinarily prejudiced if the taxable_year in which the regulatory election should have been made or any taxable years that would have been affected by the election had it been timely made are closed by the period of limitations on assessment under these criteria the interests of the government are not prejudiced in this case you have represented that granting relief would not result in your having a lower tax_liability in the aggregate for all taxable years affected by the election than you would have had if the election had been timely made taking into account the time_value_of_money furthermore the taxable_year in which the regulatory election should have been made and any taxable years that would have been affected by the election had it been timely made are not closed by the period on assessment plr-133760-08 accordingly the consent of the commissioner is hereby granted for an extension of time to file the forms necessary to make the election to include net capital_gains from the disposition of property_held_for_investment in investment_income for year x this extension shall be for a period of days from the date of this ruling the election should be made by filing form_4952 and by including a copy of this ruling with an amended_return for year x we enclose a copy of the letter for this purpose no opinion is expressed as to the application of any other provision of the code or the regulations which may be applicable under these facts 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 enclosed is a copy of the letter_ruling showing the deletions proposed to be made in the letter when it is disclosed under sec_6110 of the internal_revenue_code this ruling is based upon information and representations submitted by taxpayer and accompanied by a penalty of perjury statement while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely christopher f kane branch chief branch income_tax accounting ---- ---------------------------------- cc


internal_revenue_service number release date index number -------------- ------------------------------------------- ------------------------------------------------------------ ------------------------- ---------------------- ---------------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ----------------- telephone number --------------------- refer reply to cc ita b03 plr-153279-09 date date legend taxpayer -------------------------------------------------- accountant ----------------------------------------- year ------- dollar_figurea ----------- dollar_figureb ----------- dollar_figurec ----------- dear ------------------- this responds to your letter on behalf of taxpayer requesting an extension of time under sec_301_9100-1 and -3 of the procedure and administration regulations to make a late election to include net capital_gains from the disposition of property_held_for_investment in investment_income under sec_163 and sec_163 of the internal_revenue_code for year facts during year taxpayer had net capital_gains from the disposition of property_held_for_investment in the amount of dollar_figurea investment_interest of dollar_figureb and had disallowed investment_interest from prior years in the amount of dollar_figurec carried forward to year accountant prepared taxpayer’s income_tax return for year but did not advise plr-153279-09 taxpayer to make the election under sec_163 to treat net_capital_gain as investment_income in addition taxpayer was not aware of the election under sec_163 to treat capital_gains as investment_income accountant subsequently discovered that the sec_163 election was not made on the year income_tax return when taxpayer was informed of this omission taxpayer instructed the accountant to apply for an extension of time to make the election applicable law sec_163 provides that in the case of a taxpayer other than a corporation the amount allowed as a deduction for investment_interest shall not exceed the net_investment_income of the taxpayer for the taxable_year sec_163 defines investment_income in general as the sum of i gross_income from property_held_for_investment other than gain taken into account under clause ii i ii the excess if any of i the net gain attributable to the disposition of property_held_for_investment over ii the net_capital_gain determined by only taking into account gains and losses from dispositions of property_held_for_investment plus iii so much of the net_capital_gain referred to in clause ii i as the taxpayer elects to take into account under this clause sec_1_163_d_-1 of the income_tax regulations provides that the election under sec_163 must be made on or before the due_date including extensions of the income_tax return for the taxable_year in which the net_capital_gain is recognized sec_301_9100-3 of the procedure and administration regulations generally provides extensions of time for making regulatory elections for this purpose sec_301_9100-1 defines the term regulatory election to include an election whose deadline is prescribed by a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-3 provides that requests for extensions of time for regulatory elections will be granted when the taxpayer provides evidence including affidavits described in the regulations to establish to the satisfaction of the commissioner that plr-153279-09 the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government sec_301_9100-3 states that a taxpayer will be deemed to have acted reasonably and in good_faith if the taxpayer i requests relief before the failure to make the regulatory election is discovered by the service ii inadvertently failed to make the election because of intervening events beyond the taxpayer's control iii failed to make the election because after exercising due diligence the taxpayer was unaware of the necessity for the election iv reasonably relied on the written advice of the service or v reasonably relied on a qualified_tax professional and the tax professional failed to make or advise the taxpayer to make the election the affidavits presented show that taxpayer acted reasonably and in good_faith having reasonably relied on accountant a qualified_tax professional who failed to make or advise taxpayer to make the election furthermore the affidavits presented show that after exercising due diligence taxpayer was unaware of the necessity for the election in addition taxpayer requested relief before the failure to make the regulatory election was discovered by the service under sec_301_9100-3 a taxpayer will not be considered to have acted reasonably and in good_faith if the taxpayer- i seeks to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 at the time the taxpayer requests relief taking into account sec_1_6664-2 of the income_tax regulations and the new position requires a regulatory election for which relief is requested ii was informed in all material respects of the required election and related tax consequences but chose not to file the election or iii uses hindsight in requesting relief if specific facts have changed since the original deadline that make the election advantageous to a taxpayer the service will not ordinarily grant relief taxpayer is not seeking to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 at the time relief is requested plr-153279-09 taxpayer was not informed in all material respects of the required election and its related tax consequences furthermore taxpayer is not using hindsight in requesting relief taxpayer has represented that specific facts have not changed since the original deadline that make the election advantageous to her sec_301_9100-3 provides in part that the interests of the government are prejudiced if granting relief would result in the taxpayer having a lower tax_liability in the aggregate for all taxable years affected by the election than the taxpayer would have had if the election had been timely made taking into account the time_value_of_money sec_301_9100-3 provides in part that the interests of the government are ordinarily prejudiced if the taxable_year in which the regulatory election should have been made or any taxable years that would have been affected by the election had it been timely made are closed by the period of limitations on assessment under these criteria the interests of the government are not prejudiced in this case taxpayer has represented that granting relief would not result in her having a lower tax_liability in the aggregate for all taxable years affected by the election than she would have had if the election had been timely made taking into account the time_value_of_money furthermore the taxable_year in which the regulatory election should have been made and any taxable years that would have been affected by the election had it been timely made are not closed by the period on assessment accordingly the consent of the commissioner is hereby granted for an extension of time to file the forms necessary to make the election to include net capital_gains from the disposition of property_held_for_investment in investment_income for year this extension shall be for a period of days from the date of this ruling the election should be made by filing form_4952 and by including a copy of this ruling with an amended_return for year a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative enclosed is a copy of the letter_ruling showing the deletions proposed to be made in the letter when it is disclosed under sec_6110 of the internal_revenue_code plr-153279-09 the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely christopher f kane branch chief branch income_tax accounting


department of the treasury internal_revenue_service washington d c may number release date cc tege eoeg et1 - cor-109696-01 uilc memorandum for from subject office of division counsel associate chief_counsel tax exempt and government entities cc tege eoeg et1 - cor-109696-01 railroad retirement act tax status in accordance with the coordination procedure established between the service and the railroad retirement board rrb the rrb has provided us with its opinion that the following business became an employer under the railroad retirement act and the railroad unemployment insurance act effective date we have reviewed the opinion of the rrb and based upon the information submitted to the rrb we also conclude that became an employer under the railroad_retirement_tax_act effective date please take the appropriate action regarding this business cc will e mcleod


internal_revenue_service department of the treasury washington dc q os q usk 40fa contact person telephone number in reference to date t ep ra t3 aug legend taxpayer a taxpayer b ira x ira y ira yy roth_ira x roth_ira y roth_ira yy company m 21h month j - month m dear mr and mrs in letters dated date and date you requested a tuling in which you request relief under sec_301_9100-3 of the procedure and administration regulations the following facts and representations support your ruling_request taxpayers a and b maintained iras x y and yy individual_retirement_arrangements described in code sec_408 with company m during month m taxpayers a and b converted iras x y and yy to roth_ira s x y and yy respectively also with company m taxpayers a is married to taxpayer b taxpayer a and b's adjusted_gross_income for exceeded the limit found at sec_408a b of the internal_revenue_code however until month j taxpayers a and b were not aware that their adjusted_gross_income for calendar_year precluded their converting iras x y and yy to roth iras x y and yy furthermore taxpayers a and b became aware of the time limit found in announcements and at the same time that they discovered that their adjusted_gross_income exceeded permissible limits taxpayers a and b timely filed a calendar_year joint federal_income_tax return based on the above you request the following letter_ruling that pursuant to sec_301_9100-3 of the regulations taxpayers a and b are granted a period not to exceed six months from the date of this ruling letter to recharacterize their roth iras x y and yy to traditional iras with respect to your request for relief under sec_301_9100-3 of the regulations sec_408a d of the internal_revenue_code and sec_1_408a-5 of the income_tax regulations provide that except as otherwise provided by the secretary a taxpayer may elect to recharacterize an ira contribution made to one type of ira as having been made to another type of ira by making a trustee-to trustee transfer of the ira contribution plus earnings to the other type of ira in a recharacterization the ira contribution is treated as having been made to the transferee ira and not the transferor ira under sec_408a and sec_1_408a-5 this recharacterization election generally must occur on or before the date prescribed by law including extensions for filing the taxpayer’s federal_income_tax retums for the year of contributions sec_1_408a-5 question and answer -6 describes how a taxpayer makes the election to recharacterize the ira contribution to recharacterize an amount that has been converted from a traditional_ira to a roth_ira the taxpayer must notify the roth_ira trustee of the taxpayer’s intent to recharacterize the amount the taxpayer must provide the trustee and the transferee trustee if different from the transferor trustee with specified information that is sufficient to effect the recharacterization and the trustee must make the transfer section l408a-4 q a-2 provides in summary that an individual with modified_adjusted_gross_income in excess of dollar_figure for a taxable_year is not permitted to convert an amount to a roth_ira during that taxable_year sec_1_408a-4 q a-2 further provides in summary that an individual and his spouse must file a joint federal tax_return to convert a traditional_ira to a roth_ira and that the modified_adjusted_gross_income subject_to the dollar_figure limit for a taxable_year is the modified agi derived from the joint_return using the couple’s combined income sec_301_9100-1 sec_301_9100-2 and of the procedure and administration regulations in general provide guidance conceming requests for relief submitted to the service on or after date section c of the regulations provides that the commissioner of the internal_revenue_service in his discretion may grant a reasonable extension of the time fixed by a regulation a revenue_ruling a revenue_procedure a notice or an announcement published in the internal_revenue_bulletin for the making of an election or application_for relief in respect of tax under among others subtitle a of the code sec_301_9100-2 lists certain elections for which automatic extensions of time to file are granted sec_301_9100-3 of the regulations generally provides guidance with respect to the granting of relief with respect to the elections not referenced in sec_301_9100-2 the relief requested in this case is not referenced in section sec_301_9100-3 of the regulations provides that applications for relief that fall within sec_301_9100-3 will be granted when the taxpayer provides sufficient evidence including affidavits described in sec_301_9100-3 to establish that the taxpayer acted reasonably and in good_faith and granting relief would not prejudice the interests of the government sec_301_9100-3 of the temporary regulations provides that a taxpayer will be deemed to have acted reasonably and in good_faith i if its request for sec_301_9100-1 relief is filed before the failure to make a timely election is discovered by the service ii if the taxpayer inadvertently failed to make the election because of intervening events beyond the taxpayer's control iii if the taxpayer failed to make the election because after exercising reasonable diligence the taxpayer was unaware of the necessity for the election iv the taxpayer reasonably relied upon the written advice of the service or v the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election sec_301_9100-3 ii of the temporary regulations provides that ordinarily the interests of the government will be treated as prejudiced and that ordinarily the service will not grant telief when tax years that would have been affected by the election had it been tumely made are closed by the statute or limitations before the taxpayer's receipt of a ruling granting relief under this section ols announcement lr b date provided that a taxpayer who timely filed his her federal_income_tax return would have until date to recharacterize an amount that had been converted from a traditional_ira to a roth_ira announcement lr b date provided that a taxpayer who timely filed his her federal_income_tax return would have until date to recharacterize an amount that had been converted from a traditional_ira to a roth_ira taxpayers a and b timely filed their federal_income_tax return as a result they were eligible for relief under either announcement or announcement however they missed the deadlines found in said announcements therefore it is necessary to determine if they are eligible for relief under the provisions of sec_301_9100-3 of the regulations in this case taxpayers a and b were ineligible to convert their iras x y and yy to roth iras x y and yy since their adjusted_gross_income exceeded dollar_figure for calendar_year however taxpayers a and b believed that they were eligible to convert iras x y and yy to roth iras until they discovered otherwise at which time the deadline in announcement had passed taxpayers a and b filed this request for sec_301 relief shortly after discovering that taxpayers a and b were ineligible to convert iras x y and yy to roth iras calendar_year is not a closed tax_year with respect to your request for relief we believe that based on the information submitted and the representations contained herein the requirements of sec_301_9100-1 and sec_301_9100-3 of the regulations have been met and that you have acted reasonably and in good_faith with respect to making the election to recharacterize your roth iras as traditional iras specifically the service has concluded that you have met the requirements of clause iti of sec_301_9100-3 b of the regulations therefore you are granted an extension of six months from the date of the issuance of this letter_ruling to so recharacterize no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section or either the code or regulations which may be applicable thereto z0ui this letter is directed only to the taxpayer who tequested it ‘section j of the code provides that it may not be used or cited as precedent lean sincerely yours pranes frances v sloan manager employee_plans technical group tax_exempt_and_government_entities_division x20


internal_revenue_service p o box cincinnati oh release number release date date date legend b employer dear department of the treasury employer_identification_number contact person - id number contact telephone number uil you asked for advance approval of your employer-related scholarship grant procedures under internal_revenue_code sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax you requested approval of your scholarship program to fund the education of certain qualifying students our determination we approved your procedures for awarding employer-related scholarships based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding employer-related scholarships meet the requirements of code sec_4945 as a result expenditures you make under these procedures won't be taxable also awards made under these procedures are scholarship or fellowship grants and are not taxable to the recipients if they use them for qualified_tuition_and_related_expenses subject_to the limitations provided in code sec_117 description of your request your letter indicates you will operate an employer-related scholarship program for children and dependents of employees and grandchildren of employees of b the purpose of your program is to provide financial assistance to an individual to pursue an education for that individual's own benefit to be eligible to apply for a scholarship the student must e e beachild a grandchild or a dependent of an employee of b be enrolled for a minimum of credit hours each semester be pursuing a post-secondary education at an accredited two-year or four-year technical school college university or graduate school letter catalog number 58264e e satisfy the minimum admissions standards of a qualified technical school college university or graduate school you anticipate publicizing the scholarship program through memoranda to b employees in addition beyond notifying existing employees of the existence of the program b will not use the scholarship program to induce prospective employees to join b or current employees to continue employment at b the recipients will be selected by a selection committee independent of you on an objective and non-discriminatory basis with neither race creed color sex age nor disability being considered the committee will not include any employees current or former of yours or b’s you may also contract the services of an independent service provider that is in the business of performing scholarship administration services to private_foundations including selecting the recipients alternatively the selection committee may include individual volunteers from accounting firms charitable organizations educational institutions law firms and or banks furthermore the selection committee will choose grant recipients based solely on objective standards that are completely unrelated to the recipients’ or their parents’ guardians’ or grandparents’ employment and to the b line_of_business a scoring system will be used and the initial tentative selection criteria and their maximum scores are as follow grades academic record academic performance points individual data points work experience demonstrated leadership extracurricular activities - school community awards recognition and honors statement of goals and aspirations unusual circumstance sec_3 outside appraisal points financial need points your board will determine the maximum scholarship award amount however your independent selection committee will determine the amount of each scholarship and may consider the amount of the tuition at the designated school or college as well as have the exclusive right to vary the amount of the scholarships awarded the grants will also be awarded in the order recommended by the committee in addition the number of scholarships awarded annually will not exceed percent of the number of individuals who were eligible for the scholarship program applied for such scholarships and were considered by the independent selection committee in selecting the scholarship recipients for that year or percent of the number of individuals who were eligible for such scholarships whether or not they applied in that year letter catalog number 58264e scholarships will be given for one academic year under no circumstances will a recipient lose a scholarship merely because their parent guardian or grandparent is no longer an employee of b furthermore the scholarship checks will be made payable in one or two payment s and mailed directly to the school the award will be applied to the student’s fall and or spring semester for their tuition fees books and room and board unused funds will be returned to you you will also require recipients to provide grade transcripts following each semester quarter or term to verify they are still in good standing with the school or college and satisfy the ongoing eligibility requirements specifically to maintain an award the recipient must continue to attend an accredited two-year or four-year technical school college university or graduate school and satisfy the minimum admissions standards of such technical school college university or graduate school you represent that you will arrange to receive and review grantee reports annually and upon completion of the purpose for which the grant was awarded investigate diversions of funds from their intended purposes and take all reasonable and appropriate steps to recover diverted funds ensure other grant funds held by a grantee are used for their intended purposes and withhold further payments to grantees until you obtain grantees’ assurances that future diversions will not occur and that grantees will take extraordinary precautions to prevent future diversions from occurring you represent that you will maintain all records relating to individual grants including information obtained to evaluate grantees identify whether a grantee is a disqualified_person establish the amount and purpose of each grant and establish that you undertook the supervision and investigation of grants basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant the grant is a scholarship or fellowship subject_to code sec_117 the grant is to be used for study at an educational_organization described in code sec_170 revproc_76_47 1976_2_cb_670 provides guidelines to determine whether grants a private_foundation makes under an employer-related program to employees or children of employees are scholarship or fellowship grants subject_to the provisions of letter catalog number 58264e code sec_117 if the program satisfies the seven conditions in sections dollar_figure through dollar_figure of revproc_76_47 and meets the applicable_percentage tests described in section dollar_figure of revproc_76_47 we will assume the grants are subject_to the provisions of code sec_117 you represented that your grant program will meet the requirements of either the percent or percent percentage_test in revproc_76_47 these tests require that e e e the number of grants awarded to employees’ children in any year won't exceed percent of the number of employees’ children who were eligible for grants were applicants for grants and were considered by the selection committee for grants or the number of grants awarded to employees’ children in any year won't exceed percent of the number of employees’ children who were eligible for grants whether or not they submitted an application or the number of grants awarded to employees in any year won’t exceed percent of the number of employees who were eligible for grants were applicants for grants and were considered by the selection committee for grants you further represented that you will include only children who meet the eligibility standards described in revproc_85_51 1985_2_cb_717 when applying the percent test applicable to employees’ children in determining how many employee children are eligible for a scholarship under the percent test a private_foundation may include only those children who submit a written_statement or who meet the foundation's eligibility requirements they must also satisfy certain enrollment conditions you represented that your procedures for awarding grants under this program will meet the requirements of revproc_76_47 in particular e e e an independent selection committee whose members are separate from you your creator and the employer will select individual grant recipients you will not use grants to recruit employees nor will you end a grant if the employee leaves the employer you will not limit the recipient to a course of study that would particularly benefit you or the employer other conditions that apply to this determination e e this determination only covers the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don't differ significantly from those described in your original request this determination is in effect as long as your procedures comply with sections dollar_figure through dollar_figure of revproc_76_47 and with either of the percentage letter catalog number 58264e tests of sec_4 if you establish another program covering the same individuals that program must also meet the percentage_test this determination applies only to you it may not be cited as a precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes to your program to the cincinnati office of exempt_organizations at internal_revenue_service exempt_organizations determinations p o box cincinnati oh you cannot award grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives all funds distributed to individuals must be made on a charitable basis and further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 you should keep adequate_records and case histories so that you can substantiate your grant distributions with the irs if necessary we've sent a copy of this letter to your representative as indicated in your power_of_attorney please keep a copy of this letter in your records if you have questions please contact the person listed at the top of this letter sincerely stephen a martin director exempt_organizations rulings and agreements catalog number 58264e letter


department of the treasury internal_revenue_service washington d c tax exempt and soe aug tep naltr uic attn xxxxxxxxxx xxxxxxxxxkx xxxkxxkxxkx xxxkxxkxxkx xxxxxxxxkx legend company f firm a year year year year year date date date trustee a xxxxxxxxkxxk xxxxxkkxxx xxxx xxxx xxxx xxxx xxxx xxxkkxkkxxkkx xxxxkxkxxkkx xxxkxkkxxkkk xxxkxkxkkkkk dear xxxxxxxxxx this is in response to the xxxxxxxxxx letter submitted on company f’s behaif in which it requests an extension of time pursuant to sec_301_9100-1 of the procedure and administration regulations the p a regulations to file the notice of election described in sec_3 of revproc_93_40 1993_2_cb_535 rev_proc to be treated as operating qualified separate lines xxxxxxxxxx page of of business qslobs under sec_414 of the internal_revenue_code_of_1986 as amended the code and sec_1_414_r_-1 and sec_1_414_r_-4 of the income_tax regulations i t regulations’ facts the following facts and representations have been submitted under penalties of perjury in support of company f’s ruling_request company f is a diversified holding_company engaged in a variety of businesses domestically and abroad company f's united_states subsidiaries are organized in qslobs for qualified_plan testing purposes and there are no qualified_employee benefit plans maintained by any member of the controlled_group that are common to all members company f engaged in numerous acquisition transactions that have changed the employee population of its controlled_group since year for the year plan_year company f elected to be treated as three separate qslobs under sec_414 of the code and filed an internal_revenue_service form 5310-a notice of plan merger or consolidation spinoff or transfer of plan assets or liabilities notice of qualified_separate_lines_of_business on date for the year plan_year because of changes in corporate ownership company f began operating only two qslobs in year company f made a number of corporate acquisitions company f determined it was required to include those companies in their controlled-group in the year plan_year for testing purposes company f has engaged firm a to provide employee_benefits and actuarial consulting services since year the services include retirement_plan coverage and nondiscrimination testing for all entities in company f’s controlled_group firm a provided testing services to determine whether company f needed to elect additional qslobs to meet the coverage and nondiscrimination requirements for the year plan_year firm a advised company f that it would pass the applicable tests for that plan_year without electing additional qslobs and that it did not need to file a form 5310-a with the internal_revenue_service the service by date on date firm a advised company f that it had conducted additional testing and that firm a’s initial recommendation regarding qslob elections was incorrect firm a recommended that company f file an election to maintain two additional qslobs for the year plan_year firm a’s recommendation was made after the deadline for submitting form 5310-a had already passed for the year plan_year as evidenced by an affidavit from trustee a trustee for company f’s various retirement plans company f represents that other than its failure_to_file form 5310-a in a timely manner all requirements under sec_414 of the code are satisfied xxxxxxxxxx page of ruling requested company f requests a ruling that under sec_301_9100-3 of the p a regulations the filing of form 5310-a as described above will be deemed as a timely filing for purposes of operating qualified_separate_lines_of_business under sec_414 r with respect to its year testing year law in general sec_414 of the code provides that for purposes of sec_129 and sec_410 of the code an employer shall be treated as operating separate lines of business during any year if the employer operates separate lines of business for bona_fide business reasons and satisfies certain other conditions under the code if the employer is treated as operating qslobs for the year the employer may apply the minimum coverage requirements of sec_410 including the nondiscrimination requirements of sec_401 of the code and the minimum participation requirements of sec_401 of the code separately with respect to the employees in each qualified separate business line sec_414 of the code requires that an employer notify the secretary_of_the_treasury that a line_of_business is being treated as separate for purposes of sec_129 and sec_410 of the code sec_3 of revproc_93_40 sets forth the exclusive rules for satisfying the notice requirement of sec_414 of the code section dollar_figure of revproc_93_40 provides that notice must be given by filing form 5310-a section dollar_figure of revproc_93_40 provides that notice for a testing year must be given on or before the notification date for the testing year the notification date for a testing year is the later of october of the year following the testing year or the 15th day of the 10th month after the close of the plan_year of the plan of the employer that begins earliest in the testing year section dollar_figure of revproc_93_40 provides in pertinent part that after the notification date notice cannot be modified withdrawn or revoked and will be treated as applying to subsequent testing years unless the employer takes timely action to provide a new notice under sec_301_9100-1 of the p a regulations the commissioner of internal revenue may grant a reasonable extension of time to make a regulatory election or certain statutory elections under subtitle a of the code if the taxpayer demonstrates to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting the relief will not prejudice the interests of the government sec_301_9100-1 of the p a regulations defines the term regulatory election as an election whose due_date is prescribed by a regulation published xxxxxxxxxx page of the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin notice that an employer elects to be treated as operating qualified_separate_lines_of_business pursuant to sec_414 of the code which is under subtitle a and sec_3 of revproc_93_40 is a regulatory election the commissioner has authority under sec_301_9100-1 and sec_301_9100-3 of the regulations to grant an extension of time if a taxpayer fails to file a timely notice of election under sec_3 of rev_proc sec_301_9100-3 of the p a regulations provides that applications for relief that fall within sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish that the taxpayer acted reasonably and in good_faith and granting relief would not prejudice the interests of the government sec_301_9100-3 of the p a regulations provides that a taxpayer will be deemed to have acted reasonably and in good_faith if the taxpayer i requests relief under this section before the failure to make the regulatory election is discovered by the service ii failed to make the election because of intervening events beyond the taxpayer's control iii failed to make the election because after exercising reasonable diligence taking into account the taxpayer's experience and the complexity of the return or issue the taxpayer was unaware of the necessity for the election iv reasonably relied on the written advice of the service or v reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election section c of the regulations provides that ordinarily the interests of the government will be treated as prejudiced and that ordinarily the service will not grant relief when tax years that would have been affected by the election had it been timely made are closed by the statute_of_limitations before the taxpayers receipt of a ruling granting relief under this section or if granting relief would result in a taxpayer having a lower tax_liability in the aggregate for all taxable years affected by the election than the taxpayer would have had if the election had been timely made xxxxxkxxxkx page of analysis pursuant to sec_301_9100-1 of the p a regulations an election by an employer to be treated as operating qslobs pursuant to sec_414 of the code and sec_3 of revproc_93_40 is a regulatory election under sec_301_9100-1 of the regulations the commissioner of internal revenue may grant a reasonable extension of time to make a regulatory election or certain statutory elections under subtitle a of the code if the taxpayer demonstrates to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting the relief will not prejudice the interests of the government company f's ruling_request contains an explanation describing the circumstances that caused its failure to give the service timely notice of its qslob election for year under sec_301_9100-3 the taxpayer will be deemed to have acted reasonably and in good_faith if it reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election here company f's failure was due to its having reasonably relied on firm a’s recommendation that it would pass coverage and nondiscrimination testing without electing additional qslobs the ruling_request also provides an explanation of the actions company f took following their discovery of this failure furthermore the interests of the government are not prejudiced by the service granting company f's request section c of the p a regulations provides that ordinarily the service will not grant relief when tax years that would have been affected by the election had it been timely made are closed by the statute_of_limitations before the taxpayers receipt of a ruling granting relief under this section or if granting relief would result in a taxpayer having a lower tax_liability than if the election had been timely made here the statute_of_limitations has not run for any_tax years that would have been affected by the election had it been made timely in addition granting relief will not result in company f having a lower tax_liability than if the election had been timely made conclusion with respect to company f's request for relief based on the information submitted and the representations contained herein company f is entitled to relief based on clauses i and v of sec_301_9100-3 of the p a regulations as a result we conclude that good cause has been shown for the failure to timely make the election provided for in sec_3 of revproc_93_40 furthermore we find that the government is not prejudiced by the issuance of this ruling and that the other requirements of sec_301_9100-1 have been satisfied accordingly the filing of form 5310-a as described above will be deemed to be a timely filing for purposes of notifying the service that company f cree is operating four qualified_separate_lines_of_business under sec_414 of the code with respect to the year plan_year accordingly company f is granted an extension of months from the date of the issuance of this ruling letter to file notification of the qslob election on form 5310-a with the appropriate irs office no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this ruling does not constitute a determination that a separate_line_of_business may be treated as satisfying the requirement of administrative scrutiny within the meaning of sec_1_414_r_-6 of the i t regulations 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 copies of this letter have been sent to your authorized representatives in accordance with a power_of_attorney on file in this office if you wish to inquire about this ruling please contact xxxxxxxxxxx at - _ please address all correspondence to xxxxxxxxxx sincerely yours ft aden lest actin seo ae eo onzéll littlejohn manager mployee plans technical group enclosures deleted copy of ruling letter notice of intention to disclose cc xxxxxxxxxx power_of_attorney


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 b03 plr-135954-18 date date legend x --------------------------------------------------- --------------------------------------- a ------------------------- ---------------------------------------------------- b -------------------------- ---------------------------------------------------- state date1 date2 date3 date4 date5 date6 n1 n2 n3 ----------- ----------------------- ----------------------- ------------------- -------------------------- ------------------------ ------------------------ -------- ---------- ----- plr-135954-18 dear -------------------- this responds to a letter dated date submitted on behalf of x by x’s authorized representative requesting a ruling under sec_1362 of the internal_revenue_code code facts the information submitted states that x was incorporated under the laws of state on date1 on date2 x undertook a recapitalization and x’s board_of directors amended x’s articles of incorporation to divide x’s common_stock into n1 shares of class a stock and n2 shares of class b stock the class a shares retained voting power and the class b shares held no voting power the class a and class b shares otherwise conferred identical rights to distribution and liquidation proceeds on date3 x’s board_of directors amended x’s articles of incorporation for a second time to change the liquidation rights of x’s stock after this amendment the class a and class b shares were entitled to receive equal shares of any assets of x in liquidation until the amount of dollar_figuren3 had been paid to each share upon reaching dollar_figuren3 in liquidation proceeds per share the class b shares were entitled to receive the balance of any remaining assets of x on date4 x filed an election to be taxed as an s_corporation x represents that at time this election was filed x’s board_of directors were either unaware or had forgotten that the distribution and liquidation rights had been changed and differed for class a and class b shares as a result of the date3 amendment to x’s articles of incorporation in addition x represents that x’s tax advisors were unaware of this amendment on date4 x had two shareholders a and b a and b remained the only shareholders of x from date4 through date6 x represents that x’s legal counsel discovered the date3 amendments to x’s articles of incorporation that created two classes of stock in connection with due diligence performed prior to the sale of x stock by a and b that occurred on date6 upon learning about this date3 amendment x’s board_of directors amended x’s articles of incorporation on date5 to reconstitute the class a and class b shares into a single class of stock with identical rights to distribution and liquidation proceeds in order to rectify the ineffectiveness of x’s s_corporation_election x represents that x and x’s shareholders have filed tax returns consistent with x being an s_corporation since date4 the facts indicate that the circumstances resulting in the ineffectiveness of x’s s_corporation_election were inadvertent and were not motivated by tax_avoidance or retroactive tax planning x and each person who was or is a shareholder of x at any time since date4 agree to make any adjustments plr-135954-18 consistent with the treatment of x as an s_corporation as may be required by the secretary with respect to such period law and analysis sec_1361 provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 defines a small_business_corporation as a domestic_corporation which is not an ineligible_corporation and which does not a have more than shareholders b have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual c have a nonresident_alien as a shareholder and d have more than one class of stock sec_1_1361-1 of the income_tax regulations provides in part that a corporation is generally treated as having only one class of stock if all outstanding shares of stock of the corporation confer identical rights to distribution and liquidation proceeds sec_1_1361-1 provides that the determination of whether all outstanding shares of stock confer identical rights to distribution and liquidation proceeds is made based on the corporate charter articles of incorporation bylaws applicable state laws and binding agreements relating to distribution and liquidation proceeds collectively the governing provisions sec_1362 provides that except as provided in sec_1362 a small_business_corporation may elect in accordance with the provisions of sec_1362 to be an s_corporation sec_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the first day of the first taxable_year for which the corporation is an s_corporation such corporation ceases to be a small_business_corporation a termination of an s_corporation_election under sec_1362 is effective on or after the date of cessation sec_1362 provides that if an election under sec_1362 or sec_1361 by any corporation a was not effective for the taxable_year for which made determined without regard to sec_1362 by reason of a failure to meet the requirements of sec_1361 or to obtain shareholder consents or b was terminated under sec_1362 or or sec_1361 the secretary determines that the circumstances resulting in such ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in plr-135954-18 the ineffectiveness or termination steps were taken a so that the corporation for which the election was made or the termination occurred is a small_business_corporation or a qualified_subchapter_s_subsidiary as the case may be or b to acquire the required shareholder consents and the corporation for which the election was made or the termination occurred and each person who was a shareholder in such corporation at any time during the period specified pursuant to sec_1362 agrees to make such adjustments consistent with the treatment of such corporation as an s_corporation or a qualified_subchapter_s_subsidiary as the case may be as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in such ineffectiveness or termination such corporation shall be treated as an s_corporation or a qualified_subchapter_s_subsidiary as the case may be during the period specified by the secretary conclusion based solely on the facts submitted and the representations made we conclude that x’s s_corporation_election was ineffective on date4 as a result of the second class of stock created by the date3 amendment to x’s articles of incorporation we conclude that this ineffectiveness was inadvertent within the meaning of sec_1362 pursuant to the provisions of sec_1362 x will be treated as an s_corporation beginning on date4 and continuing thereafter unless x’s s_corporation_election otherwise terminated under sec_1362 for other reasons 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 specifically no opinion is expressed or implied regarding x’s eligibility to be an s_corporation the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for a ruling it is subject_to verification on examination this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-135954-18 in accordance with the power_of_attorney on file with this office copies of this letter are being sent to your authorized representatives sincerely adrienne m mikolashek branch chief branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index number ----------------------------------------- ---------------------------- ---------------------------------------- --------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------- id no ------------- telephone number --------------------- refer reply to cc corp b06 plr-121886-08 date date legend distributing ------------------------------------------------------------------------ ------------------------------- ----------------------------------- controlled -------------------------------- --------------------------------------------------------------------------------------------------- corp xyz ------------------------ ------------------------------------------------------------------------------ ------------------------------------------------------------------------ ----------------------------------------------------------------------------------------- ------------------------------------------------------------------------- ----------------------------------------------------- ---------------------------------------------------------------------------------------- ------------------------------------------------------------------------ --------------------------------------------- ---------------------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------- ----------------------------------------------------------------------------------------------------------- --------------------------------------------------- ------------------------------------------------------------------------------------------------------------ -------------- prs-1 prs-2 prs-3 prs-4 prs-5 plr-121886-08 llc-1 llc-2 --------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------- ---------------------------------- --------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------- ------------------------- shareholder aa ----------------- shareholder bb -------------------- shareholder cc asset asset asset asset asset asset asset ------------------------ -------------------- -------------- -------------- ----------- ------------------- --------------- --------------- asset --------------- asset asset asset asset asset asset ------------------ ------------------- --------------- -------------------------- -------------- ----------------------- plr-121886-08 asset asset date date date date a b c d e f dollar_figuregg a b c d e f g h i j -------------- --------------- -------------------------- ------- ------- ------- --------- ----------- ---------------- --------- ----- ------- ----------------- ------ ------ --- ----- ------ --- -- --- --- --- plr-121886-08 k l m n o p q r s t ------------- ---- --------------- --------------- -------- -------- --- ------ -------- ------ x business state a dear ------------------- ----------------------------------- ---------- this letter responds to your date letter requesting rulings on certain federal_income_tax consequences of the proposed transaction described below the information provided in that letter and in later correspondence is summarized below the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process moreover this office has not reviewed any information pertaining to and has made no determination regarding whether the distribution described below satisfies the business_purpose requirement of sec_1_355-2 ii is used principally as a device for the distribution of the earnings_and_profits of the distributing_corporation or the controlled_corporation or both see sec_355 of the internal_revenue_code the code and sec_1_355-2 or iii is part of a plan or series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a 50-percent or plr-121886-08 greater interest in the distributing_corporation or the controlled_corporation see sec_355 and sec_1_355-7 facts distributing was formed on date in state a distributing is an s_corporation shareholder aa owns a shares of distributing class a common voting_stock and b shares of distributing class b non-voting common_stock shareholder bb owns a shares of distributing class a common voting_stock and c shares of distributing class b non-voting common_stock shareholder cc owns d shares of distributing class b non-voting common_stock shareholder aa and shareholder bb are officers of distributing distributing has been engaged in x business since date distributing owns assets these assets are x business_assets in addition distributing owns other x business_assets distributing itself has no operational employees shareholder aa and shareholder bb make all of the significant business decisions with respect to distributing’s x business corp xyz was formed on date in state a corp xyz is an s_corporation shareholder aa owns e shares of corp xyz class a voting common_stock and f shares of corp xyz class b non-voting common_stock shareholder bb owns e shares of corp xyz class a voting common_stock and f shares of corp xyz class b non-voting common_stock corp xyz owns a of x business’ asset shareholder aa and shareholder bb are officers of corp xyz prs-1 is a domestic limited_partnership formed on date shareholder aa and shareholder bb are the general partners of prs-1 for the past five years shareholder aa has had a profits interest in prs-1 of not more than b for the past five years shareholder bb has had a profits interest in prs-1 of not more then b distributing is a limited_partner of prs-1 distributing acquired its limited_partnership_interest in prs-1 on date during the past five years distributing had a profits interest in prs-1 of not less than c during the past five years distributing had a capital interest in prs-1 of d prs-1 owns x business’ assets and asset and e of x business’ asset in addition prs-1 owns the land and building which serves as the central office for the entities herein described prs-1 provides some of its employees to distributing’s x business these employees perform services for distributing for an arm’s length price these employees provide both management and operational functions for distributing’s x business prs-1 is responsible for both hiring and training these employees distributing through its officers shareholder aa and shareholder bb has performed active and substantial management functions for prs-1 plr-121886-08 distributing through its officers shareholder aa and shareholder bb make significant business decisions regarding significant business issues of prs-1 in addition shareholder aa and shareholder bb participate in the overall supervision and direction and control of the employees of prs-1 performing operational and management functions for distributing in addition shareholder aa and shareholder bb participate in the overall supervision and direction and control of the remaining employees of prs-1 who perform operational and management functions for other entities prs-1 currently owes distributing dollar_figuregg the intercompany note llc is a domestic limited_liability_company that has been classified as a partnership for federal_income_tax purposes the members of llc are prs-2 and prs-3 prs-2 and prs-3 each own a f capital and profits interest in llc llc-1 owns x business’ asset llc is a domestic limited_liability_company that has been classified as a partnership for federal_income_tax purposes the members of llc are prs-2 and prs-3 prs-2 and prs-3 each own a f capital and profits interest in llc llc owns x business asset prs-2 is a domestic limited_partnership shareholder aa and shareholder aa’s spouse are the general partners of prs-2 shareholder aa and shareholder aa’s spouse each own a g capital and profits interest in prs-2 shareholder aa’s children are the limited partners of prs-2 shareholder aa’s children each own a h capital and profits interest in prs-2 prs-3 is a domestic limited_partnership shareholder bb is the general_partner of prs-3 shareholder bb and shareholder cc are the limited partners of prs-3 shareholder cc owns a i capital and profits interest in prs-3 shareholder bb owns a j capital and profits interest in prs-3 financial information has been received indicating that x business has had gross_receipts and operating_expenses representing the active_conduct_of_a_trade_or_business for each of the past five years for what are represented as constituting valid business reasons distributing has proposed the following transaction proposed transaction corp xyz will be merged into distributing pursuant to sec_368 with distributing as the surviving corporation prs-1 will distribute asset and an e interest in asset to shareholder aa and shareholder bb shareholders aa and bb will transfer asset and an e interest of plr-121886-08 asset to distributing as contributions to capital distributing will transfer k of asset to prs-1 in exchange for assets and distributing will form controlled and will transfer the following assets subject_to liabilities asset asset asset l of asset asset f of its interest in prs-1 and f of its other assets thus excluding asset asset asset asset and asset and its f interest in prs-1 to controlled in exchange for all of controlled’s stock ‘the contribution distributing will assign f of the intercompany note to controlled after the completion of the above mentioned transaction the value of x business held by distributing and controlled will be approximately the same distributing will distribute all of the stock of controlled to shareholder aa in exchange for all of shareholder aa’s stock in distributing the distribution controlled will elect to be an s_corporation prs-2 and prs-3 will be merged into prs-1 llc-1 and llc-2 will be liquidated and their assets subject_to liabilities will be distributed to prs-1 shareholder bb and shareholder cc and distributing will form prs-4 prs-1 will transfer assets and and other assets subject_to mortgages and other related liabilities including f of the intercompany note to shareholder bb shareholder cc and distributing shareholder bb shareholder cc and distributing will then contribute the above-mentioned assets and related liabilities to prs-4 distributing will own approximately an m capital and profits in prs-4 shareholder bb will own approximately a n capital and profits interest in prs-4 shareholder cc will own approximately an o capital and profits interest in prs-4 shareholder aa shareholder aa’s spouse and shareholder aa’s children and controlled will form prs-5 prs-1 will transfer asset and k of asset and other assets subject_to mortgages and related liabilities including f of the intercompany note to shareholder aa shareholder aa’s spouse shareholder aa’s children and controlled shareholder aa shareholder aa’s spouse shareholder aa’s children and controlled will then contribute the above-mentioned assets and liabilities to prs-5 controlled will then receive approximately an m capital and profits interest in prs-5 shareholder aa will receive approximately a p profits and capital interest in prs-5 shareholder aa’s spouse will receive approximately a q capital and profits interest in prs-5 each of shareholder aa’s children will receive approximately an r profits and capital interest in prs-5 prs-1 will retain management assets including all associated employees and the central office prs-1 will be converted to a general_partnership with shareholder aa plr-121886-08 shareholder bb distributing and controlled as general partners distributing will own approximately an s capital and profits interest in prs-1 controlled will own a approximately an s capital and profits interest in prs-1 shareholder aa will own approximately a t capital and profits interest in prs-1 shareholder bb will own approximately a t capital and profits interest in prs-1 after the proposed transaction prs-1 through its employees will provide management and operational services for x businesses of distributing and controlled prs-1 will provide employees to distributing for an arm’s length fee prs-1 will provide employees to controlled for an arm’s length fee distributing through its officer shareholder bb will continue to perform active and substantial management functions for prs-1 distributing through its officer shareholder bb will continue to make significant business decisions regarding the significant business issues of prs-1 in addition shareholder bb will continue to participate in the overall supervision direction and control of the employees of prs-1 performing operational and management functions for distributing shareholder bb will make the significant business decisions for distributing controlled through its officer shareholder aa will perform active and substantial management functions for prs-1 controlled through its officer shareholder aa will make significant business decisions regarding significant business issues of prs-1 in addition shareholder aa will continue to participate in the overall supervision and direction and control of the employees of prs-1 performing operational and management functions for controlled shareholder aa will make the significant business decisions for controlled all of the employees of prs-1 will continue as employees of prs-1 after the proposed transaction shareholder aa and shareholder bb will continue to guarantee certain debts of prs-1 after the proposed transaction distributing prs-4 and shareholder bb will enter into an indemnification agreement in which they agree to indemnify controlled prs-5 and shareholder aa for any liabilities on any debts retained by distributing or assumed by prs-4 controlled prs-5 and shareholder aa will enter into an indemnification agreement in which they agree to indemnify distributing prs-4 and shareholder bb for any liability on any debts assumed by controlled or prs-5 representations the following representations are made with respect to the distribution a the fair_market_value of the controlled_corporation stock and other consideration to be received by shareholder aa of the distributing_corporation will be approximately plr-121886-08 equal to the fair_market_value of the distributing_corporation stock surrendered by shareholder aa in the exchange b no part of the consideration to be distributed by the distributing_corporation will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of the corporation c the five years of financial information submitted on behalf of the distributing_corporation is representative of the corporation’s present operation and with regard to such corporation there have been no substantial operational changes since the date of the last financial statements submitted d the five years of financial information submitted on behalf of the business contributed to controlled is representative of the corporation’s present operation and with regard to such corporation there have been no substantial operational changes since the date of the last financial statements submitted e following the transaction the distributing and controlled_corporation will each continue independently and with its separate employees such employees will be provided by pr sec_1 to distributing and controlled for an arms length price the active_conduct of its share of all the integrated activities of the business conducted by the distributing_corporation prior to the consummation of the transaction f the distribution of the stock or stock and securities of the controlled_corporation is carried out for the following corporate business_purpose in order to resolve divergent shareholder interests and disputes the distribution of the stock or stock and securities of the controlled_corporation is motivated in whole or substantial part by this corporate business_purpose g the transaction is not used principally as a device for the distribution of the earnings_and_profits of the distributing_corporation or the controlled_corporation or both see sec_355 a b h the total adjusted_basis and the fair_market_value of the assets transferred to controlled in the contribution will equal or exceed the sum of i the total liabilities assumed within the meaning of sec_357 by controlled and ii the total amount of any money and the fair_market_value of any other_property within the meaning of sec_361 received by distributing and transferred to its creditors in connection with the reorganization i the liabilities assumed within the meaning of sec_357 by controlled in the contribution were incurred in the ordinary course of business and are associated with the assets being transferred plr-121886-08 j the total fair_market_value of the assets transferred to controlled in the contribution will exceed the sum of i the amount of any liabilities assumed within the meaning of sec_357 by controlled in connection with the exchange ii the amount of any liabilities owed to controlled by distributing that are discharged or extinguished in connection with the exchange and iii the amount of any cash and the fair_market_value of any other_property other than stock and securities permitted to be received under sec_361 without the recognition of gain received by distributing in connection with the exchange k the fair_market_value of the assets of controlled will exceed the amount of its liabilities immediately_after_the_exchange l the aggregate fair_market_value of the assets transferred to controlled in the contribution will equal or exceed the aggregate adjusted_basis of these assets m the income_tax_liability for the taxable_year in which investment_credit_property including any building to which sec_47 applies is transferred will be adjusted pursuant to sec_50 or a or sec_47 as in effect before amendment by public law title 104_stat_1388 if applicable to reflect an early disposition of the property n the distributing_corporation neither accumulated its receivables nor made extraordinary payment of its payables in anticipation of the transaction o no intercorporate debt will exist between the distributing_corporation and the controlled_corporation at the time of or subsequent to the distribution of the controlled stock p for purposes of sec_355 immediately after the distribution no person determined after applying sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of distributing stock entitled to vote or percent or more of the total value of shares of all classes of distributing stock that was acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the distribution q for purposes of sec_355 immediately after the distribution no person determined after applying sec_355 will hold stock possessing percent or more of the total combined voting power of all classes of controlled stock entitled to vote or percent or more of the total value of shares of all classes of controlled stock that was either i acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the distribution or ii attributable to distributions on distributing stock_or_securities that were acquired by purchase as defined in sec_355 and during the five-year period determined after applying sec_355 ending on the date of the distribution plr-121886-08 r payments made in connection with all continuing transactions if any between the distributing and controlled corporations will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length s no two parties to the transaction are investment companies as defined in sec_368 and iv t the distribution is not part of a plan or series of related transactions within the meaning of sec_1_355-7 pursuant to which one or more persons will acquire directly or indirectly stock representing a 50-percent_or_greater_interest within the meaning of sec_355 in distributing or controlled including any predecessor or successor of any such corporation u immediately after the distribution neither distributing nor controlled will be a disqualified_investment_corporation within the meaning of sec_355 other representations v the merger of corp xyz into distributing will qualify as a tax-free reorganization under sec_368 w controlled and prs-5 will be solely responsible for the debts assumed by controlled and prs-5 shareholder aa controlled and prs-5 will indemnify shareholder bb distributing and prs-4 for any liability on the debts assumed by controlled and prs-5 x distributing and prs-4 will be solely responsible for the debts retained by distributing or assumed by prs-4 shareholder bb distributing and prs-4 will indemnify shareholder aa controlled and prs-5 for any liability on the debts retained by distributing or assumed by prs-4 rulings based solely on the information and representations submitted we rule as follows on the proposed transaction the transfer by distributing to controlled of assets in exchange for all of the outstanding_stock of controlled and controlled’s assumption of distributing’s liabilities followed by distributing’s distribution of the controlled stock to shareholder aa in exchange for all of shareholder aa’s stock in distributing will be a reorganization within the meaning of sec_368 distributing and controlled each will be a_party_to_a_reorganization under sec_368 see revrul_77_11 c b plr-121886-08 distributing will not recognize any gain_or_loss on its transfer of property to controlled in exchange for controlled stock and controlled’s assumption_of_liabilities sec_361 and sec_357 controlled will not recognize any gain_or_loss on the receipt of assets from distributing in exchange for controlled stock sec_1032 controlled’s basis in each asset received from distributing will be the same as the basis of that asset in the hands of distributing immediately before its transfer b controlled’s holding_period in each asset received from distributing will include the period during which distributing held that asset sec_1223 distributing will not recognize any gain_or_loss on the distribution of all the controlled stock to shareholder aa in exchange for all of shareholder aa’s distributing stock sec_361 shareholder aa will not recognize any gain_or_loss and will not otherwise include any amount in income on the receipt of all of the shares of controlled stock in exchange for all of its distributing stock sec_355 the basis of the controlled stock in the hands of shareholder aa immediately_after_the_exchange will be the same as that shareholder’s basis in the distributing stock held immediately before the exchange sec_358 the holding_period of the controlled stock received by shareholder aa will include the holding_period of the distributing stock exchanged therefor provided the distributing stock is held as a capital_asset on the date of the distribution sec_1223 earnings_and_profits if any will be allocated between distributing and controlled in accordance with sec_312 and sec_1_312-10 caveats we express no opinion about the tax treatment of the proposed transaction under other provisions of the code and regulations or the tax treatment of any condition existing at the time of or effects resulting from the proposed transaction that are not specifically covered by the above rulings in particular no opinion is expressed regarding i whether the distribution satisfies the business_purpose requirement of sec_1_355-2 plr-121886-08 ii whether the distribution is being used principally as a device for the distribution of earnings_and_profits of distributing or the controlled_corporation see sec_355 and sec_1_355-2 iii whether the distribution is part of a plan or series of related transactions pursuant to which one or more persons will acquire directly or indirectly stock representing a 50-percent_or_greater_interest in distributing or the controlled_corporation see sec_355 and sec_1_355-7 iv whether the merger of corp xyz into distributing qualifies as a reorganization under sec_368 procedural statements this ruling letter is directed only to the taxpayer distributing sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of this letter_ruling sincerely _________________________________ steven j hankin senior technician reviewer branch office of associate chief_counsel corporate


internal_revenue_service number release date index number ------------------------------------------------------------ -------------- ---------------------------------------------- ------------------------------------------------ --------------------- ------------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------- id no -------------- telephone number ---------------------- refer reply to cc fip b05 plr-104077-18 date august legend issuer airport ------------------------------------------------------------------------ ---------------------------------------------- ------------------------------------------------ terminal complex ----------------------------------------------------------------------------------------------- ------------------------------------------------------------------------ boarding area ---------------------------------------------------------- ------------------------------------------------------------------------ city state bonds ---------------------------------------------- -------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ -------------------------------------------- dear --------------- this responds to your request for a ruling that for purposes of compliance with sec_147 of the internal_revenue_code code the issuer may allocate proceeds of the bonds and equity as defined below to the boarding area on an undivided portion basis such that it may allocate the proceeds and equity to qualified and non-qualified uses as plr-104077-18 defined below respectively regardless of the location of those uses within the boarding area during the term of the bonds facts and representations issuer owns and operates the airport the airport includes the terminal complex as well as runways taxiways and support facilities the terminal complex includes boarding areas which have a wide variety of retail shops bars restaurants coffee shops and similar passenger amenities terminal shops that are operated by third- party private operators under leases from issuer the nature size variety and scope of terminal shops change over time based on consumer trends style and overall economic conditions however none of the terminal shops will be described in sec_142 issuer is in the process of making substantial renovations to portions of the terminal complex the renovations including the complete demolition and reconstruction of the boarding area and will finance part of the costs of the renovations with the proceeds of the bonds issuer expects to receive proposals from private concessionaires for one or more terminal shops to be located within the reconstructed boarding area and expects that such terminal shops will include retail locations the principal business of which is the sale of alcoholic beverages for consumption off premises within the meaning of sec_147 non-qualified use use not described in sec_147 is referred to herein as qualified_use issuer expects that during the expected term of the bonds terminal shops with non-qualified use will be relocated to other terminal shop locations within the boarding area issuer intends to use funding sources that are not proceeds of any tax-exempt or other tax-advantaged bond equity to finance at least the costs of the renovations allocable to the terminal shops in the boarding area that it expects to be used for non- qualified_use issuer intends to use proceeds of the bonds which were issued as exempt facility bonds pursuant to sec_142 to finance costs of the renovations to the boarding area issuer will allocate the equity no later than the placed_in_service_date of the boarding area issuer will allocate the proceeds and the equity to the qualified and non-qualified uses of the boarding area respectively on a floating basis over the term of the bonds based on the costs of the portions of the boarding area being so used up to but not exceeding the amounts of proceeds and equity allocated to the boarding area law and analysis sec_103 provides that except as provided in sec_103 gross_income does not include interest on any state_or_local_bond sec_103 provides in part that sec_103 shall not apply to any private activity that is not a qualified_bond within the meaning of sec_141 plr-104077-18 sec_141 provides that a bond is a private_activity_bond if the bond is issued as part of an issue that meets the private_business_use_test of sec_141 and the private_security_or_payment_test of sec_141 or the private_loan_financing_test of sec_141 under sec_141 an issue meets the private_business_use_test if more than percent of the proceeds of an issue are to be used for any private_business_use private_business_use is defined in sec_141 as use directly or indirectly in a trade_or_business carried on by any person other than a governmental_unit for this purpose any activity carried on by a person other than a natural_person is treated as a trade_or_business sec_141 provides in general that an issue meets the private_security_or_payment_test if the payment of the principal of or the interest on more than percent of the proceeds of an issue is directly or indirectly secured_by an interest in property used or to be used for a private_business_use secured_by an interest in payments in respect of such property or to be derived from payments whether or not to the issuer in respect of property or borrowed money used or to be used for a private_business_use sec_141 defines a qualified_bond to include any private_activity_bond that is an exempt_facility_bond meets the applicable_requirements of sec_146 volume_cap and meets the applicable_requirements of sec_147 sec_142 defines an exempt_facility_bond to include any bond issued as part of an issue percent or more of the net_proceeds of which are to be used to provide airports sec_147 states that a private_activity_bond shall not be a qualified_bond if issued as part of an issue and any portion of the proceeds of such issue is to be used to provide any airplane skybox or other private luxury box health club facility facility primarily used for gambling or store the principal business of which is the sale of alcoholic beverages for consumption off premises the statutory predecessor to sec_147 is sec_103 of the internal_revenue_code of code which was added by c of the deficit_reduction_act_of_1984 publaw_98_367 98_stat_630 the legislative_history to sec_103 includes the following language in reference to the prohibition on the use of bond proceeds for any skybox or other private luxury box in the case of skyboxes or other private luxury boxes the committee does not intend to prohibit the use of industrial_development_bonds idbs to finance the construction renovation or refurbishing of a facility solely because skyboxes are included in the project so long as the plr-104077-18 project otherwise qualifies for tax-exempt_financing rather no portion of the proceeds of the idb may be used to provide any skybox for this purpose the skybox shall be deemed to include the interior furnishings of the box eg the box’s plumbing electrical and decorating costs and the structural_components required for the box eg the box’s walls ceilings special enclosures but does not include the normal components of the stadium such as structural supports to the extent they would have been required for the remaining portion of the stadium if no skyboxes and no regular seats in lieu of skyboxes had been built house supplemental report h_r rep no pt pincite see also h_r rep no pincite discussing financing of mixed-use airport facilities under sec_142 issuer expects to have terminal shops in the reconstructed boarding area that have non-qualified use moreover issuer expects that such terminal shops will during the term of the bonds be relocated to other terminal shop locations within the boarding area issuer will finance the costs allocable to such terminal shops with equity and seeks a ruling that the amount of the equity may be allocated to the boarding area on an undivided basis rather than to a specific location or discrete portion to accommodate the relocations of the terminal shops with non-qualified use the legislative_history described above supports applying a reasonable allocation method to avoid using the proceeds of tax-exempt_bonds for non-qualified costs while still being able to finance with proceeds of tax-exempt_bonds those portions of the facility that otherwise qualify for such financing within the boarding area consistent with the legislative_history to the predecessor to sec_147 issuer will use bond proceeds only for the costs of the areas to be used for qualified_use and will use equity for the costs of the terminal shops with expected non-qualified use issuer will allocate the proceeds and the equity to the qualified and non-qualified uses respectively on a floating basis over the term of the bonds based on the costs of the portions of the boarding area being so used up to but not exceeding the respective amounts of proceeds and equity allocated to the boarding area accordingly we conclude under the facts described above that this is a reasonable allocation method conclusion under the facts and circumstances of this case we conclude that for purposes of compliance with sec_147 of the code issuer may allocate proceeds of the bonds and the equity on an undivided portion basis to the boarding area and issuer may allocate such funds during the term of the bonds to the qualified and non-qualified uses of the boarding area respectively regardless of the specific location based on the costs of the portions of the boarding area being so used up to but not exceeding the amounts of proceeds and equity allocated to the boarding area plr-104077-18 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any transaction or item discussed or referenced in this letter including whether the bonds meet the requirements for the exclusion of interest from gross_income under sec_103 this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to each of issuer’s authorized representatives the ruling contained in this letter is based upon information and representations submitted by issuer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the materials submitted in support of the request for a ruling it is subject_to verification upon examination sincerely associate chief_counsel financial institutions products by _________________________ timothy l jones senior counsel branch cc