department of the treasury internal_revenue_service washington d c of f i c e of c h i e f c ou n s e l date number release date uilc cc psi b07 postf-151066-01 internal_revenue_service national_office field_service_advice memorandum for from subject area_counsel paul f kugler associate chief_counsel cc psi credit_for_increasing_research_activities under sec_41 of the internal_revenue_code this chief_counsel_advice responds to your memorandum dated date in accordance with sec_6110 this chief_counsel_advice should not be cited as precedent legend taxpayer subsidiary subsidiary date date date date date postf-151066-01 date date date issues how should taxpayer compute its credit_for_increasing_research_activities under sec_41 research_credit for the taxable_year including the date it distributed all of its stock in subsidiary a wholly-owned subsidiary to its shareholders how should subsidiary compute its research_credit for its taxable_year beginning on the day following the date taxpayer distributed all of its stock in subsidiary to taxpayer’s shareholders how should taxpayer compute its research_credit for the taxable_year including the date it distributed all of its stock in subsidiary a wholly-owned subsidiary to its shareholders how should subsidiary compute its research_credit for its taxable_year beginning on the day following the date taxpayer distributed all of its stock in subsidiary to taxpayer’s shareholders conclusions taxpayer should compute its research_credit for the taxable_year including the date it distributed all of its stock in subsidiary a wholly-owned subsidiary to its shareholders by computing two components the first component will include the research_credit allocable to the qualified_research_expenses paid_or_incurred by subsidiary during its short credit_year beginning date and ending date the second component will include the research_credit attributable to all members of taxpayer’s controlled_group as of the end of its taxable_year beginning on date and ending on date subsidiary should compute its research_credit for its taxable_year beginning on the day following the date taxpayer distributed all of its stock in subsidiary to taxpayer’s shareholders using the short taxable_year rules described in sec_1_41-3 taxpayer should compute its research_credit for the taxable_year including the date it distributed all of its stock in subsidiary a wholly-owned subsidiary to its postf-151066-01 shareholders by computing two components the first component will include the research_credit allocable to the qualified_research_expenses paid_or_incurred by subsidiary during its short credit_year beginning date and ending date the second component will include the research_credit attributable to all members of taxpayer’s controlled_group as of the end of its taxable_year beginning on date and ending on date subsidiary should compute its research_credit for its taxable_year beginning on the day following the date taxpayer distributed all of its stock in subsidiary to taxpayer’s shareholders using the short taxable_year rules described in sec_1_41-3 facts taxpayer is a publicly traded corporation for all relevant taxable years taxpayer filed a form_1120 u s_corporation income_tax return including all members of taxpayer’s consolidated_return group for taxable years preceding the taxable_year beginning on date subsidiary was a wholly-owned subsidiary of taxpayer and a member of taxpayer’s consolidated_return group on date taxpayer distributed all of its stock in subsidiary to taxpayer’s shareholders subsidiary filed a form1120 for the taxable_year commencing on date the day after date and ending on date subsidiary also filed forms for each taxable_year beginning after date for taxable years preceding the taxable_year beginning on date subsidiary was a wholly-owned subsidiary of taxpayer and a member of taxpayer’s consolidated_return group on date taxpayer distributed all of its stock in subsidiary to taxpayer’s shareholders subsidiary filed a form1120 for the taxable_year commencing on date the day after date and ending on date subsidiary also filed forms for each taxable_year beginning after date law sec_41 provides a nonrefundable income_tax_credit for qualified_research_expenses paid_or_incurred by a taxpayer during the taxable_year under the general_rule the research_credit is equal to the sum of twenty percent of the excess if any of the taxpayer's qualified_research_expenses for the taxable_year over its base_amount postf-151066-01 and the base_amount is computed by multiplying the taxpayer's fixed-base percentage by its average annual gross_receipts for the preceding four years a taxpayer's fixed- base percentage is the percentage that the aggregate qualified_research_expenses of the taxpayer for taxable years beginning after date and before date is of the aggregate gross_receipts of the taxpayer for such taxable years sec_41 sec_41 requires that for purposes of determining the amount of research_credit all members of the same controlled_group_of_corporations are to be treated as a single_taxpayer prop sec_1_41-8 provides that in determining the amount of research_credit allowed with respect to a trade_or_business that at the end of its taxable_year is a member of a controlled_group_of_corporations all members of the group are treated as a single_taxpayer the research_credit allowable to any member of the controlled_group is equal to that member's proportionate share of the qualified_research_expenses and basic_research_payments giving rise to the credit prop sec_1_41-8 provides guidance on how a controlled_group_of_corporations should compute its research_credit when a controlled_group computes its base_amount the group must first aggregate each member’s base_year qualified_research_expenses base_year gross_receipts and average annual gross_receipts for the four years preceding the credit_year also the group’s credit_year qualified_research_expenses are the aggregate of each member’s credit_year qualified_research_expenses prop sec_1_41-8 provides that the credit allowable to a member of a controlled_group_of_corporations is that member's share of the aggregate credit computed as of the end of such member's taxable_year in computing the aggregate credit in the case of a group whose members have different taxable years a member shall generally treat the taxable_year of another member that ends with or within the credit_year of the computing member as the credit_year of that other member in computing the aggregate base_amount the gross_receipts taken into account with respect to another member shall include that other member's gross_receipts for the four taxable years of that other member preceding the credit_year of that other member sec_41 provides that if a taxpayer acquires the major portion of a trade_or_business of another person hereinafter in this paragraph referred to as the predecessor or the major portion of a separate_unit of a trade_or_business of a 1unless otherwise noted in this document all references to prop sec_1_41-8 refer to proposed amendments to the income_tax regulations relating to the aggregation and allocation of the research_credit published in the federal_register on date see reg-105606-99 fr postf-151066-01 predecessor then for purposes of applying sec_41 for any taxable_year ending after such acquisition the amount of qualified_research_expenses paid_or_incurred by the taxpayer during periods before such acquisition shall be increased by so much of such expenses paid_or_incurred by the predecessor with respect to the acquired trade_or_business as is attributable to the portion of such trade_or_business or separate_unit acquired by the taxpayer and the gross_receipts of the taxpayer for such periods shall be increased by so much of the gross_receipts of such predecessor with respect to the acquired trade_or_business as is attributable to such portion further sec_41 provides that if a taxpayer disposes of the major portion of any trade_or_business or the major portion of a separate_unit of a trade_or_business in a transaction to which sec_41 applies and the taxpayer furnished the acquiring person such information as is necessary for the application of sec_41 then for purposes of applying sec_41 for any taxable_year ending after such disposition the amount of qualified_research_expenses paid_or_incurred by the taxpayer during periods before such disposition shall be decreased by so much of such expenses as is attributable to the portion of such trade_or_business or separate_unit disposed of by the taxpayer and the gross_receipts of the taxpayer for such periods shall be decreased by so much of the gross_receipts as is attributable to such portion sec_1_41-7 provides that for the meaning of acquisition separate_unit and major portion see sec_1_52-2 in addition sec_1 b provides that an acquisition includes an incorporation or a liquidation no further clarification or examples describing an acquisition are provided in the regulations under sec_41 sec_1_52-2 provides that the term acquisition includes certain lease agreements further sec_1_52-2 provides that neither the major portion of a trade_or_business nor the major portion of a separate_unit of a trade_or_business is acquired merely by acquiring physical assets the acquisition must transfer a viable trade_or_business under sec_1_52-2 a separate_unit is a segment of a trade_or_business capable of operating as a self-sustaining enterprise with minor adjustments the allocation of a portion of the goodwill of a trade_or_business to one of its segments is a strong indication that the segment is a separate_unit sec_1_52-2 provides several examples illustrating the acquisition of a separate_unit of a trade_or_business each of these examples assumes that there is an acquisition of assets by an unrelated entity sec_1_52-2 provides that all the facts and circumstances surrounding the transaction shall be taken into account in determining what constitutes a major portion of a trade_or_business or separate_unit postf-151066-01 sec_41 provides that in the case of any short taxable_year qualified_research_expenses and gross_receipts shall be annualized in such circumstances and under such methods as the secretary may prescribe by regulation sec_1_41-3 b contains the following rules if a credit_year is a short taxable_year then the base_amount determined under sec_41 but not sec_41 shall be modified by multiplying that amount by the number of months in the short taxable_year and dividing the result by twelve if one or more of the four taxable years preceding the credit_year is a short taxable_year then the gross_receipts for such year are deemed to be equal to the gross_receipts actually derived in that year multiplied by twelve and divided by the number of months in that year no adjustment shall be made on account of a short taxable_year to the computation of a taxpayer's fixed-base percentage sec_41 provides that the term controlled_group_of_corporations has the same meaning given to such term by sec_1563 except that - a more than fifty percent shall be substituted for at least eighty percent each place it appears in sec_1563 and b the determination shall be made without regard to sec_1563 and e c under sec_1563 a parent-subsidiary_controlled_group exists where one or more chains of corporations are connected through stock ownership with a common parent_corporation if the percentage of ownership requirements are met with regard to each corporation in the group analysis the issues in this case involve the interaction of the research_credit computation rules under sec_41 and the special rules under sec_41 for the taxable_year in which the parent of a consolidated_group of corporations distributes to it sec_2the rules under sec_1_41-3 were amended by t d to reflect the changes to the computation of the research_credit made by the revenue reconciliation act of although these rules are applicable for taxable years beginning on or after date and notice_2001_19 provides that the irs and treasury are reconsidering t d the rules provide guidance for all taxable years beginning after date postf-151066-01 shareholders all of its stock in a wholly-owned subsidiary neither the regulations nor other published guidance specifically address these issues disposition of subsidiary under the consolidated_return_regulations in effect on date the consolidated_return of a group must include the income of the common parent for that corporation’s entire taxable_year and generally the income of each subsidiary for the portion of such taxable_year during which it was a member of the group sec_1_1502-76 if the consolidated_return of a group properly includes the income of a corporation for only a portion of such corporation’s taxable_year then the income for the portion of such taxable_year not included in the consolidated_return must be included in a separate_return or if such corporation is a member of another group which files a consolidated_return for such portion of such year then in such consolidated_return sec_1_1502-76 any period of less than twelve months for which either a separate_return or a consolidated_return is filed is considered a separate taxable_year sec_1_1502-76 if the taxable_income of a member for a taxable_year must be included partly in a consolidated_return and partly in a separate_return the taxable_income to be reported in each such return is determined on the basis of the member’s income shown on its permanent records including work papers sec_1_1502-76 if the portion of an item_of_income or deduction to be reported cannot be clearly determined from the permanent records the portion of such item to be included in each such return shall be the amount of the item for the full taxable_year multiplied by a fraction the numerator of which is the number of days for which the member’s income is to be included in such return and the denominator of which is the total number of days in such year sec_1_1502-76 based on the rules under sec_1_1502-76 for the period beginning on date and ending on date the taxable_income of subsidiary must be included on taxpayer’s consolidated_return further for the period beginning on date and ending on date the taxable_income of subsidiary must be included in a separate_return filed by subsidiary although taxpayer does not have any short taxable periods during the period beginning on date and ending on date subsidiary is treated as having two short taxable periods during the period a short taxable_period beginning on date and ending on date and a short taxable_period beginning on date and ending on date for the short taxable_period beginning on date and ending on date subsidiary was wholly-owned by taxpayer and a member of taxpayer’s consolidated_return group for the short taxable_period beginning on date and ending on date subsidiary was not a member of taxpayer’s consolidated_return group the research postf-151066-01 credit allocable to subsidiary 1's qualified_research_expenses must be determined for each short taxable_period because subsidiary and taxpayer were members of the same controlled_group for subsidiary 1's short taxable_period beginning on date and ending on date the rules of sec_41 and the regulations thereunder apply to compute the amount of research_credit allocable to subsidiary for its short taxable_period beginning on date and ending on date further the research_credit allocable to subsidiary for its short taxable_period beginning on date and ending on date is included on taxpayer’s consolidated_return for taxpayer’s taxable_year beginning on date and ending on date thus taxpayer’s research_credit for its taxable_year beginning on date and ending on date must include two components the amount of the research_credit allocable to subsidiary for its short taxable_period beginning on date and ending on date and the amount of taxpayer’s research_credit determined under the general rules of sec_41 and the regulations thereunder the general_rule for computing the research_credit for members of a controlled_group_of_corporations with different taxable years provides that a member shall generally treat the taxable_year of another member that ends with or within the credit_year of the computing member as the credit_year of that other member in this case taxpayer does not have a taxable_year that ends with or within the credit_year of subsidiary neither the regulations nor any other published guidance address this situation however the principles of sec_41 and and sec_1_41-8 provide guidance in computing the proper amount of research_credit allocable to subsidiary for its short taxable_period beginning on date and ending on date and included in taxpayer’s research_credit allowed for its taxable_year beginning on date and ending on date to compute subsidiary 1's research_credit for its short taxable_period beginning date and ending date the aggregate base_year qualified_research_expenses base_year gross_receipts and average annual gross_receipts of the members of subsidiary 1’s controlled_group for the four years preceding the credit_year must be determined because subsidiary and taxpayer were members of the same controlled_group_of_corporations for all relevant taxable years through the credit_year the group base_amount is computed without regard to the rules of sec_41 after the group base_amount is determined the base_amount should be modified by multiplying the amount by the number of months in the short taxable_year and dividing the result by twelve next the group’s credit_year qualified_research_expenses are determined by aggregating each member’s credit_year qualified_research_expenses however because subsidiary 1's credit_year is a short taxable_year the credit_year qualified_research_expenses should reflect the short taxable_year in computing the research_credit allocable to subsidiary 1's qualified_research activities during the short taxable postf-151066-01 period beginning on date and ending on date the qualified_research_expenses paid_or_incurred by subsidiary should be determined based upon subsidiary 1’s permanent records further we believe that the qualified_research_expenses paid_or_incurred by taxpayer during the period beginning date and ending date should be determined on a reasonable basis once the group’s credit_year qualified_research_expenses and the group’s base_amount for the short taxable_period are determined the research_credit for the group based on this short taxable_period and the amount of the group research_credit allocable to subsidiary should be determined under rules similar to the rules in prop sec_1_41-8 the amount allocable to subsidiary for the short taxable_period beginning on date and ending on date should be included on taxpayer’s consolidated_return for its taxable_year beginning on date and ending on date as the amount of research_credit attributable to subsidiary for the portion of the taxable_year in which it was part of the taxpayer’s consolidated_group to compute the component of taxpayer’s research_credit for its taxable_year beginning date and ending date prop sec_1_41-8 provides that in determining the amount of research_credit allowed with respect to a trade_or_business that at the end of its taxable_year is a member of a controlled_group_of_corporations all members of the group are treated as a single_taxpayer because subsidiary is not a member of taxpayer’s controlled_group_of_corporations on date subsidiary is not part of the aggregation used in computing the group credit for this component of taxpayer’s research_credit taxpayer should follow the general rules of prop sec_1_41-8 to compute its group research_credit for subsidiary 1's short taxable_year beginning date and ending date subsidiary has a separate_return_year subsidiary is no longer part of taxpayer’s controlled_group_of_corporations to compute subsidiary 1's research_credit for its short taxable_period beginning date and ending date subsidiary is no longer aggregated with taxpayer further subsidiary must compute its research_credit under the short taxable_year rules applicable to short credit years disposition of subsidiary under the consolidated regulations in effect from date through date a consolidated_return must include the common parent’s income gain deduction loss and credit for the entire consolidated_return_year and each subsidiary’s items for the portion of the year for which it is a member sec_1_1502-76 if the consolidated_return includes the items of a corporation for only a portion of its tax_year items for the portion of the year not included in the consolidated_return must be included in a separate_return sec_1_1502-76 in general a corporation ceases to be a member during a consolidated_return_year at the end of the day on which its status as a member changes and its tax_year ends for all federal postf-151066-01 income_tax purposes at the end of that day sec_1_1502-76 if a transaction occurs that is properly allocable to the portion of the subsidiary’s day after it ceases to be a member the subsidiary and all related_persons must treat the transaction as occurring at the beginning of the following day sec_1 b ii b the returns for the years that end and begin with a subsidiary becoming or ceasing to be a member are separate tax years and are subject_to the rules of the code applicable to short periods sec_1_1502-76 although the periods ending and beginning with the subsidiary’s change in status are different tax years items other than extraordinary items may be ratably allocated between the periods if the subsidiary is not required to change its annual_accounting_period or its method_of_accounting as a result of its change in status and the subsidiary makes an irrevocable ratable allocation election sec_1_1502-76 the research credits of subsidiary must be included on taxpayer’s consolidated_return for the period date through date and in a separate_return for the period date through date in computing the research credits the qualified_research_expenses paid_or_incurred by subsidiary should be allocated between these two periods based upon the ‘closing of the books’ method used by subsidiary as in the case of its disposition of subsidiary for taxpayer’s taxable_year ending on date the research_credit allocable to subsidiary for the period beginning on date and ending on date should be included as a component of taxpayer’s research_credit for taxpayer’s taxable_year including date that is taxpayer’s taxable_year beginning on date and ending on date sec_1_1502-76 see revrul_75_532 1975_2_cb_295 the qualified_research_expenses paid_or_incurred by subsidiary for the period beginning on date and ending on date should be included in computing subsidiary 2’s research_credit for its separate_return sec_1_1502-76 the actual computations of the amount of credit allowed for the period beginning on date and ending on date should be computed using the same methodology described above case development hazards and other consideration sec_3 based upon a discussion with the field agent subsidiary did not make a ratable allocation election subsidiary used the ‘closing of the books’ method under sec_1_1502-76 again we are not opining on the appropriate method to be used or the accuracy of the calculations postf-151066-01 although there is no guidance addressing the appropriate method for determining taxpayer’s qualified_research_expenses allocable to the short credit years of subsidiarie sec_1 and we believe that reasonable approaches include a pro_rata allocation method and an actual expense allocation method this writing may contain privileged information any unauthorized disclosure of this writing may have an adverse effect on privileges such as the attorney client privilege if disclosure becomes necessary please contact this office for our views please call if you have any further questions associate chief_counsel by leslie h finlow branch chief branch associate chief_counsel psi


internal_revenue_service number release date ---------------------------------- ----------------------------- --------------------------------------------- ---------------------------------- in re --------------------------------------------- ----------------------------- -------------------------- ------------------------ - department of the treasury washington dc person to contact ---------------- id no ------------- cc ita telephone number --------------------- refer reply to plr-120154-05 date date legend a ----------------------------------------------------------------- ------------------------------------------------- dates -------------------------- -------------------------- ----------------------------- groups taxpayers and on attachment taxpayers and on attachment all other taxpayers on attachment dear -------------------- this letter responds to your letter and submissions of date supplementing a previous submission of march in which you requested on behalf of a above and forty other related parties the taxpayers - see attachment certain private letter rulings relating to the late-filing of forms election to have a tax_year other than a required tax_year specifically you requested that the taxpayers’ late-filed forms be considered timely filed under the authority contained in sec_301_9100-3 of the procedure and administration regulations we are pleased to address your concerns the information submitted indicates that each of the forty-one taxpayers on whose behalf rulings are requested is a partnership employing an overall accrual_method of accounting taxpayers are members of a tiered_structure as defined in sec_1_444-2t of the temporary income_tax regulations under sec_706 of the internal_revenue_code a partnership’s taxable_year must be its required_taxable_year unless among other exceptions not relevant here the partnership elects under sec_444 of the code to use a taxable_year other than its required_taxable_year sec_444 and permit an eligible_partnership to elect or change to a taxable_year only if the deferral_period of the taxable_year elected is not longer than the shorter of three months or the deferral_period of the taxable_year being changed the term deferral_period generally refers to the number of months between the beginning of the entity’s taxable_year and the close of the first required_taxable_year ending within such taxable_year in the instant circumstances taxpayers desired to elect a taxable_year ending november for their initial taxable_year which is a permitted taxable_year under sec_444 sec_444 of the code and sec_1_444-2t of the regulations provide in relevant part that entities that are part of a tiered_structure that consists only of partnerships all of which have the same taxable_year may make or continue an election under sec_444 of the code sec_1_444-3t of the regulations provides among other requirements that form_8716 must be filed by the earlier of i the 15th day of the fifth month following the month that includes the first day of the tax_year for which the election will first be effective or ii the due_date without regard to extensions of the income_tax return resulting from the sec_444 election sec_301_9100-1 of the regulations set forth rules respecting the granting of extensions of time for making certain elections under these rules the commissioner in his discretion may grant a reasonable extension of time to make a regulatory election under subtitle a provided the taxpayer acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government sec_301_9100-2 sets forth rules governing automatic extensions for regulatory elections including elections to use other than the required tax_year under sec_444 if the provisions of section' do not apply to the taxpayer's situation as in the instant case the provisions of sec_301_9100-3 other extensions may apply sec_301_9100-3 sets forth standards that the commissioner will employ in determining whether to grant discretionary relief in situations that do not meet the requirements of sec_301_9100-2 the standards applied are whether the taxpayer acted reasonably and in good_faith in the matter and whether the granting of relief will prejudice the interests of the government generally a taxpayer will be deemed to have acted reasonably and in good_faith where for example the taxpayer reasonably relied on a qualified_tax professional and that professional failed to make or advise the taxpayer to make the election at issue in the instant circumstances group taxpayers’ forms electing to use a taxable_year ending november were due on or before date group taxpayers’ forms electing to use a taxable_year ending november were due on or before date and group taxpayers’ forms electing to use a taxable_year ending november were due on or before date due to an error or misunderstanding none of the forms was timely filed however the error was not due to any lack of due diligence or prompt action on the part of any taxpayer the information submitted and representations furnished by the taxpayers and their tax professionals establish that taxpayers acted reasonably and in good_faith in respect of this matter furthermore we have determined that the granting of relief in this case will not prejudice the interests of the government within the intendment of sec_301_9100-3 accordingly the requirements of sec_301_9100-3 for the granting of relief have been satisfied within days of the date of this ruling each taxpayer should file with the irs cincinnati service_center attn entity control a form_8716 electing to use a tax_year ending november effective for its first taxable_year ending either date date or date as appropriate a copy of this letter_ruling should accompany such submission and each taxpayer should type or print at the top of the form filed under sec_301_9100-3 of the regulations this ruling is further conditioned on taxpayers complying with sec_1 1t a which provides in relevant part that for each taxable_year that a partnership has an election under sec_444 in effect the partnership must i file a return as provided in sec_1_7519-2t and ii make any required_payment as provided in sec_1_7519-2t except for the specific ruling above which is restricted to the filing of forms we express or imply no opinion concerning the federal_income_tax consequences of the facts of this case under any other provision of the code or regulations that may be applicable thereto this letter_ruling is based on facts and representations provided by the taxpayers and their authorized representatives and is limited to the matters specifically addressed no opinion is expressed as to the tax treatment of the transactions considered herein under the provisions of any other sections of the code or regulations which may be applicable thereto or the tax treatment of any conditions existing at the time of or effects resulting from such transactions which are not specifically addressed herein because it could help resolve federal tax issues a copy of this letter should be maintained with the taxpayers’ permanent records pursuant to a power_of_attorney currently on file with this office the original of this letter_ruling is being sent to the taxpayers’ authorized representative and copies are being furnished to the taxpayers and their second-designated authorized representatives a copy of this letter is also being sent to the taxpayers’ appropriate irs industry director this ruling is directed only to the taxpayers who requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent associate chief_counsel income_tax accounting s william a jackson by _________________________ william a jackson chief branch attachment enclosures copy of this letter copy for sec_6110 purposes attachment plr-119941-05 -------------------------------------------------------------------- -------------------------------------------------------------- plr- -------------------------------- plr-119947-05 ------------------------------------------------------------------------------- plr-119950-05 ------------------------------------------------------------- plr-119955-05 ------------------------------------------ plr- ---------------------------------------- plr-120150-05 ----------------------------------------- plr-120154-05 ------------------------------------------------------ plr-120199-05 ------------------------------------------------------- plr- -------------------------- plr-120212-05 ------------------------------------------------------ plr-120219-05 --------------------------------------------- plr-120220-05 ---------------------------------------- plr-120218-05 ------------------------------------------- plr-120222-05 -------------------------------- plr-120231-05 ---------------------------------------------- plr-120233-05 ------------------------------------------------------- ------------------------------------------------------ plr-120235-05 ---------------------------------------- plr-120236-05 ------------------------------------------------------ plr-120237-05 --------------------------------------------------------------- plr-120239-05 -------------------------------------------------- plr-120248-05 --------------------------------------- plr-120249-05 ------------------------------------------ plr-120252-05 ------------------------------------------------ plr-120254-05 -------------------------------------------------------------- plr-120258-05 --------------------------------------------- plr-120263-05 -------------------------------------------------- plr-120268-05 ------------------------------------------- plr-120270-05 ------------------------------------------------------------------ plr-120507-05 ----------------------------------------------- plr-120514-05 ----------------------------- plr-120512-05 ---------------------------- plr-120517-05 ----------------------------------------------------- plr-120519-05 --------------------------------------------- plr-120526-05 ------------------------------------ plr-120527-05 -------------------------------------------------------------- plr-120566-05 ----------------------------------------------------- plr-120528-05 --------------------------------------------------- plr-120548-05 ----------------------------------------------------- plr-120550-05 ----------------------------------------- -------------------------------------------- plr-120552-05


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc dom p si 1-plr-102751-00 date date legend x state d1 this responds to your letter dated date submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts x began doing business under state law on d1 x’s shareholder intended that x be a subchapter_s_corporation effective d1 however an s_corporation_election to be treated as an s_corporation was not timely filed law and analysis sec_1362 provides that a small_business_corporation can elect to be treated as an s_corporation sec_1362 provides the rule on when an s election will be effective if an s election is made within the first two and one-half months of a corporation’s taxable_year then that corporation will be treated as an s_corporation for the year in which the election was made if an s election is made after the first two and one-half months of a corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if an election under sec_1362 is made for any taxable_year after the date prescribed for making such election for such taxable_year and the secretary determines that there was reasonable_cause for the failure plr-102751-00 to timely make the election then the secretary can treat the election as timely made for such taxable_year x’s s_corporation_election was not filed timely for the election to be effective as of d1 nevertheless x has established reasonable_cause for not making a timely election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and representations made and assuming that x otherwise qualifies as a subchapter_s_corporation as of d1 we conclude that x will be recognized as an s_corporation effective as of d1 x should file a completed form_2553 with a copy of this ruling attached reflecting its election of subchapter_s_corporation status as of d1 with the applicable service_center within days of the date of this letter except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code specifically no opinion is expressed concerning whether x otherwise satisfies the s_corporation eligibility requirements this ruling 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 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer sincerely david r haglund senior technician reviewer branch office of assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


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 b07 plr-117148-12 date date re request for private_letter_ruling regarding sec_167 and sec_168 legend taxpayer subsidiary transmitter state location region project subsidiary line transmitter line date date date ------------------------------- --------------------------- --------------------------------- ------------------------- ---------------------------------- ------------ -------------------------------- ----------------------------------- --------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- -------------------------- -------------------- --------------------------- plr-117148-12 date year year a b c d e f g h i j k l m n o -------------------------- ------- ------- --------- ---------- ---------- ----- --------- ----- -------------- -------- --------- ---------- ----------- ---------- ---- ------ --- dear ---------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of taxpayer and subsidiary requesting a private_letter_ruling that certain circumstances will not prevent each wind turbine generator wtg in subsidiary’s project from being placed_in_service for purposes of the allowance for depreciation under sec_167 and sec_168 of the internal_revenue_code plr-117148-12 facts taxpayer represents that the facts relating to the request are as follows taxpayer a state corporation is the holding_company for a number of operating companies engaged in energy related businesses and the parent of a group of affiliated corporations that file a consolidated federal_income_tax return on a calendar-year basis taxpayer and its affiliates use the accrual_method of accounting taxpayer is the parent company of subsidiary a regulated public electric utility in state subsidiary is developing a wind power generating facility that is referred to as the project and that will be located in location in connection with the project and several other projects located in state subsidiary has acquired easements to over a acres of land in region on which the project and several other of subsidiary’s wind farm projects will be constructed and operated the main components of the project which will be owned by subsidiary include i the wind turbine generators and their attendant parts and ii the electrical gathering facilities the wind turbine generators and their respective towers and tower foundations the wtgs will be constructed erected synchronized to the power grid and tested before date subsidiary intends to enter into a construction_contract with a third-party contractor for the design procurement and construction of the project the construction_contract will provide for the construction installation and testing of the wtgs the construction_contract also will provide for the construction installation and testing of the electrical gathering facilities including two electrical transformers the construction_contract will provide that the project must achieve substantial completion by date including each wtg successfully passing all critical performance testing by such date subsidiary anticipates that each wtg will reach commercial operation by date meaning a wtg is ready for daily operation has been connected to the power grid and is capable of producing and delivering electrical energy to the power grid the specific number of wtgs and the average capacity of each wtg comprising the project will be determined when a supplier is selected which selection will be based principally on a supplier’s ability to provide all of the project’s wtgs on a rolling basis with the final wtg to be delivered no later than date it is anticipated that each wtg will have a nameplate_capacity between b and c each wtg will be a self contained unit capable of operating independently of all other wtgs each wtg can be started up tested commissioned and synchronized to a power grid separately and independently of all other wtgs each wtg will be plr-117148-12 connected to the project's electrical gathering and transmission facilities once energized all of the components that make up each wtg will be tested to insure that each component has been installed properly and is working correctly and that the wtg as a whole is fully functional upon completion of the initial tests a performance test of each wtg which includes the generation of electrical power and the synchronization to the power grid will be performed successful completion of the performance tests will demonstrate that the wtg is capable of consistently performing its intended function on a routine basis it is anticipated that all of the wtgs will be delivered by date mechanical completion will occur by date commissioning of wtgs will take place during the period beginning date and ending date and the project as a whole will be substantially complete before date commissioning and testing of each wtg will take place as each wtg becomes ready the construction_contract will require that by date all necessary permits and licenses with respect to the wtgs will have been obtained the wtgs will have become synchronized to the power grid for its function of generating electricity for production_of_income the critical tests for the various components of the wtgs will have been completed and the wtgs will have been placed in control of subsidiary by the contractor further subsidiary will sell a non-de minimis amount of electricity generated by the project and each of the wtg’s by date when state enacted its renewable energy law transmitter submitted a plan for additional transmission lines needed to accommodate future wind development projects in region transmitter's project calls for construction of approximately d miles of double circuit e transmission lines and f new substations that will serve as the backbone of the system transmitter's system which will be constructed in stages is designed to meet the identified minimum and maximum wind_energy potential of region and is capable of supporting a maximum capacity of about g the first segment of transmitter’s system which affects the project is scheduled to be completed in year but there is a possibility that the line or critical interconnection facilities to the line that transmitter is constructing will not be completed until year to deliver power generated by the project to the power grid subsidiary will construct and own a single substation on which two transformers will be adjacent to one another and to the project one transformer will step up power to h and interconnect with the subsidiary line the second transformer will step up the power to i and then power will travel along a line of transmitter to a substation of transmitter where it will be stepped up to e and then transmitted on the transmitter line assuming the transmitter line is complete by date subsidiary will connect j of the project’s k total generating capacity to the transmitter line with the transmitter line and the subsidiary line fully operational strings of specific wtg’s will be assigned to a specific transformer in order to match up the appropriate generating capacity plr-117148-12 subsidiary will commence commercial operations of the project prior to date regardless of whether the transmitter line has been completed in the event that the transmitter line is not completed by date subsidiary will utilize the subsidiary line to synchronize each of the wtgs to the power grid as they are completed and to deliver the project output to the power grid although each of the wtgs would be able to produce at its full rated capacity due to the capacity limitations of the subsidiary line subsidiary expects to operate a fluctuating number of wtgs in a manner that maximizes operating efficiency depending on the current site specific wind conditions in periods of low wind when total generation from the project's wtgs is less than l subsidiary expects to operate all of the project's wtgs simultaneously in periods of high wind when total generation exceeds l subsidiary expects to curtail the production of some or all of the wtgs so as not to exceed the l limit curtailment at the project is likely to be undertaken by either pitching blades of individual wtgs to reduce their generation capacity or in more extreme wind conditions disconnecting strings of approximately m to n wtgs from the power grid in either case subsidiary expects that utilization of the subsidiary line will allow for delivery and sale of approximately o percent of the project's full rated capacity if the transmitter line is not completed prior to date subsidiary expects to rotate the operation of wtgs during the time prior to completion so that a reasonably consistent number of operating hours is logged among all of the wtgs for warranty purposes once the transmitter line is completed the interconnection capacity will be sufficient to transmit the maximum output capacity of all of subsidiary's wtgs at the desired voltage subsidiary will connect j of the project's generating capacity through i transformer to the transmitter line the remaining l of the project's generating capacity will remain interconnected through the h transformer to the subsidiary line rulings requested taxpayer requests a letter_ruling that the following will not preclude subsidiary from treating each wtg in its project as placed_in_service for purposes of the allowance for depreciation_deductions under sec_167 and sec_168 the unavailability of the transmitter line if transmitter does not complete its construction prior to date and the operation of subsidiary's project at a maximum level of approximately o percent of its full rated capacity until the transmitter line is completed law and analysis plr-117148-12 sec_167 provides a depreciation deduction for the exhaustion wear_and_tear and obsolescence of property used in a trade_or_business or held_for_the_production_of_income the depreciation deduction provided by sec_167 for tangible_property placed_in_service after generally is determined under sec_168 this section prescribes two methods for determining depreciation allowances one method is the general depreciation system in sec_168 and the other method is the alternative_depreciation_system in sec_168 under either depreciation system the depreciation deduction is computed by using a prescribed depreciation method recovery_period and convention for purposes of the general depreciation system the depreciation method recovery_period and convention are determined by the property's classification under sec_168 sec_168 provides that 5-year_property includes any property modifying the language of sec_48 that is equipment that uses solar or wind_energy to generate electricity sec_1_167_a_-11 of the income_tax regulations provides in part that property is first placed_in_service when first placed in a condition or state of readiness and availability for a specifically designed function it further provides that the provisions of sec_1_46-3 and d generally apply for purposes of determining the date on which property is placed_in_service in general property is placed_in_service in the taxable_year the property is placed in a condition or state of readiness and availability for a specifically designed function see sec_1_46-3 and sec_1_167_a_-11 placed_in_service is construed as having the same meaning for purposes of the investment_tax_credit under sec_46 and depreciation under sec_167 sec_1_46-3 provides examples of when property is in a condition of readiness and availability one of those examples is equipment that is acquired for a specifically assigned function and is operational but undergoing tests to eliminate any defects see also revproc_79_40 1979_1_cb_13 where machinery and equipment were placed_in_service in the year critical tests with appropriate materials and operational tests were completed another example in sec_1_46-3 involved operational farm equipment acquired and placed_in_service in a taxable_year even though it was not practical to use such equipment for its specifically designed function in the taxpayer’s business of farming until the following year several tax_court cases have addressed placed_in_service questions in the context of electric power plants in olgethorpe power corp v commissioner tcmemo_1990_505 and 89_tc_710 facilities can be deemed placed_in_service upon sustained power generation near rated capacity however if the facility operates on a regular basis but does not produce the projected output it may still be considered placed_in_service 46_f3d_382 5th cir nonacq 1995_2_cb_2 in the action on plr-117148-12 decision for sealy power the service stated that at a minimum the property would have to have been in a state of readiness sufficient to produce electricity on a sustained and reliable basis in commercial quantities aod finally in revrul_84_85 1984_1_cb_10 a solid_waste facility that was experiencing operational problems such that it was unable to operate at its rated capacity was nonetheless considered to have been placed_in_service since it was being operated on a regular basis and saleable steam was being produced however if a facility is merely operating on a test basis it is not placed_in_service until it is available for service on a regular basis consumers power v commissioner t c pincite the above-referenced cases and rulings provide that the following are common factors to be considered in determining placed_in_service dates for power plants approval of required licenses and permits passage of control of the facility to taxpayer completion of critical tests commencement of daily or regular operations and synchronization into a power grid for generating electricity to produce income see generally revrul_76_256 1976_2_cb_46 and revrul_76_428 1976_2_cb_47 the focus in determining a placed_in_service_date is on ascertaining from the relevant facts and circumstances the date the unit begins supplying product in such a manner that it is routinely available and is consistent with the unit’s design it is necessary to examine relevant factors occurring both before and after the claimed placed_in_service_date so that the date can be verified however a facility does not have to achieve full design output to be placed_in_service as long as it is in the process of ramping up its production levels subject_to exceptions that are beyond the taxpayer’s control the service has generally required actual operational use as a prerequisite for an asset to be deemed placed_in_service see eg 675_f2d_113 6th cir thus each wtg is placed_in_service for depreciation purposes when it is placed in a condition or state of readiness and availability for a specifically assigned function that is to produce and deliver electricity generated from wind_energy based on the facts provided and applying those facts to the factors delineated in revrul_76_256 the taxpayer represents that prior to date all necessary permits and licenses with respect to the wtgs will have been obtained each of the wtgs will have been synchronized to the power grid for its function of generating electricity for production_of_income the critical tests for the various components of the wtgs will have been plr-117148-12 completed and the wtgs will have been placed in the control of subsidiary by the contractor subsidiary will sell a non-de minimis amount of electricity generated by the project and each of the wtgs taxpayer further represents that in the event of a delay in the completion of the transmitter line by date subsidiary expects to operate a fluctuating number of wtgs in a manner that maximizes operating efficiency given the part load performance characteristics of the wtg and the then current site specific wind conditions subsidiary also expects to rotate the operation of wtgs during the time prior to the completion of the transmitter line so that a reasonably consistent number of operating hours is logged among all of the wtgs for warranty purposes this would result in an operating level of approximately o percent of the project's full rated capacity daily operation at full rated capacity is not necessary to establish that the wtgs are placed_in_service even without the temporary delivery limitations or curtailments the site specific wind conditions could dramatically reduce the daily wtg’s or the project's output as long as the wtgs are ready and available for use and producing commercial output on a regular basis operating at full rated capacity is not necessary to establish that the wtgs are placed_in_service see sealy power supra conclusions accordingly based solely on the representations submitted by taxpayer and the applicable law discussion above we conclude that the following will not preclude subsidiary from treating each wtg in its project as placed_in_service for purposes of the allowance for depreciation_deductions under sec_167 and sec_168 the unavailability of the transmitter line if transmitter does not complete its construction prior to date and the operation of subsidiary's project at a maximum level of approximately o percent of its full rated capacity until the transmitter line is completed the above ruling is expressly conditioned upon subsidiary otherwise meeting the placed_in_service factors of revrul_76_256 for each of the wtgs before date and upon the operation of the wtgs in accordance with taxpayer’s representations this letter_ruling is directed only to the taxpayer s requesting it sec_6110 provides that it may not be used or cited as precedent plr-117148-12 in accordance with the power_of_attorney we are sending a copy of this letter to taxpayer’s authorized representative we are also sending a copy of the letter_ruling to the appropriate operating division director sincerely kathleen reed kathleen reed chief branch office of associate chief_counsel income_tax accounting enclosures copy of this letter copy for sec_6110 purposes


- significant index no do department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division ‘ jun ti ep ralt- ad re dear this letter constitutes notice that the company’s requests for waivers of the minimum_funding_standard for the above-named plans for the plan years ending officer by this office by telephone on have been denied this decision was conveyed to the company's chief financial the company is a private non-profit corporation which owns and operates three thoroughbred racetracks within the state the company's primary sources of revenue are on-track wagering and the sale of its simulcast signal to various off-track betting organizations a secondary source of revenue is the use of the company's facilities for parties corporate meetings flea markets and the storage of cars from local automobile dealerships the company's revenues beyond the amounts necessary to conduct its operations are transferred to the state - based on the financial information provided by the company it is clear that the company has suffered a substantial business hardship the thoroughbred horse racing industry has suffered an industry-wide decline in revenue from on- and off-track wagering many racetracks are turning to revenue from slot machines to ensure their business viability the company's highest margin business is on-track wagering each wager yields of revenue however the trend has been toward off-track wagering which only yields all sources has increased the company's net revenue has declined or remained flat over the last years during that period the fixed costs in running the racetracks such as labor real_estate tax and fuel costs have risen dramatically the company has reported losses for each of its fiscal years since of revenue although the total dollars in wagering from bailout and the completion of its the company was basing its financial recovery primarily on the approved by the however the company has subsequently filed for reorganization under chapter of the u s bankruptcy code while the company has indicated that this was merely a bailout formality to force the subsequent news reports indicate that the state is in the process of awarding the thoroughbred racing franchise to another entity while the company has sued to keep control of the racetracks that it owns and operates the company’s financial future is in peril if it loses the franchise furthermore the company's financing partner in a proposed arrangement it had with the company these factors call in to question whether the company’s business hardship is temporary hence the company's requests for waivers of the minimum_funding_standard for the plans for the plan years ending facility backed out of the tentative financing tto make good on the have been denied you should note that excise_taxes under sec_4971 of the internal_revenue_code are currently due on each of the accumulated funding deficiencies in the plans for the plan years ending plans as soon as possible to report and pay the taxes you should file forms for each of the this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent we have sent a copy of this letter to the manager and to your authorized representatives pursuant to a power_of_attorney on file in this office to the manager if you require further assistance in this matter please contact sincerely yours c bop ais joseph h grant director employee_plans


significant index no department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division may ter chev az re dear hospital this letter constitutes notice that your request for a waiver of the minimum_funding_standard for the plan for the plan_year ending december subject_to the following conditions has been granted collateral acceptable to the pbgc be provided to the plan for the full amount of the waiver by the later of a days from the date of the ruling letter or b the earlier of i the date the pbgc notifies the service in writing that this condition has not been met or ii days from the date of the ruling letter the hospital provides to the pbgc a copy of any ruling_request it makes under sec_412 of the internal_revenue_code code the hospital makes contributions to the plan in amounts sufficient to fully fund by the plan on a termination basis for the plan_year beginning january september starting with the quarterly contribution due on date the hospital will make the required quarterly contributions to the plan in a timely fashion while the plan is subject_to a waiver of the minimum_funding_standard the hospital makes contributions to the plan in amounts sufficient to meet the minimum_funding_standard for the plan for the plan years ending december respectively without applying for a waiver of the minimum_funding_standard and by september through through the hospital provides proof of payment of all contributions described above to both individuals designated by the respective agencies using the addresses or fax numbers below of the pbgc or other of our office and to internal_revenue_service pension_benefit_guaranty_corporation your authorized representative agreed to these conditions via email on date lf any one of these conditions is not satisfied the waiver will be retroactively null and void this conditional waiver of the minimum_funding_standard has been granted in accordance with sec_412 of the code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa the amount for which this conditional waiver has been granted is equal to the contributions that would otherwise be required to reduce the balance in the funding_standard_account to zero as of date the hospital provides inpatient rehabilitation services a wide variety of outpatient services skilled nursing services and has a wholly owned for-profit subsidiary pharmacy due to declining inpatient volumes the hospital closed its emergency department and general medical acute inpatient wing the hospital then focused on developing a niche in outpatient services which include wound care and hyperbaric oxygen treatment physical and occupational outpatient services long term care including skilled nursing and an adult day care service the net effect has been to reduce the direct competition with local hospitals while offering complementary services in the community market place however during the summer of the hospital began to experience a downturn in outpatient services and reacted by eliminating positions renegotiating contractual agreements offering owned real_estate for sale and freezing the non-union portion of the defined_benefit_plan the strain from this drop in volumes has significantly affected the operating cash_flow however the measures taken in along with reducing purchased services has started to show positive results contributing to their hardship the affiliation established in with another hospital in order to consolidate operating_expenses dissolved in as a consequence the hospital has been experiencing increased overhead the hospital is now in affiliation discussions with another local hospital and has signed a letter of intent to merge via an asset acquisition in the first quarter of pursuant to the terms of the transaction the hospital will use the resulting income to eliminate its debt and fully fund the plan on a termination basis as soon as possible thereafter while the hospital has suffered a substantial business hardship it has shown that it is committed to funding the plan by committing to make contributions sufficient to fully fund the plan on a termination basis by september prospects for the hospital's financial recovery are uncertain a waiver of the minimum_funding_standard has been granted for the plan for the plan_year ending december subject_to the conditions set forth above however since the your attention is called to sec_412 of the code and sec_304 of erisa which - describe the consequences that would result in the event the plan is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived_funding_deficiency remains unamortized please note that any amendment to a profit sharing plan or any other retirement_plan covering employees covered by this plan maintained by the company to increase the liabilities of those plans would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa similarly the establishment of a new profit sharing plan or any other retirement_plan by the company covering employees covered by this plan would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa this ruling is directed only to the taxpayer that requested it sec_6110 of the _ code provides that it may not be used or cited by others as precedent we have sent a copy of this letter to the to the you furnish a copy of this letter to the enrolled_actuary who is responsible for the completion of the schedule b we suggest that lf you require further assistance in this matter please contact sincerely yours andrew e zuckerman director ep rulings agreements


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division feb u i l xxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxx legend taxpayer a xxxxxxxxxxxxxxxxxxxx individual b xxxxxxxxxxxxxxxxxxxx plan x xxxxxxxxxxxxxxxxxxxx company n xxxxxxxxxxxxxxxxxxxx amount a amount b amount c dear xxxxxxxxx xxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxx this is in response to a letter dated june as supplemented by correspondence dated date and august submitted on your behalf by your authorized representative in which you request a waiver of the 60-day rollover requirement contained in sec_402 of the internal_revenue_code the code the following facts and presentations have been submitted under penalty of perjury in support of the ruling requested 20j420026 taxpayer a represents that on date he received a distribution from plan x totaling amount a of which amount b was a required_minimum_distribution rmd for the taxable_year and amount c was due to a miscalculation by his financial advisor taxpayer a asserts that his failure to accomplish a rollover within the 60-day period prescribed by sec_402 of the code was due to the mistake made by his financial advisor individual b of company n in early taxpayer a met with individual b to ascertain taxpayer a's required_minimum_distribution from plan x and taxpayer a's individual_retirement_account with company n individual b calculated taxpayer a's required_minimum_distribution to be amount a from plan x taxpayer a relied on this advice and took a distribution from plan x totaling amount a in date individual b realized that he had made an error in calculating the required_minimum_distribution from plan x taxpayer a was then told on november that amount b not amount a should have been distributed from plan x upon learning of the error taxpayer a returned amount c to plan x on date documentation submitted shows that individual b acknowledged that he incorrectly calculated the required_minimum_distribution from plan x and he did not realize the error and did not notify taxpayer a until date which was after the expiration of the 60-day rollover period based on the above facts and representations you request a ruling that the internal_revenue_service waive the 60-day rollover requirement with respect to the distribution of amount c sec_402 of the code provides that if any portion of the balance_to_the_credit of an employee in a qualified_trust is paid to the employee in an eligible_rollover_distribution and the distributee transfers any portion of the property received in such distribution to an eligible_retirement_plan and in the case of a distribution_of_property other than money the amount so transferred consists of the property distributed then such distribution to the extent transferred shall not be included in gross_income for the taxable_year in which paid sec_402 states that such rollover must be accomplished within days following the day on which the distributee received the property an individual_retirement_account ira constitutes one form of eligible_retirement_plan sec_402 of the code provides that an eligible_rollover_distribution shall not include any distribution to the extent such distribution is required under sec_401 a of the code atd1420026 sec_402 b of the code provides in relevant part that the secretary may waive the 60-day requirement under sec_402 where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_402 of the code revproc_2003_16 2003_4_irb_359 january provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_402 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer a is consistent with his assertion that his failure to accomplish a timely rollover was due to a mistake made by his financial advisor individual b of company n therefore pursuant to sec_402 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount c from plan x provided all other requirements of sec_402 of the code except the 60-day requirement were met with respect to the contribution of amount c to plan x on june such contribution will be considered a rollover_contribution within the meaning of sec_402 of the code this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 a of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_611 k of the code provides that it may not be used or cited as precedent a copy of this letter is being sent to your authorized representative pursuant to a power_of_attorney on file in this office 2g1420026 if you wish to inquire about this ruling please contact xxxxxxxxxxxxxxxxxxxxx se t ep ra t3 at xxxxxxxxxxxxxxxx sincerely yours -- t'v't'- - c ura b warshawsky manager employee_plans technical group ' enclosures deleted copy of letter_ruling notice of intention to disclose cc xxxxxxxxxxxxxxxxxxxx