t c memo united_states tax_court henry r link petitioner v commissioner of internal revenue respondent docket no 5625-12l filed date p filed a petition for judicial review pursuant to sec_6330 in response to r’s determination that levy action was appropriate held r’s determination is sustained in the absence of abuse_of_discretion by r’s settlement officer henry r link pro_se olivia hyatt rembach for respondent memorandum opinion armen special_trial_judge this case is before the court on a petition for review of a notice_of_determination concerning collection action s under sec_6320 and or notice_of_determination petitioner seeks review of respondent’s determination to proceed with a proposed levy to collect petitioner’s outstanding liability for the taxable_year which liability consists principally of a penalty under sec_6673 imposed by the court in a prior action for redetermination commenced by petitioner the sole issue for decision is whether respondent’s determination to proceed with the proposed levy was an abuse_of_discretion we hold that it was not background this case was submitted fully stipulated under rule and the stipulated facts are so found we incorporate by reference the parties’ stipulation of facts and accompanying exhibits petitioner an unmarried individual resided in the state of south carolina when the petition was filed unless otherwise indicated all section references are to the internal_revenue_code as amended and in effect at all relevant times all rule references are to the tax_court rules_of_practice and procedure origin of petitioner’s liability petitioner did not file an income_tax return for respondent sent petitioner a notice_of_deficiency see sec_6212 and petitioner filed a petition for redetermination with this court see sec_6213 at docket no in date petitioner’s case at docket no was tried to the court in columbia south carolina thereafter the court rendered oral findings_of_fact and opinion pertinent portions of which read as follows this is the case of henry r link petitioner versus commissioner of internal revenue respondent docket number this bench opinion is made pursuant to the authority granted by sec_7459 and rule respondent determined a deficiency against petitioner for his taxable_year in the amount of dollar_figure and an addition_to_tax for failure_to_file under a in the amount of dollar_figure respondent concedes that the addition_to_tax should be reduced to dollar_figure respondent has also moved for a penalty against petitioner under sec_6673 petitioner has failed to meet the requirements of sec_7491 and therefore the burden_of_proof remains on petitioner the issues in the instant case are similar to those in link v commissioner tcmemo_2006_146 a case involving petitioner and similar issues for his previous taxable years in the instant case petitioner has offered no credible_evidence that shows that respondent’s determinations are incorrect at trial petitioner advanced only frivolous and groundless arguments the court need not address each of petitioner’s frivolous and groundless arguments with somber reasoning and copious citations of precedent as to do so might suggest that these arguments possess some degree of colorable merit 737_f2d_1417 5th cir sec_6673 a provides that this court may require the taxpayer to pay a penalty not in excess of dollar_figure whenever it appears to this court that the proceedings were instituted or maintained by the taxpayer primarily for delay or the taxpayer’s position is frivolous or groundless petitioner is no stranger to this court see link v commissioner supra despite being warned repeatedly that his positions were frivolous and groundless petitioner continued to advance those positions we accordingly shall impose a penalty on petitioner in the amount of dollar_figure to reflect the foregoing decision will be entered for respondent reflecting a reduced addition_to_tax in the amount of dollar_figure as conceded by respondent on date the court entered an order and decision at docket no granting respondent’s motion for penalty deciding that petitioner was liable for a deficiency in income_tax of dollar_figure for and an addition_to_tax under see infra pp regarding petitioner’s other actions in this court sec_6651 of dollar_figure and imposing on petitioner a penalty under sec_6673 of dollar_figure petitioner did not file a notice of appeal in docket no see sec_7483 rule accordingly in due course the court’s order and decision in that case became final see sec_7481 sec_7483 thereafter on date respondent assessed the deficiency of dollar_figure the addition_to_tax of dollar_figure and the sec_6673 penalty of dollar_figure as well as statutory interest see sec_6601 also on date respondent sent petitioner notice_and_demand for payment ie a so-called statutory notice of balance due see sec_6303 respondent’s efforts to collect petitioner’s liability despite several collection notices petitioner did not pay any portion of his outstanding liability accordingly on date respondent sent petitioner a final notice_of_intent_to_levy and notice of your right to a hearing ie the so-called collection_due_process cdp_notice see sec_6330 petitioner responded by sending respondent a form request for a collection_due_process or equivalent_hearing in such form petitioner stated only that he wanted a collection alternative in the form of an installment_agreement or an offer-in- after such assessment petitioner’s outstanding balance was dollar_figure the transcript of account for petitioner’s tax_year does reflect a withholding credit of dollar_figure on date cf sec_6513 compromise on the grounds of financial hardship health age and lack of earning ability after an introductory letter dated date from respondent’s appeals_office explaining the administrative appeal process the assigned settlement officer so sent petitioner a letter dated date among other things the so’s letter scheduled a telephone conference call and explained requirements for collection alternatives the so’s letter made clear that if petitioner wanted a collection alternative then he would need to submit form 433-a collection information statement for wage earners and self-employed individuals and substantiate his income and expenses if petitioner specifically wanted an offer-in- compromise then he would also need to submit form_656 offer_in_compromise copies of the requisite forms were enclosed with the so’s letter by letter dated date petitioner rejected a telephone conference and demanded inter alia a face-to-face conference the so and petitioner continued to communicate both by letter and by telephone and the deadline to provide financial information necessary for consideration of a collection alternative was extended by the so on more than one occasion on date the so received from petitioner form 433-a in the form 433-a petitioner stated that his monthly income was dollar_figure and that his monthly living_expenses were dollar_figure monthly living_expenses included dollar_figure for vehicle operating_expenses by letter dated date the so accepted petitioner’s statement of his monthly income and generally accepted petitioner’s statement of his monthly living_expenses based on the form 433-a however insofar as monthly vehicle operating_expenses were concerned the so allowed only dollar_figure stating that there is a cap amount for the operating cost for the vehicles and that i can only consider the expenses for one vehicle the so then proposed an installment_agreement on the basis of a monthly payment of dollar_figure which amount represented the difference between petitioner’s monthly income and petitioner’s monthly expenses as adjusted by the so referencing irs national standards the so modestly increased the amount listed by petitioner for food clothing and misc and allowed the amount listed by petitioner for out of pocket health care costs without requiring additional documentation see irs collection financial standards local standards transportation available at http www irs gov businesses small-businesses- -self-employed local-standards -transportation by letter dated date petitioner rejected the offer insisting inter alia on his need for three automobiles as follows my vehicles are very old and unreliable because i live on a fixed income and can no longer work i am unable to afford a new car payment i must keep all three vehicles in running order one car is good for short distances but is not reliable for long distance driving i require the second car for long distance driving but if i use it for short distances also then it will break down and i will not have a long distance vehicle my grandson moved in with me to help with my elderly care needs he will be going to college classes several times a week and he does not have a vehicle of his own therefore he must use one of these cars in lieu of the so’s proposal petitioner did not make any counterproposal of a specific monthly amount petitioner never submitted to the so a form_656 on date respondent’s appeals_office issued the notice_of_determination concerning collection action s under sec_6320 and or sustaining the proposed levy thereafter petitioner filed with this court a petition for lien or levy action see sec_6330 petitioner’s other actions in this court in addition to his case at docket no discussed supra petitioner commenced a collection case at docket no 10011-08l in respect of his the notice_of_determination was accompanied by a multipage attachment setting forth the so’s analysis of the matter outstanding income_tax liabilities for and there the court sustained respondent’s determination to proceed by levy for collection of petitioner’s unpaid liabilities for those five years similar to the instant case the collection case at docket no 10011-08l had its origins in two actions for redetermination of deficiencies commenced by petitioner in docket nos and which actions were decided by the court in link v commissioner tcmemo_2006_146 wl aff’d per curiam 211_fedappx_204 4th cir there the court sustained the commissioner’s determinations regarding deficiencies in income taxes and additions to tax for failing to file returns for the five years in issue notably the court also imposed on petitioner a dollar_figure penalty under sec_6673 for advancing frivolous arguments such as that his pension income was a nontaxable_exchange of equal value for his labor and that our ‘marxist’ tax system is voluntary petitioner appealed this court was affirmed per curiam by the court_of_appeals for the fourth circuit 393_fedappx_120 4th cir discussion i burden_of_proof as previously stated this case was submitted to the court by the parties fully stipulated under rule paragraph b of that rule deals with burden_of_proof and states as follows the fact of submission of a case under paragraph a of this rule does not alter the burden_of_proof or the requirements otherwise applicable with respect to adducing proof or the effect of failure of proof see rule a titsworth v commissioner tcmemo_2012_12 wl at ii administrative hearings under sec_6330 and judicial review sec_6331 authorizes the commissioner to levy upon property and rights to property of a taxpayer who is liable for taxes and who fails to pay those taxes within days after notice_and_demand for payment is made sec_6331 provides that the levy authorized in sec_6331 may be made only if the commissioner has given notice to the taxpayer no less than days before the day of the levy sec_6330 reiterates the requirement of notice before levy and confers on the taxpayer the right to request a prelevy administrative hearing sec a b b see 115_tc_35 114_tc_176 if such a hearing is requested the hearing is to be conducted by the irs office of appeals sec_6330 at a sec_6330 hearing the taxpayer may raise any relevant issue specifically including offers of collection alternatives such as an installment_agreement or an offer-in-compromise sec_6330 a taxpayer may also challenge the existence or amount of the underlying tax_liability but only if the taxpayer did not receive a statutory_notice_of_deficiency with respect to the underlying tax_liability or did not otherwise have an opportunity to dispute that liability sec_6330 a determination made by the irs office of appeals under sec_6330 to sustain a proposed levy may be reviewed by this court sec_6330 see rules where the underlying tax_liability is properly at issue we review the determination de novo goza v commissioner t c pincite where the underlying tax_liability is not at issue as it is not in the instant case we review the determination for abuse_of_discretion id pincite see also 114_tc_604 the determination of the commissioner’s settlement officer is not an abuse_of_discretion unless the determination is arbitrary capricious or without sound basis in law or fact 129_tc_107 see titsworth v commissioner wl at holding that the taxpayer bears the burden of proving abuse_of_discretion even when the case is submitted to the court fully stipulated thus the court does not conduct an independent review and substitute its judgment for that of the settlement officer 125_tc_301 aff’d 469_f3d_27 1st cir rather if the settlement officer follows all statutory and administrative guidelines and provides a reasoned balanced decision the court will not reweigh the equities 497_f3d_828 8th cir iii petitioner’s contentions invoking sec_6343 and 133_tc_392 petitioner contends that the installment_agreement proposed by the so would cause him financial hardship in vinatieri the court held that it was an abuse_of_discretion for the commissioner’s appeals_office to sustain a proposed levy if it was established as acknowledged by the appeals_office that a levy would cause the taxpayer economic hardship however vinatieri is petitioner’s argument contains facts outside the stipulated record however statements in briefs do not constitute evidence rule c distinguishable if for no other reason than that it was decided on the basis of the commissioner’s motion for summary_judgment and after the settlement officer concluded that the levy would create economic hardship and so stated in her log id pincite in the instant case in contrast there is a trial record albeit fully stipulated that petitioner characterizes on brief as adequately developed and neither respondent nor any of his agents specifically including the so has concluded that the proposed levy would create economic hardship in addition as discussed infra petitioner’s form 433-a which constitutes the only real evidence in the record of his financial condition demonstrates that although petitioner was an individual of modest means he could pay some monthly amount toward his outstanding liability in proposing an installment_agreement of a specific monthly amount the so accepted petitioner’s statement of his monthly income and generally accepted petitioner’s statement of his monthly living_expenses based on the form 433-a indeed the so modestly increased the amount listed by petitioner for food clothing and misc and allowed the amount listed by petitioner for out of pocket health care costs without requiring additional documentation even though the amount exceeded national standards the only negative adjustment see supra note made by the so to petitioner’s statement of monthly living_expenses involved vehicle operating_expenses and such adjustment was consistent with the commissioner’s published guidancedollar_figure although petitioner rejected the so’s proposal petitioner never made any counterproposal of a specific monthly amount nor did petitioner ever submit to the so a form_656 petitioner also contends that the so abused her discretion by not conducting a face-to-face hearing and that the case should therefore be remanded for that purpose see sec_6330 however given that the so accepted at face value petitioner’s form 433-a except for vehicle operating_expenses and in that instance acted consistent with irs published guidance the court concludes that remand would be neither appropriate nor helpful see 117_tc_183 dollar_figure see supra note as relevant the published guidance states that a single_taxpayer is normally allowed one automobile and that a taxpayer will be allowed the lesser_of the amount actually spent monthly for operating costs or the operating costs shown in the table emphasis added the table amount for petitioner’s region was dollar_figure which was what the so allowed even though the amount actually spent may have been less see marascalco v commissioner tcmemo_2010_130 holding that a settlement officer may generally rely on national and local collection financial standards published by the commissioner aff’d 420_fedappx_423 5th cir we also note that a face-to-face hearing is not required in all circumstances jackson v commissioner tcmemo_2010_180 wl continued iv conclusion in view of the foregoing the court holds that the so did not abuse her discretion accordingly the determination of respondent’s appeals_office to proceed with the proposed levy is sustained finally the court has considered all of petitioner’s contentions and to the extent not specifically discussed herein concludes that they are without merit moot or irrelevant to reflect the foregoing decision will be entered for respondent continued at and cases cited therein see sec_301_6330-1 q a-d6 proced admin regs in the instant case by the time that petitioner belatedly submitted his form 433-a to the so petitioner already had had an administrative hearing through the course of communications by letter and by telephone between himself and the so and even after the form 433-a was submitted the so and petitioner continued to communicate thus it cannot be said that petitioner was deprived of the opportunity of making his case through an administrative hearing


department of the treasury employer_identification_number contact person - id number contact telephone number uil internal_revenue_service p o box cincinnati oh number release date date date legend u scholarship program v name w name x name y state z college name b number c number d dollars amount dear you asked for advance approval of your 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 scholarships based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding 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 a scholarship program called u letter catalog number 58263t your purpose is to be the charitable arm of v and w chapters of x fraternal_organization whose members are descendants of those who populated y in the early century is to further the ability of the descendants of v and w to pursue their the purpose of u undergraduate education at any campus of z v and w chapters are currently comprised of approximately b members and over time have had approximately c members descendants of members of v and w are made aware of u through communications they may see from the various chapters of x eligibility is limited to those applicants who have at least one parent grandparent or great-grandparent who are or have been a member of v or w applicants must be a full- time student credit hours or more per semester for undergraduate or credit hours or more for a graduate student at a campus of z course work must consist of classes numbered or above no remedial classes or below 100-level credits will count a minimum cumulative grade point average of or above must be maintatined the amount of the scholarship will be no less than d dollars the amount of the scholarship and number of scholarships given vary from year to year based on the amount of funds available and the number of qualified applicants each potential recipient must complete an application process this includes completing an application form providing transcripts showing cumulative gpa an essay this is only required of first time applicants and their college registration your scholarship selection committee which is composed of three or more board members will review applications and the required documents which are redacted to remove personal information this committee will then present the list of acceptable applicants and their credentials to the meeting of your entire board for final approval were any applicant to be a direct relative of a board member that member is recused from the decision process you understand that grants cannot be made to disqualified persons and thus the spouses children grandchildren great-grandchildren of current board members and officers ie foundation managers and spouses of foundation managers’ children grandchildren and great grandchildren are ineligible to receive scholarships the scholarship will be paid as follows one-half of the year’s scholarship will be paid in the fall upon submitting a copy of the fall semester registration confirmation and the transcript of the previous semester’s grades the second one-half shall be paid upon your receipt of a copy of the student’s transcript reflecting the preceding semester's performance along with verification of the registration for the spring semester checks will be issued payable jointly to the student and campus a student receiving a scholarship in one year is eligible to receive a scholarship in succeeding years but he she must complete a new application each year the biographical essay is not required in succeeding year applications you represent that you will complete the following arrange to receive and review grantee reports annually and upon completion of the purpose for which the grant was catalog number 58263t letter awarded investigate diversion of funds from their intended purposes and take all reasonable and appropriate steps to recover the 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 diversion from occurring you represent that you will maintain the following 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 described above 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 the provisions of code sec_117 the grant is to be used for study at an educational_organization described in code sec_170 e e other conditions that apply to this determination e e e this determination only covers the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don't differ significantly from those described in your original request this determination applies only to you it may not be cited as a precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes to your program to the cincinnati office of exempt_organizations at internal_revenue_service exempt_organizations determinations p o box cincinnati oh e you cannot award grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives letter catalog number 58263t e e 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 jeffrey cooper director exempt_organizations rulings and agreements letter catalog number 58263t


t c summary opinion united_states tax_court jeffrey d and bonita l woodlee petitioners v commissioner of internal revenue respondent docket no 10897-98s filed date jeffrey d and bonita l woodlee pro_se ronald t jordan for respondent carluzzo special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for rule references are to the tax_court rules_of_practice and procedure the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority - - respondent determined a deficiency of dollar_figure in petitioners’ federal_income_tax the issue for decision is whether petitioners are entitled to a deduction for certain accrued but unpaid business_expenses background some of the facts have been stipulated and are so found petitioners are husband and wife they filed a timely joint federal_income_tax return which was prepared by a professional income_tax_return_preparer at the time that the petition was filed they resided in beech grove indiana references to petitioner are to jeffrey d woodlee during petitioner was the sole_proprietor of specialty insulators specialty a business engaged in the installation of insulation in commercial and residential buildings business income was deposited into and business_expenses were paid from a separate checking account maintained by petitioner for such purposes included with petitioners’ return is a schedule c profit or loss from business on which the income and deductions attributable to specialty are reported as follows gross_income dollar_figure car and truck expenses big_number depreciation sec_179 expense deduction big_number insurance office expense big_number rent lease supplies big_number taxes licenses big_number total expenses big_number net profit big_number according to the schedule c the above items were reported in accordance with the cash_method_of_accounting the schedule c further suggests that petitioner started or acquired this business before although petitioners claimed a dollar_figure deduction for supplies in only dollar_figure of that amount had been paid as of the close of that year the balance dollar_figure was paid in installments made during later years in the notice_of_deficiency respondent disallowed that portion of the deduction for supplies that represented unpaid expenses other adjustments made in the notice_of_deficiency are not in dispute discussion in general under the cash_method_of_accounting income is recognized in the year of actual or constructive receipt and expenses are deductible in the year of actual payment sec_1_446-1 income_tax regs respondent pointing to the q4e- block checked on the schedule c indicating that the cash_method_of_accounting was used to compute the items of income and deductions reported thereon argues that petitioners’ deduction for supplies is limited to the amount_paid for such expenses by the close of that year petitioners however claim that for petitioner’s business was on the accrual_method of accounting under which the deduction for supplies would be allowed as claimed on their return see sec_1 l c income_tax regs we disagree with petitioners’ claim that petitioner’s business was on the accrual_method of accounting for the claim is inconsistent with the express representation made on the schedule c and inconsistent with petitioner’s testimony that his checkbook was his bookkeeper furthermore there is nothing in the record that suggests that other deductions were computed on the accrual_method of accounting and it is clear that the income reported on the schedule c was not a taxpayer who uses the cash_method_of_accounting in computing gross_income from his trade_or_business shall use the cash_method in computing expenses of such trade_or_business sec_1 l c iv a income_tax regs in accordance with the cash_method_of_accounting petitioners are entitled to a deduction for supplies only to the extent that such expenses were paid during respondent’s - - determination in this regard is therefore sustained reviewed and adopted as the report of the small_tax_case division to reflect the foregoing and the agreement of the parties with respect to other items decision will be entered under rule


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division uniform issue list oct se tep rat legend taxpayer a taxpayer b ira ira ira sec_1 ira sec_2 date date date financial_institution t page financial_institution s amount a amount b amount wh1 amount wh2 dear this is in response to a letter dated date submitted on your behalf by your authorized representative in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayers a and b assert that on date taxpayer a authorized a direct transfer of amount a from ira to ira sec_1 and on date taxpayer b authorized a direct transfer of amount b from ira to ira sec_2 taxpayers a and b assert that their failure to accomplish a rollover of amounts wh1 and wh2 was due to financial_institution error in failing to follow the directions of taxpayers a and b taxpayer a and taxpayer b file a joint federal_income_tax return and each maintained their own iras ira and ira respectively at financial_institution t on date taxpayers a and b in an attempt to accomplish a direct_rollover of the entire balance in both ira sec_1 and to new iras sec_1 and sec_2 respectively at financial_institution s issued a written letter of instruction dated date to financial_institution t which authorized a wire transfer of amount a from ira and amount b from ira to ira sec_1 and ira sec_2 respectively on date contrary to taxpayers a and b's instructions financial_institution t erroneously and without advance notice to taxpayers a and b of the opportunity to opt_out of withholding withheld amounts wh1 and wh2 from ira sec_1 and respectively for federal_income_tax purposes and wired the remainder amounts to financial_institution s which then deposited the remainder amounts into the appropriate iras ira sec_1 and ira sec_2 20v904034 page on date taxpayers a and b were notified by their tax_return_preparer that amounts wh1 and wh2 were not transferred to ira sec_1 and ira sec_2 but by then the 60-day period had expired based on the facts and representations you request a ruling that the internal_revenue_service waive the 60-day rollover requirement with respect to the distribution of amounts wh1 and wh2 contained in sec_408 of the code sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 i from an ira which was not includible in gross_income because of the application of sec_408 page sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 r b date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 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 taxpayers a and b is consistent with taxpayer a and b's assertion that their failure to accomplish a rollover of amounts wh1 and wh2 was due to financial_institution error in failing to follow the directions of taxpayers a and b therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amounts wh1 and wh2 from ira and ira pursuant to this ruling letter taxpayers a and b are granted a period of days measured from the date of the issuance of this letter_ruling to make rollover_contributions of amounts wh‘1 and wh2 to an ira or iras described in code sec_408 provided all other requirements of code sec_408 except the 60-day requirement are met with respect to such ira contribution the contributions will be considered a rollover_contribution within the meaning of code sec_408 please note that pursuant to code sec_408 this ruling letter does not authorize the rollover of the code sec_401 minimum required distributions page 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 pursuant to a power_of_attorney on file with this office a copy of this letter_ruling is being sent to your authorized representative this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent if you have any questions please contact phone at _ or fax at ' by sincerely yours foawes sean vjo- employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose


internal_revenue_service department of the treasury washington dc number release date index number ------------------------------------------ ---------------------------------------------------- -------------------------------- ---------------------------------------- third party communication none date of communication not applicable_person to contact --------------------- id no ------------------ telephone number ---------------------- refer reply to cc fip b5 plr-112414-15 date date legend city state firm year a b ------------------------------------------- ------------------- ---------------------------------------------------- ---------------- ------------------------- ------------------------- x bonds ------------------------------------------------------------------------ y bonds -------------------------------------------------------------------- date date date date ------------------------------- ------------------------------------ ---------------------------------- ------------------------------- dear -------------------- plr-112414-15 this is in response to your request for an extension of time under sec_301_9100-1 of the procedure and administration regulations to file form_8328 carryforward election of unused private_activity_bond volume_cap for city to make a carryforward election under sec_146 of the internal_revenue_code with respect to dollar_figurea of unused private_activity_bond volume_cap from year facts and representations in year volume_cap under sec_146 in the amount of dollar_figurea was granted to city by state in connection with a proposed issuance of multifamily housing revenue bonds on date city applied for and was granted carryforward allocation from year from state city engaged firm to prepare the application_for this carryforward allocation however firm did not timely advise city of the need to file with the internal_revenue_service service a form_8328 in connection with the year carryforward allocation on date city issued x bonds and y bonds in the aggregate principal_amount of dollar_figureb when preparing its filing of form_8038 information_return for tax-exempt private_activity_bond issues in connection with these bonds city became aware that a form_8328 was not filed for the year carryforward allocation a form_8328 for the year carryforward election was then filed on date this request was filed on date promptly after discovery of the failure to timely file the form_8328 for the year carryforward election as of date the irs had not discovered city’s failure to timely file the form_8328 law and analysis sec_146 provides that if an issuing authority's volume_cap for any calendar_year after exceeds the aggregate amount of tax-exempt private_activity_bonds issued during the calendar_year by the authority the authority may elect to treat all or any portion of the excess as a carryforward for one or more carryforward purposes the election is made by filing form_8328 with the internal_revenue_service center ogden ut under notice_89_12 1989_1_cb_633 form_8328 must be filed by the earlier of february of the calendar_year following the year in which the excess_amount arises or the date_of_issue of bonds issued pursuant to the carryforward election while revproc_2005_30 2005_1_cb_1148 provides for an automatic_extension of six months from the due_date of the carryforward election to make the carryforward election it does not apply in this case the election must identify the purpose for which the carryforward is elected and must specify the amount to be carried forward for that purpose sec_146 carryforward elections and any identifications or specifications stated therein are irrevocable sec_146 plr-112414-15 sec_301_9100-1 provides in part that the commissioner has discretion to grant a reasonable extension of time to make a regulatory election defined in sec_301_9100-1 as an election whose due_date is prescribed by regulations published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-3 provides that requests for extensions of time for regulatory elections that do not meet the requirements for automatic extensions in sec_301_9100-2 must be made under the rules of sec_301_9100-3 requests for relief will be granted if the taxpayer provides evidence establishing to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that the grant of relief will not prejudice the interests of the government sec_301_9100-3 provides in part that the taxpayer is generally deemed to have acted reasonably and in good_faith if the taxpayer requested relief under that section before the failure to make the regulatory election is discovered by the irs sec_301_9100-3 provides in part that the interests of the government are prejudiced if granting relief would result in a taxpayer having a lower tax_liability than the taxpayer would have had if the election had been timely taking into account the time_value_of_money conclusion under the facts and circumstances of this case we conclude that city has acted reasonably and in good_faith and that granting an extension of time under sec_301_9100-1 to file form_8328 to carry forward dollar_figurea will not prejudice the interests of the government therefore city is granted an extension of time of days from the date of this letter_ruling to file form_8328 to carry forward dollar_figurea of unused volume_cap for year 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 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 city’s authorized representative plr-112414-15 the ruling contained in this letter is based upon information and representations submitted by city 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 s james a polfer chief branch associate chief_counsel financial institutions products ------------------------- ----------------------------------------------------- ---------------- ------------------------------ --------------------------------- ----------------------- -------------------------------------------- ---------------------------------------- --------------------------------


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-100517-00 date date legend x d1 state this responds to your letter dated date submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts x was incorporated under state law x intended to be treated as an s_corporation for federal_income_tax purposes effective on d1 but the s election was not timely filed law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective if an s election is made within the first two and one-half months of a corporation’s taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made if the election is made after the first two and one-half months of a corporation’s taxable_year then the corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made plr-100517-00 sec_1362 provides that if no election is made pursuant to sec_1362 or if made the election is made after the date prescribed for making such an election and the secretary determines there was reasonable_cause for the failure to timely make the election then the secretary may treat such an election as timely made for such taxable_year and effective as of the first day of that tax_year x did not file a timely election to be treated as an s_corporation under sec_1362 effective on d1 x has however 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 provided that x otherwise qualifies as a subchapter_s_corporation we conclude that x will be recognized as an s_corporation effective d1 within days from the date of this letter x should submit a properly completed form_2553 with a copy of this letter attached to the relevant service_center except as 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 s requesting it sec_6110 of the code provides that it may not be used or cited as precedent signed dianna k miosi sincerely dianna k miosi chief branch office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service index number number release date cc dom p si 6--plr-112420-98 date legend taxpayer partnership operating dear this letter responds to a request for a private_letter_ruling filed on behalf of taxpayer dated date you requested a ruling that gross_income derived from the disposal of timber pursuant to cutting agreements will constitute gross_income derived from gain from the sale or disposition of real_property or interests_in_real_property which is not property described in sec_1221 of the internal_revenue_code for purposes of sec_856 and sec_856 and that such income will not be treated as prohibited_transaction_income under sec_857 taxpayer is a domestic_corporation that is a limited_partner of partnership taxpayer intends to qualify and elect treatment as a reit operating is a corporate general_partner of partnership and a wholly-owned subsidiary of taxpayer it is represented that operating will be treated as a qualified_reit_subsidiary pursuant to sec_856 and the income and assets of operating will thus be treated as the income and assets of taxpayer it is anticipated that partnership taxpayer and operating will operate in an umbrella partnership reit format with timberland assets being held by partnership partnership will invest and reinvest funds contributed by its partners in interests in timber timberlands and such other plr-112420-98 assets as appropriate to establish proper portions of liquid_assets for the partnership partnership will maintain manage and dispose_of the timber growing on the timberlands held by partnership partnership will acquire timber tracts for investment purposes with the expectation of holding and managing those tracts for investment when operating as general_partner determines that it is in the best interest of partnership to dispose_of standing timber partnership will enter into agreements calling for the cutting and removal of timber pursuant to a cutting contract partnership may on occasion also sell or otherwise dispose_of timberland itself taxpayer and partnership anticipate that substantially_all of their income from disposals of timber will be generated by the disposal of timber under contracts pursuant to which partnership will retain an economic_interest in the timber it is intended that the tax treatment of the timber disposals under the contracts will be governed by sec_631 income from the disposals will be based upon an agreed amount per unit of timber ultimately harvested taxpayer anticipates that substantially_all of its income will be derived from contracts qualifying under sec_631 pursuant to which the purchaser rather than taxpayer or partnership will harvest the timber consequently taxpayer represents that partnership will retain an economic_interest in the timber disposed of pursuant to the contracts and partnership and taxpayer will receive passive_income measured by the quantity of timber actually cut by the purchaser partnership will not engage either in cutting timber or merchandising the logs cut from the timber law and analysis sec_856 provides that at least percent of a reit's gross_income excluding gross_income from prohibited_transactions must be derived from among other sources gain from the sale_or_other_disposition of stock securities and real_property including interests_in_real_property and interests in mortgages on real_property which is not property described in sec_1221 sec_856 provides that at least percent of a reit's gross_income excluding gross_income from prohibited_transactions must be derived from among other sources gain from the sale_or_other_disposition of real_property including interests_in_real_property and interests in mortgages on real_property which is not property described in sec_1221 sec_856 provides that at the close of each quarter of its tax_year at least percent of the value of a reit's total assets must be represented by real_estate_assets plr-112420-98 cash and cash items including receivables and government securities sec_856 provides that not more than percent of the value of a reit’s total assets may be represented by securities other than those includible under subparagraph a for purposes of this calculation limited in respect of any one issuer to an amount not greater than percent of the value of the total assets of the reit and to not more than percent of the outstanding voting_securities of the issuer sec_856 provides that the term real_estate_assets means real_property including interests_in_real_property and interests in mortgages on real_property and shares or transferable certificates of beneficial_interest in other qualifying reits sec_856 defines the term interests_in_real_property to include fee ownership and co- ownership of land or improvements thereon leaseholds of land or improvements thereon options to acquire land or improvements thereon and options to acquire leaseholds of land or improvements thereon but does not include mineral oil or gas royalty interests sec_1_856-3 of the income_tax regulations provides that local law definitions will not be controlling for purposes of determining the meaning of the term real_property as used in sec_856 and the regulations thereunder sec_856 provides that value means with respect to securities for which market quotations are readily available the market_value of those securities and with respect to other_securities and assets fair value as determined in good_faith by the trustees except that in the case of securities of reits the fair value shall not exceed market_value or asset value whichever is higher under sec_1_856-3 a reit that is a partner in a partnership is deemed to own its proportionate share of each of the assets of the partnership and to be entitled to the income of the partnership attributable to that share for purposes of sec_856 the interest of a partner in the partnership's assets shall be determined in accordance with the partner's capital interest in the partnership the character of the various assets in the hands of the partnership and items of gross_income of the partnership shall retain the same character in the hands of the partners for all purposes of sec_856 it is a long-standing principle of law that standing timber is treated as real_property for federal_income_tax purposes in hutchins v king 68_us_53 the supreme court stated that timber growing upon the land constituted a portion of the realty more recently the court in 115_fsupp_931 w d wis stated that growing timber under the common_law and the law of the united_states has plr-112420-98 always been considered a portion of the real_property and the owner of that timber had an interest in so much of the soil as was necessary to sustain it also the service ruled in revrul_72_515 1972_2_cb_466 that timber growing on the land is part of the land and that an exchange of timberlands of different qualities nevertheless constitutes a like_kind exchange because both are land held for investment accordingly we conclude that timberlands and the standing timber thereon constitute real_property and therefore real_estate_assets within the meaning of sec_856 and sec_856 sec_631 provides that in the case of the disposal of timber held for more than one year before the disposal by the owner thereof under any form or type of contract by virtue of which the owner retains an economic_interest in the timber the difference between the amount_realized from the disposal of the timber and the adjusted depletion basis thereof shall be considered as though it were a gain_or_loss as the case may be on the sale of the timber the date of the disposal of the timber shall be deemed to be the date the timber is cut but if payment is made to the owner under the contract before the timber is cut the owner may elect to treat the date of payment as the date of disposal of the timber for purposes of this section the term owner means any person who owns an interest in the timber including a sublessor and a holder of a contract to cut timber sec_1_631-2 provides that in the case of a disposal of timber with a retained economic_interest the provisions of sec_1231 apply and such timber shall be considered property_used_in_the_trade_or_business for the tax_year in which it is considered to have been sold along with other_property of the taxpayer used_in_the_trade_or_business as defined in sec_1231 whether or not such timber is property held by the taxpayer for sale to customers in the ordinary course of the taxpayer’s trade_or_business in order for there to be a disposal of timber under a contract for purposes of sec_631 the lessee must have a contractual obligation to cut specified timber see eg revrul_77_229 1977_2_cb_210 citing 251_f2d_163 9th cir 284_f2d_348 9th cir 302_f2d_289 5th cir opinion amended and reh den 305_f2d_557 cert_denied 371_us_921 sec_1 e provides that in order to be the owner of timber a taxpayer must have a right to cut timber for sale on its own account or for use in its trade_or_business plr-112420-98 neither sec_631 nor the regulations thereunder provide guidance on what constitutes a retained economic_interest sec_1_611-1 however provides that an economic_interest is possessed when the taxpayer has acquired by investment any interest in standing timber and secures by any form of legal relationship income derived from the severance of the timber to which the taxpayer must look for a return_of_capital in other words an owner retains an economic_interest under a timber cutting contract if the amount of the payment for the timber depends solely on the actual quantity of timber cut sec_1231 generally provides that gain_or_loss on the sale_or_exchange of property used in a trade_or_business will be treated as gain_or_loss from the sale_or_exchange of a capital_asset sec_1231 provides that property used in a trade_or_business includes timber to which sec_631 applies sec_857 provides that a tax will be imposed upon a reit equal to percent of the net_income derived by the reit from prohibited_transactions sec_857 defines the term prohibited_transaction as a sale_or_other_disposition of property described in sec_1221 which is not foreclosure_property if it is determined that the timber cutting agreements entered into by taxpayer are governed by sec_631 the standing timber disposed of pursuant to the agreements will be treated as property used in a trade_or_business under sec_1231 which section does not include property_held_for_sale in the ordinary course of business as described in sec_1221 therefore the sale of timber by taxpayer pursuant to the agreements will not satisfy the definition of a prohibited_transaction accordingly provided that the timber cutting agreements entered into by taxpayer are governed by sec_631 gross_income derived from the disposal of timber pursuant to those cutting agreements will constitute gross_income derived from gain from the sale or disposition of real_property or interests_in_real_property which is not property described in sec_1221 for purposes of sec_856 and sec_856 also such income will not be treated as prohibited_transaction_income under sec_857 no opinion is expressed or implied as to the federal tax consequences of this transaction under any provision not specifically addressed herein furthermore no opinion is expressed concerning whether taxpayer will otherwise qualify as a reit under subchapter_m part ii of chapter in addition no opinion is expressed concerning the federal tax consequences of partnership’s disposal of standing timber on the timberlands plr-112420-98 other than by timber cutting contracts governed by sec_631 further no opinion is expressed concerning whether the relationship between taxpayer and any other party to a timber cutting contract entered into by taxpayer will cause taxpayer to fail to satisfy the percent voting_securities requirement of sec_856 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 sincerely yours harold e burghart assistant to the chief branch office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court robert sievers petitioner v commissioner of internal revenue respondent docket no filed date robert sievers pro_se melissa jane hedtke for respondent memorandum opinion buch judge the internal_revenue_service issued a notice_of_deficiency to mr sievers determining deficiencies additions to tax and penalties for and as follows unless otherwise indicated all section references are to the internal continued additions to tax accuracy- related penalty year deficiency dollar_figure big_number big_number sec_6651 dollar_figure sec_6651 dollar_figure sec_6654 dollar_figure --- --- big_number --- --- sec_6662 --- dollar_figure --- after the irs issued the notice_of_deficiency the parties made many concessions including the irs’ conceding all of the additions to tax for the issues remaining for consideration are whether mr sievers is entitled to mortgage interest and real_estate tax deductions for each year is entitled to certain business_expense deductions for each year had discharge_of_indebtedness income for is liable for an accuracy-related_penalty for and is liable for additions to tax for failure_to_file a return timely and failure_to_pay_tax timely for continued revenue code in effect for the years at issue and all rule references are to the tax_court rules_of_practice and procedure all monetary amounts are rounded to the nearest dollar background at the time the petition was filed mr sievers resided in minnesota mr sievers owned and operated a landscaping business named groundscape in the fall of mr sievers experienced financial difficulty in his landscaping business and as a result he moved to arizona to try flipping houses having had little success at that venture in the spring of mr sievers returned to minnesota and resumed his landscaping business the record is not clear as to whether mr sievers timely filed a form_1040 u s individual_income_tax_return return for although the notice_of_deficiency is premised in part on mr sievers’ not having filed that return mr sievers timely filed a return but did not file a return as authorized by sec_6020 respondent prepared substitutes for returns for and using both bank deposit analyses and information returns on date the irs issued a notice_of_deficiency for and to mr sievers mr sievers timely filed a petition disputing the notice of flipping is defined as the practice of buying something such as goods real_estate or securities at a low price and quickly reselling at a higher price black’s law dictionary 9th ed mr sievers asserts that he timely filed his return consistent with this assertion respondent conceded the addition_to_tax for failure to timely file a return for thus the question of whether he timely filed is not before us deficiency this case was originally set for trial in date in anticipation of that trial date mr sievers prepared a new set of income_tax returns covering those years the court continued the case to allow mr sievers additional time to gather documents to submit to the irs and to prepare for trial after the case was continued mr sievers prepared a second set of returns which he submitted to the irs along with a general ledger and copies of canceled checks on this second set of returns he claimed deductions for mortgage interest real_estate_taxes and various business_expenses relating to his landscaping business and for he claimed a deduction for tuition mr sievers generally did not keep receipts or a log of expenses for purchases rather he relied on bank statements and canceled checks to substantiate his expenditures nevertheless before trial respondent conceded that mr sievers substantiated more than dollar_figure of business_expenses for principally consisting of labor materials supplies and depreciation respondent conceded fewer deductions for and the parties filed a stipulation of facts and a supplemental stipulation of facts at trial and they filed a stipulation of settled issues five months after trial we begin with the second set of returns and address the remaining deductions and income disputed at trial discussion the commissioner’s determinations in a notice_of_deficiency are generally presumed correct and taxpayers bear the burden of proving those determinations wrong income_tax deductions are a matter of legislative grace and the burden of proving any deduction rests on the taxpayers further taxpayers are required to maintain sufficient records to show whether or not such person is liable for tax home mortgage interest and real_estate_taxes mr sievers claims that he is entitled to deductions for home mortgage interest and real_estate_taxes related to his home in minnesota for each of the three years mr sievers claims deductions for portions of these amounts as expenses for business use of his home on schedules c profit or loss from business and the remainder as itemized_deductions on schedules a itemized_deductions both the home mortgage interest and the real_estate_taxes paid were supported by rule a 290_us_111 503_us_79 see also rule a sec_6001 stipulated information returns respondent allowed deductions only for portions of these items for and disallowed them in their entirety for and a taxpayer may deduct interest_paid or accrued on acquisition_indebtedness or home_equity_indebtedness with respect to a qualified_residence a qualified_residence includes the taxpayer’s principal_residence within the meaning of sec_121 and one other residence of the taxpayer that is selected by the taxpayer for purposes of the deduction and that is used by the taxpayer as a residence within the meaning of sec_280a sec_280a provides a taxpayer uses a dwelling_unit during the taxable_year as a residence if he uses such unit or portion thereof for personal purposes for a number of days which exceeds the greater of--a days or b percent of the number of days during such year for which such unit is rented at a fair rental similarly taxpayers may claim a deduction pursuant to sec_164 for any s tate and local and foreign real_property_taxes paid_or_accrued during the taxable_year the stipulated information returns and bank records reflect that mr sievers made the payments through direct withdrawals for the home interest and real sec_163 sec_163 estate_taxes mr sievers lived in his minnesota home while in minnesota and certainly for more than days each year there is no evidence that his minnesota home was rented out at fair rental when mr sievers was in arizona as a result mr sievers’ minnesota home was a qualified_residence therefore mr sievers is entitled to both the mortgage interest and real_estate_taxes deductions in full for each year regarding the business use of mr sievers’ residence respondent conceded that mr sievers could treat a portion of the mortgage interest and the real_estate_taxes as business_expenses for mr sievers claims he is entitled to additional deductions for the business use of his home as a general_rule sec_280a denies deductions for the business use of a taxpayer’s residence sec_280a however allows a taxpayer to deduct expenses allocable to that portion of a residence that the taxpayer uses exclusively and regularly as the principal_place_of_business for the taxpayer’s trade_or_business personal_use of a room or segregated area precludes claiming deductions for business use of that same space unless some or all of the use of the room was for the storage of inventory although mr sievers testified that he stored materials and equipment at his home he did not establish that he used any portion of his home exclusively see hefti v commissioner tcmemo_1993_128 for business during the years at issue therefore mr sievers is not entitled to any deductions for the business use of his home beyond those that respondent conceded as discussed above however he may claim itemized_deductions for his qualified_residence business_expense deductions taxpayers are allowed a deduction for ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business taxpayers are not allowed a deduction for personal living or family_expenses except where specifically allowed by the code again deductions are a matter of legislative grace and taxpayers must maintain sufficient records to establish the amounts of deductionsdollar_figure certain expenses are subject_to strict substantiation rules under sec_274 such expenses include those relating to travel meals and entertainment gifts and listed_property under sec_280f for the years at issue listed_property included passenger automobiles any other_property used as a means of sec_162 sec_262 indopco inc v commissioner u s pincite sec_6001 sec_1_6001-1 income_tax regs transportation computers and cellular telephones to comply with the strict substantiation rules the taxpayer must substantiate either through adequate_records or through sufficient evidence that corroborates the taxpayer’s testimony the amount of the expense the time and place the expense was incurred the business_purpose of the expense and the business relationship of the taxpayer to any others who may have benefited by the expense to substantiate by adequate_records the taxpayer must maintain an account book log diary or similar record and documentary_evidence to establish each element of an expenditure while a contemporaneous log is not required a taxpayer’s subsequent reconstruction of his or her expenses requires corroborative evidence to support such a reconstruction the corroborative evidence coupled with the reconstruction can elevate that subsequent reconstruction to the same level of credibility as a contemporaneous recorddollar_figure sec_280f sec_274 sec_1_274-5t temporary income_tax regs fed reg date sec_1_274-5t temporary income_tax regs fed reg date car and truck expenses for each year mr sievers claims that he is entitled to deductions for car and truck expenses_incurred in the operation of his landscaping business these expenses consist of fuel repairs and other expenses respondent conceded portions of the expenses for and but mr sievers asserts that he is entitled to deduct additional_amounts for and mr sievers provided a log that he and his accountant created using the bank records and canceled checks both the log and the supporting documents were provided to the court through stipulated exhibits the log included the date vendor and amount of each purchase mr sievers also provided testimony regarding a repair in as well as his fuel expenses for each year mr sievers provided an invoice and a demand letter that threatened legal action unless he paid the total amount due of dollar_figure the repairs were made to one of the vehicles mr sievers used in his landscape business in mr sievers also credibly testified that the dealership demanded that he pay the amount in cash the stipulated exhibits include copies of the front and back of the processed withdrawal slip for the exact same amount as well as an entry in mr sievers’ bank records mr sievers’ testimony coupled with the corroborative evidence establish that he is entitled to the business_expense deduction for this repair mr sievers and his workers used multiple vehicles and both heavy and light equipment in the landscaping business the log reflects more than purchases of fuel in a single year including many days with multiple purchases the log does not include any purchases while mr sievers was in arizona mr sievers credibly testified about the vehicles and equipment he used in his business and the amounts of fuel they required the log and the supporting bank records corroborate mr sievers’ testimony concerning his fuel expenses for each year therefore mr sievers is entitled to the business_expense deduction for his fuel for each year depreciation and sec_179 expensing mr sievers claims that he is entitled to a deduction for depreciation of equipment used in his landscaping business for each year and a deduction under sec_179 for respondent conceded a portion of the depreciation deduction for but disallowed the entirety of the sec_179 deduction and the depreciation for each of and sec_167 allows a depreciation deduction for the exhaustion wear_and_tear or obsolescence of property used in a trade_or_business the period of depreciation begins when the asset is placed_in_service placed_in_service means the time that property is first placed by the taxpayer in a condition or state of readiness and availability for a specifically assigned function whether for use in a trade_or_business for the production_of_income in a tax-exempt activity or in a personal activitydollar_figure mr sievers provided bills of sale and canceled checks for all of the items for which he claims depreciation with one exception the documents and his testimony corroborate that mr sievers and groundscape made the purchases the dates of purchase the costs descriptions of the property and the date each item was placed_in_service the one exception is that mr sievers’ father purchased the ford f-350 super duty on date and there is no record of its being sold to mr sievers or groundscape or being placed_in_service on that date accordingly mr sievers is entitled to depreciation_deductions for each year except those attributable to the ford f-350 super duty purportedly placed_in_service on date sec_179 generally allows a taxpayer to elect to treat the cost of sec_179 property as a current_expense in the year the property is placed in sec_1_167_a_-10 income_tax regs sec_1_167_a_-11 sec_1_179-4 income_tax regs service within certain dollar limitations the election must specify the items to which the election applies and the portion of the cost of each item that is to be taken into account under sec_179 moreover a sec_179 election must be made on the taxpayer’s first income_tax return whether or not the return is timely or on an amended_return filed within the time prescribed by law including extensions for filing the original return for such year an election made under sec_179 and any specifications contained in the election may not be revoked modified or changed without the secretary’s consentdollar_figure although respondent conceded the addition_to_tax for failure to timely file a return for the return mr sievers claims to have timely filed for is not in the record mr sievers did not testify at trial regarding the content of this original return further mr sievers did not allege either in documents filed with the court or at trial that he made an election under sec_179 on his original return even the two sets of returns that he submitted while this case has see sec_179 see sec_179 sec_1_179-5 and income_tax regs see 116_tc_206 sec_1 a income_tax regs see sec_179 king v commissioner tcmemo_1990_548 been pending are inconsistent in this regard mr sievers has the burden of proving that he made an election under sec_179 on his original return and he has not met his burden accordingly mr sievers is not entitled to a business_expense deduction under sec_179 for materials_and_supplies mr sievers claims that he is entitled to business_expense deductions under sec_162 for materials_and_supplies for each year respondent conceded that mr sievers was entitled to most of these expense deductions for and about half of these expense deductions for each of and the amounts respondent disallowed for and are consistent with the amounts mr sievers testified he spent on renovating his minnesota home in those years home renovation expenses are personal and not deductible as business_expenses therefore mr sievers is not entitled to business_expense deductions for materials_and_supplies in excess of the amounts respondent conceded on the first return mr sievers provided while this case has been pending he claimed a sec_179 deduction for only the ford f-350 super duty purchased by his father on the second return he claimed a sec_179 deduction for both the ford f-350 super duty and a jeep even if mr sievers had claimed the sec_179 deduction for the ford f-350 super duty on his original return he would not be entitled to the deduction because the record does not support that either he or his business owned that vehicle sec_262 tuition mr sievers claims that he is entitled to a business_expense deduction for tuition as other expenses on his schedule c for respondent conceded a small amount of other expenses for it is not clear whether respondent’s concession relates to mr sievers’ tuition expenses or to one of the other three items he listed under other expenses the parties provided a form 1098-t tuition statement issued to mr sievers for however the copy of the check that corroborated the payment was drawn on mr sievers’ father’s account further mr sievers did not explain how this expense related to his landscaping business taxpayers are allowed a deduction for payment of qualified_tuition_and_related_expenses incurred during the taxable_year q ualified tuition and related expenses include tuition and fees paid_by a taxpayer on his or her own behalf or on behalf of a spouse or a dependent it is clear that mr sievers did not pay the amount reflected on the form 1098-t therefore he is not entitled to a deduction for qualified tuition nor is he entitled to a business_expense deduction for the tuition see sec_222 see sec_25a sec_222 cancellation_of_indebtedness_income respondent included income_from_discharge_of_indebtedness in in the notice_of_deficiency on the basis of a form 1099-c cancellation of debt issued by ford motor credit co mr sievers asserts that a vehicle he purchased as the president of groundscape in was a lemon and that ford agreed to take the vehicle back as a trade-in for the ford f-350 super duty in response to a summons ford motor credit co provided documents including the date sale and financing contract the business_credit application and other records those records show that mr sievers had made only one timely payment and two late payments between april and november when the vehicle was repossessed and then sold at auction in december of the records also show that the proceeds of the auction were applied to mr sievers’ outstanding liability leaving a remaining balance of approximately dollar_figure in ford motor state ‘lemon laws’ typically provide that if the manufacturer cannot fix the defective part to conform to the express warranty after a ‘reasonable number of attempts’ and the nonconformity ‘substantially impairs’ the vehicle’s value or use the manufacturer must replace the vehicle or refund the purchase_price chrysler corp v commissioner tcmemo_2000_283 aff’d 436_f3d_644 6th cir credit co issued the form 1099-c reporting cancellation_of_indebtedness_income of dollar_figure mr sievers’ version of events regarding the vehicle is not supported by the record as discussed the ford f-350 super duty was purchased by mr sievers’ father in march of four months after the vehicle was repossessed and the vehicle identification_number of the vehicle his father traded in does not match that of the repossessed vehicle gross_income generally includes income from the discharge_of_indebtedness the rationale of this principle is that the cancellation of indebtedness provides the debtor with an economic benefit that is equivalent to income when a taxpayer realizes cancellation_of_indebtedness_income is a the business_credit application mr sievers completed listed groundscape’s name and taxpayer_identification_number as well as his own name and social_security_number the records from ford motor credit co include two forms 1099-c one issued to mr sievers and one issued to groundscape each for dollar_figure respondent has not asserted that mr sievers has additional cancellation_of_indebtedness_income as a result of this second form 1099-c to groundscape and thus we do not address the second form 1099-c sec_61 see 284_us_1 216_f3d_537 6th cir aff’g tcmemo_1998_196 see also sec_108 question of fact to be determined on the basis of the evidence a debt is deemed discharged the moment it becomes clear that the debt will never be repaid any ‘identifiable event’ which fixes the loss with certainty may be taken into consideration a bookkeeping entry by a creditor does not result in discharge_of_indebtedness income the issuance of a form 1099-c is an identifiable_event but it is not dispositive of an intent to cancel indebtedness we have held that a rebuttable_presumption arises that an identifiable_event occurred in a calendar_year if during a testing_period generally months ending at the close of the year the see 41_tc_44 callan court co v commissioner tcmemo_1965_261 88_tc_435 cozzi v commissioner t c pincite citing 274_us_398 see also sec_1_6050p-1 iv income_tax regs providing an exclusive list of eight identifiable events under which debt is discharged for information reporting purposes including the expiration of a 36-month nonpayment testing_period see kleber v commissioner tcmemo_2011_233 citing cozzi v commissioner t c pincite owens v commissioner tcmemo_2002_253 aff’d in part rev’d in part and remanded 67_fedappx_253 5th cir creditor has received no payments from the debtor the records reflect that the last payment ford motor credit co received from mr sievers was in date the 36-month period ended during and ford motor credit co issued the form 1099-c in mr sievers has not rebutted the presumption that the debt was discharged in therefore he had discharge_of_indebtedness income for additions to tax in the notice_of_deficiency respondent determined that mr sievers is liable for additions to tax for failure to timely file his income_tax return and failure to timely pay his tax sec_6651 imposes an addition_to_tax when a taxpayer fails to file a timely return unless the taxpayer establishes that the failure was due to reasonable_cause and not willful neglect sec_6651 imposes an addition_to_tax for failure to timely pay the amount of tax shown on a return unless the taxpayer establishes that the failure to pay was due to reasonable_cause and not willful neglect respondent bears the burden of production with respect to kleber v commissioner tcmemo_2011_233 citing sec_1 6050p- b iv income_tax regs the penalty and the additions to tax mr sievers then bears the burden of proving any defensesdollar_figure mr sievers conceded that he did not file a income_tax return and mr sievers did not allege that he made any payment toward his liability further mr sievers did not assert that these failures were due to reasonable_cause and not willful neglect therefore mr sievers is liable for the additions to tax under sec_6651 and for accuracy-related_penalty in the notice_of_deficiency issued to mr sievers respondent determined an accuracy-related_penalty under sec_6662 for sec_6662 and b and imposes a accuracy-related_penalty on any portion of an underpayment_of_tax required to be shown on a return if the underpayment is due to among other reasons negligence disregard of rules or regulations or any substantial_understatement_of_income_tax as with the sec_6651 additions to tax respondent bears the burden of production as to the penalty the penalty will not apply to any portion of an underpayment for which a taxpayer establishes see sec_7491 see 116_tc_438 sec_7491 that he or she had reasonable_cause and acted in good_faith as defined in the code ‘negligence’ includes any failure to make a reasonable attempt to comply with the provisions of this title and the term ‘disregard’ includes any careless reckless or intentional disregard negligence has been further defined as a ‘lack of due care or failure to do what a reasonable and ordinarily prudent person would do under the circumstances ’ additionally a taxpayer is negligent if he fails to maintain sufficient records to substantiate the items in question an understatement of income_tax is substantial if the understatement exceeds the greater of of the tax required to be shown on the return or dollar_figure mr sievers’ exact underpayment for depends on the rule_155_computations if these computations establish a substantial_understatement of sec_6664 sec_6662 85_tc_934 quoting marcello v commissioner 380_f2d_499 5th cir aff’g in part remanding in part 43_tc_168 see higbee v commissioner t c pincite sec_1_6662-3 income_tax regs sec_6662 income_tax for any year respondent has met his burden even if this is not the case mr sievers is still liable for the penalty because he acted with negligence respondent has the burden of production for negligence mr sievers did not introduce adequate_records at trial to substantiate many of the deductions disallowed in the notice_of_deficiency or those claimed in the later prepared return for likewise mr sievers did not provide any evidence or testimony to prove that he acted with reasonable_cause and in good_faith with respect to the disallowed deductions accordingly mr sievers is liable for the sec_6662 penalty for conclusion mr sievers is entitled to deductions for mortgage interest and real_estate_taxes as well as some additional deductions for business_expenses as discussed above additionally mr sievers received cancellation_of_indebtedness_income for finally mr sievers is liable for the additions to tax under sec_6651 and for and is liable for the accuracy-related_penalty under sec_6662 for see olagunju v commissioner tcmemo_2012_119 jarman v commissioner tcmemo_2010_285 in reaching these holdings we have considered all of the parties’ arguments and to the extent not addressed herein we conclude that they are moot irrelevant or without merit to reflect the foregoing and the concessions of the parties decision will be entered under rule


department of the treasury washington dc person to contact ---------------------- id no ------------- telephone number --------------------- refer reply to cc tege eoeg teb - plr-122408-044 date date number release date index number --------------------------------------- ------------------------------------------ ---------------------------- ---------------------------------- - legend authority district state bonds ------------------------------------------ -------------------------------- ------------------------ ------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------------- company a ------------------------------------------------------------------ company b -------------------------------------- date date date date year year ------------------- ------------------- ------------------ ---------------------- ------- ------- dear --------------- this responds to the authority’s request for a ruling that the acquisition of certain plr-122408-04 electric power combustion turbine generator sets the project sets with the proceeds of the bonds will not constitute acquisition of nongovernmental_output_property under sec_141 of the internal_revenue_code the code facts and representations the authority is a ---------------------------- established by the district and another ------------ --------- pursuant to the laws of the state the authority issued the bonds on behalf of the district to finance a natural gas-fired combustion turbine-based combined cycle facility the project including the costs of the project sets company a is a business unit of a for-profit independent power producer company b is a manufacturer of power generation equipment company a through a wholly-owned subsidiary entered into an agreement effective on date with company b to purchase four electric power combustion turbine generator sets the generator sets to be manufactured by company b the company a purchase agreement company b’s generator sets are non-customized mass-produced items that are generally available for sale to both public and private electric power companies company b begins to manufacture a generator set once an order is placed according to the following process company b manufactures or purchases several hundred of the component parts that comprise the generator set each component part is then allocated to one of several generator sets that company b may have in progress the allocated components are crated and segregated in storage at a time specified by the purchaser the component parts are delivered to purchaser’s designated site the component parts are assembled and installed at the purchaser’s site over a period of to months and the generator set is made ready for commercial operation after to weeks of testing the entire process from placement of the order to final operation takes approximately to months approximately eight months after entering into the company a purchase agreement company a concluded that it did not require the generator sets at this time company b was approximately halfway through step sec_1 and of the manufacturing process company a could not terminate the company a purchase agreement without great cost and instead decided to sell the right to the sets company b continued to manufacture the generator sets and company a arranged to have the component parts stored until sold the district solicited bids for two generator sets and received six responses including offers from company a and company b all bids were for the same type of generator set with one bidder offering used_property company b’s offer provided that it would only commence manufacturing the generator sets after it was awarded the contract company a was the lowest bidder the district and company a entered into a purchase agreement effective date the district purchase agreement company b plr-122408-04 acknowledged company a’s sale of the right to the project sets to the district in a revised purchase contract dated date the assignment agreement the component parts will be delivered and the project sets will be assembled and constructed at the project in year and early year the project is expected to be operational by the end of year law and analysis sec_103 of the code provides in general that 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_bond that is not a qualified_bond within the meaning of sec_141 sec_141 provides in general that the term private_activity_bond includes any bond issued as part of an issue if the amount of the proceeds of the issue which are to be used directly or indirectly for the acquisition by a governmental_unit of nongovernmental_output_property exceeds the lesser_of five percent of such proceeds or dollar_figure sec_141 provides that the term nongovernmental_output_property means any property or interest therein which before such acquisition was used or held for use by a person other than a governmental_unit in connection with an output_facility within the meaning of sec_141 other than a facility for the furnishing of water sec_141 sets forth lower private_activity_bond limits for certain output facilities but does not define the term output_facility section c of the omnibus reconciliation act of the act 1987_3_cb_102 added sec_141 to the code the conference committee report accompanying the act the conference_report h_r conf_rep no pincite 1987_3_cb_287 states that as under present law output property includes eg facilities such as electric and gas generation transmission distribution and other related facilities according to the house report h_r rep no pincite the term nongovernmental_output_property also includes property which was constructed by or for an investor-owned utility with the expectation that it would be placed_in_service by an investor-owned utility but that is not actually placed_in_service before its acquisition by a governmental_unit the conference_report pincite 1987_3_cb_291 states if property is constructed for an investor-owned utility that property is treated as nongovernmental_output_property this determination is made without regard to whether the investor-owned utility actually placed the property in service company a originally intended to install the project sets in an output_facility within the meaning of sec_141 and the conference_report therefore we must plr-122408-04 determine whether the project sets were used or held for use by company a before district entered into the district purchase agreement with company a based on the facts and circumstances of this case we conclude that the project sets were not used or held for use by company a the project sets are mass-produced items that were not customized for company a’s use other generator sets of the same type were available for sale by company b and four other companies the district had it not purchased the project sets from company a could have purchased generator sets from one of the other four companies at the time of the sale to the district company b had not yet manufactured all of the component parts the project sets will be assembled and installed for the first time at the project it follows that the project sets will first be constructed for and used by the district a governmental_unit conclusion accordingly because we conclude that the project sets were not used or held for use by company a the acquisition of the project sets with proceeds of the bonds will not constitute acquisition of nongovernmental_output_property under sec_141 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 s requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative 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 assistant chief_counsel exempt_organizations employment_tax government entities by johanna som de cerff assistant branch chief tax exempt bond branch


internal_revenue_service number release date index numbers - ------------------------------- ------------------------------------------- ---------------------- ------------------------------------ department of the treasury washington dc person to contact ------------------------------ ---------------------- ----------------------------------------------------- - telephone number --------------------- refer reply to cc psi - plr-123367-04 date august --------------------------- ----------------------------------------- ----------------------------------------------- legend x -------------------------------------- ---------------- y --------------------------------------------------- d1 d2 d3 dear ------------------ authorized representative requesting that the service grant x an extension of time pursuant to sec_301_9100-1 of the procedure and administration regulations to elect to treat y as a qualified_subchapter_s_subsidiary qsub under sec_1361 of the internal_revenue_code be an s_corporation effective d2 on d3 x acquired all the interests in y x which according to the information submitted x was incorporated on d1 and elected to this responds to a letter dated date submitted on behalf of x by x’s ---------------------- ------------------- requests for relief under sec_301_9100-3 will be granted when the taxpayer sec_301_9100-1 provides that the commissioner has discretion to grant a wholly owns y intended to treat y as a qsub effective d3 however x inadvertently failed to timely file a proper election for y sec_1361 defines a qsub as a domestic_corporation that is not an ineligible_corporation if percent of the stock of the corporation is owned by an s_corporation and the s_corporation elects to treat the corporation as a qsub sec_1_1361-3 of the income_tax regulations provides that the election will be effective on the date specified on the election form or on the date the election is filed if no date is specified the effective date specified on the election form cannot be more than two months and days prior to the date of filing and cannot be more than months after the date of filing reasonable extension of time under the rules set forth in sec_301_9100-3 to make a regulatory election sec_301_9100-1 defines a regulatory election as an election with a due_date prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclude that x has satisfied the requirements of sec_301_9100-1 and sec_301_9100-3 accordingly x is granted an extension of time of sixty days from the date of this letter to elect to treat y as a qsub effective d3 the election should be made by filing form_8869 qualified_subchapter_s_subsidiary election with the appropriate service_center a copy of this letter should be attached to the election a copy is enclosed for this purpose concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically no opinion is expressed concerning whether x is a valid s_corporation or whether y is a valid qsub for federal tax purposes provides that it may not be used or cited as precedent based solely on the information submitted and the representations made we this ruling is directed only to the taxpayer requesting it sec_6110 except as expressly provided herein no opinion is expressed or implied in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized tax representative enclosures copy of this letter copy for sec_6110 purposes sincerely heather c maloy associate chief_counsel passthroughs and special industries


internal_revenue_service number release date index number -------------------------------- ------------------------- ---------------------- ------------------------- - department of the treasury washington dc person to contact ---------------------- id no ------------ telephone number -------------------- refer reply to cc psi b02 - plr-138772-05 date date legend x state date dear ---- -------- ------------------------- ein ---------------- ----------------- ------------------ this responds to a letter dated date submitted by x’s authorized representative on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code elect s_corporation treatment effective on date but no form_2553 election by a small_business_corporation was timely filed for x x was incorporated on date under the laws of state it was intended that x sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective sec_1362 provides in relevant part that if an s election is made within the first two and one-half months of a corporation’s taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made under b however if an s election is made after the first two and one-half months of a corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is filed sec_1362 of the code provides that if a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and plr-138772-05 b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 effective date along with a copy of this letter with the appropriate service_center within days from the date of this letter then such election will be treated as timely made for date except as specifically set forth above no opinion is expressed or implied as to the federal_income_tax consequences of the transaction described above under any other provision of the code specifically no opinion is expressed concerning whether x is in fact an s_corporation for federal tax purposes this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative enclosures copy of this letter copy for sec_6110 purposes sincerely yours j thomas hines chief branch office of the associate chief_counsel passthroughs and special industries