internal_revenue_service number release date index number ------------------------------------ ----------------------------- ------------------ ------------------------------ in re ------------------------------------ ---------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------------ id no ------------ --------- telephone number --------------------- refer reply to cc psi b04 plr-135385-05 date march legend legend company agreement amendment date husband wife child child child child a b dear -------------- ----------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- --------------------------- ----------------------------------------------------------------------------- ------------------ ------------------ --------------------- ------------------ ------------------------ --------------------------- ---------------------- -- ---- this is in response to your letter dated date and other correspondence the facts submitted are as follows company is engaged in an active business requesting a ruling concerning the application of sec_2703 of the internal_revenue_code to the proposed transaction and is currently taxable as an s_corporation for federal_income_tax purposes the outstanding_stock of company consists of class a common_stock and class b common_stock husband and wife own all the shares of class a common_stock as community_property which represents a of all outstanding_stock of company children each own of the class b common_stock which represents b of all outstanding_stock of company the class a common_stock and class b common_stock are identical in all on date prior to date children and the company entered into plr-135385-05 respects except that class a common_stock has voting rights and class b common_stock does not have voting rights the agreement entitled agreement between corporation and shareholders of class b common_stock of company the agreement recites that the shareholders are owners of all the outstanding class b common_stock of the corporation sec_1 of the agreement provides in relevant part that no shareholder is to give sell assign transfer or in any way dispose_of his or her shares without obtaining prior written consent of the company and the other shareholders unless the shareholder gives written notice of his intention to do so for days following notice to the company the company has the option to purchase the shares for book_value or for the purchase_price and upon the terms stated in the notice whichever is less provided however that if the proposed transfer is by gift or without consideration the company has the option to purchase the shares for book_value if the option is not exercised as to all shares set forth in the notice notice of the proposed transfer is to be given to all shareholders who shall have the option to purchase any shares not purchased by the company at the same price and on the same terms and conditions as provided to the company in the event any shares of stock remain unpurchased after the date of exhaustion of all of the foregoing options to purchase the company has one last option to purchase the remaining unpurchased shares to be exercised by the notice thereof given to the selling or transferring shareholder within days after the date of exhaustion if the company and the other shareholders do not elect to purchase all the shares set forth in the notice of intention to transfer all such shares may be purchased at any time within days after expiration of the last possible date for election to purchase by the company on the terms specified in the notice deceased shareholder gives devises or bequeaths any of his shares to his children or to one or more of his siblings such heirs have the option to elect to retain ownership of such shares or to sell them to the company for book_value the election to retain or sell the shares must be made within days of the date of death or the right of election will terminate and the company can thereupon have the option to elect whether to require the heirs to retain ownership of the shares or to sell to the company at book_value section provides that in the event any person acquires an interest in shares of stock owned by a party to the agreement notwithstanding provisions in the agreement to the contrary through foreclosure execution divorce bankruptcy or by any operation of law the company has the option to purchase those shares for book_value section provides that upon the death of a shareholder in the event the section provides that each shareholder agrees that all of the terms and plr-135385-05 conditions of agreement apply not only to shares presently held by the shareholder but also to any future shares of company later acquired by any such shareholder changed except by a writing signed by the parties whom enforcement of the waiver or change is sought the agreement was signed by children as shareholders and by husband and wife on behalf of company section provides that the provisions of agreement may not be waived or sec_2 of amendment provides in relevant part that amendment is you have requested a ruling that amendment does not constitute a substantial it is represented that the agreement was intended only to apply to the shares of the owners of the class b common_stock of the company and the company propose to execute the first amendment to shareholders agreement amendment sec_1 of amendment modifies section of agreement to provide that each shareholder agrees that all of the terms and conditions of agreement apply only to the shares of class b common_stock now or later held by any shareholder conditioned upon and is not to be effective until company has received a favorable letter_ruling from the internal_revenue_service stating that amendment does not constitute a substantial modification of agreement under sec_25_2703-1 of the gift_tax regulations class b common_stock modification of the agreement for purposes of sec_25_2703-1 and the agreement remains exempt from the application of chapter_14 of the internal_revenue_code law and analysis generation-skipping_transfer taxes the value of any property shall be determined without regard to any option agreement or other right to acquire or use the property at a price less than the fair_market_value of the property without regard to such option agreement or right or any restriction on the right to sell or use the property agreements options rights or restrictions entered into or granted after date and agreements options rights or restrictions in existence prior to date that are substantially_modified after that date see also sec_25_2703-2 modified is treated as a right or restriction created on the date of the modification any under section e a ii of public law sec_2703 applies to sec_25_2703-1 provides that a right or restriction that is substantially sec_2703 provides that for purposes of the estate gift and plr-135385-05 discretionary modification of a right or restriction whether or not authorized by the terms of the agreement that results in other than a de_minimis change to the quality value or timing of the rights of any party with respect to property that is subject_to the right or restriction is a substantial modification if the terms of the right or restriction require periodic updating the failure to update is presumed to substantially modify the right or restriction unless it can be shown that updating would not have resulted in a substantial modification the addition of any family_member as a party to a right or restriction including by reason of a transfer of property that subjects the transferee family_member to a right or restriction with respect to the transferred property is considered a substantial modification unless the addition is mandatory under the terms of the right or restriction or the added family_member is assigned to a generation no lower than the lowest generation occupied by individuals already party to the right or restriction sec_25_2703-1 provides that a substantial modification does not include i a modification required by the terms of a right or restriction ii a discretionary modification of an agreement conferring a right or restriction if the modification does not change the right or restriction iii a modification of a capitalization rate used with respect to a right or restriction if the rate is modified in a manner that bears a fixed relationship to a specified market interest rate and iv a modification that results in an option_price that more closely approximates fair_market_value of the class b common_stock when it was executed on date the modification to section clarifies that agreement only applies to the shares of class b common_stock and not to class a common_stock this modification is consistent with the terms of agreement is clarifying in nature does not affect the quality value or timing of any rights under the agreement therefore this change is not a substantial modification of the agreement for purposes of sec_25_2703-1 thus agreement remains exempt from the application of chapter_14 in this case agreement which will be modified applies only to the shareholders in accordance with the power_of_attorney on file with this office a copy of this except as expressly provided herein no opinion is expressed or implied letter is being sent to your authorized representative concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter 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 the rulings contained in this letter are based upon information and plr-135385-05 provides that it may not be used or cited as precedent this ruling is directed only to the taxpayer s requesting it sec_6110 sincerely _________________________ george l masnik chief branch office of the associate chief_counsel passthroughs and special industries enclosure copy of letter for sec_6110 purposes


internal_revenue_service number release date index numbers --------------------------------------- ------------------------------------------------------ ------------------------------------------------------------ ----------------------------- ----------------------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------- id no ---------------- telephone number -------------------- refer reply to cc psi b3 plr-133816-13 date date x --------------------------------------------------------------------------------------------------- ---------------------- legend country ------------------------------ date ------------------ dear ------------ this letter responds to a letter dated date submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a disregarded_entity for federal tax purposes facts the information submitted discloses that x was organized on date under the laws of country x represents that it is a foreign_entity eligible to elect to be classified as a disregarded_entity for federal tax purposes however x failed to timely file form_8832 entity classification election electing to be a disregarded_entity effective date law and analysis sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 an eligible_entity with at least two members can elect to be classified as plr-133816-13 either an association and thus a corporation under sec_301_7701-2 or a partnership and an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that except as provided in sec_301 b unless the entity elects otherwise a foreign eligible_entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides in part that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 with the service_center designated on form_8832 sec_301_7701-3 provides that an election made under sec_301 c i will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed if an election specifies an effective date more than days prior to the date on which the election is filed it will be effective days prior to the date it was filed sec_301_9100-1 provides that the commissioner in exercising the commissioner’s discretion may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but not more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code code except subtitles e g h and i sec_301_9100-1 provides that the term regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-2 provides the standards the commissioner will use to determine whether to grant an automatic_extension of time for making certain elections sec_301_9100-3 provides the guidelines for granting extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301 a provides that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion plr-133816-13 based solely on the facts submitted and the representations made we conclude that x has satisfied the requirements of sec_301_9100-1 and sec_301_9100-3 as a result we grant x an extension of time of one hundred twenty days from the date of this letter to file form_8832 with the appropriate service_center to elect to be classified as a disregarded_entity effective date a copy of this letter should be attached to the form_8832 this ruling is contingent on x and the owner of x filing within days from the date of this letter all required returns including amended returns consistent with the requested relief granted in this letter these returns may include but are not limited to form_8858 information_return of u s persons with respect to foreign disregarded entities a copy of this letter should be attached to any such returns except as specifically set forth above we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item either discussed or referenced in this letter we are directing the ruling only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office we are sending a copy of this letter to x’s authorized representatives the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the ruling_request it is subject_to verification on examination sincerely associate chief_counsel passthroughs special industries by _______________________ mary beth carchia senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


department of the treasury internal_revenue_service y washington d c feb27 md tax_exempt_and_government_entities_division u i l xxxxxxxxxxxxx xxxxxxxxxxxxx xxxxxxxxxxxxx attn xxxxxxxxx legend state a employer m pian x board d group b employees statute t re kek kk kik eek u u o d i u h y this letter isin reply to a request for a letter_ruling dated date made on your behalf by your authorized representative concerning the federal_income_tax treatment of certain contributions made to plan x under sec_414 of the internal_revenue_code code the following facts and representations have been submitted statute t authorizes the establishment of plan x by employer m an instrumentality of state a statute t provides that a board such as board d may establish an optional retirement program under which contracts providing retirement and death_benefits may be purchased for its employees section b of statute t provides in pertinent part that an optional retirement_plan such as plan x established under this section shall be designated as a qualified governmental_plan under sec_401 and sec_414 of the code and a qualified pick up plan as defined in sec_414 section h of statute t provides in pertinent part that although designated as employee contributions ali group b employees’ contributions made to plan x shall be picked up and paid_by employer m in lieu of contributions by the group xxxxxxkxxkxxxkxx b employees the contributions picked up by employer m may be made through a reduction in the employee's salary or an offset against future salary increases or a combination of both the group b employees participating in plan x do not have the option of choosing to receive the contributed amounts directly instead of employer m paying such amounts to plan x pursuant to the authority contained in statute t employer m established plan x plan x a defined_contribution_plan was executed by board d on behalf of employer m on date plan x was established by employer m effective date plan x is intended to qualify under sec_401 of the code and constitute a governmental_plan under sec_414 in addition plan x is also intended to be a qualified_plan within the meaning of sec_414 empioyer m has requested a determination_letter from the internal_revenue_service as to the qualification of plan x under sec_401 a section dollar_figure of plan x provides that contributions made by a group b employee under this plan are picked-up by employer m within the meaning of sec_414 of the code and pursuant to section h of statute t section dollar_figure of plan x further provides that these group b employee contributions are made in lieu of contributions by the group b employee and that the group b employee does not have the option of choosing to receive the contributed amounts directly instead of having those contributions paid_by employer m to plan x a contribution to plan x in an amount equal to dollar_figure percent of the group b employee's compensation sec_4 of plan x provides that each group b employee shall make based on the aforementioned facts and representations you have requested the following rulings that the required group b employee contributions to plan x that are picked up by employer m within the meaning of sec_414 of the code wil be excluded from the group b employee’s gross_income that the picked up contributions to plan x wiil not be considered wages for federal_income_tax withholding purposes and therefore federal income taxes need not be withheld from the picked up contributions sec_414 of the code provides that contributions otherwise designated as employee contributions shall be treated as employer contributions if such contributions are made to a plan described in sec_401 a or a of the code established by a state government or political_subdivision thereof or by any agency_or_instrumentality of any of the foregoing where the contributions of employing units are designated as employee contributions the contributions so picked up shall be treated as employer contributions xxxxxxxxxxkxx revrul_77_462 1977_2_cb_358 addresses the federal_income_tax treatment of contributions picked up by the employer within the meaning of sec_414 of the code in revrul_77_462 the employer school district agreed to pick up the required contributions of the eligible employees under the plan the revenue_ruling held that under the provisions of sec_3401 of the code the school district's picked-up contributions to the plan are excluded from wages for purposes of the collection of income_tax at source on wages and no federal_income_tax withholding is required from employees’ salaries with respect to the said picked-up contributions the revenue_ruling further held that the school district's picked-up contributions are excluded from the gross_income of employees until such time as they are distributed to the employees revrul_81_35 1981_1_cb_255 and revrul_81_36 1981_1_cb_255 provided guidance as to whether contributions will be considered as picked up by the employer both revenue rulings establish that the following two criteria must be satisfied the employer must specify that contributions although designated as employee contributions are being paid_by the employer in lieu of contributions by the employee and the employee must not have an option of choosing to receive the contributed amounts directly or to have them paid_by the employer to the plan in revrul_87_10 1987_1_cb_136 the service considered whether contributions designated as employee contributions to a governmental_plan are excludable from the gross_income of the employee the service concluded that to satisfy the criteria set forth in revenue rulings and with respect to particular contributions the required specification must be completed before the period to which such contributions relate in lieu of contributions by the employees and that the group b in this case plan x satisfies the requirements of rev ruls and section dollar_figure of plan x provides that group b employees’ contributions are made to plan x employee does not have the option of choosing to receive the contributed amounts directly instead of having those amounts paid_by employer m to plan x further statute t which provides the statutory authority for the establishment of plan x by board d on employer m's behalf provides that all group b employees’ contributions made to plan x although designated as employee contributions shall be picked up and paid_by employer m in lieu of contributions by the group b employees statute t further provides that the group b employees participating in plan x do not have the option to receive the contributed amounts directly instead of employer m paying such amounts to plan x statute t also provides employer m may pick up these contributions through a reduction in the group b employee's salary or an offset against future salary increases or a combination of both therefore with respect to your first ruling_request we conclude that the required contributions made by the group b employees to plan x that are picked xxxxxxxxxxxxx up by employer m pursuant to section dollar_figure of plan x and section h of statute t are picked up contributions within the meaning of sec_414 of the code and as such will not be includible in the gross_income of the group b employees untit such amounts are distributed from plan x to the extent that these amounts represent contributions made by employer m these amounts will be includible in the gross_income of the group b employees or their beneficiaries in the year in such amounts are distributed to the extent that they represent amounts contributed by employer m with respect to your second ruling_request since we have determined that the picked up contributions made pursuant to section dollar_figure of plan x and statute t are to be treated as employer contributions we conclude that these contributions are excepted from wages as defined in sec_3401 of the code for federal_income_tax withholding purposes therefore no withholding of federal_income_tax is required in the taxable_year in which they are contributed to plan x for purposes of the application of sec_414 of the code it is immaterial whether an employer picks up contributions through a reduction in salary an offset against future salary increases or a combination of both in accordance with revrul_87_10 this ruling does not apply to any contribution to the extent that it relates to compensation earned before the later of the effective sate of the relevant statute or the date the pick up election under plan x is effective these rulings are based on the assumption that plan x meets the requirements for qualification under sec_401 of the code at the time of the proposed contributions and distributions no opinion is expressed as to whether the amounts in question are subject_to tax under the federal_insurance_contributions_act no opinion is expressed as to whether the contributions in question are paid pursuant to a salary reduction agreement’ within the meaning of sec_3121 of the code the effective date for the commencement of any proposed pick up cannot be any earlier than the latest of the implementation of the proposed pick up program by employer m or the date it is put in effect this letter_ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent a copy of this ruling has been sent to your authorized representative in accordance with a power_of_attorney on file in this office if you have any questions please contact t ep ra t at xxxxxxxxaxkxkkxk sincerely yours engned joyor b flond joyce e floyd manager employee_plans technical group tax exempt and government entitles division enclosures deleted copy of the letter notice


t c summary opinion united_states tax_court jason and misty dewey petitioners v commissioner of internal revenue respondent docket no 13650-08s filed date jason and misty dewey pro sese alicia e elliott for respondent ruwe judge this case was heard pursuant to the provisions of section of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion unless otherwise indicated all section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure shall not be treated as precedent for any other case respondent determined a dollar_figure deficiency in petitioners’ federal_income_tax after a concession by respondent the only issue remaining is whether petitioners are entitled to a sales_tax deduction in connection with the purchase of a new home background some of the facts have been stipulated the stipulation of facts and the attached exhibits are incorporated herein by this reference at the time the petition was filed petitioners resided in arizona in date petitioners purchased a new home from kb home sales kb homes for dollar_figure the final settlement statement prepared by first american title insurance co reflects a contract sale price of dollar_figure and detailed settlement charges of dollar_figure but does not separately state any sales_tax paid moreover the record is devoid of any indication of what taxes if any kb homes paid in date the combined rate of the transaction privilege_tax for retail sales or prime contracting for the state of arizona maricopa county and the city of mesa was percent furthermore prime contractors are allowed a flat 35-percent deduction from gross_receipts in computing the transaction respondent concedes that petitioners are entitled to an additional dollar_figure deduction for taxes paid for privilege_tax owed to the state of arizona maricopa county and the city of mesa petitioners under the direction of their tax_return_preparer determined the portion of their claimed sales_tax deduction for the purchase of their new home using a formula based on estimates for the cost of land labor materials and the sales_tax rate petitioners’ estimates are as follows new home purchase amount cost of land dollar_figure labor at percent big_number materials at percent big_number sales_tax at percent big_number total big_number on schedule a itemized_deductions of their federal_income_tax return petitioners claimed a dollar_figure taxes paid deduction which consisted of dollar_figure for state_and_local_general_sales_taxes dollar_figure for real_estate_taxes and dollar_figure for personal_property_taxes in the notice_of_deficiency respondent disallowed dollar_figure of petitioners’ claimed dollar_figure taxes paid deduction as previously noted the parties stipulate that respondent has conceded an additional dollar_figure deduction for taxes paid thus respondent has allowed a dollar_figure taxes paid deduction as follows dollar_figure for personal_property_taxes dollar_figure for real_estate_taxes and dollar_figure for state_and_local_general_sales_taxes the remaining dollar_figure represents the amount petitioners claimed as sales_tax paid on the purchase of their new home the parties stipulate that for tax_year petitioners paid state income taxes of dollar_figure however on their federal_income_tax return petitioners claimed the general_sales_tax deduction in lieu of the state_income_tax deduction the parties agree that if respondent prevails and the general_sales_tax deduction on the single-family home is not allowed then petitioners are entitled to a dollar_figure deduction for state income taxes which would entitle petitioners to total itemized_deductions of dollar_figure discussion deductions are strictly a matter of legislative grace and the taxpayer bears the burden of proving entitlement to the deductions claimed rule a 503_us_79 292_us_435 pursuant to sec_7491 the burden_of_proof as to factual issues may shift to the commissioner where a taxpayer has introduced credible_evidence relevant to ascertaining his tax_liability rule a petitioners have neither claimed nor shown eligibility for a shift in the burden_of_proof consequently the burden_of_proof remains with petitioners sec_164 allows a deduction for state_and_local_income_taxes paid_or_accrued during the taxable_year however sec_164 provides that a taxpayer may elect to deduct state_and_local_general_sales_taxes in lieu of state_and_local_income_taxes the term ‘general sales tax’ means a tax imposed at one rate with respect to the sale at retail of a broad range of classes of items sec_164 sec_1_164-3 income_tax regs defines the term sales_tax as a tax imposed upon persons engaged in selling tangible_personal_property or upon the consumers of such property which is a stated sum per unit_of_property sold or which is measured by the gross_sales price or the gross_receipts from the sale to qualify as a general_sales_tax a tax must meet two tests the tax must be a tax in respect of sales at retail and the tax must be general--that is it must be imposed at one rate in respect of the retail sales of a broad range of classes of items sec_1_164-3 income_tax regs in support of petitioners’ claimed sales_tax deduction petitioner jason dewey mr dewey alleges that kb homes completed an arizona form_5000 arizona department of revenue the election to deduct state and local sales_taxes in lieu of state_and_local_income_taxes is applicable for taxable years beginning after date and before date sec_164 transaction privilege_tax exemption_certificate thereby allowing kb homes to purchase construction materials without paying any sales_tax mr dewey theorizes that if kb homes did not have to pay sales_tax on the construction materials when purchased but rather paid a transaction privilege_tax when the home was sold to petitioners and since the builder never ventured any of their own capital to pay the tax then petitioners effectively paid the sales_tax on the construction materials and should be deemed a buyer at retail of this property in question respondent asserts however that the transaction privilege_tax in issue was imposed with respect to the sale of real_property and therefore does not qualify as general_sales_tax within the meaning of sec_164 we agree with respondent the state of arizona maricopa county and the city of mesa impose a tax on the privilege of doing business within their respective jurisdictions these so-called transaction privilege taxes are based on the volume of business transacted which is generally measured by gross_proceeds of sales or gross_income a sec_4 respondent also asserts that because the transaction privilege_tax for the state of arizona maricopa county and the city of mesa allow for a flat 35-percent deduction for land and labor the rates applied to contractors are not applied on generally the same base as other businesses subject_to the tax thus respondent argues that the taxes are not imposed at one rate in respect of a broad range of classes of items see sec_164 respondent further asserts that even if the taxes qualify as general sales_taxes they are not imposed upon petitioners because they were not separately_stated see sec_164 the case may be see ariz rev stat ann secs and retail or prime contracting classifications respectively to qualify as a retail_sale under the state of arizona maricopa county and the city of mesa taxing provisions the sale must consist of the transfer of tangible_personal_property at retail see id secs a mesa city code sec in duhame v state tax commn p 2d ariz the arizona supreme court concluded that a sale of a new home such as the transaction between kb homes and petitioners is not a sale of tangible_personal_property and consequently is not a retail_sale in this respect the arizona supreme court stated when a contractor fabricates his materials for the contractee and the completed structure is erected on the owner’s land it is as much real_property as the land itself the constituent elements of tangible_personal_property have been destroyed by their incorporation into the completed structure and such a contractor therefore is not making a sale of tangible personalty to his contractee id thus a contractor when fabricating personalty into realty neither sells resells sells at retail nor can he be considered a retailer id consequently kb homes did not engage in selling tangible_personal_property at retail when it sold a new home to petitioners under the state and local taxing authorities contractor’s sales are not retail sales therefore these taxes do not qualify as general sales_taxes within the meaning of sec_164 see karpinski v commissioner tcmemo_1983_50 see also beimfohr v commissioner tcmemo_1986_57 applying the holding in karpinski under similar facts accordingly we sustain respondent’s determination and hold that petitioners are not entitled to the dollar_figure deduction they claimed as state and local sales_taxes paid for the purchase of their new home in to reflect the foregoing and in the light of the parties’ agreement to allow a state_income_tax deduction decision will be entered under rule this court has held on several occasions that a home buyer may not deduct retail sales_taxes a contractor pays on the purchase of materials that went into the construction of the home see 78_tc_270 77_tc_482 43_tc_16 porter v commissioner tcmemo_1978_391 in each of these cases the tax was imposed in respect to sales of tangible_personal_property at retail that preceded the sales transaction involving the home buyer and in each case the home buyer was disallowed the deduction on the grounds that under state law the contractor was the ultimate consumer of the materials that went into construction of the home ie there was no retail_sale of the materials when the home buyer paid the contractor on account of our holding we need not address respondent’s other contentions see supra note


internal_revenue_service number release date index number -------------------------------------------- -------------------------------- ---------------------- --------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------- id no ----------------- ----------------------------------------------------- telephone number ---------------------- refer reply to cc psi plr-148314-13 date april legend x ---------------------------------- ------------------------------ trust1 ---------------------------------- ----------------------------------------------------------- ------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------- trust2 -------------------------------------------------------- -------------------------------------------- ------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- trust3 ----------------------------------------------------- --------------------------------------------------------------------------------- ------------------------------------ state ------- a ---------------------------------------- b ------------------------------ c ---------------------------------------- d --------------------- e ------------------------- plr-148314-13 date1 ------------------ date2 ---------------------- date3 ------------------ date4 --------------------------- date5 -------------------------- date6 -------------------- date7 ----------------------- date8 ------------------------ date9 ---------------------- date10 ---------------------- date11 ----------------------- date12 -------------------- year1 ------- year2 ------- n -------------- dear -------------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x by x’s authorized representative requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated under the laws of state on date1 x elected to be an s_corporation effective date2 among x’s shareholders are three trusts trust1 trust2 and trust3 x represents that all of its individual shareholders as well as the trust beneficiaries of trust1 trust2 and trust3 are u s citizens and that trust1 trust2 and trust3 are domestic trusts plr-148314-13 on date3 a established trust1 as a revocable_trust for his benefit and at his death for the benefit of his children b c and d trust1 became irrevocable upon a’s death on date6 pursuant to the date5 restatement of the trust agreement for trust1 separate trust shares were created for the respective benefit of a’s three children b c and d trust1 owned stock of x at the time of a’s death no additional stock of x had been added to trust1 since a’s death in addition no x stock had been allocated to d’s separate share of trust1 x represents that the separate shares of trust1 for the benefit of b and c meet the requirements as qualified subchapter_s trusts qssts except that no qsst elections had been timely filed on behalf of the separate shares of trust1 for the benefit of b and c by date7 the due_date for the election taking into account both sec_1361 and sec_1361 under sec_1361 on date4 a established trust2 as an irrevocable_trust for the benefit of b and c the trust agreement for trust2 named b and c as the trustees for their respective separate shares of trust2 also on date4 a gifted shares of x to each separate share of trust2 x represents that the beneficiaries of the separate shares of trust2 timely filed qsst elections on behalf of their respective separate shares of trust2 c died on date9 and c’s spouse e became the successor income_beneficiary of c’s separate share of trust2 for year1 and year2 e as current income_beneficiary of e’s separate share of trust2 erroneously believed that the trust was permitted to sprinkle income among various individuals and requested that the trust income be distributed among e and e’s children e made this request based on advice from an attorney that did not have knowledge that trust2 held s_corporation stock and that as a qsst it was not permitted to distribute trust income to more than one individual b acting as trustee of e’s separate share of trust2 at the time complied with this request and caused income of trust2 to be distributed to e and e’s children in year1 and year2 x represents that e and e’s children each reported and paid tax on this income on their individual returns for year1 and year2 on date8 c established trust3 as a revocable_trust upon c’s death on date9 trust3 became irrevocable and e became the trustee of trust3 upon c’s death the shares of x that c had owned individually were transferred to trust3 for the benefit of e a qsst election on behalf of trust3 was not timely filed by date10 the due_date for the election taking into account sec_1361 however x represents that e reported all of the income from trust3 on e’s individual return as if a qsst election had been properly and timely made x represents that the separate shares of trust1 the separate shares of trust2 and trust3 otherwise satisfy the requirements as qssts under sec_1361 except as indicated above x represents that x and x’s shareholders have filed tax returns consistent with x being an s_corporation since date7 except as otherwise described above x further represents that the circumstances resulting in the termination of x’s s_corporation plr-148314-13 election were inadvertent and were not motivated by tax_avoidance or retroactive tax planning x and each person who was or is a shareholder of x at any time since date7 agree to make any adjustments consistent with the treatment of x as an s_corporation as may be required by the secretary with respect to such period the period of limitations on assessments under sec_6501 has either expired or will soon expire for taxable years ending before date11 however the period of limitations on assessments under sec_6501 has not expired for the taxable years beginning on date11 or for any subsequent years sec_1361 provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 provides that a small_business_corporation means a domestic_corporation that is not an ineligible_corporation and that does not have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual sec_1362 provides that except as provided in sec_1362 a small_business_corporation may elect in accordance with the provisions of sec_1362 to be an s_corporation sec_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the first day of the first taxable_year for which the corporation is an s_corporation such corporation ceases to be a small_business_corporation a termination of an s_corporation_election under sec_1362 is effective on or after the date of cessation sec_1362 provides that if an election under sec_1362 by any corporation was terminated under sec_1362 or the secretary determines that the circumstances resulting in such termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in the termination steps were taken so that the corporation is a small_business_corporation and the corporation and each person who was a shareholder of the corporation at any time during the period specified under sec_1362 agrees to make the adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary for that period then notwithstanding the circumstances resulting in such termination the corporation shall be treated as an s_corporation during the period specified by the secretary based solely on the facts submitted and the representations made we conclude that x’s s_corporation_election terminated on date7 due to the failure of the beneficiaries to properly and timely file qsst elections for their separate shares of plr-148314-13 trust1 in addition x’s s_corporation_election would have terminated when the trustee of e’s separate share of trust2 distributed trust income to more than one individual in a tax_year had the election not already terminated on date7 x’s s_corporation_election would also have terminated on date10 due to the failure of the beneficiary to properly and timely file a qsst election for trust3 had x’s s_corporation_election not already terminated on date7 we conclude that the termination was inadvertent within the meaning of sec_1362 we further conclude that to the extent that x’s s_corporation_election would have terminated as a result of the subsequent events described above had the election not terminated earlier such terminations would have been inadvertent within the meaning of sec_1362 pursuant to the provisions of sec_1362 x will be treated as continuing to be an s_corporation on date7 and thereafter unless x’s s_corporation_election otherwise terminated under sec_1362 for reasons not stated in this letter provided that the following conditions are met as an adjustment under sec_1362 a payment of dollar_figuren and a copy of this letter must be sent to the following address internal_revenue_service cincinnati service_center west rivercenter blvd covington ky stop terri lackey manual deposit this payment must be sent no later than days from the date of this letter this ruling is contingent upon the beneficiaries of the separate shares of trust1 filing qsst elections for their separate shares of trust1 with an effective date of date12 within days of the date of this letter in addition the beneficiary of trust3 must file a qsst election for trust3 with an effective date of date9 within days of the date of this letter a copy of this letter should be attached to each qsst election if the above conditions are not met then this letter_ruling is null and void furthermore if these conditions are not met x must send a notification that its s election has terminated to the service_center with which x’s s election was filed 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 specifically no opinion is expressed or implied regarding x’s eligibility to be an s_corporation or the validity of its s_corporation_election further no opinion is expressed or implied as to whether trust1 and or its separate shares trust2 and or its separate shares and trust3 qualify as qssts finally no opinion is expressed or implied regarding whether the separate shares of trust1 and trust2 are substantially separate and independent shares of a_trust within the meaning of sec_643 and properly treated as separate trusts for purposes of sec_1361 and d the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury plr-148314-13 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 this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely bradford r poston senior counsel branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court shenita a hill petitioner v commissioner of internal revenue respondent docket no filed date shenita a hill pro_se catherine s tyson for respondent memorandum opinion gerber judge this matter is before the court to address respondent’s date motion for summary_judgment motion pursuant to rule unless otherwise indicated all section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure respondent contends that no genuine issue exists as to any material fact and that the determination in the notice_of_deficiency with respect to petitioner’ sec_2013 income_tax_liability and accuracy-related_penalty should be sustained petitioner’s response to respondent’s motion was filed date the issues for our consideration are whether petitioner failed to report dollar_figure of income and is liable for an accuracy-related_penalty under sec_6662 and b background at the time the petition was filed petitioner resided in missouri petitioner filed a federal_income_tax return for which did not include dollar_figure of unemployment_compensation that she had received from the state of connecticut petitioner during the administrative_proceeding contended that she used an online method for filing her return and was not aware that the unemployment_compensation needed to be included because it was not earned_income petitioner also did not include dollar_figure that she received in connection with her health_savings_account during in a date notice_of_deficiency respondent determined a dollar_figure deficiency in petitioner’ sec_2013 income_tax and a dollar_figure accuracy-related_penalty for an underpayment attributable to a substantial_understatement_of_income_tax within the meaning of sec_6662 petitioner timely filed a petition for redetermination and alleged that she was not aware that the unemployment_compensation was includible because it was not earnings and unemployment_compensation was not described in the online program she used to file her return she also alleged that she did not receive information concerning the unemployment_compensation until after she had used the online return preparation in her petition to this court petitioner did not specifically contest the inclusion of the dollar_figure of unemployment_compensation or reference the dollar_figure health account adjustment finally petitioner did not specifically contest the accuracy-related_penalty in her petition in her income_tax return petitioner reported negative taxable_income of dollar_figure an earned_income_credit of dollar_figure and a child_tax_credit of dollar_figure after inclusion of the dollar_figure of unemployment_compensation and the dollar_figure health account adjustment petitioner’s corrected taxable_income was dollar_figure after this case was set on a st louis missouri trial session respondent moved for summary_judgment with respect to the income_tax deficiency and the penalty stating that there was no genuine issue of material fact petitioner in her response to respondent’s motion stated that she had contacted the internal the income_tax deficiency was also based on other mathematical adjustments that were purely computational and generated by the determination of increased income revenue service taxpayer_advocate_service advocate who advised that petitioner could still amend her return and she asked the court to allow her time to amend her return so that the fee sic penalty would not be assessed petitioner also stated that she is now disputing the amount owed due to the information that she received from the advocate discussion summary_judgment is intended to expedite litigation and to avoid unnecessary and expensive trials 61_tc_861 summary_judgment may be granted where the pleadings and other materials show that there is no genuine dispute as to any material fact and that a decision may be rendered as a matter of law rule b see schlosser v commissioner tcmemo_2007_298 tax ct memo lexis at aff’d 287_fedappx_169 3d cir the burden is on the moving party to demonstrate that no genuine dispute as to any material fact remains and that he is entitled to judgment as a matter of law 116_tc_73 in all cases the evidence is viewed in the light most favorable to the nonmoving party 100_tc_32 however the nonmoving party is required to go beyond the pleadings and by her own affidavits or by the ‘depositions answers to interrogatories and admissions on file ’ designate ‘specific facts showing that there is a genuine issue for trial ’ 477_us_317 see also 119_tc_157 115_tc_554 respondent’s motion made allegations of fact based upon documents attached to the motion petitioner’s response made no statements concerning or in other respects showing that respondent’s alleged facts were incorrect and or that there was any dispute concerning them in the documents attached to respondent’s motion petitioner’s written responses to respondent tacitly agreed that the unemployment_compensation was taxable and that she failed to report it in her return under these circumstances we must find and hold that respondent’s determination that petitioner had unreported income of dollar_figure was not in error with respect to the dollar_figure accuracy-related_penalty under sec_6662 petitioner did not specifically contest that determination in her petition sec_6662 imposes an accuracy-related_penalty equal to of the underpayment to which sec_6662 applies sec_6662 applies to the portion of any underpayment which is attributable to inter alia negligence or disregard of rules or regulations sec_6662 or a substantial_understatement_of_income_tax sec_6662 in this case the notice_of_deficiency attributed the penalty to a substantial_understatement_of_income_tax there is a substantial_understatement_of_income_tax for any taxable_year if the amount of the understatement exceeds the greater of of the tax required to be shown on the return for the taxable_year or dollar_figure sec_6662 petitioner reported negative taxable_income of dollar_figure an earned_income_credit of dollar_figure and a child_tax_credit of dollar_figure her income_tax deficiency exceeds dollar_figure which is greater than of the tax required to be shown on the return after inclusion of the dollar_figure of unreported income petitioner’s corrected taxable_income was dollar_figure accordingly the understatement for the year comes within the definition of a substantial_understatement sec_6664 provides that the penalty under sec_6662 shall not apply to any portion of an underpayment if it is shown that there was reasonable_cause for the taxpayer's position and that the taxpayer acted in good_faith with respect to that portion see 116_tc_438 petitioner did not specifically raise the penalty in her petition but she raised the question of the fee which we interpret to mean penalty in her response to respondent’s motion petitioner’s explanation that the online software did not reference the unemployment_compensation and or that she did not receive information from the state of connecticut until after she had filed her return does not in the context of this case constitute reasonable_cause for which petitioner may be relieved of the penalty accordingly respondent’s determination with respect to the sec_6662 accuracy-related_penalty is not in error accordingly we will grant respondent’s motion to reflect the foregoing an appropriate order and decision will be entered


ture rvaime service - uniform issue list t ep ra t1 mul attn legend board a church b church c church d church m directory n state o plan x t t ladies and gentiemen this is in response to a letter dated date as supplemented by additional correspondence dated date and date in which your authorized representative requested private letter rulings regarding the applicability of sec_414 and sec_403 of the internal_revenue_code code to plan x the following facts and representations have been submitted board a board is a state o not for-profit corporation chartered in the board administers an endowment that provides retirement and welfare benefits to church m ministers and missionaries and their beneficiaries in the board broadened its scope to include ministers and missionaries and their beneficiaries from other denominations and organizations which share beliefs and practices similar to church m to attain this objective the board operates either directly or through the medium of related_organizations it cooperates with such organizations in securing so far as practicable uniformity in the methods for the extension of such aid it promotes interest in the better maintenance of the ministry among church m and church m-related organizations and in other denominations which share similar beliefs and practices also it receives and administers funds to provide benefits to employees of church m or other like-minded denominations and such employees’ beneficiaries the board may adopt measures to achieve the above-mentioned objectives board a is one of four related boards of church m the closeness of the is illustrated by the fact that under the relationship between board a and church m board's act of incorporation and by-laws up to of the board's managers directors are elected by church m’s general board the remaining managers between two and seven of board a are elected by the members of the board from the general_public on the basis of particular skills helpful to the board in performing its functions each proposed amendment to the board’s by-laws must be provided to church m in care of its general secretary at least days prior to the date of the meeting at which a vote is taken with respect to such proposed amendment further any change to the purpose of board a must be approved by church m’s general board accordingly aithough it is separately incorporated board a serves church m in its provision of retirement and related benefits in furtherance of its stated purpose under its charter the board has established and maintains plan x as it exists today plan x is intended to operate as an approved tax- sheltered annuity program under code sec_403 the decision to extend participation in board-administered programs required the approval of church m’s general leadership the board chose to broaden access to its plans because it believes that this action will further the denominations’ evangelical and ab ecumenical purposes and facilitate the blending of related churches by sharing resources and facilities each participating employer in pian x is either a local congregation of church m or an organization associated with church m churches c and d promote education and missionary projects in conjunction with church m member organizations it is represented that all of these entities are organizations described in code sec_501 and exempt from federal income_taxation under sec_501 board a and churches b c and d share organizational characteristics with and hoid religious beliefs and practices that are similar to church m specifically each is an organization that is characterized by one or more of the following i ii iv v vi a church_or_convention_or_association_of_churches or a person acting under the direction of a church_or_convention_or_association_of_churches founded the organization that shares beliefs and practices similar to church m and is affiliated or associated with church m the members governing board or officers of the church_or_convention_or_association_of_churches share religious beliefs and practices similar to members of church m and they have the right to appoint or elect a majority of the organization’s governing board_of directors a church_or_convention_or_association_of_churches which holds religious beliefs and practices similar to church m owns the property upon which sit facilities in which the organization carries on a substantial portion of its activities or such church_or_convention_or_association_of_churches provided in the past year or current_year more than of the organization's revenues a majority of the members of the organization’s governing board must be members of a church_or_convention_or_association_of_churches which is affiliated or associated with church m the organization’s articles of incorporation or an equivalent document provides that its primary purpose is to provide services or resources to a particular church_or_convention_or_association_of_churches that either is affiliated or associated with church m in furtherance of the organization's teachings tenets and core beliefs the organization’s articles of incorporation or an equivalent document require that upon dissolution its assets after provision for payment of all liabilities go to a particular church or organization that adheres to and follows the teachings tenets and core beliefs found in paragraph vii below vii viii ix the organization follows basic teachings tenets and core beliefs like those of a belief in the supremacy of the scriptures rather than hurch m including the church or a hierarchy a belief in religious liberty in the freedom to worship without any compuision by or from the state a belief in the practice of autonomy of the local church and a belief in the priesthood of all believers a belief in the father than the organization requires members of its goveming board or its officers to subscribe to a statement including the teaching tenets and core beliefs set forth in vii above a church_or_convention_or_association_of_churches which shares religious practices and beliefs similar to church m is included in directory n church m’s directory of affiliated or associated organizations the participating organizations share significant common religious-beliefs and practices with church m organizations many of these beliefs and practices are codified in the by-laws of church m churches including the preservation and propagation of freedoms and characteristics and respect for the independence of the individual church church b shares the following core beliefs with church m churches the belief that scripture is the word of god and the supreme authority the belief in the local church with the primary task of proclaiming the gospel of jesus christ the belief in rather than infants the belief in the independence of the local church which must be free from ecclesiastic or political authority and the belief in the separation of church and state church b is open to membership only for churches who subscribe without reservation to its core beliefs church c shares the following core beliefs with church m churches the belief in the development and organization of an alliance of individuals and congregations dedicated to the preservation of historic principles freedoms and traditions the belief in the freedom of the individual to read and interpret the scriptures the belief in the freedom of the local church the belief in the servant role of leadership including the full partnership of all god’s peopie in missions and ministry and the betief in the principle of a free church in a free state and the opposition of any effort by either church or state to use the other for its own purposes church d shares the following core beliefs with church m churches the belief in bringing together church members who desire to call out god's gifts in each person in order that the gospel of jesus christ will be spread throughout the world the belief in being committed to the preservation and propagation of individual and historic freedoms and distinctions the belief in the priesthood of all believers the belief in the acceptance 4s of the authority of the bibie without the aid of creeds and the belief in the autonomy of each church and the separation of church and state in the interests of religious liberty based on the foregoing facts and representations you have requested the following rulings that plan x constitutes a church_plan within the meaning of code sec_414 provided that pian x satisfies code sec_403 qualified employment with board a and churches b c and d under plan x will count as service for purposes of the maximum exclusion_allowance under code sec_403 a plan is not subject_to the coverage requirements of code section-410 see code sec_410 the vesting requirements of code sec_411 see code sec_411 b or the funding requirements of code sec_412 see code sec_412 if the plan is a church_plan pursuant to code sec_414 and the church has not elected under code sec_410 to have such requirements apply however such a plan must satisfy the coverage vesting and funding requirements as in effect on date code sec_414 defines a church pian as a plan established and maintained for its employees or their beneficiaries by a church or by a convention or association of churches which is exempt from taxation under code sec_501 code sec_414 provides that a church_plan includes a pian maintained by an organization whether a civil law corporation or otherwise the principal purpose or function of which is the administration or funding of a plan or program for the provision of retirement benefits or welfare benefits or both for the employees of a church or a convention or association of churches if such organization is controlled by or associated with a church or a convention or association of churches code sec_414 defines employee to include a duly ordained commissioned or licensed minister or a church in the exercise of a ministry regardiess of the source of his or her compensation and an employee of an organization whether a civil law corporation or otherwise which is exempt from tax under code sec_501 and which is controlled by or associated with a church or a convention or association of churches code sec_414 provides that a church or a convention or association of churches which is exempt from tax under code sec_501 shall be deemed the employer of any individual included as an employee under subparagraph b code sec_414 provides that an organization whether a civil law corporation or otherwise is associated with a church_or_convention_or_association_of_churches if the organization shares common religious bonds and convictions with that church_or_convention_or_association_of_churches in order for an organization to have a church_plan it must establish that its employees are employees or deemed employees of the church_or_convention_or_association_of_churches under code sec_414 in addition a church_plan must be established and maintained for its employees by a church or a convention or association of churches which is exempt from tax under code sec_501 as provided in sec_414 or it must be maintained by an organization described in sec_414 _ in this case you have stated that board a and churches b c d and m are organizations described in code sec_501 and exempt from tax under sec_501 board a is associated with church m through its administration of funds which provide benefits to employees of church m churches you have further demonstrated that a large majority of board a’s directors are appointed by church m’s executive body finally you have shown that board a shares a commitment to the teachings tenets and core beliefs of church m for example a belief in the supremacy of the scriptures rather than the church or a hierarchy a belief in teligious liberty in the freedom to worship without any compulsion by or from the state a belief in the practice of and a belief in the priesthood of ail believers a belief in the autonomy of the local church father than in addition you have shown that employees covered by pian x are either employees of church m or of an organization associated with church m board a churches b c or d in view of the stated purpose of board a and churches b c and d their organization structure and actual activities and their adherence to a consistent set of teachings tenets and core beliefs we conclude that board a and churches b c and d share common religious bonds and convictions with church m and are therefore associated with church m within the meaning of code sec_414 and for purposes of the church_plan rules further because the employees of board a and churches b c and d are employees of organizations associated with a church_or_convention_or_association_of_churches they may also be deemed employees of that church_or_convention_or_association_of_churches under the rules of code sec_414 accordingly we conclude that the employees of board a and churches b c and d may also be deemed to be church m employees under the rules of sec_414 and for purposes of the church_plan rules conversely church m is considered to be the employer of employees of board a and churches b c and d under the rules of code sec_414 however an organization must aiso establish that its plan is established and maintained by a church or a convention or association of churches or by an organization described in code sec_414 to be described in code sec_414 a an organization must have as its principal purpose the administration of the plan and must also be controlled by or associated with a church or a convention or association of churches it has been submitted that plan x is administered by board a and as noted above in addition because board a and churches b c and d are associated with church m the principal purpose of board a is the administration of pian x board a constitutes an organization the principal purpose or function of which is the administration or funding of plans or programs for the provisions of retirement benefits for employees of board a and churches b c and d therefore plan x is maintained by an organization described in cade sec_414 for purposes of the church_plan rules accordingly with respect to ruling_request one we rule that plan x as maintained by board a is a church_plan under code sec_414 code sec_403 provides that amounts contributed by an employer to purchase an annuity_contract for an employee are excludable from the gross_income of the employee in the year contributed to the extent of the applicable_exclusion allowance provided certain requirements are met code sec_403 defines an employee's exclusion_allowance as an amount equal to the excess if any of the amount determined by multiplying of includible_compensation by the number of years_of_service over the aggregate amount contributed by the employer for annuity_contracts and excludible from the gross_income of the employee for any prior year code sec_403 states that a retirement_income_account is a defined contribution program established or maintained by a church a convention or association of churches including an organization described in code sec_44 e a to provide benefits under code sec_403 for an employee described in code sec_403 or his beneficiaries code sec_403 further provides in part thata retirement_income_account shall be treated as an annuity_contract described in code sec_403 code sec_403 provides that for purposes of code sec_403 and sec_415 i all years_of_service by i a duly ordained commissioned or licensed minister of a church or il a lay person as an employee of a church a convention or association of churches including an organization described in code sec_414 shall be considered as years_of_service for one employer and ii all amounts contributed for annuity_contracts by each such church_or_convention_or_association_of_churches or such organization during such years for such minister or lay person shall be considered to have been contributed by one employer code sec_403 c further provides that the terms church and convention or association of churches have the same meaning as when used in code sec_414 because board a and churches b c and d are associated with church m their employees are employees of organizations described in code sec_414 thus we conclude with regard to ruling_request number that all years_of_service with board a and churches b c and d shall be considered years_of_service with one employer for purposes of computing an employee’s maximum exclusion_allowance under code sec_403 this ruling assumes that plan x satisfies the requirements of code sec_403 - a copy of this letter has been sent to your authorized representative in accordance with a power_of_attorney on file in this office ge this ruling is directed only to the taxpayer who requested it code section k provides that it may not be used or cited by others as precedent sincerely yours hqned john swieca manager employee_plans technical group tax_exempt_and_government_entities_division - - enclosures deleted copy of the ruling notice ce dollar_figure


cca_2016072215203112 48a 48b 48c id uilc number release date from sent friday date pm to cc bcc subject sec_48a and sec_48c hi ----------- this responds to your recent inquiry concerning the timing of future disclosures under sec_48a and sec_48c both statutes require disclosure of certified awardees after the two or one year period for certification accordingly we recommend that the public disclosure of the certified applicant’s identity and credit_amount occur after the irs’ certification letter is issued on a related matter the certification of sec_48b credits is a one-step process that only involves the allocation of sec_48b credits therefore we recommend disclosing the identity of applicants and the amount of the credit certified at the time of the allocation with respect to all three credits the statutes address when but not how the disclosures must be made cc psi will determine how best to disclose these certified awardees on a case-by-case basis we understand that lb_i nrc recently certified credit awardees under the sec_48a and sec_48b programs with respect to these instances p si and otp will disclose the required information by publication in the internal_revenue_bulletin please contact me ---------------------------or ----------------------if you have any additional questions thank you ------------


internal_revenue_service number release date index no date cc psi - plr-119815-01 x a d1 year dear this responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 of year a x's president represents that it was the shareholders’ intent to have x elect to be an s_corporation effective d1 of year x’s form ss-4 application_for employer_identification_number reflects that it was the shareholders’ intent to have x treated as an s_corporation x filed its tax returns using form_1120s u s income_tax return for an s_corporation however the form_2553 election by a small_business_corporation for x was not timely filed with the service_center sec_1362 provides that if-- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make 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 effective for x's tax_year beginning d1 of year accordingly provided that x makes an election to be an s_corporation by filing a form_2553 with the appropriate service_center effective for its year plr-119815-01 taxable_year within days following the date of this letter then such election will be treated as timely made for x’s year taxable_year a copy of this letter should be attached to the form_2553 except as specifically ruled upon above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provisions of the code including whether x was or is a small_business_corporation under sec_1361 this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative associate chief_counsel passthroughs and special industries sincerely yours shannon cohen assistant to the chief branch enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number info release date index number -------------------------------- -------------- -------------------------- ------------------------------- - department of the treasury washington dc person to contact -------------------- id no ------------- telephone number --------------------- refer reply to cc psi - genin-164282-03 date date dear ------------ we are responding to your correspondence requesting to revoke s_corporation status as of the taxable_year based on the information submitted you assert that the internal_revenue_service accepted your revocation taxpayers are generally prohibited from retroactively revoking s_corporation status under ' d of the internal_revenue_code an election can be terminated by revocation only if shareholders holding more than one-half of the shares of stock of the corporation on the date on which the revocation is made consent to the revocation further a revocation is made during the taxable_year and on or before the 15th day of the 3rd month is effective on the first day of such taxable_year and if made after the 15th day of the 3rd month the revocation is effective for the following taxable_year a revocation may specify a prospective date if the revocation specifies a date for revocation which is on or after the date which the revocation is made the revocation shall be effective on and after the date so specified your account fails to reflect that a timely revocation for was received by the irs if you can produce either a copy of an irs revocation acceptance letter or proof eg certified mail receipt of timely mailing your request we can intervene genin-164282-03 please keep this letter with your tax records and feel free to provide a copy of it to your authorized representative we hope that the above information proves helpful s dianna k miosi sincerely yours dianna k miosi chief branch associate chief_counsel


internal_revenue_service number release date index number ------------------ ------------------------ ------------------------------------- --------------------------------------------------- ------------------------- in re ------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------- id no ----------------- telephone number --------------------- refer reply to cc psi b05 plr-132213-10 date date legend taxpayer tenant state building firm date date date ------------------------------------- ----------------------- ------------------------------------------------ ----------------------- --------- ------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------- ------------------------------------------------------ ----------------------------------------------------------------- -------------------------- ----------------- -------------- dear ------------ this letter responds to your letter and subsequent correspondence requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations for taxpayer to make the election under sec_1_48-4 of the income_tax regulations to treat tenant as having purchased building plr-132213-10 the information submitted and the representations made are as follows taxpayer is a state limited_liability_company that rehabilitated building in a manner that qualifies for the historic_rehabilitation_credit under sec_47 of the internal_revenue_code tenant a state limited_liability_company leases building from taxpayer pursuant to a date lease agreement on date taxpayer and tenant entered into an agreement to pass through the historic rehabilitation credits to tenant the agreement under the agreement taxpayer agreed to file an election pursuant to sec_1_48-4 the election on or before the due_date including any extensions of time of tenant’s federal_income_tax return for the year in which qualified_rehabilitation_expenditures are taken into account taxpayer failed to make the election pursuant sec_1_48-4 in date taxpayer was advised that the tax filings were late in date firm was engaged to complete the required tax returns taxpayer requests an extension of time to make the election law and anaylysis sec_38 allows a credit for the taxable_year in an amount equal to the sum of the business_credit carryforwards carried to the taxable_year the amount of the current_year_business_credit plu sec_3 the business_credit carrybacks carried to the taxable_year under sec_38 the amount of the current_year_business_credit includes the investment_credit under sec_46 the rehabilitation_credit is a component of the sec_46 investment_credit sec_47 provides that the rehabilitation_credit for any taxable_year is the sum of percent of the qualified_rehabilitation_expenditures with respect to any qualified_rehabilitated_building other than a certified_historic_structure and percent of the qualified_rehabilitation_expenditures with respect to any certified_historic_structure under sec_47 qualified_rehabilitation_expenditures with respect to any qualified_rehabilitated_building shall be taken into account for the taxable_year in which the qualified_rehabilitated_building is placed_in_service section sec_50 makes applicable rules similar to the rules of former sec_48 relating to certain leased properties under former sec_48 a person other than a person referred to in former sec_46 who is a lessor of property may at such time in such manner and subject_to such conditions as are provided by regulations prescribed by the secretary elect with respect to any new sec_38 property other than property described in former sec_48 to treat the lessee as having acquired such property plr-132213-10 sec_1_48-4 of the income_tax regulations provides that a lessor of property may elect to treat the lessee of property as having purchased the property for purposes of the credit allowed by sec_38 sec_1_48-4 requires a statement of election to treat the lessee as a purchaser to be filed in the manner and within the time provided in sec_1_48-4 or g sec_1_48-4 provides the information that must be included in the election statement under sec_1_48-4 the election statement must be filed with the lessee on or before the due_date including any extensions of time of the lessee’s return for the lessee’s taxable_year during which possession of the property is transferred to the lessee sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term election includes an application_for relief in respect of tax sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election that does not meet the requirements of sec_301_9100-2 a request for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusions based solely on the information submitted and the representations made we conclude taxpayer satisfies the requirements of sec_301_9100-1 and sec_301_9100-3 accordingly taxpayer’s election will be considered timely filed for purposes of sec_1_48-4 if it is filed within days of the date of this letter a copy of this letter should be sent to the appropriate service_center with a request that it be attached to taxpayer's amended tax_return for the taxable_year a copy is enclosed for that purpose except as specifically set forth above no opinion is expressed or implied concerning the federal_income_tax consequences of the facts described above under any other provisions of the code moreover we express no opinion concerning the assessment of interest additions to tax additional_amounts or penalties for failure_to_file an income_tax return with respect to any year in particular we express no opinion plr-132213-10 on whether taxpayer’s rehabilitation_expenditures qualify for the historic_rehabilitation_credit pursuant to a power_of_attorney on file with this office a copy of the letter is being sent to taxpayer’s authorized representative in addition we are sending a copy of this letter to the appropriate sb_se official this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent the rulings contained in this letter are based upon information and representations submitted by 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 curt g wilson associate chief_counsel passthroughs and special industries by _____________________________ nicole cimino senior technician reviewer branch office of associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ------------- --------------------- ----------------------------- ---------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------- telephone number --------------------- refer reply to cc intl bo2 plr-135545-10 date november ty ------- ty ------- legend partnership x --------------------- ein ---------------- corporation a -------------------------------------- corporation b --------------------- country -------- state ------------- s --- t --- dear ------------- this is in response to a letter dated date requesting certain rulings on behalf of partnership x 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 facts partnership x is a limited_liability_company formed under the laws of state and treated as a partnership for u s federal tax purposes partnership x has s members t of which are u s persons us members the us members consist of u s individuals and a domestic_corporation collectively non-partnership members that each own less than percent of partnership x and domestic partnerships partnership members that each own more than percent of partnership x taxpayer has represented that notice_2010_41 2010_22_irb_715 does not apply to partnership x’s structure plr-135545-10 partnership x wholly-owns corporation a a limited_liability_company formed under the laws of state that is disregarded as an entity separate from partnership x for u s federal tax purposes corporation a in turn wholly-owns corporation b an entity formed under the laws of country which is treated as a corporation for u s federal tax purposes corporation b will earn income that is expected to be passive_income within the meaning of internal_revenue_code code sec_1297 corporation b qualifies as a controlled_foreign_corporation cfc as defined under code sec_957 because partnership x is a domestic_partnership that wholly owns corporation b for u s federal tax purposes in addition corporation b expects to qualify as a passive_foreign_investment_company pfic without taking into account the application of code sec_1297 as defined under code sec_1297 ruling requested corporation b will not be treated as a pfic with respect to partnership x the non- partnership members or any direct or indirect owner of a partnership member pursuant to code sec_1297 during the portion of partnership x’s holding_period that partnership x is a u s shareholder within the meaning of code sec_951 with respect to corporation b and corporation b is a cfc law code sec_957 defines a cfc as a foreign_corporation with regard to which more than percent of the total combined voting power of all classes of stock entitled to vote or the total value of the stock of the corporation is owned directly indirectly or constructively by u s shareholders code sec_951 defines a u s shareholder for cfc purposes as a u_s_person who owns directly indirectly or constructively percent or more of the total combined voting power of all classes of stock entitled to vote of the foreign_corporation u s shareholder code sec_7701 defines a u_s_person as a u s citizen or resident a domestic_partnership a domestic_corporation and any domestic estate_or_trust code sec_702 provides generally that each partner in a partnership takes into account a distributive_share of the partnership’s income or gain in determining the partner’s income_tax code sec_702 provides that the character of an item_of_income or gain included in a partner’s distributive_share is determined as if such item were realized directly from plr-135545-10 the source from which realized by the partnership or incurred in the same manner as incurred by the partnership code sec_1297 defines a pfic as any foreign_corporation if either at least percent of the corporation’s income for the taxable_year is passive_income or the average percentage of assets held by the corporation during the taxable_year that produce or are held for the production of passive_income is at least percent code sec_1297 defines passive_income for purposes of the pfic income test as income which is of a kind which would be foreign_personal_holding_company_income as defined in code sec_954 subject_to certain exceptions code sec_1298 provides that a foreign_corporation is treated as a pfic with respect to a u s shareholder and the u s shareholder is subject_to the excess_distribution regime if the foreign_corporation qualified as a pfic but not a qualified_electing_fund at any point during the u s shareholder’s holding_period code sec_1297 provides that a corporation shall not be treated with respect to a shareholder as a pfic during the qualified_portion of such shareholder’s holding_period with respect to the stock in such corporation overlap rule code sec_1297 defines qualified_portion to mean the portion of a shareholder’s holding_period which is after date and during which the shareholder is a u s shareholder of the corporation and the corporation is a cfc the legislative_history to code sec_1297 provides that the overlap rule was enacted because of a concern about the unnecessary complexity caused by the application of the subpart_f and pfic regimes to the same shareholders to address this concern the legislative_history to code sec_1297 states that a shareholder that is subject_to current inclusion under the subpart_f rules with respect to stock of a pfic that is also a cfc generally is not subject also to the pfic provisions with respect to the same stock analysis it is expected that corporation b will qualify as a pfic as defined under code sec_1297 partnership x a domestic_partnership is a u_s_person within the meaning of code sec_7701 partnership x is the sole owner of corporation b for u s federal tax purposes and thus is a u s shareholder with respect to corporation b accordingly partnership x will be subject_to the subpart_f rules with respect to corporation b and will not be subject_to the pfic regime with respect to corporation b pursuant to the overlap rule the non-partnership members will take into account their distributive shares of partnership x’s income including any sec_951 inclusion with respect to corporation b the partners in the partnership members will take into plr-135545-10 account their distributive_share of their respective partnership member’s distributive_share of partnership x’s income including any sec_951 inclusion with respect to corporation b ruling based on the information submitted and the representations made we rule as follows corporation b will not be treated as a pfic with respect to partnership x the non- partnership members or the direct or indirect owners of the partnership members pursuant to code sec_1297 during the qualified_portion within the meaning of code sec_1297 of partnership x’s holding_period that partnership x is a u s shareholder of corporation b and corporation b is a cfc taxpayer has represented that notice_2010_41 does not apply to partnership x’s structure in the event a u_s_person does beneficially own an interest in partnership x directly or indirectly through a cfc as described in notice_2010_41 this ruling does not apply to such u_s_person 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_ruling this letter_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 a copy of this letter_ruling must be attached to any federal_income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely jeffery mitchell branch chief branch associate chief_counsel international