internal_revenue_service number release date index number --------------------------------- -------------------------------- ---------------------- ----------------------------------- ty department of the treasury washington dc third party communication date of communication month dd yyyy person to contact ------------------------- id no ----------------- ----------------------------------------------------- telephone number ---------------------- refer reply to cc ita b01 plr-117475-16 date date -------------------------------- trust year ------- dollar_figurea dollar_figureb ------------- ---------- dear -------------- this is in response to your letter dated date requesting permission to revoke an election made by trust to treat qualified dividends and capital_gains as investment_income for year under sec_163 and sec_163 of the internal_revenue_code and sec_1_163_d_-1 of the income_tax regulations facts taxpayer’s main source_of_income is from portfolio investments for year trust hired an accounting firm firm to prepare its form_1041 u s income_tax return for estates and trusts return the firm prepared the return by entering the relevant data into a tax software computer_program software but a keying error was made on line 4g of form_4952 investment_interest expense deduction that resulted in an inadvertent election to include the entire amount of qualified_dividend_income and net_capital_gain income of dollar_figurea as investment_income for purposes of the deduction for investment_interest expense the actual amount of investment_interest was dollar_figureb an amount significantly less than dollar_figurea the firm manually reviewed the return in accordance with the firm’s quality control policies and procedures because all of the investment_interest expense of dollar_figureb was allowed on form_4952 there was an oversight in discovering that an excessive election amount had been made on line 4g of form_4952 which affected the calculation the firm used the software to prepare many form sec_1040 during filing season for forms plr-117475-16 the software automatically limits an election to include qualified_dividend_income and net_capital_gain as investment_income for purposes of calculating the deduction for investment_interest expense to the amount of investment_interest the firm relied on the software to calculate investment_interest expense in the same manner for the taxpayer’s return however the software does not do this automatically for a form_1041 the firm was unaware of the differences in the software in identifying this type of error the error was discovered by taxpayer’s attorney after the original tax_return had been filed law analysis sec_163 provides that in the case of a taxpayer other than a corporation the amount allowed as a deduction for investment_interest shall not exceed the net_investment_income of the taxpayer for the taxable_year sec_163 defines the term investment_income in general as the sum of i ii iii gross_income from property_held_for_investment other than gain taken into account under clause ii i the excess if any of i the net gain attributable to the disposition of property_held_for_investment over ii the net_capital_gain determined by only taking into account gains and losses from dispositions of property_held_for_investment plus so much of the net_capital_gain referred to in clause ii ii or if lesser the net gain referred to in clause ii i as the taxpayer elects to take into account under this clause sec_163 also provides that the term includes qualified_dividend_income as defined in h b only to the extent the taxpayer elects to treat such income as investment_income for purposes of this subsection sec_1_163_d_-1 provides that the elections for net_capital_gain and qualified_dividend_income under sec_163 must be made on or before the due_date including extensions of the income_tax return for the taxable_year in which net_capital_gain is recognized or the qualified_dividend_income is received sec_1_163_d_-1 provides that the election under sec_163 is revocable with the consent of the commissioner the trust is requesting permission to revoke an election to treat net_capital_gain income and qualified_dividend_income as investment_income this situation is analogous to those situations concerning taxpayers who have not made a particular election provided in the regulations because of inadequate or incorrect advice form knowledgeable tax plr-117475-16 professionals and are subsequently seeking extensions of time under of the regulations on procedure and administration see revrul_83_74 1983_1_cb_112 sec_301_9100-3 generally provides extensions of time for making regulatory elections for this purpose sec_301_9100-1 defines the term regulatory election to include an election whose due_date is prescribed by a regulation a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-3 provides that requests for extensions of time for regulatory elections will be granted when the taxpayer provides evidence including affidavits described in the regulations to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government sec_301_9100-3 states that a taxpayer will be deemed to have acted reasonably and in good_faith if the taxpayer- i ii iii iv v requests relief before the failure to make the regulatory election is discovered by the service failed to make the election because of intervening events beyond the taxpayer’s control failed to make the election because after exercising due diligence the taxpayer was unaware of the necessity for the election reasonably relied on the written advice of the service or reasonably relied on a qualified_tax professional and the tax professional failed to make or advise the taxpayer to make the election in this case trust may be considered to have acted reasonably and in good_faith because trust relied on the firm a qualified_tax professional to prepare the return the firm used a software program that made an erroneous election that was not discovered by the firm despite reasonable efforts under sec_301_9100-3 a taxpayer will not be considered to have acted reasonably and in good_faith if the taxpayer- i ii seeks to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 at the time the taxpayer requests relief taking into account any qualified_amended_return filed within the meaning of sec_1_6664-2 and the new position requires a regulatory election for which relief is requested was informed in all material respects of the required election and related tax consequences but chose not to file the election or plr-117475-16 iii uses hindsight in requesting relief if specific facts have changed since the original deadline that make the election advantageous to a taxpayer the service will not ordinarily grant relief in this case trust is not seeking to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 at the time relief is requested trust was not informed in all material respects of the related tax consequences of making the election because trust was unaware an election had been made furthermore trust is not using hindsight in requesting relief specific facts have not changed since the filing of the return and making of the original election that made the election disadvantageous to the trust sec_301_9100-3 provides in part that the interests of the government are prejudiced if granting relief would result in the taxpayer having a lower tax_liability in the aggregate for all taxable_year affected by the election than the taxpayer would have had if the election had been timely made taking into account the time_value_of_money sec_301_9100-3 provides in part that the interests of the government are ordinarily prejudiced if the taxable_year in which the regulatory election should have been timely made are closed by the period of limitations on assessment under these criteria the interests of the government are not prejudiced in this case allowing the revocation of the election would not result in a lower tax_liability in the aggregate for all taxable years affected by the election than would have been the case if the election had been timely made taking into account the time_value_of_money furthermore when the request was filed the taxable_year in which the regulatory election that is sought to be revoked here and any taxable_year affected by it was not closed by the period of limitations on assessment in addition granting the revocation in the present situation would not cause undue administrative burden nor would it be inconsistent with the objectives of the underlying statue and the regulatory election conclusion the consent of the commissioner is hereby granted to revoke the election under sec_163 to include dollar_figurea as investment_income for year 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 the rulings contained in this letter are based upon information and representations submitted by trust and accompanied by a penalty of perjury statement executed by an plr-117475-16 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 a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling 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 lewis k brickates branch chief branch income_tax accounting


tcmemo_2010_219 united_states tax_court william m perry petitioner v commissioner of internal revenue respondent docket no filed date robert b jackson and william a roberts for petitioner duy p tran for respondent memorandum opinion vasquez judge this case is before the court on petitioner’s motion to restrain collection_of_taxes and to order respondent to refund an overpayment pursuant to rule unless otherwise indicated all rule references are to the tax_court rules_of_practice and procedure and all section references are to the internal_revenue_code as amended background in a notice_of_deficiency mailed to petitioner on date respondent determined a dollar_figure deficiency in petitioner’ sec_2002 federal_income_tax and additions to tax pursuant to sec_6651 and of dollar_figure and dollar_figure respectively in date respondent applied petitioner’s overpayment of dollar_figure to offset part of the deficiency on date petitioner filed a timely petition in the tax_court to contest the deficiency on date petitioner filed this motion pursuant to rule to enjoin respondent from applying the overpayment to hi sec_2002 deficiency and to order respondent to refund the overpayment we must decide whether respondent violated the restrictions on collection and assessment in sec_6213 when he offset petitioner’s overpayment against the deficiency for discussion petitioner takes the position that sec_6213 prohibits the commissioner from engaging in all collection activities including offsets during the period in which the taxpayer may petition the tax_court ie or days after the notice of on date petitioner timely filed his tax_return showing a dollar_figure overpayment at the time the petition was filed petitioner resided in texas deficiency is mailed or if the taxpayer files a petition until our decision becomes final petitioner argues that the offset violated sec_6213 because it was performed during the day period within which respondent was barred from collecting as a result petitioner maintains that the court must enjoin respondent from making the offset and order him to refund the overpayment respondent objects to petitioner’s motion on the grounds that the offset does not violate sec_6213 because an offset is not an assessment a levy or an in-court collection proceeding sec_6402 expressly authorizes the commissioner to credit an overpayment against any_tax liability of the taxpayer sec_301_6402-1 proced admin regs similarly provides that the commissioner may offset an overpayment against any outstanding liability we need not address respondent’s argument that a liability for purposes of sec_6402 arises when a notice_of_deficiency is issued this court lacks jurisdiction to grant the relief petitioner requests in his motion ie to enjoin the offset and compel respondent to refund the overpayment regardless of the definition of the term liability our authority to enjoin the commissioner’s collection activities and order him to refund amounts collected is limited see sec_6213 discussed infra b b sec_6213 provides in relevant part sec_6213 time for filing petition and restriction on assessment --within days or days if the notice is addressed to a person outside the united_states after the notice_of_deficiency authorized in sec_6212 is mailed not counting saturday sunday or a legal_holiday in the district of columbia as the last day the taxpayer may file a petition with the tax_court for a redetermination of the deficiency n o assessment of a deficiency in respect of any_tax and no levy or proceeding in court for its collection shall be made begun or prosecuted until the notice_of_deficiency has been mailed to the taxpayer nor until the expiration of such 90-day or 150-day period as the case may be nor if a petition has been filed with the tax_court until the decision of the tax_court has become final t he making of such assessment or the beginning of such proceeding or levy during the time such prohibition is in force may be enjoined by the tax_court and a refund may be ordered by the tax_court of any amount collected within the period during which the secretary is prohibited from collecting by levy or through a proceeding in court emphasis added though sec_6213 does not specifically prohibit offsets petitioner argues that the underlying fundamental principle of the statute is that the commissioner during the period in which the statute’s restriction is in effect is prohibited from collecting by any means including an offset a deficiency that a taxpayer may dispute in the tax_court a plain reading of the statute however does not support petitioner’s argument sec_6213 limits the commissioner’s authority with respect to premature assessments levies and in-court collection proceedings none of which occurred here the parties agree that respondent did not assess the deficiency furthermore an offset under sec_6402 is distinguishable from and does not constitute a levy see eg 908_f2d_18 5th cir the supreme court has held that a levy is a means by which the internal_revenue_service may acquire possession of a taxpayer’s property a ‘set-off’ on the other hand is the application of funds already in the government’s possession against a taxpayer’s outstanding tax_liability 124_tc_296 a levy is distinguishable from an offset affd 451_f3d_8 1st cir bullock v commissioner tcmemo_2003_5 an offset under sec_6402 is distinguishable from and does not constitute a levy action trent v commissioner tcmemo_2002_285 a levy must be distinguished from an offset of an overpayment or refundable_credit the commissioner may engage in nonlevy collection actions such as offsetting overpayments from other tax years after the requesting spouse files for relief finally an offset which is an administrative bookkeeping operation of applying a credit from one year against a deficiency in another year is not a proceeding in court for the collection of a deficiency see fulgoni v united_states cl_ct the the in-court collection proceedings that sec_6213 refers to include those brought by the u s government in the district courts pursuant to sec_7401 and sec_7403 the district courts of the united_states have jurisdiction over such tax collection suits see u s c secs see also sec_7402 administrative offset was a simple bookkeeping operation of applying a credit for against a debt for on the basis of the foregoing respondent did not violate sec_6213 accordingly we will deny petitioner’s motion in reaching our holdings we have considered all arguments made and to the extent not mentioned we conclude that they are moot irrelevant or without merit to reflect the foregoing an appropriate order will be entered


internal_revenue_service number release date index nos cc ita plr-113390-01 attn ein dear date this is in reference to a form_1128 application to adopt change or retain a tax_year submitted on behalf of the above- named taxpayer requesting permission to change its accounting_period for federal_income_tax purposes from a taxable_year ending to a taxable_year ending effective the taxpayer has requested that the form_1128 be considered timely filed under the authority contained in sec_301_9100-3 of the procedure and administration regulations the information furnished indicates that due to an error or misunderstanding the form_1128 was not timely filed sec_1_442-1 of the income_tax regulations provides that in order to secure the commissioner's consent to a change in accounting_period the taxpayer must file an application on form_1128 with the commissioner on or before the 15th day of the second calendar month following the close of the short_period section of revproc_2000_11 2000_3_irb_312 states in part that a form_1128 filed pursuant to this revenue_procedure will be considered timely filed for purposes of sec_1_442-1 b if and only if it is filed on or before the time including extensions for filing the return for the short_period required by such change sec_301_9100-3 of the regulations provides that requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 automatic extensions such as the instant case must be made under the rules of sec_301_9100-3 requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government based on the facts and information submitted and the representations made it is held that the taxpayer has acted plr-113390-01 reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government accordingly the requirements of the regulations for the granting of relief have been satisfied in this case and taxpayer’s late filed form_1128 requesting permission to change to a tax_year ending effective is considered timely filed the ruling contained in this letter is based upon facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for a ruling verification of the factual information representations and other data may be required as part of an examination process this ruling addresses the granting of sec_301_9100-3 relief only no opinion is expressed regarding the tax treatment of the instant transaction under the provisions of any other sections of the code or regulations that may be applicable thereto or regarding the tax treatment of any conditions existing at the time of or effects resulting from the instant transaction specifically no opinion is expressed as to whether the taxpayer is permitted under the code and applicable regulations to change to the tax_year requested in the subject form_1128 a copy of this letter_ruling and taxpayer's form_1128 are being forwarded to the service_center where the taxpayer files its federal_income_tax returns with instructions that the form_1128 be considered timely filed and processed in accordance with established procedures under revproc_2000_11 in accordance with the provisions of a power_of_attorney currently on file we are sending copies of this letter_ruling to the taxpayer's authorized representatives this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent sincerely yours associate chief_counsel income_tax and accounting s heather maloy heather maloy associate chief_counsel enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number -------------- --------------------------------- ------------------------------------------ ----------------------------------- ------------------------ -------------------------- - department of the treasury washington dc person to contact ----------------------- id no -------------- telephone number --------------------- refer reply to cc psi b02 - plr-151099-03 date date legend partnership ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------- ein ---------------- ------------------------------------------------------------------------------- ein ---------------- ------------------------------------------------------------------------------------------ ------------------------------ ----------------------------- ein ---------------- ------------------------------------------- ein ---------------- -------------------------------------------- ein ---------------- ------------------------------------------ ein ---------------- -------------------------------- ein ------------------- ------------------------------------------- ein ---------------- ------------------------------ ein ------------------- ----------------------------------- ein ---------------- ----------------------------- a b c d e f g h i j k ein ------------------- ----------------------------- ein ---------------- ------------------------------------------------ ein ---------------- -------------- ------------------------------------------------------------------------------------------ ---------- ------- ------- ------- -------------------------- ------------------ ------------------------- -------------------------- ------------------ ---------------------- ------ --------- --------- --------------------- ------------------- ------------------- -------------------- ------------- ------------- ---------- ----------- plr-151099-03 l m officer project year year year date date date date date date u v w dollar_figurew dollar_figurex dollar_figurey dollar_figurez state x state y state z country x dear ------------ plr-151099-03 this responds to a letter dated date together with subsequent correspondence submitted on behalf of partnership by partnership’s authorized representative requesting a ruling that partnership will not recognize any discharge_of_indebtedness income under sec_61 of the internal_revenue_code as a result of the following transaction the information submitted states as follows partnership was formed under the laws of state x under a general_partnership agreement effective in year partnership was created to construct and operate project on date a a state y corporation withdrew from partnership on date b a state y corporation withdrew from partnership in year as part of a consolidated_return a claimed a sec_165 loss with respect to its investment in partnership in year as part of a consolidated_return b claimed a sec_165 loss with respect to its investment in partnership these sec_165 losses were reported in closed years more than ten years prior to this ruling_request and the validity of the losses is not considered as part of this request on date b was dissolved and liquidated pursuant to which its entire right title and interest held in partnership in and under the partnership_agreement was transferred to c a state y corporation in a transaction to which sec_332 and sec_337 applied pursuant to sec_4 of the partnership_agreement withdrawn partners shall not be entitled to any return of their contributions to the capital of the partnership except that a partner shall be entitled to receive after project has become operational and at a time when partnership determines that payment may be made without undue_hardship to the partnership a an amount equal to its adjusted capital_account as adjusted under sec_4 on the date of the withdrawal and b return on such amount from the date of withdrawal to the date of payment calculated at a u rate the withdrawn partner obligations the capital_account balance of a withdrawing partner shall be recorded as a contingent_liability of the partnership and not as a partner’s capital_account from and after the date of withdrawal this right of reimbursement shall be subordinate to the rights of any creditor of partnership as of date partnership had withdrawn partner obligations totaling dollar_figurew as of date a and c as successor to b had contingent rights to receive dollar_figurex and dollar_figurey as payment of their share of the withdrawn partner obligations partnership did not issue a promissory note or any other evidence_of_indebtedness to a b or c as successor to b partnership has not paid any amount of the withdrawn partner obligations claimed a deduction for any amount of the withdrawn partner obligations or claimed that the obligations created or increased the basis of any of the partnership’s assets including cash neither a b nor c have claimed a deduction for any amount of the withdrawn partner obligations at no time have a b c d and e included in their bases of their partnership interests any amount of the withdrawn partnership obligations moreover project has never become operational plr-151099-03 officer vice president taxation of e the tax_matters_partner represents that as the withdrawn partner obligations continue to increase based on the u rate it becomes more improbable that the economics of the project would ever justify payment of the withdrawn partner obligations moreover it is extremely unlikely that a partner would make additional capital contributions or that a third party would lend money to the partnership to pay the withdrawn partner obligations the current partners of partnership are d a state y corporation with a v partnership_interest and e a state z corporation with a w partnership_interest d is a wholly-owned subsidiary of f a state y corporation which is in turn a wholly-owned subsidiary of g a country x corporation prior to date g had two shareholders h and i each a country x corporation h is now a wholly-owned subsidiary of j a country x corporation on date a purchase and sale agreement was entered into between a c and i the sellers and h k a country x corporation l a state y corporation and m a state y corporation the purchasers l and m are wholly-owned subsidiaries of h pursuant to the purchase and sale agreement l and m respectively agreed to acquire a’s and c’s as successor to b respective withdrawn partner obligations for dollar_figurez a nominal amount each h and k agreed to purchase certain assets of i including i’s interest in g after the purchase of the withdrawn partner obligations l will be entitled to receive any and all sums of money that may become due to a under sec_4 of the partnership_agreement and m will be entitled to receive any and all sums of money that may become due to c as successor to b under sec_4 of the partnership_agreement if sec_108 applied l and m would bear a relationship to the partnership specified in sec_267 or sec_707 sec_61 provides that gross_income means all income from whatever source derived including but not limited to income from the discharge_of_indebtedness based on the facts and the representations submitted the withdrawn partner obligations are in the nature of contingent equity interests and therefore such obligations are not indebtedness subject_to sec_61 accordingly the sale of the withdrawn partner obligations by the sellers for dollar_figurez a nominal amount to the purchasers will not give rise to discharge_of_indebtedness income federal tax consequences of the facts described above under any other provisions of the code no opinion is expressed as to any of the values ascribed to the exchanges subject_to the purchase and sale agreement including but not limited to the value of the withdrawn partner obligations moreover no opinion is expressed regarding any except as specifically ruled upon above no opinion is expressed concerning the this ruling is directed only to the taxpayer who requested it sec_6110 plr-151099-03 tax consequences relating to withdrawn partner obligations of withdrawn partners other than a and c as successor to b provides that it may not be used or cited as precedent being sent to partnership’s authorized representatives pursuant to a power_of_attorney on file with this office a copy of this letter is sincerely yours j thomas hines chief branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes ------------------------------ ------------------------------------------------------- ------------------------------------------ --------------------------------------- -------------------------------------- ------------------------------------ -------------------------------------------------------- ----------------------------------------------- ------------------------------------------- ------------------------------------------------------------------------------ --------------------------------- ------------------------------------- -----------------------------------


department of the treasury internal_revenue_service washington d c contact person identification_number contact number employer_identification_number form required to be filed tax years tax exempt ando government entities division release number release date date date uil -601 - dear this is our final_determination that you do not qualify for exemption from federal_income_tax under internal_revenue_code sec_501 as an organization described in code sec_501 we made this determination for the following reason s you are not operated exclusively for the promotion of social welfare within the meaning of sec_501 and the regulations thereunder first we have concluded based on all the facts and circumstances that your voter registration activities do not further social welfare purposes because they are conducted in a biased manner that favors one or more candidates for public_office second you have not established that your voter education activities are conducted to further a social welfare purpose third you will endorse candidates which does not promote social welfare purposes finally based on our review of the additional information you submitted in your protest we still believe you are not operated exclusively for the promotion of social welfare within the meaning of sec_501 and the regulations thereunder you ‘did not provide any additional information subsequent to the conference held on date and did not request review by the office of appeals you must file federal_income_tax returns on the form and for the years listed above within days of this letter unless you request an extension of time to file file the returns in accordance with their instructions and do not send them to this office failure_to_file the returns timely may result in a penalty we will make this letter and our proposed adverse determination_letter available for public inspection under code sec_6110 after deleting certain identifying information please read the enclosed notice notice of intention to disclose and review the two attached letters that show our proposed deletions instructions in notice if you agree with our deletions you do not need to take any further action if you disagree with our proposed deletions follow the if you have any questions about this letter please contact the person whose name and telephone number are shown in the heading of this letter federal_income_tax status and responsibilities please contact irs customer service pincite-829-1040 or the irs customer service number for businesses the irs customer service number for people with hearing impairments is if you have any questions about your sincerely matthew a weir director exempt_organizations rulings and agreements enclosure notice redacted proposed adverse determination_letter redacted final adverse determination_letter department of the treasury internal_revenue_service washington d c contact person identification_number contact number fax number employer_identification_number tax_exempt_and_government_entities_division date date a n u w w h h s i z i r s i s we have considered your application_for recognition of exemption from federal_income_tax under internal_revenue_code i r c sec_501 based on the information provided we have concluded that you do not qualify for exemption under sec_501 the basis for our conclusion is set forth below facts you are a corporation formed on date in state your articles of association provide that you are primarily operated for the following purposes a b c to coordinate and promote m issues policies initiatives and referenda to pursue electoral reform that n and for all other purposes permitted under sec_501 of the internal_revenue_code_of_1986 or the corresponding provision of any future united_states internal revenue law and the state revised nonprofit corporation act your form_1024 attachment activities and operational information provides that your exempt_purpose is to promote the public welfare by supporting m causes through lobbying for and coordinating efforts to support legislation initiatives referenda and pursing reforms to n and increase electoral participation you further provide that you are created primarily to coordinate the efforts of a number of affiliated organizations which are other non-partisan m- oriented non-profits affiliates your affiliates are not your members but are affiliated with you in practice by virtue of similar purposes and representation on your board_of directors fora dollar_figurex1 donation an affiliate is entitled to one seat on your board for a dollar_figurex2 donation an affiliate is entitled to two seats on your board you currently have x3 affiliates that have committed to annual donations sufficient to entitle them to representation on your board most of these affiliates are not recognized as exempt under sec_501 as organizations described in sec_501 or sec_501 you will engage in the following specific activities e voter registration you state that your voter registration activities will be non-partisan but will be focused on geographic areas generally more supportive of m causes and unregistered voters on the membership lists of your affiliates you may work directly to register voters but the bulk of your voter registration efforts will involve research such as identifying unregistered members of your affiliates you indicate that affiliates will do the actual registration work you estimate that this activity will comprise of your time to voter registration of members of affiliates and to specific geographic areas e voter education you will work to educate voters-both the members of your affiliates and the general public-regarding important m issues you will research issues important to your affiliates and provide the organizations with information and insight regarding the positions of public officials on those issues as well as potential legislation affecting those issues you may assist your affiliates with funding the production of flyers or other written materials for dissemination to their members or the general_public you will conduct research to identify geographic areas likely to be significantly affected by various issues and will provide this information to your affiliates to help them in targeting their education efforts you state that this activity will comprise of your time e endorsement of candidates during election seasons you will endorse candidates to your affiliates you state that these endorsements will be non-partisan in nature and that you will limit your endorsements to races you have through research identified to be key for m causes and you anticipate that your endorsements will cross party lines you anticipate that of your resources will be directed toward identifying and endorsing specific candidates law sec_501 provides for the exemption from federal_income_tax of organizations not organized for profit but operated exclusively for the promotion of social welfare sec_1_501_c_4_-1 provides that an organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community sec_1_501_c_4_-1 provides that the promotion of social welfare does not include direct or indirect participation in political campaigns on behalf of or in opposition to any candidate for public_office sec_1_501_c_4_-1 provides that an organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community to qualify as an exempt social_welfare_organization the activities of the organization must be those that benefit a community rather than merely benefit the organization's membership or other select group of individuals or organizations in revrul_67_71 1967_1_cb_125 the service held that a nonprofit organization created to improve a public educational system was not exempt from federal_income_tax under sec_501 when it campaigned on behalf of candidates for election to the school board a candidate for an elected position on a school board is a candidate for public_office furthermore the organization's activity in evaluating the qualifications of all potential candidates and then selecting and supporting a particular slate constituted participation in a political campaign on behalf of particular candidates even though its process of selection may have been completely objective and unbiased and was intended primarily to educate and inform the public about the candidates revrul_68_45 1968_1_cb_259 states that a ll facts and circumstances are taken into account in determining an organization's primary activity for purposes of determining whether an organization primarily engages in activities which promote in some way the common good and general welfare of the people of the community revrul_74_361 1974_2_cb_159 provides that whether an organization is primarily engaged in promoting social welfare is a facts and circumstances determination relevant factors include the manner in which the organization's activities are conducted resources used in conducting such activities the time devoted to activities by volunteers as well as employees the purposes furthered by various activities and the amount of funds received from and devoted to particular activities in revrul_76_456 1976_2_cb_151 the service approved exemption under sec_501 for an organization formed to elevate the standards of ethics and morality in the conduct of political campaigns the organization collected collated and disseminated on a non-partisan basis information concerning general campaign practices through the press radio television mail and public speeches it qualified as an educational_organization under sec_501 because it instructed and encouraged the public about political campaigns a subject useful to the individual and beneficial to the community revrul_81_95 1981_1_cb_332 considered the effect of engaging in political campaign activities on a sec_501 organization the ruling refers to five revenue rulings including revrul_78_248 for other examples of what constitutes participation or intervention in political campaigns each of those rulings involves a sec_501 organization the ruling concludes that an organization may carry on lawful political activities and remain exempt under sec_501 of the code as long as it is primarily engaged in activities that promote social welfare the corollary to this is that if an organization’s primary activities do not promote social welfare but are direct or indirect political intervention the organization is not exempt under sec_501 the key is to determine the character of the organization's primary activities by looking at all of the facts and circumstances revrul_2007_41 r b 2007_1_cb_1421 analyze sec_21 situations to determine whether sec_501 organizations described in each has directly or indirectly participated in a political campaign on behalf of or in opposition to a candidate for public_office situation of revrul_2007_41 supra describes an organization that promotes community involvement the organization sets up a booth at the state fair where citizens can register to vote no reference is made to any candidates or political_party and there are no other materials available at the booth other than the official voter registration form this organization is not engaged in political campaign intervention situation of revrul_2007_41 supra describes an organization that educates the public on environmental issues candidate g is running for the state legislature and an important element of her platform is challenging the environmental policies of the incumbent shortly before the election the organization sets up a telephone bank to cail registered voters in the district in which candidate g is seeking election the organization only urges a voter to vote if he she agrees with one candidate’s position the organization is engaged in political campaign intervention 858_f2d_876 2d cir rev'd 89_tc_599 cert_denied 490_us_1030 held that association did not qualify as a tax exempt and educational_organization the association engaged in rating candidates for both appointive and elective judgeships at the municipal state and federal level the association argued that it evaluated judicial candidates on a non-partisan basis the court stated that the statute and pertinent regulations thereunder are not limited in their application to the partisan campaigns of candidates representing recognized parties the court concluded that exemption is lost candidate for public_office ’ the court held that the associations practice of rating candidates for elective judicial offices constituted intervention or participation in political campaigns on behalf of candidates for public_office that precluded association from qualifying under sec_501 by participation in any political campaign on behalf of any analysis based on our analysis of the information you submitted with your application we have determined that you are not operated exclusively for the promotion of social welfare within the meaning of sec_501 and the regulations thereunder you have not established that your primary activities further social welfare purposes voter registration activities you estimate that fifty percent of your activities is voter registration encouraging people to participate in the electoral process through voter registration and get-out-the-vote drives conducted in a non-partisan manner are permissible under sec_501 however if voter registration activities are conducted in a biased manner that favors or opposes one or more candidates the activities will be considered political campaign intervention see revrul_2007_41 supra this is determined by analyzing all the facts and circumstances id you are more similar to the organization in situation of revrul_2007_41 your voter registration drives will be focused on geographic areas generally more supportive of m causes and unregistered voters on the membership lists of your affiliates you have described your affiliates as m-oriented like the organization in situation which only urged voters to vote if they agreed with the position of a particular candidate on a certain issue you will specifically target your voter registration efforts towards individuals that support m causes you state the bulk of your voter registration efforts will involve researching specific geographic locations to conduct voter registration activities that favor your political positions unlike the organization in situation which operated a registration booth that made no reference to political parties or candidates you are purposely seeking to conduct voter registration activities in locations that are more supportive of m causes in addition you will also target your voter registration efforts by assisting your affiliates who are m-oriented in registering members to vote accordingly your voter registration activities are conducted in a biased manner and will be considered political campaign intervention see revrul_2007_41 supra voter education you anticipate that approximately of your activities will be voter education activities you state that you will work to educate voters-both the members of your affiliates and the general public-regarding important m issues you indicate that these activities will consist of researching issues important to your affiliates and providing the organizations with information and insight regarding the positions of public officials on those issues as well as potential legislation affecting those issues assisting your affiliates with funding the production of flyers or other written materials for dissemination to their members or the general_public conducting research to identify geographic areas likely to be significantly affected by various issues and providing this information to your affiliates to help them in targeting their education efforts you did not provide any information that indicates that your research or educational materials if any are disseminated to the public in any way unlike the educational_organization described in revrul_76_456 supra which collected collated and disseminated on a non-partisan basis information concerning general campaign practices through the press radio television mail and public speeches you have not provided any information that indicates that you are doing anything other than providing research and other services to your affiliates since the bulk of these activities are conducted on behalf of and in support of your affiliates all private non-profit groups of a m-orientation and who mostly are not sec_501 or sec_501 organizations you have not established that these activities are conducted to further a social welfare purpose candidate endorsements during election seasons you will endorse candidates who promote and support m causes you state that of your activities will be devoted to this activity sec_1_501_c_4_-1 provides that the promotion of social welfare does not include direct or indirect participation in political campaigns on behalf of or in opposition to any candidate for public_office although you state that such endorsements will be non-partisan because such endorsements may cross party lines the endorsement of candidates for political office is considered direct participation in a political campaign regardless of which party the candidate is affiliated with therefore these activities do not promote social welfare within the meaning of sec_501 see revrul_67_71 supra see also the association of the bar of the city of new york v commissioner f 2d pincite conclusion in summary you have not established that you are primarily engaged in activities that promote social welfare purposes accordingly you do not qualify for exemption as an organization described in sec_501 and you must file federal_income_tax returns you have the right to file a protest if you believe this determination is incorrect to protest you must submit a statement of your views and fully explain your reasoning you must submit the statement signed by one of your officers within days from the date of this letter we will consider your statement and decide if the information affects our determination your protest statement should be accompanied by the following declaration under penalties of perjury declare that have examined this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all the relevant facts and such facts are true correct and complete you also have a right to request a conference to discuss your protest this request should be made when you file your protest statement an attorney certified_public_accountant or an individual enrolled to practice before the internal_revenue_service may represent you want representation during the conference procedures you must file a proper power_of_attorney form_2848 power_of_attorney and declaration of representative if you have not already done so for more information about representation see publication practice_before_the_irs and power_of_attorney all forms and publications mentioned in this letter can be found at www irs gov forms and publications if you if you do not intend to protest this determination you do not need to take any further action if we do not hear from you within days we will issue a final adverse determination_letter that letter will provide information about filing tax returns and other matters please send your protest statement form_2848 and any supporting documents to this address internal_revenue_service se t eo ra if you may also fax your statement using the fax number shown in the heading of this letter you fax your statement please call the person identified in the heading of this letter to confirm that he or she received your fax if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely karen schiller acting director rulings and agreements


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-108924-15 date date legend x --------------------------------------------------------------------------------- ---------------------------------------------------------------------------- trust ---------------------------------------------------------------------------------- state --------- year ------- a ------------------------------------------ b ---------------------- c -------------------- d ------------------------- e --------------------------- f ---------------------- date1 ---------------------- date2 -------------------- date3 ------------------- date4 -------------------------- plr-108924-15 date5 -------------------------- n1 ----- 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 code the information submitted states that x was incorporated under the laws of state in year1 x elected to be an s_corporation effective date1 under a_trust agreement dated date2 a established trust as a revocable_trust for her benefit and at her death for the benefit of b c d e and f on date3 trust acquired n1 shares of stock of x trust became irrevocable upon a’s death on date4 x represents that each of b c d e and f the beneficiaries is an individual and a citizen_of_the_united_states x further represents that pursuant to the trust agreement of trust the beneficiaries are properly treated as each owning substantially separate and independent shares of trust within the meaning of sec_663 and sec_1361 of the code x also represents that each of the separate shares of trust for the beneficiaries meets the requirements as a qualified_subchapter_s_trust qsst except that no qsst elections had been timely filed on behalf of the separate shares of trust for each of the beneficiaries by date5 the due_date for the election taking into account both sec_1361 and sec_1361 under sec_1361 x represents that x and x’s shareholders have filed tax returns consistent with x being an s_corporation since date5 x further represents that the circumstances resulting in the termination of x’s s_corporation_election were inadvertent and were not motivated by tax_avoidance or retroactive tax planning x and each person who was or is a shareholder of x at any time since date5 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 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 plr-108924-15 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 date5 due to the failure of the beneficiaries to properly and timely file qsst elections for their separate shares of trust we conclude that the termination was 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 date5 and thereafter unless x’s s_corporation_election otherwise terminated under sec_1362 this ruling is contingent upon the beneficiaries of the separate shares of trust filing qsst elections for their separate shares of trust with an effective date of date5 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 trust and or its separate shares qualify as plr-108924-15 qssts finally no opinion is expressed or implied regarding whether the separate shares of trust are substantially separate and independent shares of a_trust within the meaning of sec_663 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 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 summary opinion united_states tax_court samie m and nora l finch petitioners v commissioner of internal revenue respondent docket no 20308-04s filed date samie m and nora l finch pro sese william j gregg for respondent goldberg special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure respondent determined a deficiency in petitioners’ federal_income_tax of dollar_figure for the taxable_year after concessions the issues for decision are whether petitioners are entitled to miscellaneous_itemized_deductions of dollar_figure as claimed on their federal_income_tax return whether petitioners are entitled to a charitable_contribution_deduction of dollar_figure for taxable_year and whether petitioners are entitled to a deduction for medical and dental expenses of dollar_figure for taxable_year background some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference petitioners resided in moorefield west virginia on the date the petition was filed in this case 1petitioners claimed deductions for two dependency_exemptions and schedule e expenses of dollar_figure on their federal_income_tax return respondent in the notice_of_deficiency disallowed the deductions for the two dependency_exemptions and the schedule e expenses however at trial respondent conceded that petitioners are entitled to deduct the two dependency_exemptions and the schedule e expenses 2this amount has been calculated by petitioners taking into account the 2-percent floor imposed by sec_67 the amount claimed before the limitation was dollar_figure 3this amount has been calculated by petitioners taking into consideration the 5-percent floor imposed by sec_213 the amount reported before the limitation was dollar_figure during taxable_year petitioners lived in moorefield west virginia petitioners chose to live in moorefield west virginia for personal reasons during the year in issue samie m finch petitioner was employed as a nonunion ironworker by cianbro cianbro’s headquarters was in pittsfield maine cianbro had a regional_office in baltimore maryland and it was out of this office that petitioner was based as an employee of cianbro petitioner traveled to different job sites within his region those job sites included annapolis maryland union bridge maryland arlington virginia and baltimore maryland petitioner drove from his residence in moorefield west virginia to the job site and returned home each night according to petitioner he made the following round trips during taxable_year to baltimore maryland to union bridge maryland to the pentagon or arlington virginia and to the bay bridge in annapolis maryland the monthly mileage figures for these trips together with the cost of meals by month were reported on a summary sheet also attached to the summary sheet were mapquest directions to each job site dated date also during the year in issue petitioner was a pastor in the first church of god in christ located in piedmont west virginia petitioner did not receive compensation_for his services as a pastor during taxable_year during taxable_year petitioner nora l finch was retired and received social_security_benefits petitioners filed a joint federal_income_tax return for which included a schedule a itemized_deductions a schedule b interest and ordinary dividends and a schedule e supplemental income and loss on their jointly filed tax_return petitioners reported adjusted_gross_income of dollar_figure and claimed schedule a itemized_deductions of dollar_figure on their schedule a petitioners claimed the following deductions in pertinent part itemized_deductions amount line line line line line line line line line line medical and dental expenses dollar_figure net medical deduction state_and_local_income_taxes big_number other taxe sec_262 total taxes big_number gifts by cash or check big_number total gifts to charity big_number unreimbursed employee business_expenses big_number big_number net limited miscellaneous deduction total itemized_deductions big_number on date respondent issued petitioners a notice_of_deficiency for taxable_year respondent disallowed dollar_figure of petitioners’ claimed dollar_figure schedule a itemized_deductions for taxable_year the dollar_figure disallowed by 4it appears from adding together the disallowed items that the total amount disallowed should be dollar_figure rounded to the nearest dollar respondent consists of a disallowed net medical deduction of dollar_figure disallowed total gifts to charity of dollar_figure and disallowed net limited miscellaneous_itemized_deductions of dollar_figure discussion in general the commissioner’s determination in a notice_of_deficiency is presumed correct 290_us_111 in pertinent part rule a provides the general_rule that the burden_of_proof shall be upon the petitioner in certain circumstances however if the taxpayer introduces credible_evidence with respect to any factual issue relevant to ascertaining the proper tax_liability sec_7491 places the burden_of_proof on the commissioner sec_7491 rule a credible_evidence is ‘the quality of evidence which after critical analysis a court would find sufficient to base a decision on the issue if no contrary evidence were submitted’ 122_tc_143 quoting 116_tc_438 sec_7491 applies only if the taxpayer complies with substantiation requirements maintains all required records and cooperates with the commissioner for witnesses 5we interpret the quoted language as requiring the taxpayer’s evidence pertaining to any factual issue to be evidence the court would find sufficient upon which to base a decision on the issue in favor of the taxpayer see bernardo v commissioner tcmemo_2004_199 information documents meetings and interviews sec_7491 although neither party alleges the applicability of sec_7491 we conclude that the burden_of_proof has not shifted to respondent with respect to any of the issues in the present case sec_6001 and the regulations promulgated thereunder require taxpayers to maintain records sufficient to permit verification of income and expenses as a general_rule if the trial record provides sufficient evidence that the taxpayer has incurred a deductible expense but the taxpayer is unable to adequately substantiate the precise amount of the deduction to which he or she is otherwise entitled the court may estimate the amount of the deductible expense bearing heavily against the taxpayer whose inexactitude in substantiating the amount of the expense is of his own making and allow the deduction to that extent 39_f2d_540 2d cir however in order for the court to estimate the amount of an expense the court must have some basis upon which an estimate may be made 85_tc_731 without such a basis any allowance would amount to unguided largesse 245_f2d_559 5th cir moreover deductions are a matter of legislative grace and are allowed only as specifically provided by statute 503_us_79 292_us_435 with these well-established propositions in mind we must determine whether petitioners have satisfied their burden of proving that they are entitled to the claimed itemized_deductions mentioned above miscellaneous_itemized_deductions as previously stated on their schedule a for taxable_year petitioners claimed miscellaneous_itemized_deductions of dollar_figure for job expenses_incurred during taxable_year the deduction was claimed for expenses_incurred relating to petitioner’s travel between his residence in moorefield west virginia and construction work sites in baltimore maryland arlington virginia union bridge maryland and annapolis maryland respondent disallowed the deductions in full respondent determined that petitioners did not substantiate the claimed expenses or if substantiated petitioners did not prove that the expenses were not reimbursed by petitioner’s employer nor did petitioners prove that moorefield west virginia was petitioner’s tax_home sec_162 allows a deduction for ordinary and necessary business_expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business for an expense to be ordinary the transaction that gives rise to the expense must be of a common or frequent occurrence in the type of business involved 308_us_488 to be necessary an expense must be appropriate and helpful to the taxpayer’s business welch v helvering supra pincite the performance of services as an employee constitutes a trade_or_business see sec_1_162-17 income_tax regs the employee must show the relationship between the expenditures and the employment see evans v commissioner tcmemo_1974_267 affd 557_f2d_1095 5th cir the taxpayer bears the burden of substantiation 65_tc_87 affd per curiam 540_f2d_821 5th cir the determination of whether an expenditure satisfies the requirements of sec_162 is a question of fact 112_tc_183 in the case of travel_expenses entertainment_expenses and expenses paid_or_incurred with respect to listed_property eg passenger automobiles sec_274 overrides the cohan doctrine and expenses are deductible only if the taxpayer meets the section’s stringent substantiation requirements sec_274 sec_280f 50_tc_823 affd 412_f2d_201 2d cir sec_1_274-5t temporary income_tax regs fed reg date sec_274 specifically provides sec_274 substantiation required --no deduction or credit shall be allowed-- under sec_162 or sec_212 for any traveling expense including meals_and_lodging while away from home for any item with respect to an activity which is of a type generally considered to constitute entertainment amusement or recreation or with respect to a facility used in connection with such an activity for any expense for gifts or with respect to any listed_property as defined in sec_280f unless the taxpayer substantiates by adequate_records or by sufficient evidence corroborating the taxpayer’s own statement a the amount of such expense or other item b the time and place of the travel entertainment amusement recreation or use of the facility or property or the date and description of the gift c the business_purpose of the expense or other item and d the business relationship to the taxpayer of persons entertained using the facility or property or receiving the gift this section contemplates that no deduction or credit shall be allowed a taxpayer on the basis of such approximations or unsupported testimony of the taxpayer sec_1_274-5t temporary income_tax regs supra in order to substantiate a deduction by means of adequate_records a taxpayer must maintain a diary log statement of expenses trip sheet or similar record and documentary_evidence which in combination are sufficient to establish each element of each expense or use sec_1_274-5t temporary income_tax regs fed reg date a contemporaneous log is not required but corroborative evidence to support a taxpayer’s record of the elements of expenditure or use must have a high degree of probative value to elevate such statement and evidence to the level of credibility of a contemporaneous record sec_1_274-5t temporary income_tax regs supra thus no deduction for expenses under sec_274 may be allowed on the basis of any approximation or the unsupported testimony of the taxpayer see eg murata v commissioner tcmemo_1996_321 golden v commissioner tcmemo_1993_602 petitioner did not keep a handwritten log of his travel and meals in order to substantiate his claimed business travel for petitioner offered into evidence the typed summary of his travel and an information sheet from his employer showing trips to job sites the typed summary as stated before shows the number of round trips made from petitioner’s home to the job sites the round-trip mileage and the meal expenses paid there are no receipts in the record indicating meal expenses in addition the court cannot determine what the numbers on the information sheet from petitioner’s employer indicate further petitioner did not explain the information sheet nor did he testify as to its contents petitioner received dollar_figure as reimbursement from his employer for every day he traveled to a nongovernment work site such as baltimore maryland or union bridge maryland the dollar_figure was to reimburse him for gasoline expenses and meal expenses paid during work-related travel also petitioner’s employer reimbursed him cents per mile for traveling expenses in addition to the dollar_figure per day we believe petitioner did travel to the job sites during however we conclude that petitioner has not satisfied the substantiation requirements of sec_274 as to the mileage and meal expenses although for the sake of argument if we conclude that petitioner has satisfied the substantiation requirements of sec_274 as to the mileage and meal expenses petitioner has not shown that he was not reimbursed for all of his traveling expenses ie mileage and meals by his employer further even if petitioner could substantiate the travel_expenses in issue and that such amounts were not reimbursed by his employer upon the basis of the record we conclude that baltimore maryland and not moorefield west virginia was petitioner’s tax_home and therefore he would be entitled to reimbursement only for travel while he was away from his employer’s regional_office in baltimore maryland on work assignment the mileage for these trips is not in the record and thus we could not make a cohan determination charitable_contribution as previously stated petitioners on their schedule a filed with their federal_income_tax return for taxable_year claimed a deduction for contributions to charity by cash or check of dollar_figure respondent determined that petitioners did not adequately substantiate any of their claimed charitable_contribution_deduction a deduction generally is allowed for any charitable_contribution made within the taxable_year sec_170 as previously stated taxpayers generally must keep records sufficient to establish the amounts of the items required to be shown on their federal_income_tax return sec_6001 sec_1_6001-1 e income_tax regs in the event that a taxpayer establishes that a deductible expense has been paid but is unable to substantiate the precise amount we generally may estimate the amount of the deductible expense bearing heavily against the taxpayer whose inexactitude in substantiating the amount of the expense is of his own making cohan v commissioner f 2d pincite we cannot estimate a deductible expense however unless the taxpayer presents evidence sufficient to provide some basis upon which an estimate may be made 85_tc_731 deductions for charitable_contributions are subject_to further substantiation requirements sec_170 generally such deductions must be substantiated with reliable written records reflecting the name of the donee the date of the contribution and either the amount of any cash contribution or a description of the property contributed sec_1_170a-13 and b income_tax regs deductions for contributions of dollar_figure or more are disallowed in the absence of a contemporaneous written acknowledgment of the contribution by the donee sec_170 sec_1_170a-13 income_tax regs petitioners provided a typed receipt signed by bishop henderson wheeler acknowledging that petitioners contributed dollar_figure to the first church of god in christ petitioners testified that a total amount of dollar_figure was contributed by them during the taxable_year at sunday worship services in view of the fact that petitioners attended services regularly and that we believe the receipt is credible we find that the receipt is sufficient substantiation of petitioners’ charitable_contribution of dollar_figure however petitioners have not testified as to or substantiated charitable_contributions above that amount thus we conclude that petitioners are entitled to a charitable_contribution_deduction of dollar_figure for the taxable_year medical and dental expenses as previously stated on their schedule a for taxable_year petitioners claimed a deduction for medical and dental expenses_incurred of dollar_figure above the 5-percent floor respondent disallowed the deduction in full respondent determined that petitioners did not prove that the expenses were 6this amount is rounded to the nearest dollar incurred or if incurred that they were paid during taxable_year sec_213 allows as a deduction any expenses that are paid during the taxable_year for the medical_care of the taxpayer his spouse and dependents and that are not_compensated_for_by_insurance_or_otherwise 79_tc_313 the deduction is allowed only to the extent the amount exceeds percent of adjusted_gross_income sec_213 sec_1_213-1 income_tax regs the term medical_care includes amounts paid for the diagnosis cure mitigation treatment or prevention of disease or for the purpose of affecting any structure or function of the body sec_213 estate of smith v commissioner supra pincite- petitioners testified that they paid dollar_figure in medical_expenses during taxable_year giving petitioners the benefit of the doubt we find that petitioners’ testimony substantiates medical_expenses of dollar_figure however as previously stated the deduction for medical_expenses is allowed only to the extent the amount exceeds percent of adjusted_gross_income sec_213 sec_1_213-1 income_tax regs because petitioners reported adjusted_gross_income for taxable_year of dollar_figure dollar_figure does not exceed percent of petitioners’ adjusted_gross_income therefore since petitioners did not testify as to any other medical and dental expenses and they have not offered into evidence any documentation substantiating other medical and dental expenses we conclude that they are not entitled to any medical and dental expense deduction for taxable_year see sec_213 sec_1_213-1 income_tax regs reviewed and adopted as the report of the small_tax_case division decision will be entered under rule


department of the treasury internal_revenue_service washington d c date number info release date cc tege eoeg et1 - genin-160368-02 uilc memorandum for director internal_revenue_service center kansas city mo attn entity control from subject office of division counsel associate chief_counsel tax exempt and government entities cc tege eoeg et1 - genin-160368-02 railroad retirement act tax status in accordance with the coordination procedure established between the service and the railroad retirement board rrb the rrb has provided us with a reconsideration of an opinion dated date that the following business became an employer under the railroad retirement act and the railroad unemployment insurance act effective date instead of date we have reviewed the reconsideration of the opinion issued by the rrb and based upon the information submitted to the rrb we also conclude that became an employer under the railroad_retirement_tax_act effective date please take the appropriate action regarding this business will e mcleod cc


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date number release date conex-110419-11 uil the honorable lamar alexander united_states senator market street suite knoxville tn attention --------------------- dear senator alexander this letter responds to your inquiry dated date on behalf of your constituent - ------------------------ ------------ asked about the one-year limitation on deducting business travel_expenses a taxpayer who is temporarily away from home in pursuit of a trade_or_business may deduct all ordinary and necessary business_expenses the taxpayer pays or incurs while traveling including expenses for meals_and_lodging sec_162 of the internal_revenue_code the code this provision is an exception to the general_rule that taxpayers may not deduct personal living or family_expenses sec_262 of the code in general a taxpayer’s home for tax purposes is the location of the taxpayer’s principal_place_of_business or where the taxpayer normally works if a taxpayer secures employment permanently or for an indefinite period of time in a new location the new location becomes the taxpayer’s tax_home the taxpayer’s expenses of living at the new location are nondeductible personal expenses rather than deductible business_expenses however if a taxpayer secures only temporary employment in a new location the taxpayer does not change tax homes the taxpayer is treated as traveling away from his or her tax_home for business purposes and the taxpayer may deduct expenses for conex-110419-11 meals_and_lodging at the temporary work site as business_expenses under sec_162 of the code therefore if a taxpayer secures employment in a new location the taxpayer must determine whether he or she has changed tax homes as ------------ notes in his letter sec_162 of the code provides that a taxpayer who travels to a single location to work for more than one year is not temporarily away from home and cannot deduct travel_expenses the congress added this one-year_rule to sec_162 of the code in section of the energy policy act of public law number the internal_revenue_service lacks the authority to modify the statutory rule administratively i hope this information is helpful if you have any questions please contact me or ------- --------------------------------------------------------------- at -------------------- sincerely george j blaine associate chief_counsel income_tax accounting


t c memo united_states tax_court diane j sanderlin petitioner v commissioner of internal revenue respondent docket no filed date diane j sanderlin pro_se nhi t luu for respondent memorandum findings_of_fact and opinion cohen judge respondent determined deficiencies and penalties with respect to petitioner’s federal income taxes as follows year deficiency dollar_figure big_number big_number penalty sec_6662 dollar_figure the issues for decision are whether petitioner is entitled to deductions reported on schedules a itemized_deductions attached to her returns and whether she is liable for penalties determined by respondent unless otherwise indicated all section references are to the internal_revenue_code in effect for the years in issue findings_of_fact some of the facts have been stipulated and the stipulated facts are incorporated in our findings by this reference petitioner resided in oregon at the time that she filed her petition during and petitioner was employed as a licensed practical nurse petitioner worked for multiple employers to whom she was referred by employment agencies her income from employment was reported on her tax returns as wages and salaries on her federal_income_tax returns petitioner reported adjusted_gross_income of dollar_figure for dollar_figure for and dollar_figure for on the schedule a attached to each return petitioner claimed job expenses and other miscellaneous deductions totaling dollar_figure for dollar_figure for and dollar_figure for also attached to each return was a form_8283 noncash charitable_contributions in which the description of items allegedly donated was shown as misc household or household misc the dates of acquisition and contribution of the items were omitted and the value of each item was claimed as thrift shop value the thrift shop value claimed was approximately percent percent and percent of the alleged purchase_price for and deductions respectively the statutory_notice_of_deficiency that is the basis of this case disallowed the claimed deductions which remain in dispute as follows deductions unreimbursed employee business_expenses noncash charitable deduction cash charitable deduction medical_expenses dollar_figure big_number big_number big_number dollar_figure big_number big_number big_number dollar_figure big_number -0- -0- petitioner’s returns for the years in issue were prepared by demara guaspari also known as demara lucker a return preparer in clackamas oregon for the preparation of her returns petitioner provided the preparer with only a handwritten summary of deductions and amounts of deductions to be claimed petitioner shredded original receipts and other records of her deductions after entering them on a computer_program quicken she provided neither receipts nor a computer printout to her preparer and she did not produce any receipts or other corroborating documents during the subsequent examination of her returns by the internal_revenue_service during pretrial proceedings in this case or during trial because of petitioner’s lack of cooperation during the audit the examiner issued a summons to compel testimony and production of documents because petitioner failed to appear in response to the summons an action was commenced in federal district_court petitioner did not make a reasonable attempt to reconstruct the expenses claimed on her tax returns for and she refused to secure copies of canceled checks because she did not want to pay the dollar_figure per check fee that would have been charged by her bank opinion the facts found above are sparse because petitioner failed to provide any explanation of the items that she claimed as deductions on her tax returns the findings include however facts occurring during and after the examination of her returns because this case depends entirely on the credibility of petitioner because she did not retain required records did not cooperate with reasonable requests for records and did not introduce credible_evidence with respect to the disputed deductions the burden_of_proof remains with her see sec_7491 512_f2d_882 9th cir affg tcmemo_1972_133 for the reasons set forth below we conclude that her testimony is not reliable and that she is not entitled to any of the deductions in issue petitioner testified that she shredded all original documents reflecting deductible expenditures after making entries on her computer and that the computer was stolen her testimony failed to identify any specific expenses which she was entitled to deduct and she had not made reasonable attempts to reconstruct the missing records she claimed that she was a traveling nurse incurring mileage and nursing items but she did not even suggest that she maintained a log of her mileage or other required records she claimed that she had been following the same format for many years and had not had a problem with her tax reporting before she suggested that the court allow her deductions under the rule_of 39_f2d_540 2d cir the so-called cohan_rule is that when a taxpayer adequately establishes that he or she paid_or_incurred a deductible expense but does not establish the precise amount we may estimate the allowable deduction bearing heavily against the taxpayer whose inexactitude caused the inadequacy of the evidence id estimates are not permitted with respect to vehicle expenses and other types of expenses covered by sec_274 see 50_tc_823 affd 412_f2d_201 2d cir in any event there must be sufficient evidence in the record to provide a basis upon which an estimate may be made and to permit us to conclude that a deductible expense was incurred in at least some amount no such evidence has been presented here petitioner admittedly shredded the original records and the alleged loss of records does not excuse the necessity of production of evidence see eg 71_tc_1120 priestly v commissioner tcmemo_2003_267 affd 125_fedappx_201 9th cir moreover we are not required to accept testimony that is improbable or vague 440_f2d_688 9th cir affg tcmemo_1969_159 petitioner’s claimed deductions against her reported income were so large as to be improbable her destruction of evidence and failure to make a reasonable attempt to identify specific items suggests that her claimed deductions were exaggerated and perhaps fabricated we are certainly not persuaded that the amounts claimed were incurred sec_6662 imposes a 20-percent accuracy-related_penalty on the portion of an underpayment_of_tax attributable to any one of various factors including negligence or disregard of rules or regulations see sec_6662 under sec_7491 respondent bears the burden of production with regard to penalties and must come forward with sufficient evidence indicating that it is appropriate to impose the penalty 116_tc_438 however once respondent has met the burden of production the burden_of_proof remains with the taxpayer including the burden of proving that the penalty is inappropriate because of reasonable_cause or substantial_authority id pincite respondent’s burden of production is met by showing petitioner’s negligence and disregard for rules and regulations through her failure to maintain records to support the deductions claimed as required by sec_6001 petitioner’s lack of compliance justifies the imposition of the sec_6662 penalty in this case to reflect the foregoing decision will be entered for respondent


t c memo united_states tax_court gary a simko petitioner v commissioner of internal revenue respondent docket no filed date gary a simko pro_se donald k rogers for respondent memorandum findings_of_fact and opinion panuthos chief special_trial_judge this case was heard pursuant to the provisions of sec_7443a and rule sec_180 sec_181 and sec_182 respondent determined a deficiency in all section references are to the internal_revenue_code as amended unless otherwise indicated all rule references are to the tax_court rules_of_practice and procedure petitioner's federal_income_tax in the amount of dollar_figure and an accuracy-related_penalty under sec_6662 in the amount of dollar_figure after concessions the only issue for decision is whether amounts received by petitioner in settlement of a lawsuit are excludable from income under sec_104 findings_of_fact some of the facts have been stipulated and they are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference at the time of filing the petition petitioner resided at eaton ohio on date petitioner commenced legal action against his former employer united cable tv of oakland inc united for damages related to the termination of his employment with united on date petitioner's complaint asserted claims of breach of contract negligence and intentional infliction of emotional distress petitioner's complaint further alleged that as a result of united's conduct petitioner suffered loss of employment and employability loss of past and future earnings emotional pain and suffering mental anguish and defamation of character respondent concedes that petitioner is not liable for the accuracy-related_penalty under sec_6662 and if it is determined that the amounts in question constitute taxable_income to petitioner petitioner is entitled to an itemized_deduction in the amount by which petitioner's total legal fees and costs of dollar_figure exceed percent of petitioner's adjusted_gross_income petitioner and united agreed to a nonbinding mediation proceeding held on date prior to the mediation proceeding petitioner submitted a mediation summary which stated in part petitioner was employed by united on a full time permanent basis starting in date the personnel policy handbook which is relevant to this case contains several important passages which confirm that petitioner's employment required good cause for discharge nevertheless united has contested in this litigation the nature of employment claiming that petitioner was an at-will employee and could be fired without just cause after being hired petitioner's employment continued without incident and with good performance in the ensuing months in november of despite assurances of continued job security a great number of people began losing their jobs in each case united had put together stated reasons or allegations supposedly justifying the terminations united's alleged reason for terminating petitioner although united claims not to have needed a reason was that petitioner was guilty of misconduct united alleges that on date petitioner got into the wrong truck to go out to do field work analysis of the losses suffered by petitioner is being performed currently by an expert mr charles monroe and it is expected that he may have a verbal informal and unofficial calculation by the time of mediation concerning the projected losses of petitioner in terms of benefits back pay and front pay the mediation summary does not address the tort type claims raised by petitioner in his complaint and does not discuss any personal injury suffered by petitioner the mediation panel upon evaluation of each party's respective position decided that united should pay petitioner dollar_figure in damages on date petitioner and united agreed to accept the mediation panel's evaluation and entered a stipulation and order for dismissal petitioner signed a settlement statement on date acknowledging his receipt of the settlement proceeds less attorney's_fees and expenses the statement of settlement does not identify or place a value on the specified claims of petitioner opinion as a general_rule the commissioner's determinations are presumed correct and the taxpayer bears the burden of proving that those determinations are erroneous rule a 290_us_111 except as otherwise provided gross_income includes income from all sources sec_61 348_us_426 in this regard statutory exclusions from income must be narrowly construed commissioner v schleier u s __ __ 115_sct_2159 sec_104 excludes from gross_income the amount of any damages received whether by suit or agreement on account of personal injuries or sickness this exclusion is warranted when the underlying cause of action giving rise to the recovery_of the funds in question is based upon tort or tort-type rights and the funds are received on account of personal_injury_or_sickness o'gilvie v united_states u s ___ 117_sct_452 commissioner v schleier u s at ____ s ct pincite 106_tc_441 sec_104 sec_1_104-1 income_tax regs where damages are received pursuant to a settlement agreement the nature of the claim that constitutes the actual basis for settlement controls whether such damages are excludable under sec_104 504_us_229 foster v commissioner tcmemo_1996_276 t he critical question is in lieu of what was the settlement amount_paid 105_tc_396 in determining the answer to this question the most important factor is the intent of the payor 102_tc_116 affd in part and revd in part 70_f3d_34 5th cir while the parties' settlement agreement does not in any manner allocate the proceeds to any particular claim raised by petitioner the settlement reflects the parties' willingness to accede to the conclusions of the mediation panel therefore we find that the mediation panel's evaluation served as the basis of the settlement petitioner's mediation summary furnished to the panel prior to the mediation hearing asserted claims that united breached an employment agreement by terminating petitioner the mediation summary however did not discuss any of the tort- related claims contained in petitioner's original complaint moreover the mediation summary's proposal of damage amounts appears to be based upon petitioner's lost earnings rather than upon any specific personal injury sustained by petitioner the mediation panel's evaluation as well as the settlement in question were based upon the claim that united had breached an employment contract in terminating petitioner resulting in economic damages from loss of benefits and wages therefore petitioner has failed to meet his burden of proving that the settlement was based upon tort or tort-type claims furthermore petitioner has failed to meet his burden of proving that the settlement proceeds were paid on account of personal injuries accordingly we sustain respondent's determination to reflect the foregoing decision will be entered under rule


internal_revenue_service department of the treasury washington dc person to contact telephone number refer reply to plr-109456-00 cc dom p si date date index number number release date legend partnership x d dear this responds to a letter submitted on behalf of partnership requesting that partnership be given an extension of time in which to make an election under sec_754 of the internal_revenue_code facts x a partner in partnership died on d partnership's tax_return for the taxable_year was filed without a sec_754 election partnership represents that it has acted reasonably and in good_faith that granting relief will not prejudice the interests of the government and that it is not using hindsight in making the election law and analysis under sec_754 a partnership may elect to adjust the basis of partnership property where there is a distribution_of_property or a transfer of a partnership_interest the election applies to all distributions of property by the partnership and to all transfers of interests in the partnership during the taxable_year that the election applies and all subsequent taxable years plr-109456-00 sec_1_754-1 of the income_tax regulations provides that an election under sec_754 is made in a written_statement filed with the partnership return for the taxable_year during which the distribution or transfer occurs for the election to be valid the return must be filed no later than the time for filing for the taxable_year including extensions under sec_301_9100-1 of the procedure and administration regulations the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i if the taxpayer demonstrates to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting the relief will not prejudice the interests of the government sec_301_9100-1 defines the term regulatory election as an election whose deadline is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-2 and provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion in the present situation the requirements of sec_301_9100-1 and have been satisfied as a result partnership is granted an extension of time of thirty days following the date of this letter to make a sec_754 election the election should be made in a written_statement filed with the district_director for association with partnership's tax_return a copy of this letter should be attached to the statement filed with the district_director a copy of this letter is enclosed for that purpose 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 the 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 except as specifically set forth above no opinion is expressed or implied as to the federal_income_tax consequences of the transactions described under any other provision of the code specifically no opinion is expressed concerning whether plr-109456-00 partnership is a partnership for federal tax purposes this ruling is directed only to the taxpayer on whose behalf it was requested section k provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file in this office a copy of this letter is being sent to the taxpayer sincerely yours paul f kugler assistant chief_counsel passthroughs and special industries