internal_revenue_service department of the treasury index number number release date washington dc person to contact telephone number refer reply to cc dom p si 3-plr-118003-98 date date legend x a b c date date date dear this letter responds to your letter dated date requesting an extension of time to file elections to treat a b and c as qualified subchapter_s subsidiaries qsubs under sec_1361 facts x is an s_corporation that owns and leases rental real_estate before date x operated its leasing business through a tiered_partnership structure to facilitate refinancing of the rental properties legal counsel for x counsel recommended plr-118003-98 restructuring the tiered_partnership arrangement so that the interests in each upper-tier partnership would be held by separate legal entities counsel recommended that x create new subsidiaries that would be treated as qsubs x formed a and b on date and formed c on date x relied on counsel for all aspects of the restructuring including taking the necessary steps for a b and c to be treated as qsubs counsel did not advise x that elections would have to be made and did not prepare or send form_966 to x or to a b or c the failure_to_file form_966 for each of the subsidiaries was discovered on or about date when x’s tax advisor not counsel asked x whether a b and c were qsubs and requested copies of the election forms x was unaware that elections had not been made x represents that it has always intended for a b and c to be treated as qsubs since their formation x has also submitted an affidavit signed by a member of counsel stating that x asked counsel to handle all matters necessary for treating a b and c as qsubs but that counsel failed to file the forms or advise x that elections must be filed analysis sec_1361 defines the term qualified_subchapter_s_subsidiary as a domestic_corporation that is not an ineligible_corporation if percent of the stock of the corporation is owned by the s_corporation and the s_corporation elects to treat the corporation as a qsub the statutory provision does not however provide guidance on the manner in which the qsub election is made or the effective date of the election notice_97_4 1997_2_cb_351 provides a temporary procedure for making a qsub election under notice_97_4 a taxpayer makes a qsub election for a subsidiary by filing form_966 with certain modifications with the appropriate service_center the election may be effective up to days before the filing of the form provided that date is not before the parent corporation’s first taxable_year beginning after date and that the subsidiary otherwise qualifies as a qsub for the entire period for which the retroactive election is to be effective 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 sec_301_9100-1 defines the term regulatory election as including an election whose due_date is prescribed by a notice published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an plr-118003-98 election sec_301_9100-1 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 sec_301_9100-3 in the present situation the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied thus x is granted an extension of time until days following the date of this letter for making the elections to treat a b and c as qsubs effective date for a and b and date for c x should follow the procedures set forth in notice_97_4 when making the elections a copy of this letter should be attached except as specifically set forth above we express no opinion concerning the federal tax consequences of the foregoing facts specifically we express no opinion on whether x otherwise qualifies as an s_corporation or a b and c qualify as qsubs this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent under a power_of_attorney on file with this office we are sending copies of this letter to your authorized representatives sincerely paul kugler assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc corp 1-plr-108563-00 date date legend foreign parent parent distributing controlled controlled business state x state y country a country b country c bank a bank b holding dear we respond to your letter dated date in which you requested rulings on behalf of distributing regarding the federal_income_tax consequences of certain transactions you submitted additional information in letters dated july and date the relevant information is summarized below foreign parent is a country a corporation that is the parent of an affiliated_group that comprises both domestic and foreign_corporations affiliated_group foreign parent wholly owns parent a state x holding_company that wholly owns distributing distributing is a state x corporation that operates in state y distributing uses the accrual_method of accounting and maintains its books_and_records on a calendar_year basis distributing wholly owns controlled and controlled controlled is a country b corporation that uses the accrual_method of accounting and maintains its books_and_records on a calendar_year basis controlled is a country c_corporation that uses the accrual_method of accounting and maintains its books_and_records on a calendar_year basis distributing controlled and controlled engage in business the taxpayer has submitted financial information indicating that distributing and controlled each have had gross_receipts and operating_expenses representative of the active_conduct_of_a_trade_or_business for each of the past five years the taxpayer has provided information showing that distributing and affiliated_group can significantly reduce their state y and country a taxes respectively if parent directly owns controlled and controlled the projected cost savings exceed one percent of the base_period net_income of affiliated_group to obtain these cost savings distributing will distribute the stock of controlled and controlled to parent the spin-offs foreign parent plans to consolidate its operations with those of unrelated bank a and bank b under to be formed holding the plan of consolidation contemplates restructuring of the operations of foreign parent bank a and bank b the parties have considered the possibility of merging a us subsidiary of bank a into distributing but have developed no specific plans in this regard the taxpayer has represented that the spin-offs are independent of any restructuring contemplated in relation to the consolidation of foreign parent bank a and bank b and is being done for business reasons unrelated to any restructuring the taxpayer has made the following representations with respect to the proposed spin-offs a b no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a distributing shareholder the five years of financial information submitted on behalf of distributing controlled and controlled is representative of each corporation's present operations and there will be no substantial operational changes since the date of the last financial statements submitted following the spin-offs distributing controlled and controlled will each continue the active_conduct of its business independently and with their separate employees but will continue their current service relationships the spin-offs will be carried out entirely for the purpose of producing significant cost savings for the affiliated_group through the reduction in state y and country a taxes the distribution of controlled and controlled is motivated in whole or substantial part by this corporate business_purpose no intercorporate debt will exist between distributing and either controlled or controlled at the time of or subsequent to the distribution of the controlled and controlled stock the indebtedness if any owed by controlled or controlled to distributing after the spin-offs will not constitute stock_or_securities there is no plan or intention by parent to sell exchange transfer by gift or otherwise dispose_of any stock in either distributing controlled or controlled after the distribution except for any stock issuance of distributing in connection with a possible merger of a us subsidiary of bank a into distributing at the time of the spin-offs there will be no plan or intention by distributing controlled or controlled directly or through any subsidiary_corporation to purchase any stock of distributing controlled or controlled after the spin- offs other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 at the time of the spin-offs there will be no plan or intention to liquidate distributing controlled or controlled to merge distributing controlled or controlled with any other corporation or to sell or otherwise dispose_of the assets of distributing controlled or controlled after the spin-offs except in the ordinary course of business and except for a possible merger of a us subsidiary of bank a into distributing immediately after the spin-offs no person will hold directly or indirectly disqualified_stock within the meaning of sec_355 of the code in distributing controlled or controlled that constitutes a or greater interest in distributing controlled or controlled distributing neither accumulated its receivables nor made extraordinary payment of its payables in anticipation of the transaction c d e f g h i j k l m n o p no two parties to the transaction are investment companies as defined in sec_368 and iv distributing controlled and controlled will each pay their own expenses if any incurred in connection with the spin-offs the spin-offs are not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing or more of the total combined voting power of all classes of stock of distributing controlled or controlled or stock possessing or more of the total value of all classes of stock of distributing controlled or controlled immediately before the distribution items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations further distributing’s excess_loss_account with respect to the controlled and controlled stock if applicable will be included in income immediately before the distribution payments made in connection with all continuing transactions if any between distributing controlled and controlled will be for fair_market_value based on terms and conditions arrived at by the parties at arm’s length controlled and controlled are controlled_foreign_corporations within the meaning of sec_957 at all times during the five-year period immediately preceding the date of the distribution and each will remain a controlled_foreign_corporation immediately thereafter q with respect to controlled and controlled distributing was a united_states_shareholder on the date immediately preceding the distribution based solely on the information and representations submitted we rule as follows distributing will recognize no gain_or_loss upon the distribution of common_stock of controlled or controlled to parent sec_355 no gain_or_loss will be recognized by and no amount will be included in the income of parent upon the receipt of the common_stock of controlled or controlled sec_355 the basis of the stock of each of controlled and controlled in the hands of parent shall be the lesser_of the adjusted_basis of the respective stock in the hands of distributing or the substituted_basis allocated to the stock of controlled and controlled respectively in accordance with sec_1_358-2 sec_1248 notice_87_64 c b the holding_period for the stock of each of controlled and controlled received by parent will be the greater of the holding_period of such stock in the hands of distributing or the holding_period of the stock of distributing in the hands of parent sec_1248 notice_87_64 c b sec_1248 will not be applicable to the distribution by distributing of the stock of controlled and controlled to parent sec_1248 notice_87_64 c b if parent does not recognize any gain under sec_124 by virtue of sec_1248 the earnings_and_profits of each of controlled and controlled respectively to the extent attributable to such stock under sec_1_1248-2 or sec_1_1248-3 whichever is applicable which were accumulated in taxable years of such foreign_corporations beginning after date and during the periods that each of controlled and controlled was a controlled_foreign_corporation shall be attributable to such stock sec_1_1248-1 as provided in sec_312 proper allocation of earnings_and_profits between distributing and controlled and controlled will be made under sec_1_312-10 the rulings contained in this letter are predicated upon information and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process 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 we express no opinion regarding the following the federal tax consequences of a possible merger of a us subsidiary of bank a into distributing the applicability of any transfer_pricing issues under sec_482 in connection with continuing transactions or other transactions contemplated in the ruling_request whether any or all of the above-referenced foreign_corporations are passive foreign investment companies within the meaning of sec_1297 of the code and the regulations to be promulgated thereunder if it is determined that any or all of the above-described foreign_corporations are passive foreign_corporations no opinion is expressed with respect to the application of sec_1291 through to the proposed transactions in particular in a transaction in which gain is not otherwise recognized regulations under sec_1291 may require gain recognition notwithstanding any other provision of the code this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter must be attached to any income_tax return to which it is relevant in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer sincerely associate chief_counsel corporate by mark s jennings acting chief branch


t c memo united_states tax_court michael a milnes and esther n milnes petitioners v commissioner of internal revenue respondent docket no 8612-o02l filed date michael a milnes and esther n milnes pro_se trent d usitalo for respondent memorandum opinion colvin judge this matter is before the court on respondent’s motion for summary_judgment the issue is whether it is appropriate to decide by summary_judgment that respondent’s determination to proceed with collection of petitioners’ tax_liabilities was not an abuse_of_discretion for reasons stated below we will grant respondent’s motion - - section references are to the internal_revenue_code as amended and rule references are to the tax_court rules_of_practice and procedure background petitioners are married and lived in fresno california when they filed their petition michael a milnes petitioner is an attorney a the notices of federal_tax_lien on date respondent filed with the fresno county recorder’s office a notice_of_federal_tax_lien relating to petitioners’ income_tax_liability for tax_year on date respondent filed with the fresno county recorder’s office a notice_of_federal_tax_lien relating to petitioners’ income_tax liabilities for tax years and b the notice_of_intent_to_levy on date respondent issued to petitioners a final notice_of_intent_to_levy and notice of your right to a hearing relating to petitioners’ income_tax liabilities for and on date petitioners filed a request for a collection_due_process_hearing form for tax years in which they contended that respondent should abate penalties relating to tax years and respondent ' petitioners’ tax years and are not in issue here because respondent’s notice_of_intent_to_levy did not include those years only and are at issue here failed to respond to petitioner’s request to abate penalties for late filing of individual tax returns for petitioners want to extend the time to assess tax to allow time to resolve the above issues and to obtain funds to pay taxes due and they were entitled to relief on the basis of various claims relating to employment_taxes with respect to petitioner’s law corporation and the notices of liens filed in and petitioners stated that they had applied for a loan on real_property the proceeds of which they would use to pay their tax_liabilities in full c the sec_6330 hearing and respondent’s notice_of_determination on march and date respondent’s appeals_office conducted a hearing on petitioners’ case for tax years and petitioners attended the hearing at the hearing petitioners offered to obtain a loan on real_property to pay their tax_liabilities for the years in issue petitioners did not challenge their underlying tax_liability for or at the hearing the appeals officer concluded that petitioners did not gualify for alternatives to collection such as an installment_agreement or an offer_in_compromise because petitioners were not currently in compliance with federal tax laws and they had not submitted financial information that would enable respondent to ascertain whether they qualified for any alternatives to collection once they became compliant - on date respondent sent petitioners a notice_of_determination concerning collection action s under sec_6320 and or the determination_letter in which respondent denied petitioners’ request for relief on date petitioners filed a petition for lien or levy action under sec_6320 or sec_6330 in their petition petitioners contended only that respondent erred in trying to collect from petitioners employment_taxes owed by petitioner’s law corporation and respondent failed to send to their last_known_address any notice of the federal tax_liens filed in and petitioners did not propose any alternatives to collection in their petition respondent filed a motion for summary_judgment the court ordered petitioners to file a response to respondent’s motion but they did not do so discussion a summary_judgment summary_judgment is intended to expedite litigation and to avoid the need for expensive trials fla peach corp v commissioner 90_tc_678 we may grant summary_judgment if the pleadings answers to interrogatories depositions admissions affidavits and any other acceptable materials show that there is no genuine issue of material fact and a decision may be rendered as a matter of law rule b 98_tc_518 affd 17_f3d_965 7th cir 90_tc_753 the moving party bears the burden of proving that there is no genuine issue of material fact 85_tc_812 79_tc_340 b analysis petitioners do not challenge the existence or amounts of their underlying income_tax liabilities for the years in issue where the taxpayer’s underlying tax_liability is not at issue we review the commissioner’s administrative determination for abuse_of_discretion 114_tc_604 114_tc_176 there are no genuine issues of material fact we conclude that summary_judgment is appropriate see rule b whether we have jurisdiction over employment_taxes petitioners contend that respondent erroneously tried to collect employment_taxes related to petitioner’s law corporation from petitioners we lack jurisdiction to decide that issue 114_tc_171 whether we have jurisdiction to decide whether respondent sent notices of federal tax_liens to petitioners’ last_known_address petitioners contend that respondent did not send notice of the federal tax_liens for tax years and to their - - last_known_address we lack jurisdiction to consider petitioners’ claim respondent filed the notices of federal_tax_lien on date and date sec_6320 applies to collection actions initiated after date internal revenue restructuring reform act of publaw_105_ sec_3401 112_stat_746 hurford v commissioner tcmemo_2002_94 see 117_tc_63 liens and levies are separate collection actions for purposes of sec_6320 and sec_6330 because the notices of federal_tax_lien were filed before date they are not subject_to sec_6320 conclusion the above discussion rejects the grounds upon which petitioners relied in their petition also by failing to respond to respondent’s motion petitioners waived their right to contest it see rule d 117_tc_183 we conclude that respondent’s determination to proceed with collection of the tax_liabilities assessed against petitioners was not an abuse_of_discretion accordingly we will grant respondent’s motion for summary_judgment an appropriate order and decision will be entered


significant index no department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division jan in re this letter constitutes notice that with respect to the above-named defined benefit pension_plan we have granted a waiver of the minimum_funding_standard for the plan_year ended date this waiver for the plan_year ended date has been granted in accordance with sec_412 of the internal_revenue_code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa the waived amount is the contribution which would otherwise be required to reduce the balance in the funding_standard_account to zero as of the end of the plan_year for which this waiver has been granted the company has a calendar_year fiscal_year the company sales have steadily declined from to the company has reduced staff and has received orders from new customers as of date the value of the assets of the plan was equal to of the plan's current_liability your attention is called to sec_412 of the code and sec_304 of erisa which describe the consequences that would result in the event the plan is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived_funding_deficiency remains unamortized please note that any amendment to other retirement plans maintained by the company or to the company’s profit sharing plan to increase the liabilities of those plans would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent when filing form_5500 for the plan_year ended date the date of this letter should be entered on schedule b actuarial information a copy of this letter is being sent to the manager employee_plans classification in if you have any questions on this ruling letter please contact sincerely q fu -- norman greenberg acting manager actuarial group cc manager employee_plans classification


- department of the treasury internal_revenue_service washington d c uniform issue list feb tepzra ty tax_exempt_and_government_entities_division legend taxpayer p institution x iram cdn amount a amount b date d dear this is in response to your request dated date in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code’ the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer p age represents that he received a distribution from ira m totaling amount a of which he intended to roll over amount b investment taxpayer p asserts that his failure to accomplish a rollover of amount b within the 60-day period prescribed by sec_408 was due to taxpayer p's mental condition which impaired his ability to make financial decisions during the 60-day period and which led to miscommunication or misunderstanding with institution x resulting in amount b being placed into a non-ira account into another ira page specifically taxpayer p represents that during the fall of he was severely and life-threateningly ill and was taking several medications taxpayer p asserts that the combination of his condition and his medications diminished his mental capacity at the time taxpayer p further represents that on date d he received a distribution of amount a from ira m at institution x with the intention of rolling amount b ira investment that would yield a higher return with institution x taxpayer p asserts that due to miscommunication with the personnel of institution x as a result of taxpayer p’s diminished mental capacity amount b was deposited in error into cd n a non-ira certificate of deposit in addition taxpayer p asserts that he did not understand that the transaction on date d did not constitute a valid rollover and he was unaware of the error until seven months later when he received a notice from institution x that cd n was maturing taxpayer p represents that he did not roll over any other ira during the 1-year period ending on the date d and that amount b has not been used for any purpose into another based on the facts and representations you request a ruling that the internal_revenue_service waive the day rollover requirement contained in sec_408 of the code with respect to the distribution of amount b so that taxpayer p can complete the intended rollover sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such - page individual received any other amount described in sec_408 which was not includible in gross_income because of the application of sec_408 from an ira sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer p is consistent with his assertion that his failure to roll over the distribution within days of date d was a result of miscommunication with institution x that was caused by his diminished mental capacity which in tum was due to his severe medical_condition and the effect of his medications therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount b from ira m taxpayer p is granted a period of days from the issuance of this ruling letter to contribute amount b less amounts described below into a rollover ira provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contribution the contribution of amount b into an ira will be considered a rollover_contribution within the meaning of sec_408 of the code this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 of the code page no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 _ of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with the service a copy of this letter_ruling is being sent to your authorized representative if you wish to inquire about this ruling please contact esq id - yat - please address all correspondence to se t ‘ep ra t4 sincerely yours fm donzell h littlejohn manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose notice


t c no united_states tax_court don weber ii petitioner v commissioner of internal revenue respondent docket no 15169-03l filed date on date r mailed to p two notices of determination concerning collection action r issued the first notice with respect to p’s liability for unpaid income taxes r issued the second notice with respect to p’s liability for an unpaid civil penalty under sec_6682 i r c r sent both notices to p by certified mail addressed to him at his last_known_address the first notice was returned to r by the u s postal service marked unclaimed by letter dated date r’s settlement officer sent p courtesy copies of the notices of determination on date p filed a petition for lien or levy action under sec_6330 i r c thereafter r filed a motion to dismiss p’s petition for lack of jurisdiction on the ground that it was not timely filed p opposes the granting of r’s motion contending that he did not receive either of the notices of determination until date at which time he promptly filed his petition with the court held the income_tax notice_of_determination that was sent by certified mail to p at p’s last_known_address was sufficient notwithstanding the fact that p did not receive such notice held further the courtesy copy of the income_tax notice_of_determination that r’s officer sent p in date was not a notice_of_determination under sec_6320 i r c or sec_6330 i r c nor did the sending of that copy serve to revive the statutory filing period held further because p did not timely file his petition in respect of the income_tax notice_of_determination this court lacks jurisdiction to review r’s determination to proceed with collection of p’s liability for unpaid income taxes held further this court lacks jurisdiction to review r’s determination to proceed with collection of p’s liability for the unpaid civil penalty under sec_6682 i r c because it lacks jurisdiction over the underlying liability don weber ii pro_se james e cannon and julie jebe for respondent opinion dawson judge this case was assigned to special_trial_judge robert n armen jr pursuant to the provisions of sec_7443a and rule sec_180 sec_181 and sec_182 the court agrees with and adopts the opinion of the special_trial_judge which is set forth below 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 opinion of the special_trial_judge armen special_trial_judge this collection review case is before the court on respondent’s motion to dismiss for lack of jurisdiction respondent contends that the court lacks jurisdiction on the ground the petition for lien or levy action was not timely filed as discussed in detail below we shall dismiss the petition for lack of jurisdiction background the record reflects and or the parties do not dispute the following facts on date respondent mailed to petitioner a notice_of_determination concerning collection action s informing petitioner that respondent would proceed with the collection of petitioner’s unpaid federal income taxes for and the income_tax notice on date respondent also mailed to petitioner a notice_of_determination concerning collection action s informing petitioner that respondent would proceed with the collection of petitioner’s unpaid liability for a civil penalty imposed under sec_6682 for the taxable_period ending date the civil penalty notice sec_6682 generally provides that an individual shall be liable for a civil penalty if such individual is found to have made a false statement regarding the correct amount of income_tax_withholding on wages and or backup withholding respondent mailed the income_tax notice and the civil penalty notice to petitioner by certified mail addressed to him pincite w 95th st no shawnee msn kansas the kansas address on or about date the envelope bearing the income_tax notice was returned to respondent by the u s postal service marked unclaimed the envelope included notations reflecting that the u s postal service attempted to deliver the notice to petitioner on certain specific dates on date respondent mailed a letter to petitioner at the kansas address that stated in pertinent part as follows per our telephone conversation this morning enclosed are copies of the determination letters previously mailed to you in date when the letters were originally issued on date the court received and filed a petition for lien or levy action no notice_of_determination was attached to the petition nor did the petition identify the specific notice s in dispute the petition arrived at the court in an envelope bearing a u s postal service postmark date of respondent proved the mailing of the notice_of_determination through the introduction of a postmarked copy of a certified mail list cf 89_tc_321 holding that for purposes of sec_6212 the commissioner must produce direct evidence to establish the fact that a notice_of_deficiency was mailed the record does not reflect whether the civil penalty notice was returned to respondent undelivered date in the petition petitioner listed the kansas address as his current address respondent filed a motion to dismiss for lack of jurisdiction on the ground the petition was not filed within the 30-day period prescribed in sec_6330 or sec_7502 petitioner filed an objection to respondent’s motion asserting that he did not receive either of the notices in question until date at which time he promptly filed a petition with the court petitioner also questioned why the copies of the notices that he received in date were undated respondent filed a response to petitioner’s objection asserting that the copies of the notices that were forwarded to petitioner in date were merely courtesy copies respondent further explained that the copies sent to petitioner were undated because petitioner’s case file was not immediately available and the copies in question were retrieved from respondent’s computer files this matter was called for hearing at the court’s motions session in washington d c counsel for respondent appeared at the hearing and offered argument in support of respondent’s motion to dismiss although there was no appearance by or on behalf of petitioner at the hearing petitioner did file with the court a written_statement pursuant to rule c discussion sec_6320 pertaining to federal tax_liens and pertaining to levies establish procedures for administrative and judicial review of certain collection actions as an initial matter the commissioner is required to provide a taxpayer with written notice that a federal_tax_lien has been filed and or that the commissioner intends to levy the commissioner is also required to explain to the taxpayer that such collection action may be challenged on various grounds at an administrative hearing see 115_tc_35 114_tc_176 sec_6320 and sec_6330 provide that the written notice described above shall be given in person left at the person’s dwelling or usual place of business or sent by certified or registered mail to such person’s last_known_address when the appeals_office issues a notice_of_determination concerning collection action s to a taxpayer following an administrative hearing sec_6330 provides that the taxpayer ha sec_30 days following the issuance of such notice to file a petition for review with the tax_court or if the tax_court does not have jurisdiction over the underlying tax_liability with a federal district_court see 114_tc_492 the procedure established under sec_6330 is made applicable to a proceeding regarding a federal_tax_lien by way of the cross- reference contained in sec_6320 we have held that this court’s jurisdiction under sec_6320 and sec_6330 depends on the issuance of a valid notice_of_determination and the filing of a timely petition for review see 117_tc_122 116_tc_263 offiler v commissioner supra pincite see also rule b although sec_6330 does not specify the means by which the commissioner is required to give notice of a determination made under sec_6320 and sec_6330 we conclude that the method that congress specifically authorized for sending notices of deficiency in sec_6212 and b certainly should suffice accordingly we hold that a notice_of_determination issued pursuant to sec_6320 and or is sufficient if such notice is sent by certified or registered mail to a taxpayer at the taxpayer’s last_known_address cf sec_6212 petitioner did not raise any challenge to the validity of either of the notices of determination in question sec_6212 and provides in pertinent part as follows sec_6212 notice_of_deficiency b address for notice_of_deficiency -- income and gift_taxes and certain excise_taxes -- notice of a deficiency if mailed to the taxpayer at his last_known_address continued it may be that such a notice_of_determination is also sufficient if it is given in person or left at the taxpayer’s dwelling or usual place of business cf sec_6330 however we need not and do not decide this latter matter the income_tax notice the notice_of_determination pertaining to petitioner’s unpaid income_tax liabilities was mailed by certified mail to the same address that petitioner listed as his current address in the petition for lien or levy action petitioner does not contend that such notice was mailed to an incorrect address consequently we conclude that the income_tax notice was mailed to petitioner’s last_known_address which is sufficient for jurisdictional purposes see eg sarrell v commissioner supra pincite under the circumstances the sole issue for decision with regard to the income_tax notice is whether the petition was timely filed the record reflects that the petition was not filed within the 30-day period prescribed in sec_6330 in particular the record shows that respondent mailed the notice continued shall be sufficient estate_tax -- notice of a deficiency if addressed in the name of the decedent or other person subject_to liability and mailed to his last_known_address shall be sufficient of determination to petitioner on date taking into account an intervening weekend and federal_holiday the 30-day filing period expired on tuesday date see sec_7503 however the petition in this case was not mailed to the court until date and was received and filed on date--more than months after the income_tax notice was mailed it follows that the petition was not timely filed and we are obliged to dismiss this case for lack of jurisdiction see 115_tc_114 petitioner’s assertion that his petition should be considered timely filed because he did not actually receive the income_tax notice until date is misplaced like a notice_of_deficiency issued pursuant to sec_6213 a notice_of_determination made pursuant to sec_6320 and or sec_6330 serves as a person’s ticket to the tax_court offiler v commissioner supra pincite see 81_tc_42 in accordance with longstanding principles governing the validity of a notice_of_deficiency under sec_6213 and consistent with our conclusion that the income_tax notice was sufficient because it was properly mailed to petitioner’s last_known_address by certified mail on date we hold that it is immaterial that petitioner did not receive the notice_of_determination before the expiration of the 30-day filing period see 857_f2d_676 9th cir affg 88_tc_1042 248_f2d_749 10th cir affg 27_tc_375 89_tc_806 frieling v commissioner supra pincite we further hold that the courtesy copy of the income_tax notice that respondent sent to petitioner on date was not a notice_of_determination under sec_6320 or sec_6330 therefore it could not serve to revive the 30-day filing period see teel v commissioner supra 52_tc_358 powell v commissioner tcmemo_1998_108 schoenfeld v commissioner tcmemo_1993_303 n finally we do not have the authority to extend our jurisdiction in this case notwithstanding the fact that petitioner did not receive the notice_of_determination within the 30-day filing period the court’s jurisdiction is statutorily prescribed under sec_6320 and sec_6330 and we may not extend the 30-day period for filing a petition for lien or levy action 58_tc_256 see lamont v commissioner tcmemo_1993_469 consistent with the preceding discussion we shall grant respondent’s motion to dismiss in that we lack jurisdiction to review the income_tax notice on the ground the petition for lien or levy action was not timely filed the civil penalty notice as previously mentioned the court’s jurisdiction under sec_6320 and sec_6330 is limited to cases in which the underlying tax_liability is of a type over which the court normally has jurisdiction sec_6330 115_tc_324 case dismissed for lack of jurisdiction on the ground the court lacks jurisdiction to review the frivolous_return penalty imposed under sec_6702 114_tc_171 case dismissed for lack of jurisdiction on the ground the court lacks jurisdiction to review the trust fund recovery penalty imposed under sec_6672 the record reflects that the civil penalty notice is based on the assessment of a penalty against petitioner pursuant to sec_6682 it is well settled that this court lacks jurisdiction to redetermine such penalties sec_6682 84_tc_405 fischer v commissioner tcmemo_1994_586 n because we lack jurisdiction over the tax_liability underlying the civil penalty notice we are obliged to dismiss the matter for lack of jurisdiction on that ground see barnhill v commissioner tcmemo_2002_116 cf 117_tc_159 to reflect the foregoing an order will be entered dismissing this case for lack of jurisdiction


t c memo united_states tax_court charles mandeville petitioner v commissioner of internal revenue respondent docket no filed date p failed to file federal_income_tax returns for and r determined deficiencies and additions to tax pursuant to sec_6651 and sec_6654 i r c held p is liable for the deficiencies determined by r and additions to tax pursuant to sec_6651 and sec_6654 i r c charles mandeville pro_se douglas s polsky for respondent memorandum findings_of_fact and opinion wherry judge this case is before the court on a petition for judicial review of five separate notices of deficiency in which respondent determined the following deficiencies and additions to tax with respect to petitioner’s federal income taxes for the taxable years and in the amounts as follows year deficiency additions to tax sec_6651 sec_6654 dollar_figure big_number big_number dollar_figure big_number dollar_figure big_number dollar_figure dollar_figure dollar_figure the issues for decision are whether petitioner was required to file federal_income_tax returns and is liable for income_tax deficiencies in petitioner’s and taxable years whether petitioner was required to report dollar_figure in net_short-term_capital_gain on the sale of stock in taxable_year whether petitioner can claim a dependency_exemption for his wife for the and taxable years whether petitioner is entitled to an education credit under sec_25a for the and taxable years or a the actual amount of the deficiencies remaining unpaid for all the taxable years at issue except is significantly less because a portion of the tax due had been withheld tuition_and_fees_deduction under sec_222 for the taxable_year whether petitioner may deduct moving_expenses for the and taxable years whether petitioner is liable for additions to tax under sec_6651 in the amounts specified above for the taxable years at issue whether petitioner is liable for an addition_to_tax under sec_6654 in the amount of dollar_figure for the taxable_year because he failed to pay estimated income_tax and whether petitioner is liable for a penalty under sec_6673 findings_of_fact some of the facts have been stipulated and the stipulated facts and accompanying exhibits are hereby incorporated by reference into our findings some of the facts have been deemed established pursuant to rule c and the court’s order under rule f dated date at the time he filed his petition petitioner resided in albuquerque new mexico unless otherwise indicated all section references are to the internal_revenue_code_of_1986 as amended and in effect for the taxable years at issue the rule references are to the tax_court rules_of_practice and procedure petitioner concedes that he failed to file federal_income_tax returns for the and taxable years in petitioner was employed by scientemps inc intor inc and the new mexico institute of mining technology and received wages totaling dollar_figure dollar_figure and dollar_figure respectively the new mexico institute of mining technology withheld dollar_figure in federal_income_tax in petitioner was employed by sinaf products inc and intel corporation and received wages totaling dollar_figure and dollar_figure respectively sinaf products inc and intel corporation withheld dollar_figure and dollar_figure in federal_income_tax respectively in petitioner was employed by intel corporation and received dollar_figure in wages the record in this case does not reflect any withholding of federal_income_tax from petitioner’s wages by intel corporation during that year petitioner also received dollar_figure in ordinary dividends from ubs painewebber inc in petitioner was employed by intel corporation and received dollar_figure in wages intel withheld dollar_figure in federal_income_tax that year petitioner also received dollar_figure in ordinary dividends from ubs painewebber inc in petitioner was employed by intel corporation and received dollar_figure in wages from that amount intel corporation withheld dollar_figure in federal_income_tax that year petitioner also sold stock in intel corporation for dollar_figure in gross_proceeds his basis in the stock sold was dollar_figure resulting in a net_short-term_capital_gain of dollar_figure petitioner also received dollar_figure in ordinary dividends from ubs painewebber inc petitioner had single filing_status for the taxable_year and married filing separate status for the taxable years sometime in or petitioner and his wife moved from new mexico to oregon and then back to new mexico respondent issued the aforementioned notices of deficiency petitioner then filed a timely petition with this court a trial was held on date in albuquerque new mexico i parties’ contentions opinion petitioner asserts that the burden of proving that he had unreported income_tax is on respondent and that respondent has failed to meet that burden in this case according to petitioner he is entitled to dependency_exemptions for his wife for the and taxable years education credits or a deduction for tuition and fees for the and taxable years and a moving_expense_deduction for the and taxable years petitioner also asserts that respondent has not met the burden of production regarding the additions to tax under sec_6651 and sec_6654 respondent argues that petitioner was required to file federal_income_tax returns for the taxable years at issue and that petitioner is liable for deficiencies for each of those years respondent asserts that petitioner was required to report the short-term_capital_gain from his sale of intel corporation stock in respondent next claims that petitioner is not entitled to dependency_exemptions for his wife for the and taxable years because petitioner has provided no evidence that his wife was dependent on him with respect to education credits or a deduction for tuition and fees respondent’s position is that petitioner has failed to substantiate that any qualified_tuition_and_related_expenses were paid_by him regarding the claimed moving_expense_deduction respondent concedes that petitioner and his wife moved from oregon to new mexico but argues that it is not clear when the move occurred and that only petitioner’s self-serving testimony supports petitioner’s assertion that the move was work related turning to additions to tax respondent contends that petitioner is liable for additions to tax under sec_6651 for the taxable years at issue because there is no dispute that petitioner failed to file federal_income_tax returns for those years and petitioner has failed to demonstrate reasonable_cause for such action respondent also contends that petitioner is liable for an addition_to_tax under sec_6654 for failing to pay estimated_tax in at the conclusion of the trial respondent filed a motion for sanctions pursuant to sec_6673 in his brief respondent reiterates his position that petitioner’s positions are frivolous and groundless and that the court should impose sanctions ii filing requirement deficiencies the law imposes a federal tax on the taxable_income of every individual sec_1 gross_income for the purpose of calculating taxable_income is defined as all income from whatever source derived sec_61 sec_6012 requires a taxpayer to file a tax_return in each taxable_year in which that taxpayer’s gross_income exceeds a certain threshold_amount in this case petitioner's gross_income exceeded the filing threshold for each of the taxable years at issue as a result petitioner was required to file a federal_income_tax return for each of the taxable years at issue petitioner’s arguments to the contrary are incomprehensible and frivolous that threshold_amount is generally equal to the sum of the exemption_amount and the applicable standard_deduction sec_6012 petitioner had single filing_status for the taxable_year and married filing separate status for the taxable years thus the relevant threshold amounts in this case are dollar_figure dollar_figure dollar_figure dollar_figure and dollar_figure respectively with respect to the deficiencies determined by respondent the court notes that as a general_rule the commissioner’s determination of a taxpayer’s liability for an income_tax deficiency is presumed correct and the taxpayer bears the burden of proving that the determination is improper see rule a 290_us_111 thus petitioner is incorrect that respondent bears the burden of proving the existence of income_tax deficiencies moreover petitioner has failed to demonstrate that any of the determined deficiencies are improper iii dependency_exemptions tax exemptions and deductions are a matter of legislative grace see 76_tc_1001 whether categorized as exclusions or deductions it is axiomatic that such provisions are a matter of legislative grace and must be strictly construed the taxpayer bears the burden of proving entitlement to any claimed exemptions or deductions the in light of the fact that this case involves unreported income to the extent that respondent may bear some burden to show a minimal evidentiary foundation for the asserted deficiencies respondent has done so because petitioner has stipulated the amounts of unreported salary and dividend income for the taxable years at issue see senter v commissioner tcmemo_1995_311 although petitioner did not stipulate the amount of unreported income short-term_capital_gain resulting from his sale of intel corporation stock in that amount is evidenced by third-party records submitted by respondent as an exhibit in this case taxpayer’s burden includes the burden of substantiation 65_tc_87 affd per curiam 540_f2d_821 5th cir although sec_7491 may shift the burden_of_proof to the commissioner in specified circumstances petitioner has not established that he meets the requisites under sec_7491 and for such a shift sec_151 provides a taxpayer with an exemption for a spouse if the taxpayer and the spouse do not file a joint_return and the spouse had no gross_income and is not dependent on another taxpayer during the calendar_year in which the taxpayer's tax_year began in this case petitioner asserts that he is entitled to an exemption for his wife for the and taxable years because there is no evidence that his wife had gross_income or was someone else’s dependent for any of those years petitioner’s position distorts the relevant burdens of proof and substantiation as noted because the relevant burdens of proof and substantiation are on petitioner no evidence on the relevant issues means that petitioner loses not that he wins because there is no evidence regarding petitioner’s wife’s dependency and income in and petitioner has not shown entitlement to a dependency_exemption for his wife in any of those taxable years see brunner v commissioner tcmemo_2004_187 affd 142_fedappx_53 3d cir iv education credit tuition_and_fees_deduction for qualifying individuals sec_25a allows credits6 against tax for qualified_tuition_and_related_expenses paid_by the taxpayer during the taxable_year sec_222 allows a taxpayer to deduct an amount equal to qualified_tuition_and_related_expenses paid_by the taxpayer during the taxable_year although petitioner asserts that he is entitled to education credits and or deductions for his wife’s education expenses that were incurred in and he has failed to substantiate that assertion while petitioner has provided credit card statements dated in and reflecting various charges that appear to have been made to educational institutions petitioner has not shown with any particularity what those charges were for who they were made with respect to and perhaps most importantly who made them petitioner has therefore failed to demonstrate entitlement to education credits and or a deduction for tuition and fees for the and taxable years these credits are called the hope scholarship credit and the lifetime_learning_credit both are subject_to multiple conditions and limitations that need not be discussed in this opinion the deduction is also subject_to conditions and limitations that need not be discussed in this opinion the credit card statements provided by petitioner do not contain a name and petitioner has provided no basis for linking the credit card to him in fact at trial petitioner admitted that the credit card belonged to his wife v moving_expenses deduction under sec_217 subject_to certain conditions a taxpayer can deduct moving_expenses incurred during a taxable_year in connection with the commencement of work by the taxpayer as an employee or as a self-employed_individual at a new principal_place_of_work in this case petitioner contends that he is entitled to a deduction for the and taxable years for moving_expenses incurred when he and his wife moved from oregon to new mexico although at some point petitioner appears to have moved from oregon to new mexico it is unclear whether that move actually occurred in or it is also unclear whether it was petitioner or his wife that actually incurred the moving expensesdollar_figure most importantly petitioner has provided no evidence aside from his own unsupported statement at trial that his move was work related consequently petitioner has failed to demonstrate entitlement to a moving_expenses deduction for the and taxable years petitioner has provided receipts dated in and regarding his move apparently from new mexico to oregon for a temporary work assignment and then back to new mexico as was noted with respect to the education-expenses issue it appears that the credit card statements provided by petitioner relate to his wife vi additions to tax a respondent’s burden of production under sec_7491 respondent bears the burden of production with respect to a taxpayer’s liability for penalties or additions to tax this means that respondent must come forward with sufficient evidence indicating that it is appropriate to impose the relevant penalty 116_tc_438 in instances where an exception to the penalty or addition_to_tax is afforded upon a showing of reasonable_cause the taxpayer bears the burden of demonstrating such cause id pincite b sec_6651 addition_to_tax sec_6651 imposes an addition_to_tax for failure_to_file a timely return unless it is shown that such failure is due to reasonable_cause and not to willful neglect reasonable_cause is described by the applicable regulations as the exercise of ordinary business care and prudence sec_301_6651-1 proced admin regs see also 469_us_241 w illful neglect is interpreted as a conscious intentional failure or reckless indifference united_states v boyle supra pincite here respondent has met the burden of production because the court has found that petitioner failed to file a federal_income_tax return for and petitioner has not presented any evidence to suggest that his failure_to_file was due to reasonable_cause in fact his sole argument is a terse assertion that respondent failed to meet the burden of production petitioner is incorrect consequently the court sustains respondent’s imposition of an addition_to_tax pursuant to sec_6651 c sec_6654 addition_to_tax sec_6654 imposes an addition_to_tax for underpayment of estimated income_tax by an individual taxpayer that addition_to_tax asserted by respondent only with respect to the taxable_year is computed by reference to four required_installment payments of the taxpayer’s estimated_tax liability each constituting percent of the required_annual_payment sec_6654 for taxpayers whose adjusted_gross_income for the preceding year was dollar_figure or less the required_annual_payment is equal to the lesser_of percent of the tax shown on the individual's return for the year or if no return is filed percent of his or her tax for such year or if the individual filed a return for the immediately preceding_taxable_year percent of the tax shown on that return sec_6654 b i and ii here petitioner failed to file a federal_income_tax return and made no estimated_tax payments for petitioner also failed to file a federal_income_tax return because petitioner did not file a return_for_the_preceding_taxable_year respondent has met his burden of producing evidence that petitioner had a required_annual_payment of estimated_tax for payable in four installments under sec_6654 and the court need not engage in any analysis under sec_6654 the court also concludes that petitioner does not fit within any of the exceptions listed in sec_6654dollar_figure as a consequence the court sustains respondent’s determination of the addition_to_tax pursuant to sec_6654 d sec_6673 penalty sec_6673 authorizes the tax_court to impose a penalty not in excess of dollar_figure on a taxpayer for proceedings instituted primarily for delay or in which the taxpayer’s position is frivolous or groundless a position maintained by the taxpayer is ‘frivolous’ where it is ‘contrary to established sec_6654 provides two exceptions to the sec_6654 addition_to_tax first the addition is not applicable if the tax shown on the taxpayer’s return for the year in question or if no return is filed the taxpayer’s tax for that year reduced for these purposes by any allowable credit for wage withholding is less than dollar_figure sec_6654 second the addition is not applicable if the taxpayer’s tax for the full month preceding_taxable_year was zero and the taxpayer was a citizen or resident_of_the_united_states sec_6654 the court has determined that petitioner had a liability for a federal_income_tax deficiency for that net of withholding exceeds dollar_figure and in light of our earlier conclusion regarding petitioner’s liability for a deficiency for it has not been shown that petitioner had no tax_liability in law and unsupported by a reasoned colorable argument for change in the law ’ 114_tc_136 quoting 791_f2d_68 7th cir respondent by motion has asked the court to impose a penalty under sec_6673 because some of the issues raised by petitioner including his entitlement to dependency_exemptions education credits a deduction for tuition and fees and a moving_expense_deduction were not frivolous we afford petitioner the benefit of the doubt and do not impose a penalty under sec_6673 petitioner is warned however that the court may not be so inclined should he return to the court and advance arguments as groundless as some of the other arguments advanced in this case the court has considered all of petitioner’s contentions arguments requests and statements to the extent not discussed herein we conclude that they are meritless moot or irrelevant to reflect the foregoing an appropriate order and decision will be entered


internal_revenue_service department of the treasury oe dist washington dc contact person 9g u telephone number in reference to op e eo t l date nfc employer_identification_number key district_office a a l o o s o u o t n o v t f i sec_1 o l o r d r i u q j l n r i dear sir or madam this refers to your request for rulings under sec_501 and a of the internal_revenue_code m is a d corporation that controls and oversees a health facts care delivery system of teaching and community hospitals physician groups and other caregivers includes six hospitals corporate member of each of these hospitals hospitals is the school of medicine is the parent_corporation and sole an acute care teaching hospital affiliated with the m health care system one of these p m m is also the sole corporate member of r the faculty the faculty practice is practice academic and clinical group practice that is affiliated with the school of medicine and employs all of the full-time faculty physicians practicing at p approximately physicians all of whom enjoy medical staff the faculty practice employs a multi-disciplinary privileges at the provision of clinical services medical education and research the activities of the faculty practice include p m and p each have been recognized as organizations described is subject_to the in sec_501 substantial conflicts of interest policy adopted by m of the code i a l is d corporation that has been recognized as an of the code at l‘s the main facility l provides health care organization described in sec_501 main facility in e services to ambulatory patients diagnosed with diabetes and related diseases including p’s patients and engages in both clinical and laboratory research activities and medical education programs involving diabetes and related diseases m and l will enter into a formal cooperative arrangement involving the diagnosis treatment and care of ambulatory patients with diabetes and related diseases and the performance of related medical_research and medical education m and l intend to operate this arrangement through n which has been recognized as formerly known as described in sec_501 articles of organization m and l are the members of nw and n will operate in conjunction with n’s proposed amended bylaws l will elect five of the nine members of n’s board_of trustees and m will elect four and in support of mand l under n’s restated of the code an organization under under this proposed arrangement except in certain limited circumstances n will be the exclusive provider of diabetes services for m's affiliates including pb integrated multi-disciplinary practice that will serve as essential component of m’s broad-based network of hospitals and other health care providers including p n will provide an an n has applied for a clinic license from the d department of once this license is granted n rather than l public health will provide health care services to ambulatory patients diagnosed with diabetes and related diseases including p's patients n’s principal_place_of_business will be at the main ll will lease to n approximately percent of the main facility facility where l currently provides health care services to ambulatory patients diagnosed with diabetes and related diseases in the leased portion of the main facility n will provide health care services to ambulatory patients diagnosed with diabetes and related diseases including p’s patients using leased and contracted physicians and other professional staff initially n will not directly employ physicians or other instead l will lease to n l’s employed medical personnel physicians who currently provide health care services to ambulatory patients diagnosed with diabetes and related diseases in addition m’s affiliates including the faculty practice may contract their employed physicians to l or directly to n m and l will enter into a joint_venture agreement with under the joint_venture agreement pursuant toa pb will provide clinical and respect to n services agreement between p and n management services to n based on its costs which include the direct and indirect fully allocated costs of the services provided n will compensate p for these services rulings requested the proposed arrangement between m and l with respect to n will not affect the status of p as an organization described in sec_501 of the code the payments p will receive from n under the services agreement for the provision of clinical and management services to n will not constitute unrelated_business_taxable_income to p under sec_512 a i code of the sec_501 applicable law sec_501 of the code provides an exemption from federal_income_tax for organizations described in sec_501 including organizations that are organized and operated exclusively for charitable educational or scientific purposes sec_501 of the code provides for the exemption from federal_income_tax of organizations organized and operated exclusively for charitable scientific or educational_purposes provided no part of the organization s net_earnings inures to the benefit of any private_shareholder_or_individual sec_1 c -1 a of the income_tax regulations provides that for an organization to be exempt as one described it must be both organized and in sec_501 operated exclusively for one or more exempt purposes sec_1 c -1 d i b purpose includes a charitable purpose of the regulations an exempt of the code under 199910u63 sec_1 c -1 d the term charitable is used in sec_501 its generally accepted legal sense long been recognized as second fratcher the law of trusts sec_368 rev of trusts sec_368 a charitable purpose rul 1969_2_cb_117 see restatement 4a scott and 4th ed of the regulations provides that of the code in the promotion of health has revrul_69_545 1969_2_cb_117 established a community a hospital benefit standard as the basis for the federal_income_tax exemption of hospital satisfies the community benefit standard if the health of community as individuals in achieving that objective a whole and it does not unduly benefit private a class of persons broad enough to benefit the this revenue_ruling held that a it promotes sec_1 c -1 c of the regulations provides that an organization will be regarded as operated exclusively for one or more exempt purposes only if activities which accomplish one or more of such exempt purposes specified in sec_501 not be activities is not in furtherance of so regarded if more than an insubstantial part of it engages primarily in an exempt_purpose of the code an organization will its sec_512 a sec_511 of the code in part imposes a tax on the unrelated_business_taxable_income of organizations described in sec_501 sec_512 of the code defines the term unrelated_business_taxable_income as gross_income derived by an organization from any unrelated_trade_or_business regularly less the deductions directly connected with the carried on by carrying on of such trade_or_business both computed with certain modifications it sec_513 of the code defines the term unrelated_trade_or_business as any trade_or_business the conduct of which is not substantially related aside from the need of the organization for income or funds or the use it makes of the profits derived to the exercise or performance by such organization of the purpose or function constituting the basis for its exemption sec_513 of the code provides that the term unrelated_trade_or_business does not include any trade_or_business which is carried on described in sec_501 organization primarily for the convenience of a hospital by the in the case of its patients an organization such as sec_1_513-1 of the regulations defines unrelated_business_taxable_income to mean gross_income derived by an less directly connected deductions and subject organization from any unrelated_trade_or_business regularly carried on by it to certain modifications organization subject_to the tax imposed by sec_511 of the code is includible in the computatioa of unrelated business is income from trade_or_business taxable_income if such trade_or_business is regularly carried on by the the conduct of such trade_or_business is organization and not substantially related other than through the production of funds to the organization's performance of its exempt functions therefore gross_income of an exempt it sec_1_513-1 of the regulations states that the presence of the substantially related requirement necessitates an examination of the relationship between the business activities which generate the particular income in question -- the activities that is performing the services involved -- and the accomplishment of the organization's exempt purposes of producing or distributing the goods or sec_1_513-1 of the regulations states that a trade_or_business is related to exempt purposes only where the conduct of the business activity has a causal relationship to the an exempt_purpose and is substantially related achievement of for purposes of sec_513 only if the causal relationship is a trade_or_business substantial one from which a particular amount of gross_income is derived to be substantially related to purposes for which exemption is granted the production or distribution of the goods or the performance of the services from which the gross_income is derived must contribute importantly to the accomplishment of those purposes for the conduct of thus a sec_501 c rationale following the consummation of the proposed arrangement b will continue its activities between l and m with respect to n of promoting the health of the community under the community benefit standard established in rev will continue to be organized and operated exclusively for therefore p will continue to satisfy the charitable purposes c - organizational and operational tests under sec_1 a m and l will not adversely affect the status of p as an of the code organization described in sec_501 c of the regulations a result the arrangement between rul thus b supra as sec_512 a following the consummation of the proposed arrangement between l and m with respect to n license from the state of d and after n obtains a clinic n rather than l will provide health care services to ambulatory patients diagnosed with diabetes and related diseases including p’s patients the exclusive provider of diabetes services for m’s affiliates in effect n will operate as p's outpatient including p clinic for treating ambulatory patients diagnosed with diabetes and related diseases thus n will be as pb’s tax-exempt a result p’s activities will have a substantial therefore p’s clinical and management activities with respect to n will materially benefit p’s activities and will contribute importantly to the accomplishment of purposes causal relationship to the achievement of p’s tax-exempt purpose under sec_1_513-1 of the regulations clinical and management activities with respect to n are activities that will be substantially related to p's performance of of the code and sec_1_513-1 of the regulations its exempt functions within the meaning of sec_512 a thus p’s ruling sec_1 the proposed arrangement between m and l with respect to n will not affect the status of p as an organization described in sec_501 of the code the payments p will receive from n under the services agreement for the provision of clinical and management services to n will not constitute unrelated_business_taxable_income to p under sec_512 code of the these rulings are based on the understanding that there will be no material changes in the facts upon which they are based these rulings do not address the applicability of any section of the code or regulations to the facts submitted other than with respect to the sections described these rulings are directed only to the organization that requested it may not be used or cited by others as precedent sec_6110 o the code provides that they we are informing your key district_director of this action please keep a copy of this ruling in your permanent records - j in accordance with the power_of_attorney currently on file with the internal_revenue_service we are sending a copy of this letter to your authorized representatives sincerely marvin friedlander marvin friedlander chief exempt_organizations technical branch


internal_revenue_service number release date index number department of the treasury washington dc in re person to contact telephone number refer reply to cc psi 9-plr-144483-02 date date legend trusts trust trust primary beneficiary trust primary beneficiary trust executor estate trustor spouse settlors date date date company state year dear executor this is in response to your letter dated date requesting on behalf of trustor’s estate an extension of time under sec_301_9100-3 of the procedure and administration regulations and sec_2642 of the internal_revenue_code to make allocations of trustor’s generation-skipping_transfer gst tax exemption to transfers made to irrevocable trusts plr-144483-02 a summary of the facts and representations submitted is as follows on date trustor and spouse settlors formed two trusts trust and trust one for the benefit of each of their children and their children’s spouses and descendants article i i and of each trust provide that during the life of the settlors’ child for whom the trust was established the primary beneficiary trustee shall pay income and principal to the primary beneficiary and his or her issue to provide for their health education support and maintenance article i sec_1 provides that trustee shall pay as much of the trust’s principal to the primary beneficiary’s spouse issue and the spouses of the issue as requested in writing by the primary beneficiary article i sec_1 provides the primary beneficiary with a testamentary limited_power_of_appointment to appoint the remaining trust estate among the primary beneficiary’s spouse issue and the spouses of the issue article i sec_1 provides the primary beneficiary with a testamentary general_power_of_appointment over any portion of the trust estate that is not exempt from the gst tax article i sec_1 provides that any portion of the trust estate not appointed under the provisions of article i sec_1 and is to be held in a single trust until the later of the death of the primary beneficiary’s spouse or the date the primary beneficiary’s youngest then living child attains age during this period the trustee shall pay income and principal to the primary beneficiary’s spouse issue and the issue’s spouses to provide for their health education support and maintenance article i sec_1 provides that upon the later of the primary beneficiary’s spouse’s death or the date the primary beneficiary’s youngest then living child attaining age the trust estate shall be divided into as many equal shares as there are then living children of the primary beneficiary and deceased children of the primary beneficiary leaving issue article i sec_1 a provides that the trustee of a_trust held for the benefit of the primary beneficiary’s then living child or the then living issue of a deceased child beneficiary shall pay the beneficiary thereof income and principal deemed necessary to provide for his or her health education support and maintenance article i sec_1 b provides that the trustee shall distribute so much of the principal from the beneficiary’s trust to the beneficiary’s spouse issue and spouses of the issue as the beneficiary shall request in writing article i sec_1 c provides the beneficiary with a testamentary limited_power_of_appointment to appoint the trust estate among the beneficiary’s spouse issue and the spouses of the issue article i sec_1 d provides that if the beneficiary dies before his or her trust terminates the balance of the trust shall be divided equally by right of representation and held as separate trusts for the benefit of his or her surviving issue by right of representation if any if none the balance of the trust shall be divided equally by right of representation and distributed to the trusts established for his or her surviving siblings and the issue of plr-144483-02 any deceased siblings if any if none the balance of the trust shall be divided equally by right of representation and distributed to the trusts established for the primary beneficiary’s surviving issue article i sec_1 provides that the trust shall terminate at the earlier of the death of the last survivor of the settlors’ issue or years after the death of the last survivor of the settlors’ descendants who were living on date article i sec_1 provides that if any issue of the primary beneficiary are living when the trust terminates the trust estate shall be distributed outright to the issue by right of representation article i sec_1 provides that upon the termination of the trust if no issue of the primary beneficiary are living the trustee shall distribute the trust estate outright to the then living issue of the primary beneficiary’s siblings by right of representation on date settlors each transferred shares of stock in company to each trust settlors retained an accounting firm to prepare each of their united_states gift and generation-skipping_transfer_tax returns form sec_709 reporting these transfers settlors each elected under sec_2513 to treat their gifts to the trusts as having been made one-half by each of them the accounting firm mistakenly failed to allocate settlors’ gst exemptions to the assets transferred to each trust on the form sec_709 further a notice of allocation was not attached to the form sec_709 on date trustor died during year settlors’ attorney discovered the failure to properly allocate settlors’ gst exemptions to the date transfers it has been represented that trustor had not made any transfers to trusts or skip persons to which trustor’s gst_exemption was or was required to be applied trustor’s estate has requested an extension of time under sec_2642 and sec_301_9100-3 to make a late gst_exemption allocation to the date transfers to the trusts and that such allocation will be based on the value of the property transferred to the trusts on date law and analysis sec_2601 imposes a tax on every generation-skipping_transfer gst a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2631 as in effect for the year involved provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure adjusted for inflation under sec_2631 which may be allocated by such individual or his executor to any property with respect to which such individual is the plr-144483-02 transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable sec_2632 provides that any allocation by an individual of his or her gst_exemption under sec_2631 may be made at any time on or before the date prescribed for filing the estate_tax_return for such individual’s estate determined with regard to extensions regardless of whether such a return is required to be filed sec_2632 provides that if any individual makes an indirect_skip during such individual's lifetime any unused portion of such individual's gst_exemption shall be allocated to the property transferred to the extent necessary to make the inclusion_ratio for such property zero if the amount of the indirect_skip exceeds such unused portion the entire unused portion shall be allocated to the property transferred sec_2632 provides generally that any portion of an individual's gst_exemption which has not been allocated within the time prescribed by sec_2632 shall be deemed to be allocated as follows -- a first to property which is the subject of a direct_skip occurring at such individual's death and b second to trusts with respect to which such individual is the transferor and from which a taxable_distribution or a taxable_termination might occur at or after such individual's death sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides that an allocation of gst_exemption to property transferred during the transferor’s lifetime other than in a direct_skip is made on form_709 sec_2642 provided that except as provided in sec_2642 if the allocation of the gst_exemption to any transfers of property is made on a gift_tax_return filed on or before the date prescribed by sec_6075 for such transfer or is deemed to be made under sec_2632 or c - a the value of such property for purposes of sec_2642 shall be its value as finally determined for purposes of chapter within the meaning of sec_2001 or in the case of an allocation deemed to have been made at the close of an estate_tax_inclusion_period its value at the time of the close of the estate_tax_inclusion_period and b such allocation shall be effective on and after the date of such transfer or in the case of an allocation deemed to have been made at the close of an estate_tax_inclusion_period on and after the close of such estate_tax_inclusion_period sec_2642 provides that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment sec_2642 provides that in determining whether to grant relief the secretary shall take into account all relevant circumstances including evidence of intent plr-144483-02 contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant sec_2642 further provides that for purposes of determining whether to grant relief the time for making the allocation shall be treated as if not expressly prescribed by statute notice_2001_50 2001_34_irb_189 provides that under sec_2624 the time for allocating the gst_exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust as a generation-skipping_trust are to be treated as if not expressly prescribed by statute the notice further provides that taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i under sec_301_9100-1 a regulatory election includes an election whose due_date is prescribed by a notice published in the internal_revenue_bulletin in accordance with sec_2642 and notice_2001_50 taxpayers may seek an extension of time to make an allocation described in sec_2642 under the provisions of sec_301_9100-3 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied therefore trustor’s estate is granted an extension of time of sixty days from the date of this letter to allocate trustor’s available gst_exemption to the date transfers to the trusts the allocations once made will be effective as of date the date of the transfers to the trusts the value of the assets transferred to the trusts on date will be used in determining the amount of the trustor’s gst_exemption to be allocated to the transfers the allocation should be made on a separate supplemental form_709 for the date year and filed with the internal_revenue_service center cincinnati ohio a plr-144483-02 copy of this letter should be attached to the supplemental form_709 a copy is enclosed for this 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 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 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayers sincerely heather c maloy heather c maloy associate chief_counsel passthroughs and special industries enclosures copy for sec_6110 purposes one copy of this letter


internal_revenue_service number release date index number -------------------------- ------------------- -------------------------------- re ----------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------------- id no -------------- ----------------- telephone number ---------------------- refer reply to cc psi b04 plr-133038-16 date date legend decedent spouse date date ------------------------------------------------- -------------------------- --------------------------- ----------------------- dear --------------- this letter responds to your personal representative’s letter of date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election under sec_2010 of the internal_revenue_code portability election to allow a decedent’s surviving_spouse to take into account that decedent’s deceased spousal unused exclusion dsue amount the facts and representations are as follows decedent died on date survived by spouse date is a date after the effective date of the amendment to sec_2010 which provides for portability of a dsue amount to a surviving_spouse to obtain the benefit of portability of decedent’s dsue amount to spouse decedent’s estate was required to file form_706 united_states estate and generation-skipping_transfer_tax return on or before the date that is nine months after decedent’s date of death or the last day of the period covered by an extension decedent’s form_706 was due on date but the estate did not file a form_706 to make the portability election the estate discovered its failure to elect portability after the due_date for making the election it is represented that the value of decedent’s gross_estate is less than the basic exclusion amount in the year of decedent’s death including any taxable_gifts made during her lifetime plr-133038-16 you request an extension of time pursuant to sec_301_9100-3 to elect portability of decedent’s dsue amount pursuant to sec_2010 law and analysis sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2010 provides that a credit of the applicable credit_amount shall be allowed to the estate of every decedent against the tax imposed by sec_2001 sec_2010 provides that the applicable credit_amount is the amount of the tentative_tax that would be determined under sec_2001 if the amount with respect to which such tentative_tax is to be computed were equal to the applicable_exclusion_amount on date congress amended sec_2010 effective for estates of decedents dying and gifts made after date to allow portability of a decedent’s unused applicable_exclusion_amount between spouses tax relief unemployment insurance reauthorization and job creation act of pub_l_no sec_303 124_stat_3296 sec_2010 provides that the applicable_exclusion_amount is the sum of the basic exclusion amount and in the case of a surviving_spouse the dsue amount sec_2010 generally provides that the basic exclusion amount is dollar_figure to be adjusted for inflation annually after calendar_year sec_2010 defines the dsue amount to mean the lesser_of a the basic exclusion amount or b the excess of -- i the applicable_exclusion_amount of the last deceased spouse of the surviving_spouse over ii the amount with respect to which the tentative_tax is determined under sec_2001 on the estate of such deceased spouse sec_2010 provides that a dsue amount may not be taken into account by a surviving_spouse under sec_2010 unless the executor of the estate of the deceased spouse files an estate_tax_return on which such amount is computed and makes an election on such return that such amount may be so taken into account the election once made shall be irrevocable no election may be made if such return is filed after the time prescribed by law including extensions for filing such return sec_2010 provides that the secretary shall prescribe regulations as may be necessary or appropriate to implement sec_2010 plr-133038-16 sec_20_2010-2t a of the estate_tax regulations as in effect on date provides that to allow a decedent’s surviving_spouse to take into account that decedent’s dsue amount the executor of the decedent’s estate must elect portability of the dsue amount on a timely-filed form_706 under sec_20_2010-2t a the due_date of an estate_tax_return required to elect portability is nine months after the decedent’s date of death or the last day of the period covered by an extension if an extension of time for filing has been granted under sec_20_2010-2t a the portability election is made by timely filing a complete and properly prepared estate_tax_return unless the executor satisfies the requirements for the election not to apply in sec_20_2010-2t a i sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term statutory election means an election whose due_date is prescribed by statute the term regulatory election means an election whose due_date 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_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute a request for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer failed to make the election because after exercising reasonable diligence taking into account the taxpayer’s experience and the complexity of the return or issue the taxpayer was unaware of the necessity for the election the due_date for the portability election is prescribed by statute in the case of an estate required to file an estate_tax_return under sec_6018 see sec_2010 sec_6075 and sec_6018 in the case of an estate that is not required to file an estate_tax_return under sec_6018 the due_date is prescribed by regulation see sec_20_2010-2t a see also sec_20_2010-2 and revproc_2014_18 2014_7_irb_513 sec_2 accordingly in the latter case a taxpayer may seek an extension of time to elect portability under the provisions of sec_301_9100-3 plr-133038-16 sec_6018 requires the filing of an estate_tax_return in all cases where the gross_estate exceeds the basic exclusion amount in effect under sec_2010 for the calendar_year which includes the date of death for purposes of this determination under sec_6018 the basic exclusion amount is reduced but not below zero by the sum of -- a the amount of the adjusted_taxable_gifts within the meaning of sec_2001 made by the decedent after date plus b the aggregate amount allowed as a specific exemption under sec_2521 as in effect before its repeal by the tax reform act of with respect to gifts made by the decedent after date it is represented that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is not required to file an estate_tax_return under sec_6018 under these facts the commissioner has discretionary authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly we grant an extension of time of days from the date of this letter in which to elect portability under sec_2010 the election should be made by filing a complete and properly-prepared form_706 and a copy of this letter within days from the date of this letter to the cincinnati service_center at the following address internal_revenue_service cincinnati service_center stop cincinnati oh for purposes of electing portability a form_706 filed by decedent’s estate within days from the date of this letter will be considered to be timely filed 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 if it is later determined that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is required to file an estate_tax_return pursuant to sec_6018 the commissioner is without authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability and the grant of the extension referred to in this letter is deemed null and void this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-133038-16 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 associate chief_counsel passthroughs special industries by lorraine e gardner lorraine e gardner senior counsel branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes