internal_revenue_service number info release date index number ------------------------- ---------------------------- in re ------------------------- ---------------------------- department of the treasury washington dc person to contact ----------------------- id no ------------------- ---------------------------------------------------- telephone number - refer reply to cc psi b01 - genin-161039-03 date november dear ------------- we are answering correspondence submitted by your representative requesting automatic relief in order to establish date as the effective date for your s_corporation_election based on the information provided an election was sent but the internal_revenue_service failed to receive it timely for automatic relief under revproc_97_48 is unavailable because the irs failed to receive a timely form_1120s tax_return for the taxable_year although we are unable to respond to your request as submitted this letter provides information relating to your situation announcement copy enclosed provides guidance on seeking relief for late s_corporation elections generally to request relief for a late s_corporation_election you must request a private_letter_ruling from the national_office the information forwarded to our office is insufficient for us to process a private_letter_ruling request the procedures for requesting a private_letter_ruling are set forth in revproc_2003_1 copy enclosed in addition taxpayers must submit a user_fee along with their ruling_request the standard user_fee for a private_letter_ruling is dollar_figure however taxpayers with gross_income of less than dollar_figure million on their tax_return for the most recent 12-month taxable_year qualify for a reduced user_fee in the amount of dollar_figure if you qualify for the reduced fee you must include a statement claiming that your gross_income for the last 12-month taxable_year was less than one million dollars if you decide to submit a formal request for a private_letter_ruling please follow the sample format provided in appendix b of revproc_2003_1 your request should include all required procedural statements a check for the user_fee and any documents that substantiate your intent to be an s_corporation from inception please refer your request to our office by adding the following to the address attn cc pa t p o box ben franklin station washington dc direct to cc psi room incidentally the irs has developed two compact discs to help educate small_business owners on their tax responsibilities introduction to federal taxes for small_business self-employed and a virtual small_business workshop these items are free and can be ordered by calling the irs also makes information available to small_business taxpayers online at www irs gov businesses small index please keep this letter with your tax records and feel free to provide a copy of it to your authorized representative we hope that the above information proves helpful sincerely yours s dianna k miosi chief branch associate chief_counsel passthroughs and special industries enclosures announcement revproc_2003_1


t c summary opinion united_states tax_court jeffrey s carter and kandie anderson petitioners v commissioner of internal revenue respondent docket no 23646-10s filed date jeffrey s carter and kandie anderson pro sese lewis a booth ii for respondent summary opinion dean special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case unless otherwise indicated subsequent section references are to the internal_revenue_code as amended and all rule references are to the tax_court rules_of_practice and procedure respondent issued petitioners a notice_of_deficiency in which he determined a deficiency of dollar_figure for the issue for decision is whether petitioners are liable for the sec_72 additional tax for an early withdrawal from a qualified_retirement_plan background some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by reference petitioners resided in texas when they filed their petition on date hurricane ike made landfall near galveston texas as a strong category storm hardin county was one of the many counties in the hurricane’s path subsequently hardin county was designated a federal disaster 1the court takes judicial_notice that hurricanes are classified by the intensity of their sustained winds on the saffir-simpson hurricane wind scale the categories range from to with a category storm being the strongest a category hurricane will have sustained winds between and miles per hour that will cause extensive damage national oceanic and atmospheric administration saffir-simpson hurricane wind scale http www nhc noaa gov aboutsshws php area and the residents there were eligible for limited relief from filing deadlines under sec_7508a petitioners lived in hardin county in petitioners took an early distribution of dollar_figure from petitioner husband’s qualified_retirement_plan held by principal life_insurance co to repair property damaged by the storm and to supplement income that they lost because of the storm petitioners included the distribution in their income for and included form_5329 additional taxes on qualified_plans including iras and other tax-favored accounts with their joint federal_income_tax return on form_5329 petitioners listed the dollar_figure as an early distribution and claimed that the entire amount was not subject_to the additional tax on early distributions respondent issued petitioners a notice_of_deficiency in which he determined that they were liable for the additional tax for an early distribution from a qualified_retirement_plan discussion generally the commissioner’s determinations are presumed correct and the taxpayer bears the burden of proving that those determinations are erroneous rule a see 503_us_79 290_us_111 in some cases the burden_of_proof with respect to relevant factual issues may shift to the commissioner under sec_7491 the issue for decision in this case is a legal issue therefore the burden_of_proof under sec_7491 is not relevant to the court’s decision if any taxpayer receives any amount from a qualified_retirement_plan the taxpayer’s tax under this chapter for the taxable_year in which such amount is received shall be increased by an amount equal to percent of the portion of such amount which is includible in gross_income sec_72 sec_72 however will not apply to any qualified hurricane distribution sec_1400q a qualified hurricane distribution is defined as a distribution from an eligible_retirement_plan made on or after date and before date to an individual whose principal_place_of_abode on or after date is in the hurricane katrina disaster_area made on or after date and before date to an individual whose principal_place_of_abode on or after date is in the hurricane rita disaster_area and made on or after date and before date to an individual whose principal_place_of_abode on or after date is in the hurricane wilma disaster_area sec_1400q an individual must have also suffered an economic loss by reason of one of the named hurricanes for his or her distribution to be a qualified hurricane distribution id sec_1400q was extended first to the kansas disaster_area which was damaged by storms and tornadoes in food conservation and energy act of pub_l_no sec stat pincite sec_1400q was again extended to the midwestern disaster_area damaged by severe storms tornadoes and flooding in emergency economic stabilization act of pub_l_no sec_702 sec_122 stat pincite texas is not listed as a state included in the midwestern disaster_area id petitioners argue that because the government created an exemption from the additional tax for taxpayers affected by hurricanes katrina rita and wilma and for taxpayers affected by the kansas storms and tornadoes and the midwestern severe storms tornadoes and flooding it is only fair that they be granted the same exemption although the court sympathizes with petitioners’ situation in dealing with damage from hurricane ike the tax_court is a court of limited jurisdiction and cannot make decisions solely on the basis of equity see 484_us_3 92_tc_776 73_tc_1014 40_tc_436 aff’d 331_f2d_422 7th cir petitioners did not identify and the court is unable to find any exemption for early distributions from qualified_retirement_plans for taxpayers who suffered damages and economic losses from hurricane ike respondent’s determination is sustained to reflect the foregoing decision will be entered for respondent 2petitioners’ early distribution is not one of the certain distributions to which subsec t shall not apply see sec_72


internal_revenue_service number release date index number ----------------------- ------------------------------- ---------------------------- ---------------------------------------- ---------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------------- id no ------------------ telephone number ---------------------- refer reply to cc corp b02 plr-129569-16 date january legend parent subsidiary date date company official tax professional dear ------------------ --------------------------------------------------------------------------------- ------------------------------- --------------------------------------------------------------------------------- -------------------------------- ------------------- --------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- --------------------------------------------------- --------------------------------------------------------------------------------- --------------------------------------------------------------------------------- ---------------------------------------- this letter_ruling responds to a letter dated date as revised on date submitted on behalf of parent requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election the extension is being requested for parent and subsidiary parent group to make an election to file a consolidated federal_income_tax return with parent as the common parent under sec_1_1502-75 of the income_tax regulations for the plr-129569-16 taxable_year ending date hereinafter referred to as the election additional information was submitted in a letter dated date the material information submitted for consideration is summarized below parent is a domestic_corporation on date parent acquired all the stock of subsidiary a domestic_corporation an election for parent group to file a consolidated_income_tax_return with parent as the common parent for the taxable_year ending date was due on the last day prescribed by law including extensions of time for the filing of parent’s return parent intended to file the election but for various reasons a valid election ie the filing of the consolidated_return was not filed by the due_date of parent’s return after the due_date for the election it was discovered that the election had not been filed subsequently this request was submitted under sec_301_9100-3 for an extension of time to file the election the period of limitations on assessment under sec_6501 has not expired for the taxable_year ending date or any subsequent taxable_year parent has represented that it does not seek to alter a return position for which an accuracy- related penalty has been or could be imposed under sec_6662 sec_1_1502-75 of the income_tax regulations provides in part that an affiliated_group_of_corporations which did not file a consolidated_return for the immediately preceding_taxable_year may file a consolidated_return in lieu of separate returns for the taxable_year provided that each corporation which has been a member of the group during any part of the taxable_year for which the consolidated_return is to be filed consents in accordance with sec_1_1502-75 of the regulations to the regulations under sec_1502 if a group wishes to exercise its privilege of filing a consolidated_return such consolidated_return must be filed not later than the last day prescribed by law including extensions of time for the filing of the common parent’s return under sec_301_9100-1 the commissioner has discretion to 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 internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections requests 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 in this case the time for filing the election is fixed by the regulations ie sec_1_1502-75 therefore the commissioner has discretionary authority under sec_301_9100-3 to grant an extension of time for parent to file the election provided plr-129569-16 parent shows it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by parent company official and tax professional explain the circumstances that resulted in the failure to timely file the election the information establishes that parent reasonably relied on a qualified_tax professional who failed to make or advise parent to make a valid election and that the request for relief was filed before the failure to make the election was discovered by the internal_revenue_service see sec_301_9100-3 and v based on the facts and information submitted including the representations made we conclude that parent has shown it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly provided that parent group qualifies substantively to file a consolidated_return for the applicable tax_year we grant an extension of time under sec_301_9100-3 for sixty days from the date on this letter for parent to file the election by filing a consolidated_return with parent as the common parent and attaching a form_1122 for each member of parent group for its taxable_year ending date parent group having filed a return as though a valid election was made must amend its previously filed return to attach a copy of this ruling letter to such return alternatively if parent group files its return electronically this requirement may be satisfied by attaching a statement to the return that provides the date on and the control number of this ruling letter date plr-129569-16 the above extension of time is conditioned on parent group’s tax_liability if any being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to parent group’s tax_liability for the years involved a determination thereof will be made by the applicable director’s office upon audit of the federal_income_tax returns involved we express no opinion with respect to whether in fact parent group qualifies substantively to file a consolidated_return in addition we express no opinion as to the tax effects or consequences of filing the return or the election late under the provisions of any other section of the code or regulations or as to the tax treatment of any conditions existing at the time of or effects resulting from filing the return or the election late that are not specifically set forth in the above ruling for the purposes of granting relief under sec_301_9100-3 we relied on certain statements and representations made by parent company official and tax professional however the director should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-3 to file the election penalties and interest that would otherwise be applicable if any continue to apply plr-129569-16 this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office copies of this letter are being sent to your authorized representatives sincerely _________________________________ ken cohen chief branch office of associate chief_counsel corporate cc


department of the treasury internal_revenue_service washington d c date un mun _f bal l h ' dollar_figure sof co-o0 yiy sghg oo -o contact person identification_number telephone number t eo b4 employer_identification_number legend dear taxpayer we have considered b’s ruling_request dated date along with supplemental correspondence concerning the application of sec_4941 of the internal_revenue_code to b's proposed payment of trustee fees facts b is a charitable_trust created under the laws of the state of c income_tax under sec_501 of the internal_revenue_code as an organization described in sec_501 and is a private_foundation within the meaning of sec_509 b supports and promotes the arts together with other charitable scientific and educational organizations by making direct grants to public_charities private operating_foundations and other qualifying c organizations at the discretion of the b's trustees b is exempt from federal originally three individuals served as trustees of b however one trustee recently passed away and a new trustee will not be appointed to succeed him the trustees have each assumed all of the numerous duties that are imposed on a trustee in the state of c these services include but are not limited to physical custody and management of the assets accurate record keeping responsibility for personnel matters and investment decisions and investigating making and monitoring grants to other charitable institutions b has no president or similar officer rendering substantial services to b the trustees have assumed the responsibility of performing services normally performed by a president vice president and similar officers additionally the trustees have indicated that they will be providing certain professional services normally contracted for by trusts b intends to compensate and reimburse reasonable expenses of its two trustees for the performance of personal services in accordance with b’s trust agreement the trust agreement provides a trustee shall be entitled to compensation and reimbursement of reasonable expenses including reasonable advances for expenses anticipated in the immediate future for the performance of personal services as defined in sec_53 d -3 c and such compensation and reimbursement of reasonable expenses shall not be excessive the trustees shall consider the fees charged by e or its successors in determining the amount of compensation payable to the trustees b has represented that e is not a trustee or otherwise a disqualified_person as defined in sec_4946 of the code b has provided a schedule of fees of e’s trust services the fees are based on a fixed percentage of the fair_market_value as of the end of each month of the assets under management with a sliding scale dependent upon the amount of assets under management while managing a_trust and its investments e may employ third parties to sub-advise commingled funds or to separately sub-advise an account in accordance with e's policy this additional expense passes through to the trust e charges additional fees that may be necessary in situations involving the sale of assets other than marketable_securities e's policy is to charge a transaction fee for the sale of assets other than marketable_securities finally e collects these fees whether serving as sole trustee or co-trustee b has provided an affidavit by the senior vice president of e stating that the fees charged by e are comparable to and representative of the fees charged by similar institutions for similar services b intends to pay each of its two trustees as co-trustees a fee less than the fee charged by e b's trustees will be paid using a similar sliding fee structure as e however the fee paid to the trustees will include third parties sub-advisor fees and be capped b will compensate one of its trustees whichever of the two trustees is actively involved in the sale a transaction fee for sales of assets other than marketable_securities b represents that all fees to be charged by the trustees to b for their services as trustees are reasonable for the services rendered in accordance with industry practice and consistent with local laws governing fiduciaries ruling requested b requests a ruling that the payment of trustee's fees as provided for in the b's trust agreement and under e's fee arrangement does not constitute self-dealing under sec_4941 of the code law sec_501 of the code provides in part an exemption from federal_income_tax for a corporation organized and operated exclusively for charitable scientific or educational_purposes ait provided no part of the corporation's net_earnings inure to the benefit of any private_shareholder_or_individual sec_509 of the code provides that unless specifically excepted a domestic or foreign organization described in sec_501 is a private_foundation and subject_to the excise_taxes of chapter sec_4941 of the code imposes a tax on each act of self-dealing between a private_foundation and a disqualified_person as defined in sec_4946 sec_4941 of the code provides that the term self-dealing includes any direct or indirect payment of compensation or payment or reimbursement of expenses by a private_foundation to a disqualified_person sec_4941 d e of the code provides that the term self-dealing includes any direct or indirect transfer to or use by or for the benefit of a disqualified_person of the income or assets of a private_foundation sec_4941 of the code provides that the payment of compensation by a private_foundation to a disqualified_person for personal services which are reasonable and necessary to carry out the exempt_purpose of the foundation shall not be an act of self-dealing if the compensation is not excessive sec_53 d -1 a of the foundation and similar excise_taxes regulations provides that for purposes of sec_4941 the term self-dealing means any direct or indirect transaction described in sec_53_4941_d_-2 of the regulations for purposes of this section it is immaterial whether the transaction results in a benefit or detriment to the private_foundation sec_53 d -3 c of the regulations provides that the payment of compensation and the payment or reimbursement of expenses including reasonable advances for expenses anticipated in the immediate future by a private_foundation to a disqualified_person for the performance of personal services which are reasonable and necessary to carry out the exempt purposes of the private_foundation shall not be an act of self-dealing if such compensation or payment or reimbursement is not excessive for purposes of this subparagraph the term personal services includes the services of a broker serving as agent for the private_foundation but not the services of a dealer who buys from the private_foundation as principal and reseils to third parties sec_4946 of the code describes a disqualified_person as including a foundation_manager as that term is described in sec_4946 sec_4946 of the code defines a foundation_manager as an officer director or trustee of a foundation or an individual having powers or responsibilities similar to those of officers directors or trustees of the foundation and with respect to any act or failure to act the employees of the foundation having authority or responsibility with respect to such act or failure to act ay ‘ sec_1_162-7 of the income_tax regulations provides that it is in general just to assume that reasonable and true compensation is only such amount as would ordinarily be paid for like services by like enterprises under like circumstances analysis b’s trustees are disqualified persons under sec_4946 of the code thus b's proposal to compensate the trustees for personal services will constitute self-dealing under sec_4941 unless the compensation is reasonable and necessary to carry out the exempt_purpose of b and is not excessive b’s trust agreement includes a provision for the compensation and reimbursement of reasonable expenses the trust agreement mandates that the trustees consider the fees charged by e in determining the amount of compensation payable to the trustees b has given consideration to the fees charged by e and has adopted a fee structure for its trustees which is less than e comparable to and representative of fees normally charged by similar institutions for similar services b has provided information that indicates that the fees charged by e are b's trustees have each assumed all of the duties imposed on a trustee by c law the trustees perform all of the services that e typically performs when serving as a trustee additionally b’s trustees have assumed the responsibility of performing services that are typically performed by a president vice president or similar officers furthermore the trustees have indicated that they will be providing certain professional services normally contracted for by trusts b has represented that the fees paid to its trustees are reasonable based upon the nature of the duties assumed by the trustees and the fees are less than the fees charged by institutions for similar services based upon this representation the compensation arrangements meet the requirements of sec_4941 d e of the code and sec_53 d -3 c of the regulations ruling based upon the representations b submitted b’s fee compensation arrangement for its trustees as provided for in the b's trust agreement will not constitute self-dealing under sec_4941 of the code except as specifically ruled upon above no opinion is expressed concerning the federal_income_tax consequences of the transaction described above under any other provision of the internal_revenue_code with respect to reimbursement of reasonable expenses including reasonable advances for expenses anticipated in the immediate future as provided for in b's trust agreement b should be mindful that sec_53 d -3 c of the regulations generally caps reasonable advances to not ordinarily exceed dollar_figure because this ruling could help resolve future questions about your federal_income_tax status you should keep it in your permanent records old ' this ruling is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as precedent if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter sincerely bereta v drek gerald v sack manager exempt_organizations technical group


number release date id office uilc cca_2010122014535444 ---------------------------- from --------------------- sent monday date pm to --------------------------- cc ------------------------------------------ subject re 5471s ------------- sec_6501 as amended by the hiring incentives to restore employment act hire publaw_111_147 stat sec_513 provides in relevant part that in the case of any information which is required to be reported to the secretary under sec_6038 the time for assessment of any_tax imposed with respect to any_tax return event or period to which such information relates shall not expire before the date which i sec_3 years after the date on which the secretary is furnished the information required to be reported the amendment applies to returns filed after date or returns filed on or before that date if the sec_6501 period determined without regard to such amendments for assessment of such taxes was not expired as of that date the hire_act amendment to sec_6501 therefore clarifies that a failure_to_file form_5471 for a particular tax_year would extend the time for the assessment of tax with respect to any_tax return to which the information relates the inclusion of tax_return in sec_6501 means the extended period applies to an entire tax_return and is not limited to adjustments to income related to the information required to be reported see technical explanation of the revenue provisions contained in senate amendment the hiring incentive to restore employment act under consideration in the senate jcx-4-10 date assuming the sec_6501 limitations_period was open as of date amended sec_6501 operates to extend the time for assessment of tax with respect to any_tax return including form sec_1040 and to which the information relates please note that sec_6501 was further amended on date to provide that if the failure to furnish the required information is due to reasonable_cause and not willful neglect the extended limitations_period only applies to the item or items related to such failure and not the entire tax_return publaw_111_226 stat sec_218 this provision is effective as if included in sec_513 of the hire_act depending on the facts this could affect the taxpayer in your case


g an ia or a department of the treasury internal_revenue_service commerce street dallas tx tax_exempt_and_government_entities_division release number release date legend org organization name xx date address address org address certified mail dear date date person to contact badge number contact telephone number contact address employer_identification_number this is a final notice of adverse determination that your exempt status under sec_501 of the internal_revenue_code is revoked recognition of your exemption under internal_revenue_code sec_501 is revoked effective january 20xx the following reason s you have failed to produce documents to establish that you are operated exclusively for exempt purposes within the meaning of internal_revenue_code sec_501 and that no part of your net_earnings inure to the benefit of private shareholders or individuals also you have failed to keep adequate books_and_records as required by sec_6001 and the regulations there under in our telephone conversation held on march 20xx and in our letter dated may 20xx we requested information necessary to conduct an examination of your books_and_records for the year ended december 20xx we have not received the requested information you failed to file an annual return on form_990 for the year ended december 20xx our records also indicate you have not filed an annual return on form_990 for years ending december 20xx december 20xx december 20xx and december 20xx sec_6033 provides that with certain exceptions every organization_exempt_from_taxation under sec_501 shall file an annual return sec_1_6033-2 of the income_tax regulations provides in part that every organization which is exempt from tax shall submit such additional information as may be required by the internal_revenue_service for the purpose of inquiring into its exempt status you have not provided the requested information you failed to meet the operational requirements for continued exemption under sec_501 you have not provided requested information we hereby revoke your organization’s exemption from federal_income_tax under sec_501 of the internal_revenue_code effective january 20xx contributions to your organization are no longer deductible effective january 20xx since your exempt status has been revoked you are required to file form_1120 u s_corporation income_tax return for all years beginning on or after january 20xx income_tax returns for subsequent years are to be filed with the appropriate service_center identified in the instructions for those returns it is further determined that your failure_to_file a written appeal constitutes a failure to exhaust your available administrative remedies however if you decide to contest this determination in court you must initiate a suit for declaratory_judgment in the united_states tax_court the united_states claims_court or the district_court of the united_states for the district of columbia before the ninety-first 91st day after the date that this determination was mailed to you contact the clerk of the appropriate court for rules for initiating suits for declaratory_judgment to secure a petition form write to the following address please understand that filing a petition for a declaratory_judgment under sec_7428 will not delay the processing of subsequent income_tax returns and assessment of any taxes due you also have the right to contact the office_of_the_taxpayer_advocate however you should first contact the person whose name and telephone number are shown above since this person can access you tax information and can help you get answers you can call and ask for the taxpayer_advocate assistance or you can contact the advocate from the site where this issue was determined by writing to taxpayer_advocate assistance cannot be used as substitute for established irs procedures formal appeals processes etc the taxpayer_advocate is not able to reverse legal or technically correct_tax determination nor extend the time fixed by law that you have to file a petition in court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling this letter should be kept within your permanent records if you have any questions please contact the person whose name and telephone number are shown above enclosures publication sincerely nanette m downing director eo examinations tax_exempt_and_government_entities_division org address department of the treasury internal_revenue_service exempt_organizations examinations sw 6th court plantation fl date taxpayer_identification_number form tax_year s ended person to contact id number contact numbers telephone fax certified mail - return receipt requested dear we have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the internal_revenue_code code is necessary if you accept our findings take no further action we will issue a final revocation letter if you do not agree with our proposed revocation you must submit to us a written request for appeals_office consideration within days from the date of this letter to protest our decision your protest should include a statement of the facts the applicable law and arguments in support of your position an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in publication further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice if we issue a determination_letter to you based on technical_advice no letter catalog number 34809f o b if we do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the code you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at if you have any questions please call the contact person at the telephone number shown in the heading of this letter the most convenient time to call if we need to contact you if you write please provide a telephone number and thank you for your cooperation enclosures publication publication report of examination sincerely nanette m downing director eo examinations letter catalog number 34809f eo 886a name of taxpayer explanation of items department of the treasury - internal_revenue_service org schedule no or exhibit year period ended december 20xx legend org organization name xx date state state issue whether org qualifies for exemption under sec_501 of the internal_revenue_code facts on may 20xx org inc filed articles of incorporation with the state of state the articles of incorporation provided that its purpose was to fund burial and funeral costs to families who have suffered a sudden infant death syndrome sids loss and offer peer support during the time of grief on january 20xx an initial appointment letter and an information_document_request exhibit was mailed the org to determine if the organization was operated for exempt purposes and determine if organization’s response was received on march 20xx the correspondence from org only contained documentation related to its fundraising and bank statements exhibit a majority of the purchases listed on the bank statements appeared to be personal in nature and no supporting documentation to justify the expenses were provided it was required to file forms the during a telephone conversation with the organization on march 20xx the revenue_agent requested documentation relating to funeral services and burial assistance the organization stated it provided during the tax_year ended december 20xx revenue_agent also requested copies of cancelled checks and delinquent form_990 for 20xx because gross_receipts were over dollar_figure based on a review of the bank statements on may 20xx a day notice letter and an information_document_request was mailed to organization requesting the missing documentation in order to determine if the organization is operating for exempt purposes org failed to respond to the correspondence or file the form_990 for the tax period ending december 20xx law internal_revenue_code sec_6001 provides that every person liable for any_tax imposed by the internal_revenue_code or for the collection thereof shall keep adequate_records as the secretary_of_the_treasury or_his_delegate may from time to time prescribe form 886-arev department of the treasury - internal_revenue_service page -1- form 886a name of taxpayer explanation of items department of the treasury - internal_revenue_service org schedule no or exhibit year period ended december 20xx internal_revenue_code sec_6033 provides except as provided in sec_6033 every organization exempt from tax under sec_501 shall file an annual return stating specifically the items of gross_income receipts and disbursements and such other information for the purposes for carrying out the internal revenue laws as the secretary may by forms or regulations prescribe an keep such records render under oath such statements make such other returns and comply with such rules and regulations as the secretary may from time to time prescribe sec_1_6001-1 in conjunction with sec_1_6001-1 provides that every organization exempt from tax under sec_501 and subject_to the tax imposed by sec_511 on its unrelated_business_income must keep such permanent books or accounts or records including inventories as are sufficient to establish the amount of gross_income deduction credits or other matters required to be shown by such person in any return of such tax such organization shall also keep such books_and_records as are required to substantiate the information required by sec_6033 sec_1_6001-1 states that the books_and_records required by this section shall be kept at all time available for inspection by authorized internal revenue officers or employees and shall be retained as long as the contents thereof may be material in the administration of any internal revenue law sec_1_6033-1 provides that every organization which has established its right to exemption from tax whether or not it is required to file an annual return of information shall submit such additional information as may be required by the district_director for the purpose of enabling him to inquire further into its exempt status and to administer the provisions of subchapter_f sec_501 and the following chapter of the code and internal_revenue_code sec_6033 revrul_59_95 1959_1_cb_627 concerns an exempt_organization that was requested to produce a financial statement and statement of its operations for a certain year however its records were so incomplete that the organization was unable to furnish such statements the service held that the failure or inability to file the required information_return or otherwise to comply with the provisions of internal_revenue_code sec_6033 and the regulations which implement it may result in the termination of the exempt status of an organization previously held exempt on the grounds that the organization has not established that it is observing the conditions required for the continuation of exempt status in accordance with the above cited provisions of the code and regulations under internal_revenue_code sec_6001 and sec_6033 organizations recognized as exempt from federal_income_tax must meet certain reporting requirements these requirements form 886-a rev department of the treasury - internal_revenue_service page -2- korn 886a name of taxpayer explanation of items department of the ‘l'reasury - internal_revenue_service org 20xx schedule no or exhibit year period ended december relate to the filing of a complete and accurate annual and other required federal tax forms and the retention of records sufficient to determine whether such entity is operated for the purposes for which it was granted tax-exempt status and to determine its liability for any unrelated_business_income_tax conclusion it is the internal revenue service's position that org failed to meet the reporting requirements under internal_revenue_code sec_6001 and sec_6033 to be recognized as exempt from federal_income_tax under internal_revenue_code sec_501 accordingly the organization’s exempt status is revoked effective january 20xx any contributions to org are no longer deductible as charitable_contributions org will be required to file form_1120 for the tax period ending december 20xx and all subsequent tax periods form 886-a rev department of the treasury - internal_revenue_service page -3-


uniform issue list var f i ep rao ty legend taxpayer a amount b employer c plan c payor d dear this is in response to your letter in which you request a waiver of the 60-day rollover requirement contained in sec_402 of the internal_revenue_code the code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested after working nearly years for employer c you were terminated on _ with a partial disability due to back injuries you suffered on the job you immediately filed a workers’ compensation claim with the proper state authorities but its processing was delayed you applied for a distribution from plan c and received amount b on your workers’ compensation award intending to re-deposit amount b when you received page your workers’ compensation claim was settled and on month after the 60-day rollover period expired payor d paid you the total settlement amount you would like to re-deposit amount b in plan c approximately one you represent that no other amount was distributed from plan c within the one year period since the last distribution based on the above facts and representations you request that the service waive the 60-day rollover requirement with respect to the distribution of amount b because the failure to waive such requirement would be against equity or good conscience sec_402 of the code requires than an eligible_rollover_distribution from a qualified_retirement_plan must be transferred to an eligible_retirement_plan no later than the 6o day following the day of receipt in order to avoid having to include that distribution in the distributee’s gross_income for that year sec_402 of the code provides that the secretary may waive the 60-day requirement under sec_402 of the code where the failure to waive such requirement would be against equity or good conscience revproc_2003_16 2003_4_irb_359 provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_402 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information you presented demonstrates you were disabled and the delay in processing your workers’ compensation claim prevented you from satisfying the requirement that amount b be deposited in plan c within days after the distribution therefore the service hereby grants your request to waive the 60-day rollover requirement with respect to the distribution of amount b you are granted a period of days from the issuance of this ruling letter to deposit amount b into plan c or into an individual_retirement_account provided all other requirements of sec_402 of the code except the 60-day requirement are met with respect to such contributions these amounts will be considered rollover_contributions within the meaning of sec_402 or sec_408 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 taxpayers who requested it sec_61 k of the code provides that it may not be used or cited as precedent if you wish to inquire about this ruling please contact please address all correspondence to at sincerely yours ron ee ket be manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose


t c memo united_states tax_court mila alemasov and victor popov petitioners v commissioner of internal revenue respondent docket no filed date william e taggart jr for petitioners margaret burow for respondent memorandum opinion couvillion special_trial_judge respondent determined a dollar_figure deficiency in petitioners’ federal_income_tax for a dollar_figure addition_to_tax under sec_6651 for failure_to_file timely and a dollar_figure accuracy-related_penalty under sec_6662 after concessions there are two issues for decision whether petitioners are entitled to deductions under sec_162 for expenses relating to a real_estate activity and whether petitioners are liable for an addition_to_tax under sec_6651 for failure_to_file their return timely background at the time the petition was filed mila alemasov petitioner and victor popov were married and resided in san francisco california petitioner was born in russia immigrated to the united_states when she was a child and has resided in san francisco since she has a bachelor’s degree in international business from san francisco state university and a master’ sec_1unless otherwise indicated section references are to the internal_revenue_code in effect for the year at issue and all rule references are to the tax_court rules_of_practice and procedure 2in the notice_of_deficiency respondent determined that petitioners had rental income of dollar_figure not reported on schedule e supplemental income and loss at trial respondent conceded dollar_figure of this adjustment respondent conceded the remaining dollar_figure of the adjustment in his brief to the court these concessions prompted respondent to further concede that petitioners were not liable for the sec_6662 accuracy-related_penalty since that adjustment was based on the conceded unreported rental income 3the parties did not submit an agreed stipulation of facts at trial as required by rule a yet of the exhibits accepted into evidence during the trial were filed as joint exhibits counsel for the parties are experienced attorneys before this court and such practices are not in accord with the spirit of this court’s rules_of_practice and procedure degree in business and finance from the university of san francisco petitioner held a number of jobs before the year she began working for bank of america in the fields of finance and securities investment she worked for bank of america until she was released sometime in in connection with her release petitioner received settlement fees of dollar_figure from bank of america during in addition petitioner received unemployment_compensation of dollar_figure that year with the money received from these sources petitioner began an activity as a real_estate finder and consultant an activity that allowed her to attend to her two minor children petitioner testified that she traveled to hawaii korea china and las vegas during on behalf of her clients to search for prospective real_estate investment opportunities however petitioner’s lack of a salesperson’ sec_4the nature and terms of these fees were not made part of the record however petitioners included the dollar_figure as income on their income_tax return for 5petitioner decided to begin an activity as a real_estate finder and consultant sometime in date petitioner claimed that as a real_estate finder she searched for real_estate investments on behalf of clients interested in purchasing property she would assuming that properties she recommended were purchased receive a fee for her services at trial petitioner conceded that she did not enter into any written agreements in with her clients although she testified that she had numerous e-mail exchanges with clients during the year at issue she did not offer into evidence any of these e-mail communications petitioner claimed she had oral agreements regarding fee arrangements with her clients license inhibited her ability to enter into real_estate transactions during petitioner did not earn any income for her services as a real_estate consultant and finder in an effort to expand her business petitioner obtained a salesperson’s license during to enhance her ability to act on her clients’ behalf petitioners were granted an extension of time to date to file their federal_income_tax return for however their joint_return for that year was filed on date petitioners contend that their return preparer submitted a form_2688 application_for additional extension of time to file u s individual_income_tax_return requesting an extension of time to date for the filing of their income_tax return respondent has no record that such a request was made according to respondent’s form_4340 certificate of assessments payments and other specified matters for a late filing penalty was imposed on date however respondent’s records the form_4340 reflect that the penalty was abated on date on petitioners’ joint income_tax return they reported adjusted_gross_income of dollar_figure and total_tax due of dollar_figure petitioners included with their joint income_tax return a dollar_figure payment the return reported as income the dollar_figure settlement fee that had been paid to petitioner by bank of america and included a schedule c profit or loss from business relating to an activity with the principal business_purpose described as real_estate investments the return reflected a loss of dollar_figure from the schedule c activity petitioners’ federal_income_tax return was selected for examination they were issued information document requests by the irs and were requested to substantiate the deductions claimed on schedule c of their return when petitioners did not provide the requested documents timely respondent issued a day letter proposing to disallow all of the claimed schedule c expenses petitioners protested the proposed deficiency and engaged the services of an enrolled_agent however the agent was unable to resolve the matter with respondent’s appeals_office respondent then issued to petitioners a notice_of_deficiency determining a deficiency of dollar_figure in their federal_income_tax for in the notice_of_deficiency respondent disallowed all of petitioners’ claimed schedule c deductions for for the reason that since you did not establish that the business_expense shown on your tax_return was paid_or_incurred during 6the unpaid portion of the dollar_figure is not at issue in this case and there are indications in the record that petitioners made subsequent payments on the liability the taxable_year and that the expense was ordinary and necessary to your business we have disallowed the amount shown we are not allowing the amount on your return because we did not get an answer to our request for information to support your entries you cannot claim deductions credits exemptions or other tax benefits unless you can show that you meet all of the requirements to be eligible for them petitioners filed a timely petition in this court discussion the commissioner’s determinations in a notice_of_deficiency are generally presumed correct and the taxpayer bears the burden of proving that the determinations are in error rule a 290_us_111 deductions are a matter of legislative grace and the taxpayer has the burden of proving entitlement to any claimed deduction rule a 292_us_435 welch v helvering supra this includes the burden of substantiation 65_tc_87 affd per curiam 540_f2d_821 5th cir at the commencement of trial petitioners filed a motion to shift the burden_of_proof to respondent under sec_7491 contending that they had provided credible_evidence to support their schedule c deductions for the year at issue as required by sec_7491 respondent objected to petitioners’ motion sec_7491 places the burden_of_proof on the commissioner as to any issue upon which the taxpayer introduces credible_evidence and which is relevant to the taxpayer’s tax_liability however for the burden_of_proof to be placed on the commissioner the taxpayer must comply with the substantiation and record-keeping requirements of the internal_revenue_code moreover sec_7491 requires that the taxpayer cooperate with reasonable requests for witnesses information documents meetings and interviews sec_7491 the notice_of_deficiency upon which this case is based states with respect to the expenses claimed we are not allowing the amount on your return because we did not get an answer to our request for information to support your entries petitioners failed to cooperate with reasonable requests by respondent for documents as required by sec_7491 on the record the court has denied petitioners’ motion the first issue is whether petitioners are entitled to deductions under sec_162 for expenses which they claim petitioner incurred in a real_estate trade_or_business activity for profit sec_162 allows a deduction for all ordinary and necessary expenses_incurred in carrying_on_a_trade_or_business sec_212 allows a deduction for all ordinary and necessary expenses paid_or_incurred for the production_of_income generally a taxpayer must establish that deductions claimed under sec_162 and sec_212 are ordinary and necessary expenses and the taxpayer must maintain records to substantiate the deductions claimed sec_6001 43_tc_824 sec_1_6001-1 e income_tax regs on schedule c of their federal_income_tax return petitioners reported the following gross_income and expenses income expenses advertising car and truck depreciation other interest office supplies travel meals and entertainment other total loss dollar_figure big_number big_number big_number big_number big_number big_number dollar_figure dollar_figure with respect to certain business_expenses subject_to sec_274 more stringent substantiation requirements apply than with respect to other ordinary and necessary expenses sec_274 disallows deductions for traveling expenses gifts and meals and entertainment as well as expenses related to listed_property unless the taxpayer substantiates by adequate_records or by sufficient evidence corroborating the taxpayer’s own statement the amount of the expense the time and place of the travel or entertainment or the date and description of the gift the business_purpose of the expense and the business relationship to the taxpayer of the persons entertained or receiving the gift the substantiation requirements of sec_274 are designed to encourage taxpayers to maintain records and documentary_evidence to substantiate each element of the expense sought to be deducted sec_1_274-5t temporary income_tax regs fed reg date the term listed_property is defined in sec_280f and includes any passenger_vehicle any other_property used as a means of transportation and computers sec_280f ii iv under sec_274 substantiation by means of adequate_records requires a taxpayer to maintain a diary a log or a similar record and documentary_evidence that in combination are sufficient to establish each element of each expenditure or use sec_1_274-5t temporary income_tax regs fed reg date to be adequate a record must generally be written and each element of an expenditure or use that must be substantiated should be recorded at or near the time of that expenditure or use sec_1_274-5t temporary income_tax regs fed reg date the primary evidence that petitioners paid_or_incurred the expenses related to their real_estate activity consists of petitioner’s testimony and spreadsheets that she compiled for each of the categories of expenses in addition to petitioner’s testimony petitioners provided a host of credit card statements to purportedly substantiate the claimed expenses notations were made beside some of the charges and petitioners in preparation for trial categorized some of the expenses on spreadsheets attached to the credit card statements in particular the court considers the expenses claimed by petitioners as follows advertising expenses with respect to the advertising expenses of dollar_figure petitioners’ spreadsheet reflects payments of cash in march june july and september of for advertisements in russian papers directed to real_estate investors aside from the spreadsheet no evidence such as copies of the advertisements was offered to support the claimed deduction for advertising petitioners’ evidence does not satisfy the court that those expenses were incurred accordingly the court sustains respondent’s determination disallowing the claimed advertising expenses car and truck expenses petitioners claimed car and truck expenses of dollar_figure to substantiate these expenses petitioners provided a spreadsheet detailing the date location and amount of each expense along with a very brief description of the nature of the expense for almost every car and truck expense that petitioners claimed to have paid in cash they did not provide receipts or any type of documentary_evidence to support the payment with regard to the other claimed car and truck expenses petitioners provided a small number of receipts most of the documentation to support these expenses consisted of monthly credit card statements or annual gas card statements petitioners presented no records to substantiate that the car and truck expenses claimed on their schedule c for were related to the real_estate activity or were other than personal expenses although statements from chevron and shell reflected the total_amounts charged on credit cards during there is no documentation or other evidence to show that the charges were for ordinary and necessary expenses related to the claimed business rather than for personal_use similarly other receipts and monthly credit card statements show that money was paid to union and geary automotive service however petitioners likewise failed to establish that these were ordinary and necessary expenses of the real_estate activity for these reasons respondent’s determination disallowing petitioners’ schedule c car and truck expenses is sustained 7the claimed expenses for which no receipts were provided include those for gasoline repairs and licenses depreciation petitioners claimed an dollar_figure depreciation and sec_179 expense deduction pursuant to sec_167 a depreciation deduction is generally allowed for the exhaustion wear_and_tear of property used in a trade_or_business or held_for_the_production_of_income the purpose of the deduction for depreciation is to allow the taxpayer to recover over the useful_life of the property its cost or other basis 274_us_295 petitioners claimed a depreciation deduction on their schedule c for a vehicle placed_in_service in as well as a computer purchased during that year other than petitioner’s uncorroborated self-serving testimony which we do not find probative petitioners offered nothing to substantiate that the vehicle and the computer were not used primarily for personal purposes accordingly on account of the lack of substantiation that those items of property were used in the real_estate activity or otherwise held_for_the_production_of_income respondent is sustained in disallowing the depreciation deduction of dollar_figure other interest petitioners claimed a deduction of dollar_figure for other interest which related to interest on their credit cards petitioners offered into evidence statements of their chevron and visa credit cards on their chevron credit card petitioners incurred monthly finance_charges every month during the five visa credit card statements show along with interest and finance_charges transactions at kinko’s safeway whole foods market and bally total fitness among other places indicating that the interest related substantially to credit card charges for personal purposes sec_262 expressly disallows deductions for personal living or family_expenses petitioners failed to substantiate that any interest_expense associated with the credit card charges was other than a nondeductible personal_expense no portion of the interest was shown to be related to the real_estate activity the claimed interest therefore is not allowed as a deduction office expenses petitioners offered monthly credit card statements and copies of two checks to substantiate the dollar_figure for office expenses absent further corroborating evidence to support these expenses and their relationship to the real_estate activity the court sustains respondent’s disallowance of these expenses 8the dollar_figure also included what appear to be utility expenses attributed to two vendors or service providers listed as pg e and water regardless of their classification petitioners did not establish that those expenses were related to the real_estate activity or were other than personal petitioners also claimed as office expenses cellular phone charges to t-mobile cellular phones are classified as listed_property under sec_280f and petitioners offered no continued supplies petitioners claimed a dollar_figure deduction for supplies to substantiate this item petitioners submitted two visa credit card statements the statements indicate petitioners made purchases at aaron brothers office max and the container store in may and november of the spreadsheets petitioner prepared indicate that these expenses were incurred for frames notebooks pens and items the relationship of these expenses to petitioner’s real_estate activity was not established petitioners also claim that they paid cash for some supplies but they did not present any receipts or canceled checks to support these expenses on the basis of the submitted visa credit card statements it is clear that petitioners made purchases at stores that sell office supplies there is no evidence however other than petitioner’s self-serving testimony which we do not find probative that these expenses were related to or incurred in connection with petitioner’s real_estate activity without further substantiating evidence the court sustains respondent’s determination disallowing such expenses continued evidence to satisfy the heightened substantiation requirements associated with listed_property travel petitioners contend that the dollar_figure claimed for traveling expenses was for trips to hawaii korea china las vegas and chicago for the purpose of locating potential real_estate investment opportunities for petitioner’s clients with the exception of expenses for airfare to hawaii and chicago a rental car in hawaii lodging in hawaii and las vegas and a few incidental traveling expenses petitioners contend that they paid the traveling expenses in cash in support of these expenses petitioners offered airline receipts a few credit card statements and two taxi cab receipts although sec_162 expressly permits a deduction for traveling expenses away from home in the pursuit of a trade_or_business sec_274 imposes strict substantiation requirements for deductions related to traveling expenses a deduction for traveling expenses demands pursuant to sec_274 that the taxpayer substantiate by adequate_records or by sufficient evidence the amount of the expense the time and place of the travel and the business_purpose of the expense on the record the court holds that petitioners’ limited receipts and lack of evidence to corroborate their own statements fail to satisfy the strict substantiation requirements of sec_274 see sec_274 sec_1_274-5t temporary income_tax regs fed reg date despite petitioner’s insistence that all of the traveling expenses were exclusively for a business_purpose the strict substantiation requirements of sec_274 cannot be ignored in addition petitioner admitted at trial that her two minor children accompanied her on a claimed business trip to hawaii sec_274 provides that in general no deduction is permitted for any traveling expenses paid for dependents accompanying a taxpayer on business travel accordingly respondent’s determination disallowing the claimed deduction for traveling expenses is sustained meals and entertainment petitioners claimed a schedule c deduction of dollar_figure for meals and entertainment the spreadsheet petitioners provided for these expenses listed the dates and locations of the meals along with the clients’ names and a very brief description of each client ie prospective investor or investment opportunity to support the amounts on the spreadsheet petitioners included a number of monthly credit card statements and a few receipts as for many of their other claimed schedule c expenses no receipts or other documentary_evidence was provided for those expenses paid in cash pursuant to sec_274 a taxpayer with respect to meals and entertainment must substantiate the amount time 9petitioners claimed meal expenses totaled dollar_figure which they reduced by percent as required by sec_274 place and business_purpose of the expenditure and must provide adequate_records or sufficient evidence to corroborate the claimed expense sec_274 sec_1_274-5t temporary income_tax regs supra in order to meet the adequate_records requirement a taxpayer must maintain an account book diary statement of expenses or similar record and documentary_evidence such as receipts paid bills or similar evidence which when combined establish each element of the expense that sec_274 requires to be established sec_1_274-5t temporary income_tax regs supra petitioners’ credit card statements and the spreadsheet that was created after the year at issue do not meet the adequate_records requirement for meals and entertainment_expenses of sec_274 and the regulations because they fail to sufficiently corroborate petitioners’ own statements id since petitioners did not provide the required substantiation for these expenses they are not entitled to the deduction for meals and entertainment_expenses other expenses petitioners claimed a deduction of dollar_figure for other expenses including books postage printing internet access at kinko’s and other items aside from monthly credit card statements and nonitemized credit card receipts petitioners offered no documentary_evidence to support the claimed expenses additionally petitioners did not establish that these expenses were those of petitioner’s real_estate activity for these reasons respondent is sustained in disallowing the claimed deduction for other expenses sec_6651 addition_to_tax respondent determined that petitioners were liable for an addition_to_tax under sec_6651 under sec_7491 the commissioner has the burden of production in any court_proceeding with respect to the liability of any individual for a penalty or addition_to_tax 116_tc_438 in order to meet this burden of production the commissioner must come forth with sufficient evidence indicating that it is appropriate to impose as in this case an addition_to_tax for failure_to_file a timely return id pincite once the commissioner has met this burden the taxpayer must come forward with evidence sufficient to persuade the court that the commissioner’s determination is incorrect id pincite sec_6651 imposes an addition_to_tax for failure_to_file a federal_income_tax return by its due_date determined with regard to any extension of time for filing previously granted the addition equal sec_5 percent for each month that the return is late not to exceed percent sec_6651 an addition_to_tax under sec_6651 is imposed for failure_to_file a return on time unless the taxpayer establishes that the failure was due to reasonable_cause and not willful neglect sec_6651 469_us_241 reasonable_cause requires the taxpayer to demonstrate that he exercised ordinary business care and prudence 979_f2d_1511 11th cir willful neglect is defined as a conscious intentional failure or reckless indifference united_states v boyle supra pincite petitioners concede that although they were given an extension of time to file their return until date the return was not filed until date since the return for the year at issue was filed late the only issue that remains is whether the late filing is excused by reasonable_cause sec_6651 united_states v boyle supra pincite petitioners’ explanation for failure_to_file their return timely was that their return preparer filed a form_2688 to request additional time to file their return respondent has no record that such a request was made additionally petitioners contend that respondent’s appeals_office conceded the sec_6651 addition_to_tax in support of this argument petitioners point to the certificate of assessments payments and other specified matters which was offered into evidence by respondent and shows that for the year at issue respondent abated the addition_to_tax on date respondent denies making such a concession and insists that imposition of the addition_to_tax for failure_to_file a timely return is appropriate sec_6213 prohibits assessment of a deficiency during the period within which a taxpayer may petition this court for a review of that deficiency additionally once a petition has been filed with this court for review of a deficiency assessment of that deficiency is prohibited until this court’s decision has become final id a review of the record suggests that respondent abated the sec_6651 addition_to_tax because assessment was premature and in violation of the strictures of sec_6213 not because the appeals_office conceded the addition_to_tax petitioners explained that they requested an additional extension of time to file because they had not yet compiled the information necessary to accurately file their return for the year at issue the unavailability of records does not however establish reasonable_cause for failure_to_file a return timely see 56_tc_1324 affd without published opinion 496_f2d_876 5th cir see also ruddel v commissioner tcmemo_1996_125 moreover petitioners failed to establish what records were unavailable and the record does not indicate that they attempted to obtain the information necessary to prepare their return from other sources see 92_tc_899 sec_6651 addition_to_tax upheld where taxpayers failed to show what records were needed or what actions they took to obtain such records to support the claim that their return preparer requested an additional extension of time to file their return petitioners offered an unsigned copy of a form_2688 and contend that this is similar to what was submitted notwithstanding their attempt to shift responsibility for their late filing to their return preparer such reliance on one’s accountant or return preparer does not constitute reasonable_cause for a late filing under sec_6651 united_states v boyle supra pincite see also ruddel v commissioner supra on this record the court holds that petitioners are liable for the sec_6651 addition_to_tax the court has considered all other arguments advanced by the parties and to the extent those arguments have not been specifically addressed the court concludes they are without merit decision will be entered under rule


t c memo united_states tax_court francisco e campos jr and lualhati n campos petitioners v commissioner of internal revenue respondent docket no filed date lualhati n campos pro_se jennifer breen and sylvia l shaughnessy for respondent memorandum opinion panuthos chief special_trial_judge this matter is before the court on petitioner lualhati n campos’s motion to appoint guardian ad litem and substitute party as explained in detail below we shall grant petitioner’s motion in that we shall unless otherwise indicated section references are to sections of the internal_revenue_code as amended and rule references are to the tax_court rules_of_practice and procedure recognize lualhati n campos as the next friend of petitioner francisco e campos jr for purposes of prosecuting this case background petitioners francisco e campos jr mr campos and lualhati n campos mrs campos are husband and wife on date respondent issued to petitioners a joint notice_of_deficiency in the notice respondent determined a deficiency of dollar_figure in petitioners’ federal_income_tax for and an accuracy-related_penalty under sec_6662 on date the court received and filed a timely petition for redetermination challenging the above-described notice_of_deficiency mrs campos signed the petition for herself and on behalf of mr campos attached to the petition is a letter dated date signed by matthew horn m d medical director for sharp coronado hospital the letter states that mr campos was admitted to the hospital on date suffering from a number of disabling medical conditions and that mr campos is unresponsive at this time unable to make any medical or financial decisions on date mrs campos filed a motion to appoint guardian ad litem and substitute party the motion states that mrs campos does not have the authority to act on her husband’s behalf and that mrs campos requests that the court appoint her to act as guardian ad litem in this matter respondent filed a notice of no objection to the motion pursuant to notice this matter was set for hearing at the court’s motions session in washington d c counsel for respondent appeared at the hearing and was heard petitioners filed with the court a written_statement under rule c in lieu of attending the hearing during the hearing of this matter respondent averred that the court has the authority to appoint mrs campos as guardian ad litem for mr campos under the same general procedure that the court employed in 103_tc_700 in estate of galloway the court relied upon california law to appoint a special administrator to represent the interests of a deceased taxpayer petitioner respondent also acknowledged that the court could recognize mrs campos as mr campos’s next friend under rule d discussion it is well settled that the court’s jurisdiction to redetermine a deficiency depends upon a valid notice_of_deficiency and a timely filed petition for redetermination rule a c 93_tc_22 90_tc_142 rule sets forth the basic requirements for filing a valid petition with the court rule a provides in pertinent part where the notice_of_deficiency or liability is directed to more than one person each such person desiring to contest it shall file a petition either separately or jointly with any such other person and each such person must satisfy all the requirements of this rule in order for the petition to be treated as filed by or for such person failure of the petition to satisfy applicable_requirements may be ground for dismissal of the case rule b specifically requires the signature of each petitioner or petitioner’s counsel in addition rule a requires that a case shall be brought by and in the name of the person against whom the commissioner determined the deficiency as indicated the petition in this case is not signed by mr campos however there is no dispute that mr campos is unresponsive and unable to make medical or financial decisions in an effort to protect mr campos’s interests mrs campos signed the petition on his behalf rule sets forth criteria for resolving questions pertaining to a person’s capacity to litigate in the court rule provides in pertinent part c capacity the capacity of an individual other than one acting in a fiduciary or other representative capacity to engage in litigation in the court shall be determined by the law of the individual’s domicile the capacity of a fiduciary or other representative to litigate in the court shall be determined in accordance with the law of the jurisdiction from which such person’s authority is derived d infants or incompetent persons whenever an incompetent person has a representative such as a general guardian committee conservator or other like fiduciary the representative may bring a case or defend in the court on behalf of the incompetent person an incompetent person who does not have a duly appointed representative may act by a next friend pursuant to rule c we first look to california law to determine whether mr campos possesses the requisite capacity to engage in litigation before the court see 199_f3d_642 2d cir 916_f2d_1032 5th cir california probate code section a west provides that a conservator of a person may be appointed if a person is unable to provide properly for his or her personal needs for physical health food clothing or shelter california probate code section b west provides that a conservator of the estate may be appointed for a person who is substantially unable to manage his or her own financial resources or resist fraud or undue influence we are satisfied on the record presented that mr campos is unable to provide for his personal needs for physical health and is unable to manage his own financial affairs within the meaning of california probate code section a and b west because mr campos would qualify for the appointment of a the petition reflects a mailing address for mr campos of icu coronado hospital san diego cal and a mailing address for mrs campos of ginsberg court san diego cal conservator under california law we conclude that he lacks the capacity standing alone to engage in litigation in this court rule d provides an avenue for infants or incompetent persons to prosecute a case in this court specifically rule d provides that a duly appointed representative may bring a case on behalf of an infant or incompetent person in the absence of a duly appointed representative rule d provides that an infant or incompetent person may act by a next friend or by a guardian ad litem we have said that the purpose of rule d is to protect and preserve the rights and interests of those taxpayers under the legal disability of infancy or incompetency 101_tc_61 see 888_f2d_687 10th cir and cases cited therein consistent with the plain language of rule d the recognition of a next friend or the appointment of a guardian ad litem rests within the sound discretion of the court mrs campos has informed the court that she has not been duly appointed to act as mr campos’s representative thus under rule d the question arises whether the court should recognize mrs campos as mr campos’s next friend or appoint her as mr campos’s guardian ad litem for present purposes we observe that there is no meaningful difference between the role of a next friend and a guardian ad litem eiges v commissioner supra pincite the term next friend is defined as a person who appears in a lawsuit to act for the benefit of an incompetent or minor plaintiff but who is not a party to the lawsuit and is not appointed as a guardian -- also termed prochein ami cf guardian ad litem under guardian black’s law dictionary 7th ed the term guardian ad litem is defined as a guardian usu a lawyer appointed by the court to appear in a lawsuit on behalf of an incompetent or minor_party --also termed special guardian cf next friend id pincite see 213_fsupp2d_220 n e d n y rule d is derived in large part from federal rule_of civil procedure c see 60_tc_1094 under federal rule_of civil procedure c a person seeking to represent a minor or incompetent party as next friend generally must show that the minor or incompetent party cannot prosecute the action without assistance that the next friend will represent the best interests of the minor or incompetent party and the next friend has a significant relationship with the minor or incompetent party see 495_us_149 habeas corpus proceedings 86_fsupp2d_1167 s d fla citing 195_f3d_603 11th cir moore moore’s federal practice sec pincite 3d ed normally a next friend will be a family_member such as spouse parent or sibling 124_f3d_893 7th cir eiges v commissioner supra pincite as previously discussed the record amply demonstrates that mr campos is unable to prosecute this action due to a medical disability moreover as mr campos’s spouse and de_facto representative mrs campos has a sufficiently close relationship with mr campos to justify her recognition as next friend finally although we recognize that conflicts of interest may arise between spouses filing joint returns see eg sec_6015 we are persuaded on this record that mrs campos will represent the best interests of mr campos in this proceeding consistent with the preceding discussion and considering all the facts and circumstances we conclude that this is an appropriate case for the court to exercise its discretion under rule d in an effort to promote the just speedy and inexpensive determination of this case we shall grant mrs campos’s pending motion in that we shall recognize mrs campos a sec_3 there is no allegation in the petition that either spouse is entitled to relief from joint_and_several_liability on a joint_return under sec_6015 mr campos’s next friend for purposes of these proceedings rule sec_1 d to reflect the foregoing an appropriate order will be issued under the circumstances we need not address the various issues related to the question whether mrs campos should be appointed to serve as guardian ad litem for mr campos


department of the treasury internal_revenue_service te_ge eo examinations commerce street mc dal dallas tx tax_exempt_and_government_entities_division number release date date apr person to contact identification_number contact telephone number in reply refer to last date for filing a petition with the tax_court uil code certified mail -return receipt requested dear a is final adverse determination thi sec_501 of the under sec_501 is revoked effective january 20xx internal_revenue_code irc your exemption from letter as to your exempt status under section federal_income_tax our adverse determination was made for the following reasons you have not established that you are operated exclusively for promotion of social welfare and other non-profitable purposes and the net_earnings of which are devoted exclusively to charitable educational or recreational purposes under sec_50 a as described under rc sec_501 if you decide to contest this determination in court you must initiate a suit for declaratory_judgment in the united_states tax_court the united_states claim court or the district_court of the united_states for the district of columbia before the day after the date this determination was mailed to you contact the clerk of the appropriate court for the rules for initiating suits for declaratory_judgment since you have re-applied and was approved for a tax-exempt status under sec_501 file form_990 returns with the appropriate service_center for the year you will continue to ending december 20xx and for all years thereafter the taxpayer_advocate_service tas is an independent organization within the irs that can help protect your taxpayer rights we can offer you help if your tax problem is causing a hardship or you've tried but haven't been able to resolve your problem with the irs if you qualify for our assistance which is always free we will do evelything possible to help you visit taxpayeradvocate irs gov or call ifyou have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely yours maria hooke director exempt_organizations examinations enclosures publication ii department of the treasury internal_revenue_service irs tax exempt and government entities exempt_organizations examinations pa may taxpayer identification ‘fication number number form tax_year s ended person to contact id number contact numbers telephone fax manager’s name id number manager’s contact number response due_date certified mail - return receipt requested dear why you are receiving this letter we propose to revoke your status as an organization described in sec_501 of the internal_revenue_code code enclosed is our report of examination explaining the proposed action what you need to do if you agree lf you agree with our proposal please sign the enclosed form_6018 consent to proposed action - sec_7428 and return it to the contact person at the address listed above unless you have already provided us a signed form we'll issue a final revocation letter determining that you aren't an organization described in sec_501 if we don't hear from you if you don’t respond to this proposal within calendar days from the date of this letter we'll issue a final revocation letter failing to respond to this proposal will adversely impact your legal standing to seek a declaratory_judgment because you failed to exhaust your administrative remedies effect of revocation status if you receive a final revocation letter you'll be required to file federal_income_tax returns for the tax_year s shown above as well as for subsequent tax years what you need to do if you disagree with the proposed revocation if you disagree with our proposed revocation you may request a meeting or telephone conference with the supervisor of the irs contact identified in the heading of this letter you also letter rev catalog number 34809f may file a protest with the irs appeals_office by submitting a written request to the contact person at the address listed above within calendar days from the date of this letter the appeals_office is independent of the exempt_organizations division and resolves most disputes informally for your protest to be valid it must contain certain specific information including a statement of the facts the applicable law and arguments in support of your position for specific information needed for a valid protest please refer to page one of the enclosed publication how to appeal an irs decision on tax-exempt status and page six of the enclosed publication the examination process publication also includes information on your rights as a taxpayer and the irs collection process please note that fast track mediation referred to in publication generally doesn’t apply after we issue this letter you also may request that we refer this matter for technical_advice as explained in publication please contact the individual identified on the first page of this letter if you are considering requesting technical_advice if we issue a determination_letter to you based on a technical_advice_memorandum issued by the exempt_organizations rulings and agreements office no further irs administrative appeal will be available to you contacting the taxpayer_advocate office is a taxpayer right you have the right to contact the office_of_the_taxpayer_advocate their assistance isn't a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate can't reverse a legally correct_tax determination or extend the time you have fixed by law to file a petition in a united_states court they can however see that a tax matter that hasn't been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance for additional information if you have any questions please call the contact person at the telephone number shown in the heading of this letter if you write please provide a telephone number and the most convenient time to call if we need to contact you thank you for your cooperation sincerely maria d hooke director eo examinations enclosures report of examination form_6018 publication publication letter rev catalog number 34809f form_886 a name of taxpayer explanation of items department of the treasury - internal_revenue_service schedule no or exhibit year period ended december 20xx issue whether organization described in the internal_revenue_code irc sec_501 because of no exempt activity since 20xx which includes the year of examination continues to qualify for exemption as an facts was incorporated under the laws of the state of as a non-profit corporation on february 19xx for the purpose of the following to save human lives and protect property endangered by fire and other disaster to promote the teaching and practice of fire prevention in the town of and its environs to cooperate with other organizations in furthering worthy civic projects not inconsistent with the primary purpose of this organization on july 19xx from federal_income_tax as an organization described in sec_501 was recognized to be exempt during initial interview on december 20xx the organization’s treasurer stated that the not using volunteer firefighters with the only activity conducted is gaming with the excess income going for scholarships to local students was disbanded in 20xx due to the fire chief law sec_501 exemption from taxation -an organization described in subsection c or d or sec_401 shall be exempt from taxation under this subtitle unless such exemption is denied under sec_502 or sec_503 sec_501 civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare or local associations of employees the membership of which is limited to the employees of a designated person or persons in a particular municipality and the net_earnings of which are devoted exclusively to charitable educational or recreational purposes form 886-a cev department of the treasury - internal_revenue_service page -1- form_886 a name of taxpayer explanation of items department of the treasury - internal_revenue_service schedule no or exhibit year period ended december 20xx sec_504 subparagraph a shall not apply to an entity unless no part of the net_earnings of such entity inures to the benefit of any private_shareholder_or_individual federal tax regulations sec_1 c civic organizations and local associations of employees reg sec_1_501_c_4_-1 does not reflect p l p l p l p l or p l a civic organizations in general -a civic_league_or_organization may be exempt as an organization described in sec_501 if i itis not organized or operated for profit and ii it is operated exclusively for the promotion of social welfare promotion of social welfare i in general -an organization is operated exclusively for the promotion of social it is primarily engaged in promoting in some way the common good and welfare if general welfare of the people of the community an organization embraced within this section is one which is operated primarily for the purpose of bringing about civic betterments and social improvements a social_welfare_organization will it falls within the definition of qualify for exemption as a charitable_organization if charitable set forth in paragraph d of sec_1_501_c_3_-1 and is not an action_organization as set forth in paragraph c of sec_1_501_c_3_-1 ii political or social activities -the promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public_office nor is an organization operated primarily for the promotion of social welfare if its primary activity is operating a social_club for the benefit pleasure or recreation of its members or is carrying on a business with the general_public in a manner similar to organizations which are operated for profit see however sec_501 and sec_1_501_c_6_-1 relating to business_leagues and similar organizations a social_welfare_organization that is not at any time after date exempt from taxation as an organization described in sec_501 may qualify under sec_501 even though it is an action_organization described in sec_1_501_c_3_-1 or iv if it otherwise qualifies under this section for rules relating to an organization that is after date exempt from taxation as an organization described in sec_501 see sec_504 and sec_1_504-1 department of the treasury - internal_revenue_service form 886-arev page -2- form_886 a name of taxpayer explanation of items department of the ‘i'reasury - internal_revenue_service schedule no or exhibit year period ended december 20xx revenue rulings revrul_58_617 1958_2_cb_260 jan rulings and determinations letters granting exemption from federal_income_tax to an organization described in sec_501 of the internal_revenue_code of to which contributions are deductible by donors in computing their taxable_income in the manner and to the extent provided by sec_170 of the code are effective only so long as there are no material changes in the character of the organization the purposes for which it was organized or its methods of operation failure to comply with this requirement may result in serious consequences to the organization for the reason that the ruling or determination_letter holding the organization exempt may be revoked retroactively to the date of the changes affecting its exempt status depending upon the circumstances involved and subject_to the limitations on retroactivity of revocation found in sec_503 of the code taxpayer’s position the organization’s treasurer declared that the organization has no operational activities with only chartable gaming income as their financial activities agent discussed revocation with the organization’s treasurer on december 20xx and she agreed to the proposed revocation as organization is no longer operating for an exempt_purpose exempt status is no longer qualified for exemption from federal government's position and conclusion if you agree to this conclusion please sign the attached forms if you disagree please submit a statement of your position income_tax under code sec_501 should be revoked back to the tax period beginning the first day of the organization's fiscal_year of december 20xx income is subject_to taxation as of january 20xx department of the treasury - internal_revenue_service form 886-arev page -3-