tax exempt and government entities department of the treasury internal_revenue_service washington d c may tep ka ta u i l krerekekrkerekrererekrkek kkreekrereekrerererekre kerkeekerekeerekererer attn brkkrkkkekrekreekeeeeke legend employer m krkrkekekrkererererrerer state a mm rkrkkerrerekerkrekekrk group n employees me kk kekrkekrekkeekrererereke statute p statute q statute r statute s plan x - rerehrerrer er reerrer hss onan ik me fi ii i iir rii sii soit iir iii ii rii resolution n merirtrrterccrt rors s village k me rkkkrkkkererererereer settutsnersuentuees dear kkkekkkkekkkekerkerrekk this is in response to a ruling_request dated date under a cover letter dated date as supplemented by correspondence dated date date and date submitted on your behalf by your authorized representative concerning the federal_income_tax treatment under sec_414 of the internal_revenue_code code of certain contributions to plan x the following facts and representations have been submitted on your behalf the board_of trustees of employer m a governmental employer in state a established plan x pursuant to the statutory authority granted to municipalities in state a by statute p statute p provides that in each municipality such as employer m as defined in statute q the city council or the board_of trustees shall establish and administer a pension fund for the benefit of its group n employees and their beneficiaries you represent that plan x is qualified under code sec_401 and is exempt from federal_income_tax under code sec_501 statute r provides that each group n employee shall contribute a certain percentage of his or her salary to plan x the mandatory employee contribution rate is dollar_figure percent of salary as defined in statute r statute s provides that a municipality such as employer m may pick up the group n employees’ contributions required by statute r if a municipality decides not to pick up the contributions the required contributions shall continue to be deducted from salary statute s further provides that if contributions are picked up they shall be treated as employer contributions in determining the tax treatment under the internal_revenue_code statute s also provides that a municipality shall continue to withhold federal and state income taxes based on these contributions until the internal_revenue_service or the federal courts rule that pursuant to sec_414 of the code these contributions shall not be included as gross_income of the group n employees until such time as they are distributed or made available the municipality shall pay these contributions from the same source of funds which is used to pay the salaries of the group n employees employer m may pick up these contributions by a reduction in the cash salary of the group n employees or by an offset against a future salary increase or by a combination of both on date employer m adopted resolution n to effectuate the pick up of contributions as provided for in statute ss resolution n in pertinent part recognizes that employer m has established plan x pursuant to statute p that statute r provides that a statutory_percentage shall be withheld from the group n employees’ salaries and paid to plan x that mandatory group n employee contributions are taxable as current gross_income saaeeusennesnnes and that a municipality such as employer m may pick up the group n employees’ contributions pursuant to statute s resolution n further provides that the board_of trustees of employer m has resolved to pick up the group n employees’ contributions to plan x in accordance with statute s that the contributions although designated as group n employee contributions are being paid_by employer m in lieu of contributions by the group n employees and that the employee contribution is a mandatory contribution whereby the group n employee shall not have the option of choosing to receive the contributed amounts directly instead of having them paid_by employer m to plan x based on the aforementioned facts you request the following rulings that no part of the mandatory_contributions picked up by employer m as the employer of the group n employees will be included in the gross_income of group n employees for federal_income_tax purposes pursuant to code sec_414 that the contributions picked up by employer m will not constitute wages from which taxes must be withheld political_subdivision thereof and are sec_414 of the code provides that contributions otherwise designated as employee contributions shall be treated as employer contributions if such contributions are made to a plan determined to be qualified under sec_401 a established by a state government or a picked up by the employing unit the federal_income_tax treatment to be accorded contributions which are picked up by the employer within the meaning of sec_414 of the code is specified in revrul_77_462 1977_2_cb_358 in that revenue_ruling the employer school district agreed to assume and pay the amounts employees were required by state law to contribute to a state pension_plan revrul_77_462 concluded that the school district's picked-up contributions to the plan are excluded from the employees’ gross_income until such time as they are distributed to the employees the revenue_ruling held further that under the provisions of sec_3401 a a of the code the school district’s contributions to the plan are excluded from wages for purposes of the collection of income_tax at source on wages therefore no withholding is required from the employees’ salaries with respect to such picked-up contributions the issue of whether contributions have been picked up by an employer within the meaning of sec_414 of the code is addressed in revrul_81_35 1981_1_cb_255 and revrul_81_36 1981_1_cb_255 these revenue rulings established that the following two criteria must be met the employer must specify that the contributions although designated as employee neneeneneenneenetie contributions are being paid_by the employer in lieu of contributions by the employee and the employee must not be given the option of choosing to receive the contributed amounts directly instead of having them paid_by the employer to the pension_plan furthermore it is immaterial for purposes of the applicability of code sec_414 whether an employer picks up contributions through a reduction in salary an offset against future salary increases or a combination of both in revrul_87_10 1987_1_cb_136 the internal_revenue_service considered whether contributions designated as employee contributions to a governmental_plan are excludable from the gross_income of the employee the service concluded that to satisfy the criteria set forth in revenue rulings and with respect to particular contributions the required specification of designated employee contributions must be completed before the period to which such contributions relate in this request resolution n satisfies the criteria set forth in revrul_81_35 and revrul_81_36 by specifically providing that employer m will pick up the group n employees’ contributions now being paid_by the group n employees to plan x that the contributions although designated as employee contributions are in lieu of contributions by the group n employees and that the group n employee shall not have the option of choosing to receive the contributed amounts directly instead of having them paid_by employer m to plan x accordingly we conclude with respect to ruling requests number and that the amounts picked up by employer m on behalf of the group n employees who participate in plan x shall be treated as employer contributions and will not be includible in the group n employees’ gross_income in the year in which such amounts are contributed for federal_income_tax treatment these amounts will be includible in gross_income of the group n employees or their beneficiaries in the taxable_year in which they are distributed to the extent that the amounts represent contributions made by employer m because we have determined that the picked-up amounts are to be treated as employer contributions they are excepted from wages as defined in sec_3401 of the code for federal_income_tax withholding purposes in addition no part of the amounts picked up by employer m will constitute wages for federal_income_tax withholding purposes in the taxable_year in which they are contributed to plan x these rulings apply only if the effective date for the commencement of the pick- up is no earlier than the later of date the date that resolution n as submitted with your correspondence dated date was adopted for purposes of the application of code sec_414 it is immaterial whether an employer picks up contributions through a reduction in salary an offset against future salary increases or a combination of both eanennnnennennnnes approved and signed by the president of village k or the date the pick up is put into effect these rulings are based on the assumption that plan x will be qualified under sec_401 of the code at the time of the proposed contributions and distributions this ruling is limited to the tax treatment of the proposed contributions under code sec_414 no opinion is expressed as to the tax treatment of the transactions described herein under the provisions of any other section of either the code or regulations which may be applicable thereto no opinion is expressed as to whether the amounts in question are subject_to tax under the federal_insurance_contributions_act no opinion is expressed as to whether the amounts in question are paid pursuant to a salary reduction agreement’ within the meaning of code sec_3121 these rulings are directed only to the taxpayer who requested them sec_6110 of the code provides that they may not be used or cited by others as precedent a copy of this letter has been sent to your authorized representative in accordance with the power_of_attorney on file with this office if you have questions regarding this ruling you may contact hhrkkkkkrererrer ere ree eere kerr ere set fd bat hd sincerely yours agned 07gb b flotd joyce e floyd manager employee_plans technical group - enclosures deleted copy of this letter_ruling notice


significant index no department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division jun re dear trustees union this letter constitutes notice that your request for waivers of the minimum_funding_standard for the plan for the plan years ending date and have been granted subject_to the condition that for the period starting with the date of the ruling letter granting the funding waivers and continuing for each plan_year through the plan_year beginning on october each contributing employer to the plan must make contributions to the plan sufficient to avoid imposition of the tax under sec_4971 g of the internal_revenue_code code your authorized representative agreed to this condition in a letter dated date if this condition is not met the waivers of the minimum_funding_standard granted for the plan for the plan years ending date and are retroactively null and void the conditional waivers granted for the plan for the plan years ending date and have been granted in accordance with sec_412 of the code and sec_303 of employee_retirement_income_security_act_of_1974 erisa both as in effect prior to the pension_protection_act of ppa '06 the amount for which this waiver has been granted is equal to the contributions that would otherwise be required to reduce the balance in the funding_standard_account of the plan to zero as of date and determined without regard to sec_412 of the code the plan is a multiemployer_plan covering employees subject_to collective bargaining between the union and its associated business agents and contracting employers the plan was adopted on date since the plan was certified to be in critical status the trustees approved a rehabilitation plan on date during the plan_year ending date there were employers contributing to the plan as of date there were only employers contributing to the plan the trustees have continued to reduce benefits as a result of the continuing decline in the hours worked in the jurisdiction at the current time the remaining contributing employers have met the terms of the rehabilitation plan that was adopted based on the limited financial information provided by the contributing employers it is clear that at least of the contributing employers to the plan would experience substantial financial hardship if the minimum_funding requirements are not waived for the plan years ending date and this hardship would be exacerbated by the imposition of the excise_tax under sec_4971 a of the code which would apply for all three plan years in question as discussed above there has been a drop off in the number of contributing employers to the plan and the number of hours worked by participants in the plan has also fallen this is a result of the steady decline in the amount of union labor used by contractors in the union's area the economy in the union's area is depressed as a result of the general economic downturn in the us it is unlikely that there will be much improvement in the economic situation of the remaining contributing employers until there is a general mid- to long-term recovery in the economy the trustees and the remaining contributing employers have taken several steps to mitigate the funding issues in the plan including adopting a rehabilitation plan as required by ppa '06 the plan will continue to experience funding deficiencies even if the waiver is granted however no excise_taxes will apply under sec_4971 a of the code as long as the plan is in critical status and the terms of the rehabilitation plan are met by the remaining contributing employers your attention is called to sec_412 of the code and sec_304 of erisa both in effect under ppa '06 which describe the consequences that would result in the event the plan is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived funding deficiencies remain unamortized please note that any amendment to a profit sharing plan or any other retirement plans covering employees covered by the plan maintained by the contributing employers to increase the liabilities of those plans would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa similarly the establishment of a new profit sharing plan or any other retirement_plan by the contributing employers covering employees covered by the plan would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa this ruling is directed only to the taxpayer that requested it sec_611 o k of the code provides that it may not be used or cited by others as precedent we have sent a copy of this letter to the manager ep classification in baltimore maryland to the manager ep compliance unit in chicago illinois and to your authorized representative pursuant to a power_of_attorney on file in this office we suggest that you furnish a copy of this letter to the enrolled_actuary who is responsible for the completion of the schedules mb if you require further assistance in this matter please contact at sincerely yours william b hulteng manager employee_plans technical cc


third party communication date of communication month dd yyyy cca_2015010616301701 id uilc number release date from sent tuesday january pm to cc bcc subject re form 2848-qualified poa the tmp is the member manager under sec_301_6231_a_7_-2 who has been designated as tmp the facts below do not indicate which of the two members meet this criteria although it appears llc2 is taking actions consistent with its being the manager you will need to confirm this before doing anything else member is the only eligible tmp then it is probably is the tmp a foreign gp cannot be designated tmp if any u s member is eligible but if the u s member does not meet the definition of an eligible member-manager under the -2 regulation then the foreign member can be designated under -1 b if the foreign


uni form l é vee lest ma lys of -h department of the treasury internal_revenue_service washington d c mar tl lf vat tax exempt and government entities legend church c order a st m medical center a plan m directory m this is in response to a ruling_request dated date as supplemented by additional correspondence dated date and date in which your authorized representatives request rulings on your behalf concerning whether plan m is a church_plan described in sec_414 of the internal_revenue_code and whether plan m was so described as of date and thereafter the following facts and representations have been submitted on your behalf medical center a is a not-for-profit corporation which provides hospital services and home care services medical center a's articles of incorporation provide that the sole corporate member of medical center a is the superior general and councillors of order a order ais a religious_order of adherents of church c with a mission of taking care and nursing of the sick establishment and maintenance of hospitals and education of younger sisters of the order order a is listed in directory m which lists the names of agencies instrumentalities and institutions operated supervised or controlled by or in connection with church c in the united_states its territories and possessions - ne page the business of medical center a is managed by its board_of trustees medical center a's by-laws provide that members of the board_of trustees are chosen at the annual meeting of its sole member order a under medical center a's certificate of incorporation as amended order a approves the election of the members of the board_of trustees may remove any member with or without cause elects or removes corporate officers and establishes the mission and philosophy of medical center a the by-laws of medical center a provide that any member of the board_of trustees may be removed with or without cause by order a medical center a is listed in directory m the official directory of church c and has been continuously so listed since at least medical center a's by-laws provide that medical center a is a church c institution medical center a's mission statement provides that the medical center a community inspired by st m and faithful to the teachings of church c is committed to excellence in health care and education it is represented that medical center a operates by the ethical and religious directives for church c health care services national conference of church c bishops in delivery of care education of physicians practitioners and employees it is further represented that medical center a provides pastoral care staff and other clergy for patients employees and visitors and has a daily morning recitation of a selected religious reading and displays a crucifix in each patient room medical center a currently maintains plan m a defined_benefit_plan established for medical center a employees on date plan m is qualified under sec_401 of the code there are a total of big_number active participants in plan m all plan participants are on the medical center a payroll but participants are assigned to work for other related and affiliated entities all of these related and affiliated entities are described in sec_501 of the code and are exempt from tax under sec_501 plan m was amended effective date to provide for a pension committee which is now the administrator of plan m the board_of trustees established the pension committee pursuant to a resolution dated date the pension committee's sole purpose and function is to administer plan m there are five members of the pension committee the president and chief_executive_officer of medical center a and the chief operating officer and senior vice president of medical center a are members of the pension committee the three remaining members are appointed by the president and chief_executive_officer of medical center a with the consent of the board_of trustees based on the above facts and representations rulings are requested that plan m is qualified as a church_plan within the meaning of sec_414 of the code plan m is deemed to have qualified as a church_plan within the meaning of sec_414 of the code on date and thereafter sec_414 of the code defines a church_plan as a plan established and maintained for its employees or their beneficiaries by a church or by a convention or association of churches which is exempt from taxation under sec_501 of the code page sec_414 was added to the code by sec_1015 of the employee_retirement_income_security_act_of_1974 erisa publaw_93_406 1974_3_cb_1 enacted date sec_1017 of erisa provided that sec_414 applied as of the date of erisa's enactment however sec_414 subsequently was amended by sec_407 of the multiemployer pension_plan amendments act of publaw_96_364 to provide that sec_414 was effective as of date sec_414 of the code provides in part that the term church_plan does not include a plan if less than substantially_all of the individuals included in the plan are church employees as described in sec_414 or sec_414 sec_414 of the code provides that a plan established and maintained for its employees or their beneficiaries by a church or by a convention or association of churches includes a plan maintained by an organization whether a civil law corporation or otherwise the principal purpose or function of which is the administration or funding of a plan or program for the provision of retirement benefits or welfare benefits or both for the employees of a church or a convention or association of churches if such organization is controlled by or associated with a church or a convention or association of churches sec_414 of the code defines employee to include a duly ordained commissioned or licensed minister of a church in the exercise of his or her ministry regardless of the source of his or her compensation and an employee of an organization whether a civil law corporation or otherwise which is exempt from tax under sec_501 and which is controlled by or associated with a church or a convention or association of churches sec_414 of the code provides that a church or a convention or association of churches which is exempt from tax under sec_501 shall be deemed the employer of any individual included as an employee under subparagraph b sec_414 of the code provides that an organization whether a civil law corporation or otherwise is associated with a church or a convention or association of churches if association of churches it shares common religious bonds and convictions with that church or convention or sec_414 of the code provides that if a plan intended to be a church_plan fails to meet one or more of the church_plan requirements and corrects its failure within the correction_period then that plan shall be deemed to meet the requirements of this subsection for the year in which the correction was made and for all prior years sec_414 provides in pertinent part that the term correction_period means the period ending days after the date of mailing by the secretary of a notice of default with respect to the plan's failure to meet one or more of the church_plan requirements in order for an organization to have a qualified church_plan it must establish that its employees are employees or deemed employees of the church_or_convention_or_association_of_churches under sec_414 of the code by virtue of the organization's affiliation with the church_or_convention_or_association_of_churches and that the plan will be administered by an organization of the type described in sec_414 2nns5804r page it is represented that medical center a is listed in directory m which is the official directory of church c and has been continuously so listed since at least the internal_revenue_service has determined that any organization listed in directory m is an organization described in sec_501 of the code that is exempt from tax under sec_501 also any organization that is listed in directory m shares common religious bonds and convictions with church c and is deemed associated with church c within the meaning of sec_414 of the code accordingly medical center a was and is exempt from taxation under sec_501 and was and is also associated with church c therefore pursuant to sec_414 and c of the code its employees are deemed to be employees of church c and church c is deemed to be the employer of such employees for purposes of the church_plan rules with respect to sec_414 of the code the employees assigned to related and affiliated entities amounted to only percent of participants in plan m therefore in this case the employees assigned to related and affiliated entities constitute an insubstantial percent of the participants in plan m however an organization must also establish that its plan is established and maintained by a church or a convention or association of churches or by an organization described in sec_414 of the code to be described in sec_414 of the code an organization must have as its principal purpose the administration of the plan and must also be controlled by or associated with a church or a convention or association of churches since date plan m has been administered by a committee consisting of two officers of medical center a and three additional members appointed by the president and chief_executive_officer with the consent of the board_of trustees thus the committee has been under the control of medical center a since date since the committee is controlled by medical center a it is indirectly associated with church c this is so because medical center a is associated with church c further since as represented above the sole purpose of the committee is the administration of the plan m the committee constitutes an organization the principal purpose or function of which is the administration of plans or programs for the provision of retirement benefits or welfare benefits or both for the employees of medical center a therefore the committee would qualify as an organization described in sec_414 of the code for the period since date for the period from date to date as provided under sec_414 of the code where a plan fails to meet one or more of the church_plan requirements and corrects its failure within the correction_period then that plan shall be deemed to meet the requirements of sec_414 for the year in which the correction is made and for all prior years thus the defect has been corrected as provided under sec_414 of the code accordingly in regard to your ruling_request we conclude that plan m is qualified as a church_plan within the meaning of sec_414 of the code plan m is deemed to have qualified as a church_plan within the meaning of sec_414 of the code on date and thereafter page this letter expresses no opinion as to whether plan m satisfies the requirements for qualification under sec_401 of the code the determination as to whether a plan is qualified under sec_401 is within the jurisdiction of the appropriate office of the internal_revenue_service this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file in this office a copy of this ruling is being sent to your authorized representative this letter was prepared by who may be reached at sincerely yours frances v sloan manager employee_plans technical group enclosures deleted copy of letter notice


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi - plr-132893-02 date date legend x a d1 year d2 year dear this letter responds to your letter dated date and subsequent correspondence submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 in year a as the sole shareholder of x represents that x was intended to be an s_corporation beginning d2 of year x filed a form_1120s u s income_tax return for an s_corporation for its year taxable_year and all relevant subsequent taxable years however no form_2553 election by a small_business_corporation was filed with the internal_revenue_service sec_1362 of the code provides that if a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year plr-132893-02 based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x's year taxable_year accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective for its year taxable_year within days following the date of this letter then such election will be treated as timely made for x's year taxable_year a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 of the code this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to x sincerely yours carolyn hinchman gray senior counsel branch associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service department of the treasury index number u i l no washington dc number release date legend person to contact telephone number refer reply to cc dom p si plr-121422-98 date date company state shareholder a dear this letter responds to a letter dated date requesting a ruling on behalf of company under sec_1362 of the internal_revenue_code the information submitted discloses that company was incorporated on a in state company has one shareholder shareholder it is represented that company has intended to be an s_corporation since its incorporation believing itself to be an s_corporation company has operated accordingly after the end of its first taxable_year however company discovered that its s election had not been timely filed company requests a ruling that its sec_1362 election will be treated as timely made for its taxable_year that begins on a sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 explains when an s election will be effective generally if an s plr-121422-98 election is made within the first two and one half months of a corporation’s taxable_year then that corporation will be treated as an s_corporation for the year in which the election is made sec_1362 provides that if an s election is made after the first two and one half months of a corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year following the year in which the s election is made sec_1362 provides that if no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year and sec_1362 shall not apply applying the relevant law to the facts submitted and representations made we rule that company's sec_1362 election will be treated as timely made for its taxable_year that begins on a however this ruling is contingent on company filing form_2553 election by a small_business_corporation with an effective date of a with the appropriate service_center within days from the date of this ruling a copy of this letter should be attached to the form_2553 except as specifically set forth above we express no opinion concerning the federal tax consequences of the foregoing facts specifically we express no opinion on whether company otherwise qualifies as an s_corporation this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours jeff erickson assistant to the chief branch office of the assistant chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes


department of the treasury internal_revenue_service te_ge eo examination commerce street dallas texas date date tax_exempt_and_government_entities_division release number release date legend org - organization name xx - date address - address org address employer_identification_number person to contact id number contact numbers voice fax certified mail -- return receipt requested dear this is a final adverse determination_letter as to your exempt status under sec_501 of the internal_revenue_code your exemption from federal_income_tax under sec_501 of the code is hereby revoked effective january 20xx have agreed to this adverse determination by signing form_6018 you our adverse determination was made for the following reasons you have not conducted any exempt_purpose activities for several years there are no plans to conduct activities in the foreseeable future thus you have no activities that serve charitable educational or other exempt purposes under sec_501 of the code therefore you no longer meet the requirements of sec_501 and sec_1 c -1 d in that you failed to establish that you are operated exclusively for an exempt_purpose contributions to your organization are no longer deductible under sec_170 of the internal_revenue_code you are required to file federal_income_tax returns on form_1120 those returns should be filed with the appropriate service_center processing of income_tax returns and assessment of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the internal_revenue_code if you decide to contest this determination in court you must initiate a suit of 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 ' day after the date this determination was mailed to you contact the clerk of the appropriate court for rules for initiating suits for declaratory_judgment you may write to the tax_court at the following address you also have the right to contact the office_of_the_taxpayer_advocate you can call and ask for taxpayer_advocate assistance or you can contact the taxpayer_advocate office located nearest you by calling or by writing to taxpayer_advocate assistance cannot be used as a substitute for established irs procedures formal appeals processes etc the taxpayer_advocate is not able to reverse legal or technically correct_tax determinations or extend the time fixed by law that you have to file a petition in the united_states tax_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 if you have any questions in regards to this matter please contact the person whose name and telephone number are shown in the heading of this letter thank you for your cooperation sincerely nanette m downing director eo examinations department of the treasury internal_revenue_service west creek road stop independence ohio xx - date address - address tin form tax years ended person to contact tax_exempt_and_government_entities_division legend org - organization name date org address dear after examining all available information we believe an adjustment of your organization's exempt status may be necessary our proposed_adjustment is found in the enclosed form 4621-a and a detailed explanation is found in the enclosed form 886-a if you accept our findings please sign the enclosed form_6018 consent form and mail it to our office within days from the date of this letter see enclosed publication for details on the examination process and publication sec_5 and for details on appeal rights if you do not accept our findings you have days from the date of this letter to mail us any additional evidence or information you would like us to consider or you may request a discussion of our findings with an examiner who is familiar with your return and submit any additional evidence or information you would like the examiner to consider you may also request a conference to discuss the proposal with the examiner's group manager if you plan to come in for a discussion please phone or write us in advance so that we can arrange a convenient time and place if we do not hear from you within days we will have to process your case on the basis of the adjustment shown in the examination_report the person whose name and telephone number appear above will be glad to answer any questions you may have an addressed envelope is enclosed for your convenience thank you for your cooperation sincerely cheryl a johnson internal revenue_agent enclosures form 4621-a form 886-a agreement form_6018 publications and envelope form 886-a naa ad schedule number or exhibit explanations of items name of taxpayer org tax identification_number ein year period ended 20xx12 legend org organization name co-3 co-4 co-2 xx - date state - state founder - founder co- companies issue whether org the exempt_organization hereinafter referred to as the eo continues to qualify for exemption as an organization described in sec_501 of the internal_revenue_code hereinafter referred to as the irc due to inactivity facts the eo was incorporated in the state of state on january 19xx per the articles of incorporation obtained from the state’s website the corporation was primarily organized to assist young people especially minorities with professional development in the fields of entertainment nursing and business the articles were amended april 19xx to change the purpose to providing education and awareness regarding missing children under the name of co-1 the internal_revenue_service hereinafter referred to as the irs issued a determination_letter dated july 19xx conferring tax exempt status to the eo under sec_501 effective may 19xx the advance_ruling period for being considered exempt under a b i a vi as an organization which could reasonably expected to be publicly supported ended december 19xx a letter requesting documentation of public support was issued by the irs november 19xx because a response was not received the irs letter of april 19xx changed the organization's foundation status to private_foundation a memo issued to missing children agencies by founder the eo's founder states that co-1 went defunct in 19xx he states it was absorbed into co-1 a division of org an organizational chart describes co-1 as a worldwide trade_association of the entertainment industry under co- are listed co-1 ‘defunct’ co-2 co-3 and the co-4 an examination conducted in september 19xx found no evidence of exempt_purpose activities although founder initially agreed and in november 19xx signed form_6018 consent to proposed adverse action he later appealed the decision the examination was closed in february 19xx as a no-change with an advisory to report all gross_receipts and disbursements the eo filed a form_990 for tax_year 20xx showing zero dollars in all revenue expense asset and liability fields the eo did not file a form_990 for tax_year 20xx the eo filed a form ez for tax_year 20xx showing zero dollars in all revenue expense asset and liability fields founder stated in a telephone conversation with the revenue_agent on october 20xx that the eo has conducted no exempt_purpose activities for several years due to his poor health there are no plans to conduct activities in the foreseeable future founder stated that form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service form 886-a rev date name of taxpayer org tax identification_number ein explanations of items year period ended 20xx12 schedule number or exhibit he believed he had closed everything down when he was contacted by the state attorney general's office in 20xx with a request for financials statements founder states that no money is being received through the web sites that are soliciting donations for org the eo does not currently have a board_of directors the 20xx returns states that because of founder's illness everyone resigned taxpayer's position founder was under the impression that he no longer had tax exempt status and he currently agrees with the proposal to revoke the eo's exemption due to inactivity government’s position the eo has not conducted any exempt_purpose activities in at least three years according to its forms and oral testimony the eo is not operating exclusively for one or more purposes under which the organization was granted tax-exempt status and therefore its tax exempt status should be revoked law sec_501 of the code exempts from federal_income_tax organizations organized and operated exclusively for charitable educational and other exempt purposes provided that no part of the organization's net earrings inures to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 of the regulations provides that in order to be exempt as an organization described in sec_501 of the code the organization must be one that is both organized and operated exclusively for one or more of the purposes specified in that section is not exempt will be regarded as operated exclusively for one or more exempt purposes only if primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 of the code sec_1_501_c_3_-1 of the regulations provides that an organization if an organization fails to meet either the organizational or the operational_test it it engages sec_1_501_c_3_-1 of the regulations provides that an organization is not organized or operated exclusively for one of more exempt purposes unless it serves a public rather than a private interest thus it is necessary for an organization to establish that it is not organized or operated for the benefit of private interest such as designated individuals the creator or his family shareholders of the organization or persons controlled directly or indirectly by such private interests form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service form 886-a rev date org schedule number or exhibit explanations of items name of taxpayer tax identification_number ein 20xx12 year period ended revrul_72_369 states in part that in order for an organization to pass the operational_test the organization's resources must be devoted to purposes that qualify as exclusively charitable conclusion because the eo failed to meet the reporting requirements under sec_6001 and sec_6033 to be recognized as an organization exempt from federal_income_tax under sec_501 described in sec_501 the eo's exempt status is revoked effective january 20xx the organization is not required to file form_1120 u s_corporation income_tax return because there are no revenue and no expenses to report form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service


t c memo united_states tax_court estate of charles baxter southern sr deceased first american trust company n a co-executor petitioner v commissioner of internal revenue respondent docket no filed date allan j wade for petitioner e ford holman jr for respondent memorandum opinion körner judge this case is before the court on petitioner's motion for summary_judgment and respondent's motion for partial summary_judgment under rule there is no all statutory references are to the internal_revenue_code in effect as of the date of decedent's death and all rule references are to the tax_court rules_of_practice and procedure except as otherwise noted dispute as to any material facts hearing and argument of the motions was held on date in memphis tennessee charles baxter southern sr decedent died on date and was survived by his spouse dorothy i southern a daughter two sons and nine grandchildren at the time of his death decedent was a resident of pemiscot county missouri probate of the will and administration of the estate was had in the circuit_court probate division of pemiscot county missouri the coexecutors of decedent's_estate timely filed a federal estate_tax_return the return showed a gross_estate of dollar_figure and deductions of dollar_figure resulting in a net estate of dollar_figure adjusted_taxable_gifts of dollar_figure were reported and when added to the estate provided a net taxable_estate of dollar_figure the tentative_tax shown was dollar_figure a unified_credit of dollar_figure and a credit_for_state_death_taxes in the amount of dollar_figure were taken leaving a net estate_tax of dollar_figure which was the amount_paid respondent determined a deficiency of dollar_figure in the federal estate_tax of the estate of charles baxter southern sr petitioner here such deficiency resulted from a dollar_figure increase in the taxable_estate that increase resulted in part from respondent's determination that dollar_figure was improperly deducted from the gross_estate as part of the computation of the marital_deduction the second component of the increase is dollar_figure an amount equal to certain of the estate's administration_expenses taken as a deduction on its fiduciary income_tax return form_1041 respondent determined that under the language of the will those administration_expenses must be subtracted in arriving at the residuary_estate thereby reducing the marital_deduction by an equal amount in the alternative because there was a residuary marital share respondent determined that payment of administration_expenses from estate income or the grant of discretion to make such payment should decrease the marital share in an equal amount to represent the decrease in total value passing to the spouse the alternative determination by respondent presents essentially the same issue2 as heard before the supreme court in 101_tc_314 affd 63_f3d_1083 11th cir cert granted u s 116_sct_1564 argued date because the decision in that case may be controlling as to this argument we shall not decide that issue at this time rather we shall preserve and decide it after a decision in estate of hubert is handed down thus there are two issues presently to decide in this case the first is whether under the language of the will dollar_figure wa sec_2 petitioner and respondent agreed and the court entered a decision in estate of southern v commissioner docket no date that deduction of the administration_expenses from the estate income on the fiduciary income_tax return of decedent's_estate was proper thus the issue for decision here will be whether the marital_deduction must be reduced in the case of a residuary marital bequest where administrative expenses have been properly taken on the fiduciary income_tax return improperly included in calculating the marital share the amount passing to the marital trust which is part of the marital_deduction in arriving at the federal estate_tax we hold that it was not improper second whether the language of the will requires that administration_expenses be subtracted from the residuary_estate we hold that it does not specific bequests under item ii of decedent's will labeled specific bequests various personal items and dollar_figure went to the widow and bequests of dollar_figure each went to all nine of decedent's named grandchildren all such legatees survived decedent item iii titled bequest of residuary_estate provided in the first sentence all the rest and residue of my estate after subtracting therefrom the aggregate amount_of_deductions allowed by sec_2053 and sec_2054 shall constitute my residuary_estate and shall pass as hereinafter provided i hereby devise and bequeath my residuary_estate as follows the marital share as hereinafter defined to the trustee to hold in a marital trust or trusts for the use and benefit of my wife dorothy irene southern and the balance of my residuary_estate the non-marital share to be divided as hereinafter provided item i of the will names the executors items ii and iii have been noted herein the remaining items of this lengthy will except item x mentioned hereinafter are not material here they involve the later disposition of the trusts first set out by item ii and administrative provisions under the will the marital share funds the marital trust and is hereinafter defined the nonmarital share is the balance of the residuary_estate after deducting the marital share the nonmarital share is allocated as hereinafter provided the second paragraph of item iii defines the marital share it provides the marital share shall be an amount equal to the value of my residuary_estate reduced by the largest amount which when added to the amount of any adjusted_taxable_gifts made by me during my lifetime will be subject_to federal estate_tax under sec_2001 of the internal_revenue_code_of_1986 or any successor provision at a marginal_rate of less than to calculate the marital share we start with the residuary_estate as provided under the first paragraph of item iii next we must calculate the largest amount la which when added to lifetime gifts lg will be taxed at a marginal_rate of less than percent to tax the sum of the largest amount and the lifetime gifts at a marginal_rate of less then percent we must consider the entire taxable_estate the entire taxable_estate consists of the nonmarital share as hereinafter determined the lifetime gifts and the bequests to the grandchildren bg the specific bequests to the spouse would not be part of the taxable_estate as those bequests qualify for the marital_deduction thus we interpret the above sentence to mean what amount when added to lifetime gifts will cause the taxable_estate te to be taxed at less than percent the only unknown in our equation is the largest amount or la under sec_2001 the marginal amount ma taxed under percent is dollar_figure it is agreed by the parties that the amount of the lifetime adjusted_taxable_gifts was dollar_figure the taxable_estate has three components the bequests to the grandchildren the lifetime gifts and the largest amount which will be the same as the nonmarital share thus te is equal to bg lg la the taxable_estate must be equal to the marginal amount which is dollar_figure therefore te is equal to dollar_figure because the values of te bg and lg are known the value of la is determined by subtracting bg and lg from te thus our formula is te - lg bg la therefore la dollar_figure which is dollar_figure less the sum of dollar_figure and dollar_figure the nonmarital share is dollar_figure the residuary_estate is dollar_figure and when reduced by the nonmarital share leaves a marital share of dollar_figure this was the amount shown on the estate_tax_return respondent argues that we must not include the bequests to the grandchildren when making the computation respondent insists that the above-quoted sentence instructs us to reduce the residuary_estate by some amount which when added to lifetime gifts would be taxed at less than percent respondent asserts that the formula should be lg plus la equals ma or la ma - lg under this approach la equals dollar_figure which is dollar_figure - big_number although the language of the will is less than crystal clear we agree with petitioner for two reasons in order to give meaning to the term marginal amount we must consider the entire taxable_estate second we find that petitioner's version of the will identifies a sensible intent to have the taxable_estate taxed at less than percent this is a logical tax planning scheme respondent's assertion evidences no sensible intent although there is no requirement that a will be sensible or logical when there is a discernible intent and the language lends itself to more than one interpretation we adopt the interpretation that is consistent with the intent of the will and gives full meaning to every word and clause 323_f2d_664 8th cir we conclude that decedent intended the computation be made with reference to the entire taxable_estate respondent argues incorrectly that petitioner is including the dollar_figure gifts to the grandchildren in the computation of the marital_deduction the dollar amount may be the same but petitioner has not included the dollar_figure bequest to the grandchildren in the marital_deduction rather it has increased the marital share and therefore the marital_deduction by dollar_figure to offset the presence of the dollar_figure bequest in the taxable_estate the dollar_figure increase to the marital share is taken from other assets in the residuary_estate of which these bequests to the grandchildren do not form a part the option of where to take the deduction the second issue to be decided is whether the language of the will requires that an amount equal to the administration_expenses be subtracted in arriving at the residuary_estate regardless whether such administration_expenses are paid from estate income or corpus the first sentence of item iii provides that the residuary_estate is the amount of estate remaining after bequests ie the rest and residue less deductions allowed under sec_2053 and sec_2054 respondent asserts that this language requires that any expenses allowed under sec_2053 and sec_2054 be deducted from the gross_estate to determine the residuary_estate petitioner argues that sec_2053 there being no sec_2054 expenses does not allow deductions that section merely specifies those classes of deductions which are allowable the commissioner allows these deductions upon examination and approval of the estate_tax_return form_706 since certain administration_expenses were claimed on form_1041 u s fiduciary income_tax return of the estate pursuant to sec_642 they were not claimed or allowed for estate_tax purposes we agree with petitioner item x of decedent's will provisions relating to the executor provides the executor may a elect to use the costs of administration of my estate as deductions for federal estate_tax purposes or federal_income_tax purposes and b elect to use date of death values or optional values for federal estate_tax purposes emphasis added the will gives the executor discretion as to how to account for the administration_expenses this provision bolsters petitioner's argument because it clarifies the idea that it was to be determined after death whether any administration_expenses would be claimed under sec_2053 we conclude that the will does not require the residuary_estate to be diminished by an amount equal to the administration_expenses that were not in fact claimed or allowed under sec_2053 and were instead properly deducted from estate income petitioner's motion for summary_judgment will be granted in part in that the dollar_figure bequest was properly included in calculating the marital share and in that the language of the will does not require that administration_expenses be subtracted from the residuary_estate thus decreasing the marital_deduction respondent's motion for partial summary_judgment will accordingly be denied in part the balance of the case will be reserved for future resolution an appropriate order will be issued


id office uilc cca-102895-08 ------------- number release date from -------------------- sent tue to ---------------------------- cc subject re requested legal opinion statute_of_limitations see reg e date of occurrence - where a single contractual arrangement provides for periodic_payments over course of the dp's tax_year consider the excess_benefit_transaction with respect to the aggregate annual payments to occur on the last day of the tax_year i think this would apply even if they are not sure about an actual written contract etc re the substance of the t p's argument in this case see reg a - in determining the reasonableness of comp paid in one year services performed in prior years may be taken into account -------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- -----------------------