department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------------- ---------------------------------------------------- telephone number -------------------- refer reply to cc psi b03 plr-129319-15 date february internal_revenue_service number release date index numbers -------------------------------------- ---------------------- ---------------- ----------------------------- ----------------------------------------------- ------------------------------------ -------------------------------------- ---------------------------------------- legend x ----------------------------------------------------- ------------------------------------------------ y ------------------------------------------------------ ------------------------------ z ------------------------- ----------------------------------------------------- country date n1 n2 ------- ------------------ ------- ------ dear ------------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations for x to file an election under sec_301_7701-3 to be classified as a partnership for federal tax purposes plr-129319-15 the information submitted states that x was formed under the laws of country on date x is owned by y which holds an n1 percent ownership_interest in x and z which holds an n2 ownership_interest in x x represents that it is a foreign_entity that is eligible to elect to be classified as a partnership for federal tax purposes effective date however x failed to file timely form_8832 entity classification election to be classified as a partnership for federal tax purposes effective date sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes elections are necessary only when an eligible_entity does not want to be classified under the default classification or when an eligible_entity chooses to change its classification sec_301_7701-3 provides the default classification for an eligible_entity that does not make an election sec_301_7701-3 provides that unless the entity elects otherwise a foreign eligible_entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability under sec_301_7701-3 a foreign eligible_entity has limited_liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 by filing form_8832 with the appropriate service_center under sec_301_7701-3 this election will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified the date specified on form_8832 cannot be more than days prior to the date on which the election is filed and cannot be more than months after the date the election is filed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code code except subtitles e g h and i sec_301_9100-1 provides that the term regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic_extension of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory plr-129319-15 elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when a taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the granting of relief will not prejudice the interests of the government based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center and elect to be classified as a partnership for federal tax purposes effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose this ruling is contingent on x and its owners filing within days from the date of this letter to the extent necessary or appropriate all required federal_income_tax returns and information returns including amended returns consistent with the relief granted in this letter a copy of this letter should be attached to any such returns except as specifically set forth above we express or imply no opinion concerning the federal tax consequences of the facts described above under any other provision of the code and the regulations thereunder in addition sec_301_9100-1 provides that the granting of an extension of time for making an election is not a determination that the taxpayer is otherwise eligible to make the election 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 the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the ruling_request it is subject_to verification on examination plr-129319-15 in accordance with the power_of_attorney on file with this office we are sending copies of this letter to x’s authorized representatives sincerely associate chief_counsel passthroughs special industries by __________________________ richard t probst senior technician reviewer branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ------------------------------------------------- ------------------------------ --------------------- ----------------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------- id no ------------- telephone number --------------------- refer reply to cc ita b04 plr-163133-05 date date legend legend x - ------------------------------ y - ------------------------------------------------------------------------------------- date - ------------------ date - --------------------------------- date - ---------------- date - --------------------------- date - ----------------- date - ----------------- year - ------- dear ---------------------- this letter_ruling is in reference to x’s request that its form_1128 application to adopt change or retain a tax_year be considered timely filed under the authority contained in sec_301_9100-3 of the procedure and administration regulations taxpayer filed a form_1128 to change its accounting_period for federal_income_tax purposes from a taxable_year ending on date to one ending on date effective date taxpayer’s form_1128 was not however timely filed x’s form_1128 requesting a change in accounting_period for the tax_year ending on date was due on date in year x researched procedures to change its accounting_period x had concluded that it would qualify to make the change in accounting_period under the automatic provisions of revproc_2002_37 2002_1_cb_1030 a form_1128 filed pursuant to revproc_2002_37 is timely if it is filed on or before the time including extensions for filing the return for the short_period required to effect such change in late year x began investigating the possibility of forming a joint_venture after a lengthy period of due diligence and negotiations y was incorporated on date x and y contributed their respective operations to the joint_venture on date and each plr-163133-05 have a percent partnership_interest in the joint_venture y has a taxable_year ending on date immediately on learning of the possibility that a change in accounting_period under the automatic provisions of revproc_2002_37 would not apply and having therefore missed the due_date for filing the request to change its tax_year x authorized its representative to file this request for relief revproc_2002_39 2002_1_cb_1046 provides the general procedures for establishing a business_purpose and obtaining the approval of the commissioner of internal revenue to adopt change or retain an annual_accounting_period for federal_income_tax purposes under the revenue_procedure a taxpayer will be granted permission to adopt change to or retain an annual_accounting_period other than a required_year if the taxpayer establishes a business_purpose for the requested annual_accounting_period a form_1128 filed pursuant to revproc_2002_39 is timely if it is filed on or before the time not including extensions for filing the return for the short_period required to effect such change sec_301_9100-3 provides that requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 automatic extensions such as the instant case must be made under the rules of sec_301_9100-3 requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government based on the facts and information submitted and the representations made it is held that x has acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government accordingly the requirements of the regulations for the granting of relief have been satisfied and x’s late filed form_1128 requesting permission to change from a tax_year ending on date to one ending on date effective date is considered timely filed x’s form_1128 will be processed in accordance with the established procedures under revproc_2002_39 the ruling contained in this letter is based upon facts and representations submitted by x and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for a ruling verification of the factual information representations and other data may be required as part of an examination process this ruling addresses the granting of sec_301_9100-3 relief only no opinion is expressed or implied regarding the tax treatment of the instant transaction under the provisions of any other section of the code or regulations that may be applicable thereto or regarding the tax treatment of any conditions existing at the time of or effects resulting from the instant transaction specifically no opinion is expressed or implied as to whether x is permitted under the code and applicable regulations to change to the tax_year requested in the subject form_1128 plr-163133-05 this ruling is directed only to the taxpayer that requested it sec_6110 provides that it may not be used or cited as precedent enclosed is a copy of the letter_ruling showing the deletions proposed to be made in the letter when it is disclosed under sec_6110 in accordance with the provisions of a power_of_attorney currently on file we are sending a copy of this letter to the taxpayer’s authorized representatives michael j montemurro branch chief office of associate chief_counsel income_tax accounting sincerely


- q department of the treasury internal_revenue_service tar exempt awd government entities oehense dote as l000 um date ec certified mail taxpayer_identification_number form_990 tax_year s ended person to contact id number contact numbers telephone fax last date to petition the courts dear this is a final_determination regarding your exempt status under sec_501 c of the because you have not established that you are internal_revenue_code code observing the conditions required to continue exempt status recognition of your exemption from federal_income_tax as an organization described in internal_revenue_code sec_501 is retroactively revoked to our determination was made for the reason that you have falled to produce documents records or other information to establish that you are operated exclusively for one or more exempt purposes set forth in sec_501 or that you were not operated for the benefit of private interests or that a part of your net_earnings did not inure to the benefit of private individuals contributions made to your organization are not deductible under sec_170 of the code furthermore you are required to file federal_income_tax retums on form_1120 for all open years if you decide to contest this determination in court a petition for declaratory_judgment proceeding in the united_states tax_court the united_states court of claims or the united_states district_court for the district of columbia must be filed within days from the date this determination was mailed to you the publication attached gives you information about filing suit in these courts tpct cinipapavt pass taxpayer you also have the right to contact the office_of_the_taxpayer_advocate advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate is not able to reverse a legally correct_tax determination nor extend the time fixed by law that you have to file a petition in the u s 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 may call toll-free and ask for taxpayer_advocate assistance ’ you prefer you may contact your local taxpayer_advocate at if you have any questions please contact the contact person at the telephone number shown in the heading of this letter thank you for your cooperation sincerely marsha ramirez director eo examinations enclosure publication - internal_revenue_service department of the treasury ow oct ‘taxpayer identification_number form tax_year a ended - peracn to contectid number 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 do not agree with our proposed revocation you must submil 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 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_organization 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 rhatter for technical_advice as explained in publication if we issue a determination_letter to you based on technical_advice no further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice 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 witbin 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 letter catalog number tt 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 forma appeals process the taxpayer_advocate cannot reverse a jegally correct_tax determination or extend the time fixed by law that you have to file a petition ina us court the taxpayer_advocate can however se 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 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 hi r c johnson director eo examinations enclosures publication publication report of examination letter catalog number 4b08f cata dk form_886 a name of taxpayer schedule no or exhibit year period ended explanation of items department of the treasury - intumal revenue servier facts according to our records the an organization exempt from federal_income_tax because it is an organization described in sec_501 of the internal_revenue_code the services' records further indicate that the corporation was granted exemption in and is classified as other than a private_foundation because it is described in sec_170 and sec_509 of the internal_revenue_code is individuals representing the organization approached the service they advised us that the organization was not in compliance with their payroll responsibilities and wanted to make correction after conducting research we noted that not only was the organization delinquent with their payroll responsibilities they were also delinquent in filing forms the last year that the organization filed form_990 was for fiscal_year ending the taxpayer submitted most of the payroll retums that were due however the taxpayer never submitted any forms we called the representatives who originally contacted the service on behalf of the taxpayer they did not return our calls we decided to initiate an examination of the taxpayer we sent an appointment letter by certified mail to the taxpayer's last_known_address the letter was returned as undeliverable law sec_501 states that organizations organized and operated exclusively for religious charitable educational and other exempt purposes may qualify for exemption in order to qualify for exemption under sec_501 no part of the organization's net_earnings may inure to the benefit of any private_shareholder_or_individual no substantial part of the organization's activities may involve carrying on propaganda or otherwise attempting to influence legislation and the organization may not participate in or intervene in including the publishing or distributing of statements any political campaign on behalf of or in opposition to any candidate for public_office income_tax regulation sec_1_501_c_3_-1 states that organizations described in this section must be organized and operated exclusively for one or more of the purposes specified in such section to meet either the organizational_test or the operational_test it is not exempt if an organization fails income_tax regulation sec_1_501_c_3_-1 states that an organization is organized exclusively for one or more exempt purposes only if its articles of organization limit the purposes of the organization to one or more exempt purposes generally the articles of organization cannot empower the organization to engage in activities other than as an insubstantial part that are not in furtherance of one or more exempt purposes form 886-a ‘rev deparunent of the treasury - internal_revenue_service lad page 1lof2 ee t s g -g2-940 887d wol form_886 a neparument of the treasusy - internal revenue serviec name of taxpayer explanation of items schedule no or exhibic yeat pcriod ended income_tax regulation sec_1_501_c_3_-1 states an organization wiil be regarded as operating exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose sec_1_6001-1 requires that each person required to file a return maintain books_and_records to allow the service to establish whether the taxpayer is liable for any_tax liability exempt_organizations must also maintain the records required by sec_6033 sec_1_6033-2 states that in general every organization_exempt_from_taxation under sec_501 shail file annual information_return specifically setting forth its items of gross_income gross_receipts and disbursements and such other information as may be prescribed in the instructions issued with respect to the return such return shall be filed annually regardless of whether such organization is chartered by or affiliated or associated with any central parent or other organization sec_1_6033-2 states that an organization which is exempt from taxation under sec_501 and is not required to file annually shall immediately notify the service in writing of any changes in its character operations or purpose for which it was originally created this section further states that every organization exempt from tax whether or not it file an annual information_return shall submit such additional information as may be required by the internal_revenue_service for the purpose of inquiring into its exempt status and administering the provisions of the tax laws is required to taxpayer's positions none provided reasoning and conclusion an organization described in sec_501 the internal_revenue_service attempted to conduct an examination to insure that the organization was entitled to continue its tax exempt status the service mailed an audit letter by certified mail to the organization's last_known_address the audit letter was returned as undeliverable received exemption as accordingly we are proposing to revoke the exempt status of the effective form 886-acrev s-c8 department of the treasury - internal_revenue_service page of d ee t s ae-de-230


department of the treasury internal_revenue_service washington d c contact person identification_number contact number employer_identification_number form required to be filed tax years tax_exempt_and_government_entities_division number release date date date uil dear this is our final_determination that you do not qualify for exemption from federal_income_tax as an organization described in internal_revenue_code sec_501 recently we sent you a letter in response to your application that proposed an adverse determination the letter explained the facts law and rationale and gave you days to file a protest since we did not receive a protest within the requisite days the proposed adverse determination is now final because you do not qualify for exemption as an organization described in code sec_501 donors may not deduct contributions to you under code sec_170 you must file federal_income_tax returns on the form and for the years listed above within days of this letter unless you request an extension of time to file instructions and do not send them to this office failure_to_file the returns timely may result in a penalty file the returns in accordance with their we will make this letter and our proposed adverse determination_letter available for public inspection under code sec_6110 after deleting certain identifying information please read the enclosed notice notice of intention to disclose and review the two attached letters that show our proposed deletions if you disagree with our proposed deletions follow the instructions in notice action if you agree with our deletions you do not need to take any further in accordance with code sec_6104 we will notify the appropriate state officials of our determination by sending them a copy of this final letter and the proposed adverse letter you should contact your state officials if you have any questions about how this determination may affect your state responsibilities and requirements if you have any questions about this letter please contact the person whose name and telephone number are shown in the heading of this letter federal_income_tax status and responsibilities please contact irs customer service pincite-829-1040 or the irs customer service number for businesses the irs customer service number for people with hearing impairments is if you have any questions about your sincerely robert choi director exempt_organizations rulings agreements enclosure notice redacted proposed adverse determination_letter redacted final adverse determination_letter department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division date date legend m organization d city e state f incorporation date dear contact person identification_number contact number fax number employer_identification_number vil we have considered your application_for recognition of exemption from federal_income_tax under internal_revenue_code sec_501 based on the information provided we have concluded that you do not qualify for exemption under code sec_501 the basis for our conclusion is set forth below issues do you m qualify for exemption under sec_501 of the code facts you were incorporated as a not-for-profit entity in the state of e on date f per your articles of incorporation the specific and primary purposes include the advancement of charity and education and the operation of a restaurant and other food services with a commitment to community outreach funding for families or individuals that exceed the income letter cg catalog number 47630w poverty guidelines for assistance and or suffers a financial or economic crisis and other related or corresponding charitable purposes by the distribution of funds for such purposes your articles of described in sec_501 of the code also include language that complies with the organizational_test as your bylaws indicate your primary purpose is to provide educational and career development opportunities your governing body includes the executive director human resource coordinator the chairman director the vice chairman director the secretary director the treasurer director the senior director of operations the director of dining room operations the director of membership and the director of membership and call center operations annually the director of dining room operations is the daughter of the senior the executive director human resource coordinator and the senior director of operations are husband and wife and also your founders and incorporators each is estimated to be paid dollar_figure director of operation and the step-daughter of the executive director human resource coordinator the director of finance and marketing is the mother of the executive director human resource coordinator the director of dining room operations the director of membership and the director of membership and call center operations each are estimated to be paid dollar_figure secretary director and the treasurer director are volunteers one of the contractors whose company is selected to handle kitchen design and installation and architectural plans during the renovation phase is the spouse of the director of membership annually the chairman director the vice chairman director the you describe your mission as follows strive to provide superior value offer outstanding quality customer service quality fine foods and fine dining we want our customer and members to not only will our clientele receive a fine quality meal they will have the total experience of m also be provided with an enjoyable and relaxing atmosphere you later amended narrative description of planned activities to state your mission is the respected dedication and commitment to community outreach for working families and individuals in crisis in the community your business plan states the focus for the profits from the services will be instituted into your for working families and individuals in d community that otherwise do not qualify for assistance because the total household_income exceeds the federal state income poverty guidelines to obtain assistance your requirements are the family or individual must be experiencing an economic or financial crisis and the total household_income must exceed the federal state income poverty guidelines for assistance your business plan also describes membership are made available to any consumer membership dues are tax deductible and your purpose is to provide quality fine foods excellence in fining dining superior service to your members and customers development or financial knowledge and valuable information which will support your financial decisions and letter cg catalog number 47630w once you are operational along with many other charitable programs you state the restaurant industry is currently being dominated by a few larger restaurants and you believe you can successfully enter the industry as the first of its kind c not-for-profit restaurant by offering quality fine dining and fine foods excellence in customer service membership to the restaurant special member only discounts superior value and competitive prices you state m will evolve into an incredibility customer-focused member-focused not-for-profit restaurant valued and devoted and committed to meeting all associated customer and member needs and the responsibility to their satisfaction you state it is your long-term goal to be global with your mission and be the restaurant of choice for the largest fine dining audience in the d community and in america you state that once you have the opportunity to serve consumers and offer benefits of the restaurant and membership along with your competitive prices you believe the consumer or member is less likely to move to your competitor the last section of your business plan states the following due to intense competition restaurants must look for ways to differentiate their place of business and make it unique in order to achieve and maintain a competitive advantage the founders of m realize the need for differentiation and uniqueness and believe that combining a fine dining experience and a will be the concept of success the fact that no other national restaurant has entered this arena presents us with a window of opportunity and an entrance into a profitable market you state your hours of operation will be consistent with other restaurants monday through saturdays with possibility of special events and fundraisers scheduled on sundays along with one time per month open to provide senior citizens brunches in conjunction with your senior citizens program you will operate with both paid staff and volunteers you will employ trainers for the on-the-job training of the students you will have about administrative staff members instructors trainers to students at any given time for training and employment purposes and employees to run the restaurant you also indicate employees key staff instructors and trainers and will be students of your staff will be to date you have not opened your restaurant you are currently in the start-up mode seeking funding to begin operations although you do not obtained a facility you describe the facility will be at least big_number square feet and will seat over big_number guests in the dining area alone you will have a minimum of parking spaces you project that the restaurant start-up expenses will be dollar_figure attributed to employee’s salaries and benefit dollar_figure for food beverage and equipment this includes dollar_figure for building expenses and dollar_figure letter cg catalog number 47630w you provide a start-up summary of expenses that lists kitchen design architectural plans manuals handbooks recipes brochures pre-opening labor vip lunch dinner building lease equipment accessories liquor license alcoholic beverages program fundraising and reserve your revenues will include membership dues you offer tax-deductible membership dues to any consumer and can be paid under five membership categories single husband and wife couples family corporate and student the membership benefits include discounts on lunches dinners parties banquets parties business meetings weddings and bridal and baby showers your three-year growth forecast reads as follows growth yr2 growth w w potential customers member - lunch non-member -- lunch member - dinner non-member - dinner children - member parties banquets non-member parties banquets total growth yr h h a a i p n dollar_figure dollar_figure - a a p a l o l w n a l a l n a l a you also provide a five-year sales forecast which shows the restaurant sales will dollar_figure year dollar_figure year you estimate there will be employees to operate the restaurant for year and dollar_figure for year dollar_figure for year dollar_figure for for you state you will offer a wide menu variety atmosphere ambience a friendly professional staff in a casual environment the menu will be established by the assistant director of operation the menu will consist of standard items and will be altered for training and by member patron demand the restaurant will offer some various menu entrees of fine quality food and fine dining including a vegetarian selection and a children’s menu you also have suggested dinner wines along with a discrete wine list you state all of these qualities will be consistent with your goal of providing quality fine foods and a remarkable fine dining experience you state that you will inform your patrons members their meals are tax deductible on all menus advertisements brochures consumer receipts and all marketing data you state prices of the menu are set consistent with market_value and then discounted to fit a charitable_organization you also state the menu prices have been set below cost of market_value to fit a charitable_organization as part of membership benefits your members receive discount on menu items the percentage of discounts fluctuates between to for soups and appetizers and entrée items with respect to fine dining to for larger items on the menu such as special salads and you state a second method of funding is through sponsorship you state you will depend solely upon grant and sponsorship funding for the start-up component of this charitable letter cg catalog number 47630w organization you state you will rely on grant and sponsorship funds for special events and fundraisers dedicated to your charitable cause you forecast you will raise dollar_figure semiannual fundraising in you state that you will offer each donor contributor grantor or sponsor the ability to maintain a separate contribution accounts under which they have the right to give advice on the use or distribution of their funds you state the donor contributor grantor or sponsor may also provide advice on the types of investments distribution from the types of investments or the distribution from the contribution account including the specific program or start-up expenses for the first year of your operation you state nonmembers also have the benefit of a tax deductible charitable_contribution the difference in the members and nonmember price of a meal party banquet etc is the charitable_contribution for nonmember there are four levels of sponsorship the sponsorship benefits include complimentary dinner advertisement in your newsletter and menu a plaque and membership sponsorship receipts will be used to defray the capitalization costs necessary to purchase the restaurant equipment aside from operating the restaurant you state you will be involved in other charitable activities the special programs listed in your application include tuition program job training program community outreach funding program welfare to work homeless shelter program christmas program and senior citizens program and building program you indicate that you will provide two types of scholarships college tuition program and pre- college tuition program the college tuition program will be offered to those going to college that have a dedication to community outreach the pre-college tuition program will be for working families experiencing financial difficulties and want their child to attend parochial private or christian school you state job training is based on a two-week classroom course schedule and 60-day on-the- job training course schedule which takes into account the difficulty hazard and liability that training people for food service trade entail each employee will be paid for both work and attending of the job training classes the remaining training period will be spent in community outreach activities you state the community outreach funding program will provide an opportunity for families and individuals to obtain assistance for rent mortgage utilities food and clothing your welfare to work program will provide an opportunity for a job training program and an opportunity for employment with you you state you will implement a homeless shelter program which will provide an opportunity for the homeless shelters to receive quality food from you the volunteering committee when selected will be members and will have extensive contacts with homeless shelters as well as the various city agencies that serve the homeless letter cg catalog number 47630w the senior citizens program will provide funding for seniors experiencing financial difficulties the building program will work with families due to crisis repair and rebuild their home that homeowners renters insurance does not cover and to be eligible their income must exceed the federal state poverty guidelines for assistance and funding you have an agreement with another entity who will handle the transfer of the funds for your special programs your application states that you will be transferring funds for your special programs to only one liaison organization which has agreed to aid in the screening and distribution of funds for all of the charitable special programs that you intend to offer you indicate the training program is designed to not only educate the students but also to open up jobs for your graduates if employment is unavailable at your facility upon completion of the job training program your recruiter will then begin job placement services for employment elsewhere there will be approximately to trainees you estimate about to of trainees will remain as employees you state the wages will be set according to guidelines of the labor board laws consistent with other restaurants employees and taking into consideration the wages of a non-profit or c corporation hour week and students will have a 40-hour training work week staff ouss persons will work approximately hours a week consistent with other restaurant establishments staff members will work a after training most hired wait- you state no one will be paid for the christmas program which will take at least months to establish your patrons will volunteer to adopt a less fortunate family for the christmas holiday each family will provide a list of things needed for the family and the volunteer committee will disburse the lists to the adopting patrons and the restaurant will donate gift cards to local grocery stores so the families can obtain their traditional family christmas dinner and the senior and building programs will also be operated by a volunteer committee you project the tuition program will provide ten dollar_figure tuition scholarship awards you estimate the senior citizen program will have to seniors attending brunch one sunday per month the building program will be based on victims who go through hardships and disasters in a fiscal_year and if not qualified for other assistance you would then extend an application_for assistance from you the tuition law sec_501 of the code provides for the exemption from federal_income_tax of organizations organized and operated exclusively for charitable purposes sec_1_501_c_3_-1 of the income_tax regulations states that an organization described in sec_501 of the code an organization must be both organized and operated exclusively for one or more of the purposes specified in such section if an organization fails to meet either the organizational_test or the operational_test it is not exempt in order to be exempt as letter cg catalog number 47630w sec_1_501_c_3_-1 of the regulations provides that an organization will be regarded as operated exclusively of one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 of the code an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose sec_1_501_c_3_-1 of the regulations states that an organization is not organized or operated exclusively for one or more exempt purposes unless it serves a public rather than a private interest thus to meet the requirement of this subdivision 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 interest sec_1_501_c_3_-1 of the regulations provides that the term charitable is used in - sec_501 of the code in its generally accepted legal sense and includes relief of the poor and distressed or of the underprivileged as well as the advancement of education sec_1_501_c_3_-1 of the regulations provides that the educational refers to as the instruction or training of the individual for the purpose of improving or developing his capabilities or the instruction of the public on subjects useful to the individual and beneficial to the community sec_1_501_c_3_-1 of the regulations provides that an organization may meet the requirements of sec_501 although it operates a trade_or_business as a substantial part of its activities if the operation of such trade_or_business is in furtherance of the organization's exempt_purpose or purposes and if the organization is not organized or operated for the primary purposes of carrying on an unrelated_trade_or_business the corporation was formed to in revrul_73_127 1973_1_cb_221 the service held that an organization that operated a cut- price retail grocery outlet and allocated a small portion of its earnings to provide on-the-job training to hard-core unemployed did not qualify for exemption operate a retail grocery store to sell food to residents of a poverty area at prices substantially lower than those charged by competing grocery stores to provide free grocery delivery service ‘to residents who need it to participate in the federal food stamp program and to provide job training for unemployed residents the organization's purpose of providing job training for hard- core unemployed was charitable and educational within the meaning of the common_law concept of charity however the organization’s purpose of operating a retail grocery store where food was sold to residents of a poverty area at low prices was not recognized as a charitable purpose under the basic common_law concept of charity operation of the store and the operation of the training program are two distinct purposes that was ends or objects sought to be accomplished by the organization through use of its resources and since the former purpose was not a recognized charitable purpose the organization was not organized and operated exclusively for chartable purposes the ruling went on to say the in revrul_76_94 1976_1_cb_171 the service held that an exempt organization's operation of a retail grocery store as part of its therapeutic program for emotionally disturbed adolescents almost letter cg catalog number 47630w fully staffed by the adolescents and on a scale no larger than was reasonably necessary for the performance of the organization's exempt functions was not unrelated_trade_or_business in 302_f2d_934 ct_cl the court considered the status of an organization that provided analysis of securities and industries and of the economic climate in general it sold subscriptions to various periodicals and services providing advice for purchases of individual securities the court noted that education is a broad concept and assumed argued that the organization had an educational purpose the court concluded however that the totality of the organization's activities which included the sale of many publications as well as the sale of advice for a fee to individuals was more indicative of a business than that of an educational_organization the court held that the organization had a significant non-exempt commercial purpose that was not incidental to the educational purpose and that the organization was not entitled to be regarded as exempt in 950_f2d_365 cir the court_of_appeals upheld a tax_court decision tcmemo_1990_484 that an organization operating restaurants and health food stores in a manner consistent with the doctrines of the seventh day adventist church does not qualify under sec_501 the court found substantial evidence to support a conclusion that the organization's activities furthered a substantial nonexempt purpose including a the organization's operations were presumptively commercial b the organization competed directly with other restaurants and food stores c the organization used profit-making pricing formulas common in the retail food business d the organization engaged in a substantial amount of advertising e the organization's hours of operation were competitive with other commercial enterprises and f the organization lacked plans to solicit donations in 326_us_279 the supreme court held that the presence of a single non-exempt purpose if substantial in nature will destroy a claim for exemption regardless of the number or importance of truly exempt purposes in 30_tc_1151 the court held that an applicant for tax exempt status under sec_501 has the burden of showing it comes squarely within the terms of the laws conferring the benefit sought letter cg catalog number 47630w application of law you are not as described in sec_501 because you are not organized and operated exclusively for charitable educational scientific or religious purpose your restaurant does not further the exempt_purpose described in sec_501 you are not as described in sec_1_501_c_3_-1 of the regulations because more than an insubstantial part specifically the restaurant of your activities is devoted to non-exempt purposes you are not as described in sec_1_501_c_3_-1 of the regulations because your activities serve private benefits of your members and patrons who not only receive a discount for their meals but also a tax deductibility for their membership fees and or meals you are similar to the organization described in revrul_73_127 because the operation of the restaurant and the operation of the training and other charitable programs are two distinct purposes since the operation of the restaurant is the main part of your activities and is not a recognized charitable purpose you are not organized and operated exclusively for charitable purposes your restaurant hours prices menu items and services are competitive to for-profit restaurants your restaurant is staffed by paid employees and trainees may be hired as your employees after their training your paid staff is mainly for the operation of the restaurant rather than for the training program or any charitable functions your restaurant operation is no different from those of for-profit restaurants therefore you are in competition with for-profit restaurants furthermore you serve private benefits to your patron members and patron non-members by giving them discounts and tax deductibility benefits to lure them from your competitors you are not similar to the organization ruled in revrul_76_94 because your restaurant operation is your main function and your planned training and charitable programs are secondary to your total activities and are added programs as the way to attract customers to your restaurant as you indicated you believe that the consumers or members are less likely to move to your competitors once you have the opportunity to serve the consumers and offer benefits of the restaurant and membership along with competitive prices therefore any charitable and training programs are secondary and incidentally to your overall activities you are similar to the organizations described in the american institute for economic research v united_states supra and living faith inc v commissioner supra you plan to operate a fine dining restaurant in competition with other for-profit fine dining restaurants your restaurant is viewed as commercial your hours prices and menu items are competitive to those of for- profit restaurants your sources of revenues are mainly from restaurant sales and your expenses are mainly for the restaurant operation taking in totality your restaurant is a significant non-exempt commercial activity that is not incidental as held in better business bureau of substantial will preclude tax exemption under sec_501 of the code your restaurant operation a substantial part of your activities is a non-exempt purpose therefore you are not operating exclusively for an exempt_purpose as described in sec_501 supra a single non-exempt purpose if letter cg catalog number 47630w according to the findings in nelson v commissioner supra you have the burden of proving that you satisfy the requirements of the particular exemption statute whether you meet this requirement is a statement of fact the facts indicate that your primary activities are the operations of a fine dining restaurant that is similar to any other for-profit restaurants thus you do not appear to qualify under sec_501 applicant's position you state that you are operating for charitable purposes and you do not wish to separate the charitable programs from the operation of the restaurant you state that if you separate the restaurant operation from the charitable programs umbrella it leaves entirety of your operations cut-off and isolated completely form obtaining any opportunity for funding and bank loans from financial_institution you provide copies of information from the internet about other organizations which may have been recognized under sec_501 of the code you state that those organizations have great similarities in their charitable purpose comparable to your charitable purpose but not offering all of the exact programs you would be offering you also provide letters of support from senators and representatives service response to applicant’s position your activities mainly comprise of a restaurant operation which is in competition with any for- profit restaurants your restaurant is commercial in nature and not as described under sec_1_501_c_3_-1 of the regulations in addition you provide private benefits to your members and patrons by giving them a discount for their meals as well as a tax deduction for membership fee and or part of restaurant tabs although you change your mission statement to sound more charitable your proposed activities mainly the operation of the restaurant remain unchanged the training and other outreach program that you may have are insignificant to the commercial aspects of the restaurant operation finally you believe you are exempt under sec_501 of the code because other similar organizations are exempt under sec_501 however each determination is based on facts qualification or operations of another organization have no bearing on the determination of your status you have not proved that you qualify for exemption under sec_501 see nelson v commissioner supra conclusion based on the facts and circumstances presented the service concludes that you do not qualify for recognition of exemption from federal_income_tax as an organization c of the code your activities are indistinguishable from similar activities of an described in section letter cg catalog number 47630w ordinary commercial enterprise accordingly you must file federal tax returns and contributions to you are not deductible under sec_170 of the code you have the right to file a protest if you believe this determination is incorrect to protest you must submit a statement of your views and fully explain your reasoning you must submit the statement signed by one of your officers within days from the date of this letter we will consider your statement and decide if the information affects our determination if your statement does not provide a basis to reconsider our determination we will forward your case to our appeals_office you can find more information about the role of the appeals_office in publication exempt_organization appeal procedures for unagreed issues types of information that should be included in your appeal can be found on page of publication under the heading regional_office appeal’ must be accompanied by the following declaration the statement of facts item under penalties of perjury declare that have examined the statement of facts presented in this appeal and in any accompanying schedules and statements and to the best of my knowledge and belief they are true correct and complete the declaration must be signed by an officer or trustee of the organization who has personal knowledge of the facts your appeal will be considered incomplete without this statement if an organization’s representative submits the appeal a substitute declaration must be included stating that the representative prepared the appeal and accompanying documents and whether the representative knows personally that the statements of facts contained in the appeal and accompanying documents are true and correct an attorney certified_public_accountant or an individual enrolled to practice before the internal_revenue_service may represent you during the appeal process if you want representation during the appeal process you must file a proper power_of_attorney form_2848 power_of_attorney and declaration of representative if you have not already done so you can find more information about representation in publication practice_before_the_irs and power_of_attorney all forms and publications mentioned in this letter can be found at www irs gov forms and publications if you do not file a protest within days you will not be able to file a suit for declaratory_judgment in court because the internal_revenue_service irs will consider the failure to appeal as a failure to exhaust available administrative remedies code sec_7428 provides in part that a declaratory_judgment or decree shall not be issued in any proceeding unless the tax_court the united_states court of federal claims or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted all of the administrative remedies available to it within the irs letter cg catalog number 47630w if you do not intend to protest this determination you do not need to take any further action if we do not hear from you within days we will issue a final adverse determination_letter that letter will provide information about filing tax returns and other matters we have sent a copy of this letter to your representative as indicated in your power_of_attorney please send your protest statement form_2848 and any supporting documents to the applicable address mail to deliver to if you fax you may fax your statement using the fax number shown in the heading of this letter your statement please call the person identified in the heading of this letter to confirm that he or she received your fax if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely robert s choi director exempt_organizations rulings agreements enclosure publication letter cg catalog number 47630w


internal_revenue_service number release date index number ------------------------------ ----------------------------- ---------------------- -------------------------------- - department of the treasury washington dc person to contact ----------------------------- id no ------------- ----------------------------------------------------- telephone number --------------------- refer reply to cc fip b01 - plr-147076-03 date date -------------------------------------------- ------------------------ ----------------- -------------------- ------------------------------------------ --- legend central fund trust state advisor m dear -------------- correspondence you submitted on behalf of central fund as its authorized representative the ruling requested involves whether the waiver of certain advisory fees will cause dividends_paid by central fund to fail to qualify for the dividends-paid deduction under sec_561 and sec_852 of the internal_revenue_code facts trust is organized as a state business_trust and is registered as an open-end management investment_company under the investment_company act of u s c sec_80a-1 et seq as amended act trust also is a series company under rule 18f-2 of the act with multiple portfolios series outstanding including central fund central fund has been and will continue to be operated in a manner intended to qualify it as a regulated_investment_company ric under sec_851 and will distribute all or substantially_all of its income to avoid being subject_to tax under sec_852 this responds to a request_for_ruling dated date and subsequent certain of the participating funds may issue groups of shares that represent the service providers for each portfolio series of trust including central fund certain other funds that are also portfolio series of trust and certain other funds plr-147076-03 central fund is treated as a separate corporation under sec_851 for purposes of the code except with respect to the definitional requirement of sec_851 that are advised or sub-advised by advisor or advised or sub-advised by any other entity controlling controlled by or under common_control with advisor all such advisors or sub-advisors hereinafter referred to as advisor these funds hereinafter referred to as participating funds are permitted to use any cash balances that have not been invested in portfolio securities to purchase shares of central fund such an investment may not exceed m of the participating fund’s total assets will be the same advisor serves as investment_advisor to each portfolio series of trust including central fund and as investment_advisor or a sub-advisor to each of the other participating funds a participating fund also may have an investment_advisor or a sub-advisor that is unrelated to advisor shares of participating funds are distributed by a number of different broker-dealers interests in the same portfolio of securities but have different arrangements for shareholder services or the distribution of shares or both multiple group system each of these multiple group systems complies with the requirements of revproc_99_40 1999_2_cb_565 central fund and some of the participating funds have or will adopt a shareholder servicing and distribution plan pursuant to rule 12b-1 under the act rule 12b-1 plan each rule 12b-1 plan provides or will provide that a participating fund with a multiple group system may not bear expenses pursuant to the plan in the aggregate in excess of a specified fixed percentage per annum of the average net assets of such fund for central fund and participating funds with no multiple group system each rule 12b-1 plan provides that a participating fund may not bear expenses pursuant to the plan in excess of a specified fixed percentage per annum of the average net assets of such fund central fund has only one class of shares and no separate class of shares will be created for shares purchased by a participating fund all distributions of dividends to shareholders of central fund will be made pro_rata based on net asset value of shares owned including distributions made to a participating fund similarly all distributions of dividends made by a participating fund to its shareholders will be made pro_rata based on net asset value of shares owned except for differences permitted under revproc_99_40 the advisor of each participating fund proposes to waive its advisory fees in an amount equal to any distribution and or service fees that such participating fund incurs under the rule 12b-1 plan in connection with the fund’s investment in central fund sec_852 provides that a ric is not taxable under subchapter_m part i sec_851 defines a ric in part as a domestic_corporation meeting certain plr-147076-03 law and analysis election gross_income and diversification requirements sec_851 provides a special rule for a ric having more than one fund this provision treats each fund as a separate corporation for all purposes of the code other than the definitional requirement of sec_851 a corporation that is a ric within the meaning of sec_851 and that is taxable under subchapter_m part i pays tax on its investment_company_taxable_income under sec_852 and on the excess if any of its net_capital_gain over its deduction for dividends_paid determined with reference to capital_gain dividends only under sec_852 unless its deduction for dividends_paid as that term is defined in sec_561 with certain modifications for the taxable_year equals or exceeds a specified portion of its taxable_income with certain adjustments and its net tax-exempt_interest income include dividends_paid during the taxable_year eligible for the deduction for dividends_paid under sec_561 includes only dividends described in sec_316 which provides a definition of dividends for purposes of corporate_distributions by a corporation to its shareholders out of its earnings_and_profits e_p accumulated after date or out of its e_p of the taxable_year computed as of its close of the taxable_year without diminution by reason of any distributions made during the taxable_year without regard to the amount of the e_p at the time the distribution was made considered as a dividend for purposes of computing the dividends_paid deduction under sec_561 unless the distribution is pro_rata does not prefer any shares of stock of a class over other shares of stock of that same class and does not prefer one class of stock over another class except to the extent that one class is entitled without reference to waivers of their rights by shareholders to be preferred sec_561 defines the deduction for dividends_paid for purposes of sec_852 to sec_316 defines the term dividend as any distribution_of_property made sec_562 states that the term dividends except as otherwise provided sec_561 applies the rules of sec_562 to determine which dividends are sec_562 provides that the amount of any distribution shall not be revproc_99_40 describes conditions under which distributions made to taxpayer represents that the advisor to the participating funds is proposing to central fund and participating funds are each treated as separate corporations plr-147076-03 shareholders of a ric may vary and nevertheless be deductible as dividends under sec_562 sec_4 of revproc_99_40 provides that a fee or expense incurred by a ric may be waived or reimbursed if certain requirements are met sec_4 contains the general_rule that the benefit of a waiver or reimbursement of an advisory fee or management expense must be allocated to all shares based on net asset value sec_4 provides a non relevant exception waive the advisory fee it charges each participating fund in an amount equal to the rule 12b-1 plan distribution and or service fees the fund incurs as a shareholder in central fund under the proposed plan dividends_paid to participating funds as shareholders of central fund will not be affected but dividends_paid to shareholders of a participating fund will be augmented by the amount being waived the fee waived by advisor will be allocated among the shares of the participating fund based on net asset value pursuant to sec_851 because the amount of the waiver of the advisory fee will be allocated among the shareholders of a participating fund based on the net asset value of the shares the waiver complies with the general_rule of sec_4 of revproc_99_40 conclusion this ruling will have no effect on whether dividends_paid by central fund will be eligible for the deduction for dividends_paid under sec_561 and sec_852 regarding the federal tax aspects of this transaction solely for purposes of this ruling we have assumed that any agreement for advisory services between advisor central fund or a participating fund provides for reasonable_compensation provides that it may not be used or cited as precedent advisor’s waiver of its advisory fee for each participating fund as described in this ruling is directed only to the taxpayer s requesting it sec_6110 except as specifically ruled upon above no opinion is expressed or implied plr-147076-03 letter is being sent to the taxpayer and to a second representative of the taxpayer in accordance with the power_of_attorney on file with this office a copy of this sincerely susan thompson baker assistant to the chief branch office of associate chief_counsel financial institutions products


internal_revenue_service number release date index number --------------------------- ---------------------------------- -------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------------- id no ---------------- ----------------- telephone number ---------------------- refer reply to cc psi b04 plr-124663-16 date date re ----------------------------------------- legend decedent spouse date date ---------------------------------------------------- ---------------------- -------------------- ---------------------- dear ----------------- this letter responds to your personal representative’s letter of date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election under sec_2010 of the internal_revenue_code portability election to allow a decedent’s surviving_spouse to take into account that decedent’s deceased spousal unused exclusion dsue amount the facts and representations are as follows decedent died on date survived by spouse date is a date after the effective date of the amendment to sec_2010 which provides for portability of a dsue amount to a surviving_spouse to obtain the benefit of portability of decedent’s dsue amount to spouse decedent’s estate was required to file form_706 united_states estate and generation-skipping_transfer_tax return on or before the date that is nine months after decedent’s date of death or the last day of the period covered by an extension decedent’s form_706 was due on date but the estate did not timely file a form_706 to make the portability election the failure to elect portability was discovered after the due_date for making the election spouse as executor of decedent’s estate represents that the value of decedent's gross_estate and adjusted_taxable_gifts is less than the basic exclusion amount in the year of the decedent's death spouse requests an extension of time pursuant to sec_301_9100-3 to elect portability of decedent's dsue amount pursuant to sec_2010 plr-124663-16 law and analysis sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2010 provides that a credit of the applicable credit_amount shall be allowed to the estate of every decedent against the tax imposed by sec_2001 sec_2010 provides that the applicable credit_amount is the amount of the tentative_tax that would be determined under sec_2001 if the amount with respect to which such tentative_tax is to be computed were equal to the applicable_exclusion_amount on date congress amended sec_2010 effective for estates of decedents dying and gifts made after date to allow portability of a decedent’s unused applicable_exclusion_amount between spouses tax relief unemployment insurance reauthorization and job creation act of pub_l_no sec_303 124_stat_3296 sec_2010 provides that the applicable_exclusion_amount is the sum of the basic exclusion amount and in the case of a surviving_spouse the dsue amount sec_2010 generally provides that the basic exclusion amount is dollar_figure to be adjusted for inflation annually after calendar_year sec_2010 defines the dsue amount to mean the lesser_of a the basic exclusion amount or b the excess of -- i the applicable_exclusion_amount of the last deceased spouse of the surviving_spouse over ii the amount with respect to which the tentative_tax is determined under sec_2001 on the estate of such deceased spouse sec_2010 provides that a dsue amount may not be taken into account by a surviving_spouse under sec_2010 unless the executor of the estate of the deceased spouse files an estate_tax_return on which such amount is computed and makes an election on such return that such amount may be so taken into account the election once made shall be irrevocable no election may be made if such return is filed after the time prescribed by law including extensions for filing such return sec_2010 provides that the secretary shall prescribe regulations as may be necessary or appropriate to implement sec_2010 sec_20_2010-2t a of the estate_tax regulations as in effect on date provides that to allow a decedent’s surviving_spouse to take into account that decedent’s dsue amount the executor of the decedent’s estate must elect portability of the dsue plr-124663-16 amount on a timely filed form_706 under sec_20_2010-2t a the due_date of an estate_tax_return required to elect portability is nine months after the decedent’s date of death or the last day of the period covered by an extension if an extension of time for filing has been granted under sec_20_2010-2t a the portability election is made by timely filing a complete and properly prepared estate_tax_return unless the executor satisfies the requirements for the election not to apply in sec_20_2010-2t a i sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term statutory election means an election whose due_date is prescribed by statute the term regulatory election means an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute a request for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election the due_date for the portability election is prescribed by statute in the case of an estate required to file an estate_tax_return under sec_6018 see sec_2010 sec_6075 and sec_6018 in the case of an estate that is not required to file an estate_tax_return under sec_6018 the due_date is prescribed by regulation see sec_20_2010-2t a see also sec_20_2010-2 and revproc_2014_18 2014_7_irb_513 sec_2 accordingly in the latter case a taxpayer may seek an extension of time to elect portability under the provisions of sec_301_9100-3 sec_6018 requires the filing of an estate_tax_return in all cases where the gross_estate exceeds the basic exclusion amount in effect under sec_2010 for the calendar_year which includes the date of death for purposes of this determination under plr-124663-16 sec_6018 the basic exclusion amount is reduced but not below zero by the sum of a the amount of the adjusted_taxable_gifts within the meaning of sec_2001 made by the decedent after date plus b the aggregate amount allowed as a specific exemption under sec_2521 as in effect before its repeal by the tax reform act of with respect to gifts made by the decedent after date spouse represents that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is not required to file an estate_tax_return under sec_6018 under these facts the commissioner has discretionary authority under sec_301 to grant to decedent’s estate an extension of time to elect portability based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly we grant an extension of time of days from the date of this letter in which to elect portability under sec_2010 the election should be made by filing a supplemental form_706 together with a copy of this letter within days from the date of this letter to the cincinnati service_center at the following address internal_revenue_service cincinnati service_center stop cincinnati oh for purposes of electing portability the form_706 filed by decedent's_estate within days from the date of this letter will be considered to be timely filed the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination if it is later determined that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is required to file an estate_tax_return pursuant to sec_6018 the commissioner is without authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability and the grant of the extension referred to in this letter is deemed null and void this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-124663-16 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely associate chief_counsel passthroughs special industries by karlene lesho karlene lesho senior technician reviewer branch office of associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes