t c memo united_states tax_court robert b kemp jr petitioner v commissioner of internal revenue respondent docket no filed date john p konvalinka for petitioner monica d armstrong for respondent memorandum opinion gale judge respondent issued a notice of final_determination denying petitioner’s claim for an abatement of interest on his and federal_income_tax liabilities petitioner timely filed a petition for review with this court pursuant to sec_6404 the issue for decision is whether respondent abused his discretion in failing to abate interest on petitioner’s federal_income_tax liabilities for and we hold that he did not background the parties submitted this case fully stipulated pursuant to rule the stipulation of facts and the attached exhibits are incorporated herein by this reference at the time of filing of the petition petitioner resided in hixson tennessee in date petitioner was informed by letter that his federal_income_tax return had been selected for examination the letter also requested certain documents including petitioner’s and federal_income_tax returns later that month petitioner had lengthy meetings with the revenue_agent who was conducting the examination the revenue_agent went on maternity leave months later in date petitioner filed amended federal_income_tax returns for and reporting additional taxable_income of dollar_figure dollar_figure and dollar_figure respectively unless otherwise indicated all section references are to the applicable_provision of the internal_revenue_code for the periods involved and all rule references are to the tax_court rules_of_practice and procedure on or about date petitioner filed an amended federal_income_tax return for reporting additional taxable_income of dollar_figure petitioner paid all of the additional tax due and accrued interest with respect to the foregoing amended returns at some point between date and date petitioner’s taxable_year was added to the examination covering in date petitioner’s examination was assigned to a new revenue_agent who discussed the examination of and on two occasions with petitioner’s representative no additional information was obtained from petitioner by respondent after date on or about date the revenue_agent examining petitioner’s returns initiated a civil_fraud referral for and and on date the agent issued a 30-day_letter to petitioner proposing civil_fraud penalties for those years on date a special_agent from respondent’s criminal_investigation_division met with the revenue_agent conducting petitioner’s and examination regarding petitioner’s case and all civil_action concerning those years ceased on date the special_agent issued a memorandum to respondent’s examination_division advising it to suspend or not initiate any civil_action against petitioner for individual income_tax returns for the years through on account of a grand jury investigation of alleged violations of sec_7206 the memorandum further ordered the transfer of all original returns and administrative files for the foregoing years on date a federal grand jury returned a 15-count indictment against petitioner including counts of alleged violation of sec_7206 for taxable years through and various nontax criminal violations sometime in july or date petitioner filed an amended federal_income_tax return for reporting additional taxable_income of dollar_figure and additional tax due of dollar_figure petitioner paid the resulting additional tax due and accrued interest petitioner’s criminal trial commenced on date on date a jury found petitioner guilty of violating sec_7206 for each of the taxable years through petitioner was acquitted of all nontax charges petitioner filed a timely appeal the parties stipulated that the amended_return for was filed in date reporting additional taxable_income of dollar_figure however the actual amended_return in evidence indicates the time and amount described above this discrepancy does not in any event affect the analysis or the result in this case on date respondent issued a notice_of_deficiency to petitioner determining fraud penalties under sec_6663 for and petitioner filed a timely petition in this court seeking a redetermination of the fraud penalties for and on date petitioner’s conviction was affirmed by the court_of_appeals for the sixth circuit on or about date petitioner received a letter from respondent stating in part thank you for your inquiry of june we have resolved your problem with your tax_return please disregard the prior request by memorandum dated date district_counsel of respondent advised respondent’s examination_division that the criminal proceedings against petitioner were concluded in connection with the proceedings in this court concerning a redetermination of the and fraud penalties petitioner and respondent became involved in a dispute over discovery and a continuance of the trial on date petitioner requested a continuance which was granted on date on date the revenue_agent who conducted the examination of petitioner’s and taxable years met with respondent’s counsel at the u s attorney’s office to review the record in petitioner’s criminal case at that time upon a review of the criminal case record and the administrative file the decision was made to assert civil_fraud penalties against petitioner for and on date respondent issued a notice_of_deficiency to petitioner determining fraud penalties under sec_6663 for and petitioner sought a redetermination in this court only with respect to the fraud_penalty for the fraud penalties for and were assessed on date and petitioner paid them on date on date petitioner filed a claim_for_refund and request for abatement of penalty and interest with respect to and on date respondent sent petitioner a letter advising him of a preliminary determination to deny his claim_for_abatement of interest with an explanation of the reasons for the denial attached the attached explanation stated in part your claim_for_abatement of interest cannot be allowed since there were no errors or delays in performing a ministerial_act for instance the agent taking maternity leave is not a ministerial_act nor is the delay caused by the investigation the appeal process or the court proceedings petitioner administratively appealed this determination and on date respondent issued a notice of final_determination to petitioner denying his request for abatement of interest for and and giving the following reason there was no error or delay relating to the performance of a ministerial_act in processing the examination of your return discussion interest on a federal_income_tax liability including a fraud_penalty generally begins to accrue on the due_date of the return sec_6601 e b the commissioner has authority to abate an assessment of interest on a deficiency or payment of income_tax if the accrual of such interest is attributable to an error or delay by an officer_or_employee of the internal_revenue_service in performing a ministerial_act sec_6404 a ministerial_act means a procedural or mechanical act that does not involve the exercise of judgment 113_tc_145 sec_301_6404-2t temporary proced admin regs fed reg date any such error or delay shall be taken into account only after the internal_revenue_service has contacted the taxpayer in writing with respect to the deficiency or payment on which the interest has accrued sec_6404 finally the legislative_history indicates that congress did not intend the abatement authority to be used routinely to avoid payment of interest rather congress intended the provision to be used in instances where failure to abate sec_6404 was amended by the taxpayer bill of right sec_2 publaw_104_168 110_stat_1457 to permit the commissioner to abate interest with respect to an unreasonable error or delay resulting from managerial or ministerial acts the amendment is effective for interest accruing with respect to deficiencies or payments for tax years beginning after date and is therefore inapplicable here interest would be widely perceived as grossly unfair s rept pincite 1986_3_cb_1 h rept pincite 1986_3_cb_1 we have jurisdiction to order an abatement of interest where the commissioner’s failure to do so is an abuse_of_discretion sec_6404 petitioner seeks an abatement of all interest accrued with respect to the fraud penalties for and in effect claiming that the abatement should cover the entire period back to the due_date of the returns for those years invoking sec_301_6404-2t example temporary proced admin regs supra petitioner contends that respondent’s date issuance of the notice_of_deficiency determining the and fraud penalties was a ministerial_act that was improperly delayed since respondent possessed all information and had completed all consultations with respect to these penalties by date further petitioner argues the imposition of interest in these circumstances would be widely perceived as grossly unfair because respondent delayed asserting the and fraud penalties as a litigation tactic in the proceeding sec_4 in sec_6404 was redesignated sec_6404 victims of terrorism tax relief act of publaw_107_134 115_stat_2434 for taxable years beginning after date this regulation has been amended and made final see sec_301 d proced admin regs before this court involving a redetermination of the fraud penalties determined for and respondent counters that there was no ministerial delay in connection with the date determination of the fraud penalties for and because respondent was restricted from examining petitioner’s and amended returns because of the criminal prosecution of petitioner covering those years until the date memorandum of district_counsel advising respondent’s examination_division of the conclusion of the criminal proceedings respondent further argues that in any event respondent’s first contact in writing with petitioner regarding the and fraud penalties was the date notice_of_deficiency we find untenable petitioner’s argument that any delay beyond date in issuing a notice_of_deficiency determining the and fraud penalties constituted a delay or error in the performance of a ministerial_act petitioner contends that all information had been provided to respondent and all consultations completed with respect to the and fraud other than his bald claim that all interest should be abated petitioner offers no argument in support of the proposition that an abatement back to the due dates of his and returns should occur we accordingly consider only the earliest claim for which petitioner offers any support namely that interest should be abated starting in date because respondent should have issued a notice_of_deficiency concerning the and fraud penalties at that time penalties by date in so contending petitioner claims to fall within sec_301_6404-2t example temporary proced admin regs supra the example provides that where an examination of a taxpayer’s return has revealed a deficiency the issuance of a notice_of_deficiency is a ministerial_act after the taxpayer and the internal_revenue_service have identified all agreed and unagreed issues the notice has been prepared and reviewed including review by district_counsel if necessary and any other relevant prerequisites have been completed id petitioner’s amended_return reporting the previously unreported income upon which the fraud_penalty was based had not even been submitted to respondent in date it was not submitted until july or date by which time civil_action for the years through had been suspended while petitioner’s amended_return for had been submitted in date before the suspension of civil_action petitioner has not shown that a notice_of_deficiency for had been prepared or reviewed or that all other relevant prerequisites for its issuance had been completed before the suspension of civil_action in date once civil_action was suspended to facilitate development of the criminal case against petitioner the delay in taking actions in the civil cases for and including any delay in issuing a notice see supra note of deficiency during the period in which the criminal case was pending was not a delay in the performance of a ministerial_act see 113_tc_206 affd 9_fedappx_700 9th cir the decision to defer civil proceedings until resolution of the criminal aspects of a case is an exercise of judgment not a ministerial_act id thus there was no delay in the performance of a ministerial_act with respect to the fraud penalties for and through the period that petitioner’s criminal case was pending that is from the cessation of civil_action in date until the date affirmance of petitioner’s conviction became final as for the period between the time that petitioner’s conviction became final and the date issuance of the notice_of_deficiency determining the and fraud penalties petitioner points to no specific ministerial_act that was improperly delayed other than the issuance of the notice itself as with the period preceding cessation of civil_action however petitioner has not shown that all of the necessary review and exercise of judgment that underlay the decision to assert fraud had been completed at this time in this regard petitioner’s convictions under sec_7206 for and had no preclusive effect with respect to whether he committed civil_fraud in those years see 84_tc_636 thus a decision to assert civil_fraud required an assessment of the supporting evidence moreover while petitioner’s and taxable years had been the subject of an examination that proposed civil_fraud penalties before the cessation of civil_action the and taxable years had not insofar as the record discloses thus the decision to assert fraud in the date notice necessarily involved a review of the evidence of fraud and the exercise of judgment the antithesis of a ministerial_act accordingly we conclude that petitioner has failed to demonstrate any error or delay in the performance of a ministerial_act before the issuance of the date notice_of_deficiency as for petitioner’s contention that respondent’s decision to assert fraud for and was a litigation tactic that if allowed to give rise to interest would be widely perceived as grossly unfair we note that petitioner did not even attempt to dispute the fraud penalties in this court in any event perceptions of gross unfairness come into play only once an error or delay in the performance of a ministerial_act has been established in light of our conclusion that petitioner has failed to identify any ministerial error or delay prior to the issuance of the date notice_of_deficiency we need not decide whether the date letter petitioner received from respondent was a contact in writing with respect to for purposes of sec_6404 moreover petitioner has not alleged nor is there any evidence that any contact in writing with respect to the deficiencies for or occurred in connection with the development of the criminal action against petitioner we accordingly express no view concerning whether a written contact in connection with a criminal_referral may constitute a contact in writing for purposes of sec_6404 petitioner has identified no ministerial error or delay after the date issuance of the notice_of_deficiency and we find none after issuance of the notice determining the fraud penalties for and petitioner failed to petition this court with respect to the fraud penalties for and determined in the notice the penalties were assessed days after the expiration of the period for filing a tax_court petition on date and were paid on date petitioner advances one additional basis for finding an abuse_of_discretion by respondent relying on jacobs v commissioner tcmemo_2000_123 petitioner claims that respondent abused his discretion by failing to disclose the basis for his decision to reject petitioner’s claim_for_abatement of interest petitioner’s reliance on jacobs is misplaced in that case the commissioner had given no explanation of his decision not to abate interest other than a conclusory statement that there were no errors or delays that warranted abatement here while the explanation given in the notice of final_determination is likewise conclusory respondent offered a more detailed statement of his reasons in the written explanation accompanying the preliminary determination to deny abatement the reasons therein given to the effect that the delay attributable to the investigation of petitioner’s case and the criminal proceedings did not constitute a delay in the performance of a ministerial_act comport with our conclusion that no ministerial delay occurred in these circumstances moreover the parties’ stipulations and the accompanying exhibits demonstrate that respondent’s issuance of the notice_of_deficiency in question was not a dilatory ministerial_act as petitioner claims in sum petitioner has not shown any abuse_of_discretion on the ground that respondent failed to provide reasons for his decision not to abate we have considered all other contentions raised by petitioner and conclude that they lack merit for the foregoing reasons respondent’s refusal to abate any interest with respect to petitioner’s and deficiencies was not an abuse_of_discretion to reflect the foregoing decision will be entered for respondent


department of the treasury internal_revenue_service washington d c contact person identification_number telephone number taxpayer_identification_number tax_exempt_and_government_entities_division release number release date date date uil r r e egen a o m i u o h u o e u o y o u o h a l a m o c g a o e w n n d k k n i dear we have considered your ruling_request dated date you are requesting a ruling under sec_4941 of the code with regard to a settlement agreement affecting certain testamentary bequests to a private_foundation described in sec_501 and sec_509 facts a and b are the surviving children of c c a resident of state died on date d is a limited_partnership in which each of a b and c held certain partnership interests at the time of c's death the assets held by c at c’s death included a x general_partnership interest in d and a y limited_partnership_interest in d collectively the interests e is a private_foundation described in sec_501 and sec_509 of the code the two executors of c’s estate also serve as the two co-trustees of e prior to c's death a b and c executed an agreement granting each of a and b the right upon c’s death to purchase one-half of c’s limited_partnership interests in d at a price equal to the value of those interests as of the date of c’s death as determined by an independent qualified_appraiser subject_to increase or decrease equal to the final_determination of the value of those interests in the federal estate_tax proceedings for c’s estate the first option’ c’s will as submitted for probate in the court with jurisdiction over c’s estate bequeathed c’s general_partnership interest in d outright to e the will further directed the executors to offer subject_to the terms and conditions of the partnership_agreement of d in writing to each of a and b the option to purchase for cash up to one-half of c’s limited_partnership interests in d that c owned at c’s death at its value as finally fixed and determined for federal estate_tax purposes after independent appraisal the second option’ in addition c’s will provided that the residue of c’s estate after satisfaction of certain specific bequests set forth in c’s will and after satisfaction of debts administrative expenses and taxes attributable to c’s estate would pass to e subsequent to submission to the court of c’s will for probate a series of arbitration and court proceedings were launched involving a b the executors and the trustees each of the first option the second option and the bequests to e was challenged as part of the various proceedings in addition the executors filed claims against a and b for alleged overdistributions from d to a and b after approximately z years of litigation and arbitration proceedings regarding the interests the attorney_general of state intervened in an attempt to help resolve the parties’ disputes with the help of the attorney_general of state a b the executors and the trustees entered into a settlement agreement effective as of date under the settlement agreement a and b will purchase all of the interests at a price set forth in the settlement agreement this price is equal to the value of the interests as reported by c’s will pay a designated amount in estate for federal estate_tax purposes in addition a and b settlement of all additional claims made by the executors against a and b with regard to the interests the attorney_general of state consented to the settlement agreement on date the court with jurisdiction over c’s estate issued an order approving the settlement agreement ruling requested the execution delivery and performance of the settlement agreement and the consummation by the parties of the transactions contemplated therein will not constitute acts of direct or indirect self-dealing under sec_4941 and none of the parties to the settlement agreement including their executors trustees directors officers owners employees agents and attorneys will be liable for tax under sec_4941 for such actions law sec_4941 imposes certain excise_taxes on direct and indirect acts of self-dealing between a disqualified_person and a private_foundation and also imposes a separate excise_tax on the participation by any foundation_manager in an act of self-dealing between a disqualified_person and a private_foundation knowing it is such an act unless such participation is not willful and is due to reasonable_cause sec_4941 provides that for purposes of sec_4942 the term self-dealing means any direct or indirect sale_or_exchange or leasing of property between a private_foundation and a disqualified_person sec_4941 defines self-dealing to include any direct or indirect transfer to or use by or for the benefit of a disqualified_person of the income or assets of a private_foundation sec_4946 provides that the term disqualified_person with respect to a private_foundation includes a substantial_contributor to the foundation a family_member of a substantial_contributor including children and foundation managers including trustees and individuals with similar powers or responsibilities sec_53_4946-1 of the foundation and similar excise_tax regulations with reference to sec_507 of the code defines the term substantial contributor’ as any person who contributed or bequeathed an aggregate amount of more than dollar_figure to the private_foundation if such amount is more than percent of the total contributions and bequests received by the private_foundation in the year of such contribution and in the case of a_trust the creator of the trust in 572_fsupp_9 e d ark aff'd 718_f2d_290 cir cert den 466_us_962 the court held that purchase by a decedent’s son who was also executor of the estate of estate property earmarked for a private_foundation was indirect self-dealing in 87_tc_1016 the court held that because a foundation which was a beneficiary of an estate had an expectancy interest in the estate sale of estate property otherwise passing from the estate to the foundation constituted acts of indirect self- dealing under sec_4941 analysis self-dealing under sec_4941 may occur by virtue of the transfer of property held in an estate to which a private_foundation has an interest or expectancy 572_fsupp_9 e d ark aff'd 718_f2d_290 8th cir cert den 466_us_962 reis 87_tc_1016 absent the litigation and arbitration proceedings e arguably had an expectancy under the terms of c’s will as submitted for probate either in the interests themselves or with regard to the limited_partnership interests in an amount of money equal in value to the option_price in fact e’s ultimate expectancy with regard to the interests depended on final resolution of the litigation and arbitration proceedings although the parties to the settlement agreement could have awaited the end of those proceedings doing so may have taken many more years cost a considerable amount in legal fees and ultimately resulted in less property for e instead the parties chose to settle the dispute all parties to the settlement agreement were represented by independent counsel and there is no suggestion of collusion to benefit any particular party the attorney_general of state participated in facilitating the settlement agreement and consented to its terms the court with appropriate jurisdiction over c’s estate has approved the settlement agreement entering into the settlement agreement will eliminate the risk that e’s expectancy with regard to the interests might be reduced if the litigation and arbitration proceedings continued will preclude the need to expend additional charitable funds pursuing the litigation and will allow e to access the property passing to it from c’s estate and begin to use that property in furtherance of its charitable activities because the settlement agreement was the product of arm’s-length negotiations including the participation and consent of the attorney_general of state and approval of the court with jurisdiction over c’s estate e's expectancy in c’s estate with regard to the interests is established by the settlement agreement all parties acting in performance of the settlement agreement are viewed as merely carrying out their legal rights and obligations with regard to the interests ruling accordingly based on the facts and circumstances discussed above we rule that the execution delivery and performance of the settlement agreement and the consummation by the parties of the transactions contemplated therein does not give rise to self-dealing under sec_4941 and no tax under sec_4941 is due with regard to the transactions described in the settlement agreement this ruling will be made available for public inspection under sec_6110 of the code after certain deletions of identifying information are made for details see enclosed notice notice of intention to disclose a copy of this ruling with deletions that we intend to make available for public inspection is attached to notice if you disagree with our proposed deletions you should follow the instructions in notice this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent this ruling is based on the facts as they were presented and on the understanding that there will be no material changes in these facts this ruling does not address the applicability of any section of the code or regulations to the facts submitted other than with respect to the sections described because it could help resolve questions concerning federal tax_liabilities this ruling should be kept in your permanent records if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter in accordance with the power_of_attorney currently on file with the internal_revenue_service we are sending a copy of this letter to your authorized representative sincerely matthew l giuliano manager exempt_organizations guidance group enclosure notice


internal_revenue_service department of the treasury index nos washington dc person to contact telephone number refer reply to cc dom it a plr-111597-98 date oct ssns dear this is in reference to a form_1128 application to adopt change or retain a tax_year submitted on behalf of the above- ynamed taxpayer an individual requesting permission to change her accounting_period for federal_income_tax purposes from a to a calendar_year ending december fiscal_year ending april effective for the tax_year beginning may taxpayer has requested that the form_1128 be considered timely filed under the authority contained in sec_301_9100-3 of the procedure and administration regulations the the taxpayer's form_1128 requesting a change in accounting_period to a tax_year ending december was due on or before the information furnished indicates that last day of january the taxpayer intended to make the change in a timely and proper manner however due to an error or misunderstanding the change was not correctly made application was not due to any lack of due diligence or prompt action on the part of the taxpayer the subsequent late filing of the sec_1_442-1 of the income_tax regulations provides that in order to secure the commissioner’s consent to a change in accounting_period a taxpayer must file an application on form_1128 with the commissioner as provided therein c b procedure for individuals meeting the requirements described therein to change their accounting periods from fiscal to such applications may be filed with the calendar tax years internal_revenue_service center where the taxpayer's federal_income_tax returns are filed on or before the last day of january following the short_period affected by the change provides an expeditious consent rev_proc sec_301_9100-3 of the regulations provides that requests for extensions of time for regulatory elections that do sec_301_9100-2 automatic extensions not meet the requirements of such as the instant case must be made under the rules of sec_301_9100-3 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 requests for relief filed more than days beyond requests for relief subject_to sec_301_9100-3 will the due_date for filing form_1128 will be approved only in unusual and compelling circumstances based on the facts and information submitted and the representations made we have determined that the taxpayer 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 in this case and taxpayer’s late filed form_1128 requesting permission to change to a calendar tax_year is considered timely filed except as specifically addressed herein no the ruling contained in this letter is based upon facts and representations submitted by the taxpayer and is limited to the filing of form_1128 opinion is expressed regarding the tax treatment of the subject transaction under the provisions of any other sections of the code or regulations that may be applicable thereto this office has not verified any of the material submitted in support of the requested ruling verification of factual information representations and other data is within the examination jurisdiction of the taxpayer’s local district_director a copy of this letter_ruling and taxpayer's form_1128 are being forwarded to the service_center where the taxpayer files its federal_income_tax returns with instructions that the form_1128 be considered timely filed and processed in accordance with established procedures under revproc_66_50 we will associate a copy of the application with the return filed for the short_period as required in sec_3 please attach or associate a copy of this letter_ruling with your federal_income_tax return for the short_period of revproc_66_50 this ruling is directed only to the taxpayer that requested sec_6110 j of the internal_revenue_code provides it that it may not be used or cited as precedent sincerely yours assistant chief_counsel income_tax and accounting enclosures copy of this letter copy for sec_6110 purposes in by irwin a leib deputy assistant chief_counsel tr


internal_revenue_service department of the treasury uil nos dc washington person to contact telephone number refer reply to cc dom fi p plr-103110-98 date february legend taxpayer corporation lender agent account account date date w date date m i a o h dollar sec_1 t i number number u o percent percent dear this letter responds to a letter received date requesting the as revised in a letter received february following rulings that sec_263 will not disallow any deductions for interest on certain loans because of stock a costless_collar on corporation plr-103110 -98 alternatively that sec_263 will disallow deductions for only a portion of the interest on the loans and or sec_1 b -3t d will be available to identify that that stock identification rules similar to those of sec_1 l c the corporation stock used as collateral for the loans is distinct from the corporation stock subject_to the costless_collar facts taxpayer and a counterparty will enter into a costless taxpayer will purchase a cash-settlement put the put option and the cali option if collar with respect to a specified number of shares of corporation stock_option from the counterparty and sell a cash-settlement call option to the counterparty will have the same trade dates and the same maturity dates the price of corporation stock is less than the exercise price of the put option at maturity the counterparty will pay to taxpayer an amount equal to the product of that difference times the specified number of shares greater than the exercise price of the call option at maturity taxpayer will pay to the counterparty an amount equal to the product of that difference times the specified number of shares the exercise prices of the two options will be set so that the premiums on the two options are substantially equal exercise price of the call option will be greater than the exercise price of the put option if the price of corporation stock is the taxpayer entered into a margin loan agreement with lender on under the agreement taxpayer can borrow a maximum of the loan is collateralized with number shares of date dollar sec_1 taxpayer’s corporation stock on date certificates representing number shares of corporation stock were transferred from taxpayer’s account with agent to account with agent account collateral for lender numbers and issue dates is included in an attachment a list of the certificates share is designated as an account for taxpayer's taxpayer might enter into additional loan agreements the collateralized with corporation stock in the future existing loan is and any future loans collateralized with taxpayer’s corporation stock will be unrelated to the costless_collar taxpayer exceeds the sum of the number of shares used as collateral for the loans and the number of shares specified in the costless_collar the number of shares of corporation stock owned by plr-103110-98 corporation’s stock is publicly traded as of date taxpayer owned number shares of corporation stock as of date taxpayer owned approximately percent of the voting power of corporation and approximately percent of its stock applicable law sec_263 provides that no deduction shall be allowed for interest_and_carrying_charges properly allocable to personal_property that is part of a straddle any amount not allowed as a deduction because of sec_263 is chargeable to the capital_account of the personal_property to which it relates sec_263 was added to the code by the economic_recovery_tax_act_of_1981 sec_1092 defines straddle as offsetting positions with respect to personal_property sec_1092 defines personal_property as any section d a provides that personal_property generally does personal_property of a type that is actively_traded not include stock exception to the general_rule of sec_1092 is part of a straddle at least one of the offsetting positions of which is an option with respect to such stock or substantially_identical_stock_or_securities sec_1092 d b i i provides’ an a for stock that sec_1092 defines position as an interest in personal_property sec_1092 a provides that a taxpayer holds offsetting positions with respect to personal_property if there is a substantial diminution of the taxpayer's risk of loss from holding any position with respect to personal_property by reason of his holding one or more other positions with respect to personal_property sec_1092 b recognizes that one or more positions may offset only a portion of one or more other positions and directs the secretary to issue regulations that prescribe the method for determining the portion of such other positions that will be taken into account such regulations the secretary has not yet issued sec_1092 a i provides that two or more positions shall be presumed to be offsetting if the positions are in the same personal_property whether established in such property or a contract for such property plr-103110-98 sec_263 defines interest_and_carrying_charges as the excess of the sum described in sec_263 a over the sum described in sec_263 described in sec_263 a or continued to purchase or carry the personal_property the first summand of the sum is interest on indebtedness incurred there is no direct authority interpreting the phrase indebtedness incurred or continued to purchase or carry in sec_263 however the phrase also occurs in sec_265 as well as several other code sections sec_265 provides that no deduction shall be allowed for interest on indebtedness incurred or continued to purchase or carry tax-exempt obligations was redesignated from sec_265 by the tax_reform_act_of_1986 authorities under sec_265 a are not controlling for purposes of sec_263 but may provide useful guidance in the absence of any direct authority under sec_263 sec_265 ‘ revproc_98_3 1998_1_irb_100 provides in sec_4 that rulings or determination letters will not ordinarily be issued on the issue whether for purposes of sec_265 indebtedness is incurred or continued to purchase or carry tax- exempt obligations sec_1_1012-1 and provide rules for the sec_1_1012-1 sec_1_1012-1 provides that an adequate adequate identification of shares of stock sold or transferred by a taxpayer identification is made if certificates representing the stock are delivered to the transferee i provides that an adequate identification is made if stock is left in the custody of a broker or other agent the taxpayer specifies to the broker or agent the particular stock to be sold or transferred at the time of the sale or transfer and confirmation of the specification is set forth in a written document from the broker or agent within a reasonable_time thereafter sec_1 i c ii provides that an adequate identification is made if the taxpayer delivers a single stock certificate to a broker or other agent for sale of a part of the stock through the broker or agent the taxpayer specifies to the broker or agent the particular stock to be sold or transferred at the time of delivery and confirmation of the specification is set forth in a written document from the broker or agent within a reasonable_time thereafter an adequate identification is made if the taxpayer sells or transfers part of the stock represented by a single certificate directly to the purchaser or transferee and the taxpayer maintains a written record of the particular stock that he intended to sell or transfer ii also provides that sec_1_1012-1 ol fe plr-103110-98 -s5- sec_1_1092_b_-3t provides requirements and methods sec_1 b - for the identification of positions that are part of a sec_1092 identified mixed_straddle 3t d provides a presumption that the taxpayer has identified a sec_1092 identified mixed_straddle by the time required if the taxpayer receives independent verification of the identification constitute independent verification including the placement of a position in a separate and designated account maintained by a broker futures commission merchant or similar person sec_1 b -3t d i person or the party from which one or more positions of the straddle are acquired stating the date the straddle is established and identifying the other positions of the straddle sec_1 b -3t d ii sec_1_1092_b_-3t describes facts that and written confirmation from such a application of law to ruling requests based on the facts and representations submitted we we conclude that the options offset only a portion of conclude that the two positions consisting of the put option in the costless_collar and taxpayer’s corporation stock constitute a straddle under sec_1092 we conclude similarly that the call option and taxpayer’s corporation stock also constitute a straddle that stock consisting of the number of shares specified in the costless_collar because the payoff under each option is determined by that number of shares under the call option will be higher than the exercise price under the put option it options will be exercised at maturity collateral for also be identified with the put option the shares that are or otherwise identified with the call option may is certain that at most one of the because the exercise price thus in the absence of regulations under sec_1092 b we is permissible for taxpayer to identify which conclude that it shares of corporation stock are part of the straddles and which shares are used as collateral for the loans using appropriately modified versions of the methods of sec_1_1012-1 and or sec_1 b -3t d in order to establish that the shares that are part of the collar are not used as collateral for the loans for either method any timing requirements applicable to the straddles refer to the date the costless_collar is established and any timing requirements applicable to any loan refer to the date the loan is made the plain language of sec_263 prevents us from ruling that thus can never apply to put-and-call collars on stock sec_263 ruling requests and would require that we rule on the dollar_figure plr-103110-98 issue whether the loans were incurred or continued to purchase or carry the corporation stock in the costless_collar language incurred or continued to purchase or carry is the same as in sec_265 covered by sec_4 of rev ruling requests and the issues are similar to the issues we decline to rule on because the and proc except as specifically ruled on above no opinion is expressed concerning the tax consequences of this transaction under any other provision of the code or regulations particular no opinion is expressed concerning the applicability of sec_263 to the costless_collar and the loans no ruling was requested and none is given concerning sec_1259 in this ruling is directed only to the taxpayer who requested sec_6110 of the code provides that it may not be it used or cited as precedent sincerely yours assistant chief_counsel financial institutions products by b - a uy kt fs a betel obert b williams assistant to chief branch enclosure copy off plr-103110-98 attachment certificates representing shares of taxpayer’s corporation stock transferred from account to account on date number shares issued 29s


internal_revenue_service number release date index number --------------------- ------------------------------- ----------------------- --------------------------- ------------------------ ------------------------------- ----------------------- --------------------------- in re --------------------------- ---------------------- ------------------------------------------------ -------------------------------------------- - department of the treasury washington dc person to contact ----------------------------- id no ------------- ----------------------------------------------------- telephone number --------------------- refer reply to cc intl plr-139607-05 date date --------------------------- ----------------------------------- ---------------- ---------------- -------------------------- ------------- ----------------- -------------- ----------------------------------- legend company x country y date date date shareholder z number a number b exchange c dear ------------------------------------ this is in response to a letter dated date requesting a ruling under sec_1 of the internal_revenue_code code 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 plr-139607-05 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 facts company x is a country y limited_liability_company that maintains an office in the united_states company x files its federal_income_tax return using the week fiscal_year convention the most recently ended fiscal_year ended on date company x intends to make distributions during the period between date and date company x may have current_earnings_and_profits in its taxable_year that begins on date if so these distributions would be treated as dividends for federal_income_tax purposes company x is not incorporated in a possession_of_the_united_states nor is it eligible for benefits of a comprehensive_income_tax_treaty with the united_states which the secretary has determined is satisfactory for purposes of sec_1 company x’s common shares are listed on the exchange c and are company x’s only outstanding class of stock shareholder z the majority shareholder owns approximately number a shares of company x common_stock prior to date company x filed a registration_statement on sec form s-3 with respect to number b shares of its common_stock owned by shareholder z this registration is now effective and as a result shareholder z can subject_to any secondary restrictions sell up to number b of its company x common shares in the open market the remainder of shareholder z’s shares have not been registered under the securities act of shareholder z plans to dispose_of its remaining unregistered shares by distributing such shares to its partners as restricted shares these unregistered shares may be sold in accordance with rule of the securities act of as amended which permits limited sales of restricted shares of a publicly traded company subject_to certain restrictions ruling requested whether the number b shares of company x common_stock that are subject_to the registration_statement on sec form s-3 which was declared effective on date are readily_tradable on an established_securities_market in the united_states for purposes of code sec_1 whether the restricted shares of company x common_stock are readily_tradable on an established_securities_market in the united_states for purposes of code sec_1 plr-139607-05 law and analysis sec_1 generally provides that certain dividends_paid to individual shareholders from either a domestic_corporation or a qualified_foreign_corporation are subject_to tax at the reduced rates applicable to certain capital_gains sec_1 provides that a foreign_corporation not otherwise treated as a qualified_foreign_corporation under sec_1 shall be so treated with respect to any dividend paid_by such corporation if the stock with respect to which such dividend is paid is readily_tradable on an established_securities_market in the united_states notice_2003_71 2003_43_irb_922 provides in part that for purposes of applying sec_1 to taxable years beginning on or after date common or ordinary stock is considered readily_tradable on an established_securities_market if it is listed on a national securities exchange that is registered under section of the securities exchange act of u s c 78f or on the nasdaq stock market securities so listed must be registered under the securities act of exchange c is a national securities exchange that is registered under section of the securities exchange act of accordingly pursuant to notice_2003_71 for taxable years beginning on or after date common shares that are registered under the securities act of and are therefore tradable on exchange c are considered readily_tradable on an established_securities_market in the united_states under sec_1 common shares that are not registered under the securities act of are not considered readily_tradable and thus do not satisfy the requirements of code sec_1 ruling the number b shares of company x common_stock that were registered under the securities act of based on the filing of the registration_statement on sec form s- which was declared effective on --------------------- are readily_tradable on an established_securities_market in the united_states for purposes of code sec_1 ruling the unregistered shares of company x common_stock are not readily_tradable on an established_securities_market in the united_states for purposes of code sec_1 accordingly company x will not be treated as a qualified_foreign_corporation with respect to any dividend paid on these restricted shares and therefore any distribution made by company x with respect to the restricted shares is excluded from the definition of qualified_dividend_income for purposes of sec_1 plr-139607-05 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in particular no opinion is expressed or implied concerning whether distributions made by company x with respect to number b shares will be qualified_dividend_income to the shareholders owning such shares 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 the taxpayer a copy of this letter must be attached to any income_tax return to which it is relevant sincerely karen a rennie senior technical reviewer branch office of associate chief_counsel international cc


internal_revenue_service number info release date date cc dom p si 1-cor-111213-00 uilc we are responding to correspondence submitted on your behalf by requesting relief in order to establish as the effective year for an s_corporation_election the information submitted explains that your form_2553 submitted under revproc_98_55 on date was rejected by the fresno service_center although we are unable to respond to to your request as submitted this letter provides useful information relating to your request in revproc_98_55 the internal_revenue_service provides an extended window period during which a taxpayer may file form_2553 in your situation this window closed on date rendering automatic relief unavailable announcement copy enclosed provides guidance on seeking relief for late s_corporation elections and inadvertent invalid s_corporation elections generally to request relief for a late or invalid s_corporation_election you must request a private_letter_ruling from the national_office the procedures for requesting a private_letter_ruling are set out in revproc_2000_1 copy enclosed in addition revproc_2000_1 requires taxpayers to submit a user_fee along with their ruling_request the standard user_fee for a private_letter_ruling is dollar_figure however taxpayers with gross_income of less than dollar_figure million on their last-filed tax_return qualify for a reduced user_fee in the amount of dollar_figure if you are eligible to use the reduced fee provision you must include the statement described in b b of appendix a with your request please review appendix b for a sample format for requesting a private_letter_ruling if you decide to submit a formal request for a private_letter_ruling please include the proper user_fee and refer your request to our office by adding the following to the address attn cc dom corp t p o box ben franklin station washington dc direct to cc dom p si br room please keep this letter with your tax records and feel free to provide a copy of it to your authorized representative we hope that the above information proves helpful sincerely yours s dianna k miosi dianna k miosi chief branch office of the assistant chief_counsel passthroughs and special industries enclosures announcement revproc_2000_1


t c summary opinion united_states tax_court timothy c robbins petitioner v commissioner of internal revenue respondent docket no 5187-04s filed date timothy c robbins pro_se robert s scarbrough for respondent couvillion special_trial_judge this case was heard pursuant to sec_7463 in effect when the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority 1unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year at issue respondent determined a deficiency of dollar_figure in petitioner’s federal_income_tax for the year the sole issue for decision is whether petitioner realized discharge_of_indebtedness income under sec_61 and if so the extent thereof under sec_108 some of the facts were stipulated those facts with the annexed exhibits are so found and are made part hereof petitioner’s legal residence at the time the petition was filed was everett washington petitioner is a civil litigation attorney in the state of washington from until he was a solo practitioner in petitioner hired a recent law graduate julie herber as an associate and ultimately divided the practice with her during ms herber owned one-half of the building where petitioner’s practice is conducted and one-half of his principal_residence ms herber along with two other people also shared ownership of a cabin with petitioner petitioner and ms herber were married sometime after until petitioner had a credit card account with mbna america bank n a mbna sometime during petitioner defaulted on his credit card payments and allowed the outstanding balance to exceed his credit limit as of date the unpaid balance on petitioner’s mbna credit card was dollar_figure petitioner did not contact mbna to dispute the amount owing instead petitioner negotiated a settlement with mbna for payment of the balance mbna agreed to accept a payment of dollar_figure as full accord and satisfaction for the dollar_figure balance petitioner remitted the dollar_figure to mbna on date mbna thereafter issued petitioner a form 1099-c cancellation of debt for the dollar_figure difference between what petitioner owed on his card and the amount he paid pursuant to the agreement petitioner filed hi sec_2001 federal_income_tax return timely reporting gross_income of dollar_figure from wages and rental income but he did not include as gross_income the dollar_figure forgiven by mbna and reflected on the form 1099-c in the notice_of_deficiency respondent determined that the dollar_figure forgiven by mbna constituted gross_income the principal issue is whether petitioner is absolved from liability for tax on this forgiveness of indebtedness because of his claim that he was insolvent at the time the indebtedness was forgiven gross_income includes all income from whatever source derived sec_61 discharge_of_indebtedness is specifically included as an item_of_gross_income sec_61 this means that a taxpayer who has incurred a financial obligation that is later discharged or released has realized an accession to income 284_us_1 216_f3d_537 6th cir affg tcmemo_1998_196 the rationale of this principle is that the discharge of a debt effects the freeing of assets previously offset by the liability 116_tc_63 citing united_states v kirby lumber co supra the treatment of discharge_of_indebtedness income parallels the internal revenue code’s treatment of loans 294_f3d_985 8th cir affg in part and revg in part tcmemo_2000_221 borrowed funds are not included in a taxpayer’s income nor are repayments of a loan deductible from income when however an obligation to repay a loan is settled for less than the amount of the loan one ordinarily realizes income_from_discharge_of_indebtedness sec_61 110_tc_279 citing 790_f2d_1409 9th cir affg in part and revg in part t c memo the difference between the face value of the debt and the amount_paid in satisfaction of the debt is includable in the taxpayer’s gross_income 23_f3d_1032 6th cir affg tcmemo_1992_673 petitioner does not challenge the principle that discharge_of_indebtedness constitutes gross_income his sole argument is that he was insolvent at the time he was relieved of this liability and therefore the discharged indebtedness does not constitute gross_income under sec_108 gross_income does not include any amounts that would be includable in gross_income by reason of the discharge of the indebtedness_of_the_taxpayer provided that the taxpayer was insolvent at the time the indebtedness was discharged petitioner testified extensively about his debts and offered into evidence a collection statement listing his assets and liabilities the court however concludes that petitioner’s testimony lacks credibility petitioner produced no documentation to support his claims reflected on the collection statement offered at trial petitioner claimed both in his collection statement and at trial that he was jointly and severally liable for the mortgage on his business and two residences however petitioner owned these properties jointly with other parties although petitioner may have been jointly and severally liable with other parties for the indebtedness on these properties that fact standing alone as relates to the issue in this case does not establish that petitioner was insolvent without proof that the other codebtors were themselves insolvent the court therefore rejects petitioner’s argument his financial statement without additional corroboration as regards the solvency of his codebtors does not satisfy or establish to the court that he is insolvent petitioner reported dollar_figure in gross_income for the year at issue furthermore petitioner testified that his firm earned dollar_figure in and about the same in he had at least a 50-percent interest in his principal_residence and the building where his firm was located additionally he had at least a percent interest in a cabin during although petitioner had credit card debt in addition to the balance with mbna the evidence presented does not satisfy the court that these other liabilities exceeded the value of his assets on this record the court holds that petitioner was not insolvent during and therefore must include as gross_income the dollar_figure discharge_of_indebtedness reported by mbna respondent therefore is sustained reviewed and adopted as the report of the small_tax_case division decision will be entered for respondent


- significant index no 2uu7130296 department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division jan - t ep ra az in re company this letter constitutes notice that your request for a waiver of the minimum_funding has standard for the above-named plan for the plan_year ending february been denied application of the was made by ground the company’s primary business had been the sale and custom application of current financial hardship was brought on by many factors after the events of date the company was forced to cease operations for several months the company was unable to raise its prices because its to meet growing expenses because of the general downturn experienced by the agriculture industry additionally the company suffered damage to two of its resulting in additional unforeseen expenses as a result the company made the decision in november has expanded by pursuing other business opportunities specifically the company started a coffee franchise and began leasing industrial property that it owns to cease its agricultural operations however the company were not allowed to the ‘and of unencumbered industrial property that the company identified a buyer for the company owns the company intends to use the proceeds of this sale to fully fund the plan and then terminate the plan in the next year or two sec_412 of the code states that one of the factors in determining temporary substantial business hardship is whether it is reasonable to expect that the plan will be continued only if the waiver is granted since the company has indicated that it is planning on terminating the plan it is not reasonable to expect that the plan will be ‘continued only if the waiver is granted you were notified in a letter dated date that your request had been - tentatively denied and you were offered the opportunity of a conference of right to review this decision and to present additional information that you believe the service should take into account before finalizing this ruling you were also informed that if this conferente did not take place within days of the date of the letter your request for a waiver of the minimum_funding_standard for the plan_year ending february would be denied and a ruling letter to that effect would be issued you have not contacted this office to schedule a conference hence your request for a waiver of the minimum_funding_standard for the plan_year ending february denied has been this ruling is directed only to the taxpayer that requested it sec_61 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 _ to the manager ep compliance unit in and to your authorized representative pursuant to a power_of_attorney on file in this office if you require further assistance in this matter please contact sincerely yours oia ‘donna m prestia manager employee_plans actuarial group


internal_revenue_service cor-115872-00 number info release date uil the honorable rosa delauro u s house of representatives washington d c dear ms delauro date thank you for your letter of date signed by you and a number of your colleagues encouraging the internal_revenue_service to immediately readjust the business standard mileage rate to reflect the recent increase in gasoline prices you note that the increased cost has particularly burdened self-employed taxpayers who use automobiles for business purposes gasoline prices we realize increased gasoline prices are an economic burden however the cost of gasoline is only one part of the business standard mileage rate which includes fixed and operating automobile costs these costs include depreciation or lease payments maintenance and repairs insurance and license and registration fees in addition to gasoline and oil less than one-third of the cents per mile rate comes from the cost of gasoline and oil thus an immediate adjustment in the rate taking into account the recent increase in gasoline prices might not be significant setting the business standard mileage rate the rate is a national average amount determined by an annual study performed by an independent_contractor who is an expert in the cost analysis of business use of automobiles the contractor uses recent data from each state on the component costs of operating the most popular automobiles the contractor then combines this data to achieve a national composite cents-per-mile rate advantages of using the business standard mileage rate reducing a taxpayer’s record-keeping burden is the principal advantage of using the rate gasoline prices rise and fall during the year but taxpayers may continue to use the same rate without having to keep records of actual expenses although rising gasoline prices can be a disadvantage for taxpayers who use the rate falling prices can work to their advantage for example although gasoline prices fell in for all of and through date taxpayers were able to use the rate that reflected the earlier higher prices taxpayer’s options to deduct the ordinary and necessary expenses of using an automobile for business purposes a taxpayer must substantiate the cost date place and business_purpose of each use of the automobile by adequate_records for the cost the taxpayer has two options substantiate actual cost by keeping records or by other_sufficient_evidence use the business standard mileage rate using the rate gives approximate not actual costs taxpayers can deduct the actual business_expenses of using a personally-owned automobile and this may be advantageous when automobile costs are rising publication travel entertainment gift and car expenses contains further information on how taxpayers should substantiate expenses i have enclosed the relevant pages from that publication i am sending a similar letter to your colleagues i hope this information is helpful please call me at or robert a berkovsky at if you have any questions sincerely charles o rossotti enclosure


department of the treasury internal_revenue_service washington d c jul uniform issue list numbers kkkkkkekrkkkk kkk kr rr rk kk kk kk rk kkk rr rr rr re of-e2ep-t legend individual a individual b decedent a decedent b taxpayer cc eker eker kek rr kk kr ek ik kkk kk l u i kkk kkk kr rk k ek rrr kek kkk kkk ee te re kk or kr kk kkk kek kkk kk kek kk ek kkk kkk kkk kk keke kkk k kek taxpayer d er rk re tk ee te kk ke kk rk kk kkk ek ek individual_retirement_arrangement ira x individual_retirement_arrangement ira y individual_retirement_arrangement ira z dear kekkkkers kkk kk kr ik ek kek kkk kkk rk kek ak ak kk l u kkrkk hk kk kk i toi ork kr rior rk kkk k kor tk rk i kk kk a i tkk ik or ok ee ke wkkkkk this is in response to a letter dated date as supplemented by additional correspondence dated january january january april and june in that correspondence your authorized representative requested a private_letter_ruling on your behalf regarding certain required distributions of assets from the individual_retirement_arrangements iras previously owned by your parents decedents a and b named above your authorized representative also submitted the following representations in support of your request facts and individual a owned iras xx and y individual b owned ira z individuals a and b were spouses and the parents of taxpayers c a both and d custodial_account established under sec_408 of the code a and b had attained the required_beginning_date as defined in sec_401 c of the internal_revenue_code during the early years of the 1990’s and had commenced making required withdrawals from their iras at that time individuals a and b had reciprocal beneficiary designations individual a named individual b as the beneficiary of iras x and y individual b named individual a as the beneficiary of ira z contingent beneficiary of iras x neither taxpayer c nor d was named as a y or prior to his death individual a had received annuitized distributions from iras x and y based on his single life expectancy with the amount of the annuity recalculated annually the father of taxpayers c and d died in november individual a on date individual b transferred the assets of iras x and y to ira z and commenced receiving distributions from ira z based on her single life expectancy percent of ira z consisted of assets attributable to decedent a and iras x and y individual b in ira z before the transfer gains losses and distributions attributable to these amounts have been accounted for since the transfer the remaining percent of ira z assets belonged to the transferred assets and as of date the terms of ira z provide that absent a specific election to the contrary the amount distributed to the ira owner will be recalculated annually distributions to her were recalculated annually pursuant to the terms of her ira in march individual b amended the beneficiary designation of ira z naming her two children taxpayers c and d equal beneficiaries the mother of taxpayers c and d died in april because individual b made no such election as b taxpayers c and d propose to distribute percent of the total assets remaining in ira z--the amounts therein attributable to their mother’s decedent b’s ira on or before date taxpayers c and d also propose to distribute the remaining assets in ira z their father’s decedent a’s january taxpayer c ira which was transferred to ira z on over the life expectancy of the older beneficiary ie the percent of total ira assets attributable to taxpayer c was born in taxpayer d was born in based on the preceding facts and representations you request a ruling that distributions of the percent of ira z assets--the amounts attributable to decedent a’s iras--over the life expectancy of taxpayer c based on c’s adjusted age will meet the requirements of sec_401 of the code as applied to ira z by virtue of sec_408 a sec_408 of the code defines an individual retirement sec_408 states that under regulations a ie which meets the requirements of sec_408 a account as through a prescribed y the treasury secretary rules similar to the rules of sec_401 sec_401 a of an individual for whose benefit the trust is maintained a required minimum distributions from qualified_plans shall apply to the distribution of the entire_interest of the code sets forth the general rules applicable to and the incidental death_benefit requirements of section sec_401 a a ii of the code provides in pertinent part that a_trust shall not constitute a qualified_trust unless the plan of which the trust is a part provides that the entire_interest of each employee will be distributed beginning not later than the required_beginning_date employee or over the lives of such employee and a designated_beneficiary or over a period not extending beyond the life expectancy of such employee or the joint life expectancies of such employee and designated_beneficiary in accordance with regulations over the life of such with respect to iras sec_401 c of the code provides that the term required_beginning_date means april of the calendar_year immediately following the calendar_year in which the owner of that ira attains age sec_401 a b i of the code provides that where distributions have begun under subparagraph a ii constitute a qualified_trust unless the plan provides that if a_trust shall not i ii the distribution of the employee’s interest has begun in accordance with subparagraph a ii and the employee dies before his entire_interest is distributed to him the remaining portion of such interest will be distributed at least as rapidly as under the method of distribution being used under subparagraph a ii of the date of the employee’s death as sec_1_408-8 of the proposed income_tax regulations q a a-4 b proposed regs provides in pertinent part that the ‘unless indicated otherwise all references in sec_401 a to an employee and his or her beneficiaries should be read to mean the ira owner and his or her beneficiaries only beneficiary who may elect to treat the beneficiary’s entire_interest in the trust or the remaining part of such interest if distribution thereof has commenced to the beneficiary as the beneficiary’s own account is the individual’s surviving_spouse if the surviving_spouse makes such an election the distribution would then be subject_to the distribution_requirements of sec_401 a a rather than sec_401 a b an election to claim the ira as the surviving spouse’s own will be considered to have been made if any amounts in the account transferred in accordance with the requirements of sec_408 d a i into an ira for the benefit of such surviving_spouse or been distributed within the appropriate time period applicable to the decedent under sec_401 b the result of such an election is that the surviving_spouse shall then be considered the individual for whose benefit the trust is maintained have been rolled over or have not sec_1 a -1 of the proposed regs q a d-2 a provides in pertinent part that designated beneficiaries are only individuals who are designated under the plan provides that an individual may be designated as a beneficiary under the plan either by its terms or affirmative election by the employee or the employee's surviving_spouse specifying the beneficiary if the plan so provides by an in general it sec_1 a -1 q a d-3 a of the proposed regs provides of the code for purposes of calculating the distribution period described in that dollar_figure a a ii designated_beneficiary will be determined as required_beginning_date no designated_beneficiary under the plan to receive the employee’s benefit upon the employee’s death the distribution period is limited to the employee’s life expectancy or a period not extending beyond the employee’s life for distributions before death the as of that date there is of the employee’s if sec_401 d of the code permits an employee and his or section a -1 q a e-8 a provides in pertinent part that the joint her spouse to recalculate their life expectancies annually life and last survivor expectancy of the employee and spouse is recalculated annually using the employee’s and spouse’s attained age in each distribution calendar_year using the employee’s and spouse’s attained ages as distribution calendar_year employee’s spouse the recalculated life expectancy of the deceased is reduced to zero in the year following the calendar_year of death in any calendar_year in which the last applicable life expectancy is reduced to zero the plan must distribute the employee’s entire remaining interest prior to the last day of such year in order to satisfy sec_401 a of the employee’s and spouse’s birthdays in that upon the death of the employee or the a sec_1 a -1 o a e-5 a of the proposed regs provides that if more than one individual is designated as a beneficiary with respect to an ira the designated_beneficiary with the shortest life expectancy will be treated as the designated_beneficiary for purposes of determining the sec_401 distribution period sec_1 a -1 q a e-7 c of the proposed regs states that a plan may adopt a provision that permits the employee or spouse in the case of distributions described in sec_401 a b iii inapplicability of sec_40l a d permitted the employee or spouse must elect whether or not life expectancy will be recalculated no later than the time of the first required_distribution under sec_401 a to elect the applicability or if such an election is of the code iv or sec_1 a -1 q a e-8 of the proposed regs provides in that the life expectancy of a non-spouse beneficiary pertinent part may not be recalculated section q a e-8 b provides further guidance on calculating the applicable life expectancy when the employee’s life expectancy is being recalculated and the life of the designated_beneficiary is not recalculated such applicable life expectancy is the joint and last survivor expectancy using the employee’s or the surviving spouse’s attained age as of the individual’s birthday during the distribution calendar_year and an adjusted age of the designated_beneficiary beneficiary is his or her attained age in the calendar_year in which the ira’s owner attains age reduced by one for each calendar_year which has elapsed since that calendar_year the adjusted age of the designated in this case decedent b’s required_beginning_date for ira z had was still the it to zero and not taxpayers c and d decedent b’s death in occurred while decedent a named beneficiary for that ira when decedent a died in reduced his recalculated life expectancy for purposes of ira z for the distribution calendar_year also reduced her recalculated life expectancy for those ira z funds attributable to her to zero in the calendar_year those ira assets attributable to decedent b must be distributed to the current designated beneficiaries taxpayers c and d no later than date the ira z custodian and taxpayers c and d will meet the minimum distribution_requirements of sec_401 a d of the code and sec_1 a - q a e-8 a by the distribution of the entire remaining balance in ira z attributable to decedent b prior to the last day of the last year in which the sole remaining life expectancy pertaining to that remaining balance was reduced to zero of ira 2’s assets as assets from iras x and y to ira adjusted for gains losses and required distributions through the date of distribution in calendar is an amount equal to percent this distribution from ira z the date of the transfer of of january therefore regarding the assets in ira z attributable to decedent a then in january of individual b exercised her rights as surviving_spouse and took ownership of those assets by transferring the entire account balances from iras x and y to ira z individual b accomplished her transfers during the calendar_year thus b created an account balance in percent of ira z assets for purposes of the required_distribution rules as of december the required_beginning_date for distributions of the assets transferred in date therefore date above individual b began receiving required distributions from the rollover portion of ira z during distribution in in accordance with the rule given from iras x and y to ira z was b took a discretionary in this case while the proposed_regulations do not specifically answer the question of whether taxpayer c can be considered the designated_beneficiary for purposes of code sec_401 a the absence of final regulations such issues may be resolved by a reasonable interpretation of the proposed_regulations and statutory provisions considered the designated_beneficiary of ira z for purposes of sec_408 a of the code since he was the older of the two beneficiaries named by then individual b before the december distribution date for the inherited portion percent of ira z accordingly it is concluded that taxpayer c may be and a in required in march decedent b named taxpayers c and d as co-beneficiaries of assets in ira z this beneficiary designation was made in a timely manner prior to the required_beginning_date for distributions of assets transferred from iras x and y to ira z therefore had she chosen decedent b could have received distributions from ira z over her and taxpayer c’s joint life expectancy taxpayer c being her oldest designated_beneficiary with the minimum_required_distribution rules chose to receive distributions over her single life expectancy recalculated greater than the required minimums or accelerate receipt of her lifetime distributions in effect decedent b received distributions in amounts such distributions would have complied in other words chose to instead taxpayer a decedent b’s election to accelerate distributions does not affect the determination above that b’s timely designating taxpayers c and das her co-beneficiaries resulted in code sec_401 a required distributions being those computed using decedent b’s and taxpayer c’s joint and survivor life expectancy thus although taxpayer c’s life expectancy was not used in computing lifetime distributions to b may be used to determine post-death required distributions to decedent b's beneficiaries in short the at least as rapidly rule will not be violated if post-death distributions are calculated using the life it a000 kou e- expectancy of decedent b’s oldest designated_beneficiary taxpayer c since decedent b could have used taxpayer c’s life expectancy to determine the amount of her required lifetime distributions in this case as noted above decedent b’s life expectancy was thus as of the end of the calendar_year being recalculated following the year of her death her life expectancy for purposes of code sec_401 distributions to decedent b’s designated beneficiaries for the percent of ira z assets transferred to ira z from iras x and y in will be those computed using the adjusted age and life expectancy of taxpayer c her oldest designated_beneficiary therefore required is reduced to zero therefore it is ruled that for calendar years after distributions of the percent of ira z assets--the amounts attributable to decedent a’s iras--over the life expectancy of taxpayer c based on c’s adjusted age as defined under sec_1 a -1 requirements of sec_401 virtue of sec_408 a q a e-8 b of the proposed_regulations will meet the of the code as applied to ira by this ruling is directed solely to the taxpayer who requested it code sec_6110 provides that it may not be used or cited by others as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely ae swieca manager johnh emgloyee plans technical group tax_division exempt and government entities enclosures deleted copy of this letter notice of intention to disclose notice copy of notification letter form to authorized representative s