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 tege eoeg teb plr-124530-06 date date legend issuer state borrower city a ty-------- ty-------- ------------------------------------------------------------------------ ---------------- -------------------------------------- ---------------------------- township a ------------------------------------------- bonds ------------------------------------------------------------------------------- ---------- ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ ---------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------- ------- --------- ---------------------- ----------------------- date date plr-124530-06 date ----------------------- date -------------------------- --------- --------- --------- --------- --------- v w x y z dear ----------------------- this is in response to your request for a ruling that the use of the bond proceeds as described below will be an insubstantial deviation for purposes of the public notice and approval requirements set forth in sec_147 of the internal_revenue_code the code and sec_5f of the temporary income_tax regulations facts and representations the issuer is an instrumentality of the state the borrower is a nonprofit corporation organized under the laws of state and an organization described in sec_501 the borrower owns and operates healthcare delivery systems in the state including two separately licensed acute care hospitals located in city a hereinafter referred to as campus a and campus b and an ambulatory care center located in township a hereinafter referred to as campus c on date in compliance with the public notice requirement of sec_147 the issuer published a public notice the notice in newspapers of general circulation covering the state and the localities in which the projects described in such notice were to be located the notice provided the place date and time of the public hearing relating to the proposed issuance of the bonds which were to be issued as qualified c bonds the notice also set forth the maximum aggregate principal_amount of bonds and indicated that the proceeds of the bonds would be used to i finance and reimburse the borrower for costs of renovations to facilities at campus a and campus b and b pay for construction of an approximately v square foot ambulatory care center at campus c street addresses for campus a campus b and campus c were also plr-124530-06 included in the notice on date the public hearing was duly held and on date the governor of the state approved the issuance of the bonds on date the issuer issued the bonds after tefra approval and prior to the issuance of the bonds the borrower determined that a portion of the project located on campus c the privately owned portion could not be financed with the proceeds of the bonds it was anticipated at that time that there were sufficient capital costs incidental to the projects described in the notice at campus a and campus b on which the borrower could expend the proceeds of the bonds initially intended for the privately owned portion the ambulatory care center at campus c as constructed measures w square feet of which x square feet were financed with the proceeds of the bonds and y square feet comprise the privately owned portion subsequent to the issuance of the bonds the borrower entered into a ground lease for a commercial property located in township a adjacent to campus c the new property the new property includes a z square foot commercial building the new_building the new property has a different address from and is located on a different tax lot from campus c but is located contiguous to campus c the borrowed would like to use proceeds of the bonds originally issued to finance the privately owned portion to substantially renovate the new_building after renovation that building will be used to provide services including enhanced imaging service cat scan and mri a center for treatment of sleep disorders and additional clinical offices which would improve the level of care at the borrower’s ambulatory care center because the new property is contiguous to campus c the borrower intends to functionally integrate the new property into campus c and anticipates that patients of campus c will routinely move between the buildings on the campus c and the new_building to receive ambulatory healthcare services the borrower expects to incorporate the new property into campus c through the use of common parking facilities and signage for both the new property and campus c and expects to utilize a single combined address for both campus c and the new property which address would differ from that described in the notice law analysis sec_103 provides that except as provided in sec_103 gross_income does not include interest on any state_or_local_bond sec_103 provides in part that sec_103 shall not apply to any private_activity_bond that is not a qualified_bond within the meaning of sec_141 sec_141 provides that the term qualified_bond means any private_activity_bond that is a qualified sec_501 bond sec_147 provides that a private_activity_bond is not a qualified_bond unless it is part of an issue that has been approved by the governmental_unit that issued the plr-124530-06 bond or by the governmental_unit on whose behalf the bond was issued sec_147 treats an issue as having been approved by a governmental_unit if the issue is approved by the applicable_elected_representative of the governmental_unit after a public hearing following reasonable public notice sec_5f provides further guidance on meeting the public notice and approval requirements under sec_5f f a facility is within the scope of an approval if the notice of public hearing and the approval contain all of the following i a general functional description of the type and use of the facility to be financed ii the maximum aggregate face_amount of obligations to be issued with respect to the facility iii the initial owner operator or manager of the facility and iv the prospective location of the facility by its street address or if none by a general description designed to inform readers of its specific location the term facility as defined in sec_5f f includes a tract or adjoining tracts of land improvements thereon and any personal_property used in connection with such real_property separate tracts of land including improvements and connected personal_property may be treated as one facility only if they are used in an integrated operation an approval is valid under sec_5f f for any issue used to provide publicly approved facilities notwithstanding insubstantial deviations with respect to the maximum aggregate face_amount of the bonds issued under the approval for the facility the name of its initial owner manager or operator or the type or location of the facility from that described in the approval an approval or notice of public hearing is not adequate if any of the items in sec_5f f i through iv with respect to the facility to be financed are unknown on the date of the public notice or the date of the approval sec_5f g provides that a public hearing is a forum providing a reasonable opportunity for interested individuals to express their views both orally and in writing on the proposed issue of bonds and the location and nature of a proposed facility to be financed sec_5f g further provides that the public notice must be reasonably designed to inform residents of the affected governmental units including residents of the issuing unit and the governmental_unit where a facility is to be located of the proposed issue the notice must state the time and date for the hearing and contain the information contained in paragraph sec_5f f notice is presumed to be reasonable pursuant to sec_5f g if it is published no fewer than days before the scheduled hearing the purpose of the public notice and approval requirements of sec_147 is to ensure that the affected members of the general_public will be notified of a pending bond issue and made aware of the intended use of proceeds in order to elicit comments that will ensure a substantial public benefit from issuing the bonds in this case the new property is contiguous to campus c moreover the borrower intends to functionally integrate the new property into campus c and anticipates that patients of campus c would routinely move between the buildings on the existing campus c and plr-124530-06 the new_building to receive ambulatory healthcare services the borrower expects to incorporate the new property into campus c through the use of common parking facilities and signage for both the new property and campus c the borrower further expects to utilize a single combined address for both campus c and the new property accordingly the new property may be treated as part of the facility under sec_5f f although the combined property will exceed the square footage described in the notice and have a different street address than that published in the notice the notice put the public in the affected area on notice as to the borrower’s intention to use the bond proceeds to finance facilities for the provisions of ambulatory healthcare services in the vicinity of campus c and the new property thus the notice published originally in newspapers of general circulation covering the state and the affected localities provided the general_public in those localities with all of the pertinent information regarding the projects as required by sec_147 and sec_5f f conclusion based on the factual representations set forth above we conclude that the proposed use of the bond proceeds to substantially rehabilitate the new_building that will be functionally integrated into campus c constitutes an insubstantial deviation from the project described in the notice and will not cause the bonds to fail to meet the public notice and approval requirements of sec_147 and sec_5f f the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-124530-06 in accordance with the powers of attorney on file with this office copies of this letter are being sent to your authorized representatives sincerely timothy l jones senior counsel tax exempt bonds branch exempt_organizations employment_tax government entities cc ------------------- ----------------------- ------------------- ----------------------------------------------- ------------------------------- -------------------------------------------------------------------- ---------------------------- ------------------------------------------------------------------ --------------------------------------


cca_2016041909321004 id uilc number release date from sent tuesday date am to cc bcc subject question ------- sec_6513 of the code does provide that amounts withheld are deemed paid_by the taxpayer as of the due_date of the return for that year however the fact that the amount was paid does not mean it would automatically be applied to the outstanding liability for rather under sec_6402 the service may credit an overpayment against any liability and shall refund any balance but is not required to do so in any particular manner as a result counsel has previously opined that prepaid amounts for a given year are not deemed credited to a tax_liability for another year until the time the return for the first year is processed and the credit is applied see eg irs fsa irs sca see also 33_fedclaims_600 -------------- -------------------------- ------------------------------------------- -------------------------------------- --------------------------------------------------------------------------------------------------------------------- ----------------------------------


department of the treasury internal_revenue_service washington d c date gl-109325-99 uil number release date cc el gl br1 memorandum for rocky mountain associate district_counsel attn mark h howard from alan c levine chief branch general litigation subject issue whether the internal_revenue_service service should interplead the surplus proceeds from the redemption and sale of property or should the service accept an assignment of the purported interest of the decedent’s legitimate children in the surplus proceeds and pay the money to the surviving_spouse conclusion the service should interplead the money the service cannot rely on the assignment of the legitimate children’s interest in the surplus proceeds because the decedent may have an illegitimate child although we have no reason to believe that an illegitimate child exists state law provides that an illegitimate child has a property right in an intestate estate to avoid the potential problem of injuring an illegitimate child’s intestate interest the money should be interplead with the state court which will then resolve any claims to the money facts at the time of the taxpayer’s death a junior federal_tax_lien encumbered the decedent's real_property in a will the decedent left the real_property to his former spouse who never probated the will subsequently a senior commercial lienor gave notice to the service of a nonjudicial_sale of the property thereby extinguishing the tax_lien but leaving the service with the right_of_redemption in your memorandum dated date you explain that the ownership rights to the surplus proceeds are confusing because of conflicting state statutes gl-109325-99 sec_7425 and d the service then exercised its right_of_redemption sold the property and applied the sale proceeds to the decedent’s tax_liability leaving surplus proceeds to resolve the ambiguity as to the ownership of the surplus proceeds private counsel for the former spouse suggests that the legitimate children would be willing to assign any interest they may have to the former spouse thus the service could pay the former spouse under the theory either that the money has been assigned to her or that she is entitled to the surplus proceeds as the owner of the property law and analysis sec_6342 provides that surplus proceeds remaining after the service’s redemption shall be credited or refunded to the person or persons legally entitled to the money thus under the common_law an illegitimate child had no claim against an intestate estate the state however has rejected this common_law treatment of illegitimate children and has provided instead that all children-legitimate as well as illegitimate-have the right to inherit via intestacy accordingly even if the legitimate children assign whatever interest they have to the former spouse we do not recommend that the service remit the surplus proceeds to the former spouse because there may be an illegitimate child who has an intestate claim against the funds the service cannot determine with certainty that there is no illegitimate child we recommend that the service interplead the funds and let the court resolve the competing interests to the funds case development hazards and other considerations we can identify no other litigating hazards that would change or qualify the conclusions reached in this memorandum if you have any further questions please call the branch pincite-3610


department of the treasury internal_revenue_service te_ge eo examinations fulton street room brooklyn ny tax_exempt_and_government_entities_division date number release date ong organization name xx date address address org address certified mail dear taxpayer_identification_number person to contact identification_number contact telephone number this is a final adverse determination regarding your exempt status under sec_501 of the internal_revenue_code the code our favorable determination_letter to you dated july 20xx is hereby revoked and you are no longer exempt under ‘ sec_501 of the code effective january 20xx you have failed to establish that you are operated exclusively for exempt purposes within the meaning of internal_revenue_code sec_501 and that no part of your net_earnings inure to the benefit of private shareholders or individuals you failed to respond to repeated reasonable requests to allow the internal_revenue_service to examine your records regarding your receipts expenditures or activities as required by sec_6001 and sec_6033 contributions to your organization are no longer deductible under sec_170 you are required to file income_tax returns on form_1120 these returns should be filed with the appropriate service_center for the tax_year ending december 20xx and for all tax years thereafter in accordance with the instructions of the return pursuant to sec_509 of the code your private_foundation_status continues unless your status as such is terminated under sec_507 of the code therefore in addition to filing form_1120 you are required to continue filing form_990-pf and you are still subject_to excise_taxes under chapter of the code until such time as you terminate your private_foundation_status under sec_507 of the code processing of income_tax returns and assessments of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the internal_revenue_code if you decide to contest this determination under the declaratory_judgment provisions of sec_7428 of the code a petition to the united_states tax_court the united_states claims_court or the district_court of the united_states for the district of columbia must be filed before the day after the date this determination was mailed to you please contact the clerk of the appropriate court for rules regarding filing petitions for declaratory judgments these courts at the following addresses by referring to the enclosed publication you may write to you also have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter nanette m downing director eo examinations publication sincerely enclosure tax_exempt_and_government_entities_division org address department of the treasury internal_revenue_service exempt_organizations capitol street fresno ca date taxpayer_identification_number form tax_year s ended person to contact id number contact numbers telephone fax certified mail - return receipt requested dear if you accept our findings take no further action we will issue a final revocation letter 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 submit to us a written request for appeals_office consideration within days from the date of this letter to protest our decision your protest should include a statement of the facts the applicable law and arguments in support of your position an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in if we issue a determination_letter to you based on technical_advice no publication further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice letter catalog number 34809f if we do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the code you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at lf you have any questions please call the contact person at the telephone number shown in the heading of this letter the most convenient time to call if we need to contact you if you write please provide a telephone number and thank you for your cooperation sincerely francisco n favila revenue_agent enclosures publication publication report of examination letter catalog number 34809f form 886-a rev date explanations of items name of taxpayer org year period ended december 20xx tax identification_number ein schedule number or exhibit legend org organization name president president xx date city city state state secretary secretary issue whether org qualifies for exemption under sec_501 of the internal_revenue_code facts org the organization was granted tax exempt status as on organization described in internal_revenue_code irc c the advance_ruling period began on september 20xx and ended on december 20xx the organization failed to provided necessary documentation to maintain its publicly_supported_organization status under sec_509 a and b a vi and was classified as a private_foundation from the organization's inception the organization failed to reply to numerous letters sent by the service in an attempt to review financial records to ensure the organization is operating as stated on their application_for tax exempt status the letters were sent to the organization's president president and secretary secretary at the address in city state provided on the organization’s application_for tax exempt status the state secretary of state lists the organization’s corporate status as active and it also lists mr secretary as the agent for service of process at the city address the letter sent to secretary at the city address was accepted and signed for law sec_6001 provides that every person liable for any_tax imposed by the irc or for the collection thereof shall keep adequate_records as the secretary_of_the_treasury or_his_delegate may from time to time prescribe sec_6033 provides except as provided in sec_6033 every organization exempt from tax under sec_501 shall file an annual return stating specifically the items of gross_income receipts and disbursements and such other information for the purposes of carrying out the internal revenue laws as the secretary may by forms or regulations prescribe and keep such records render under oath such statements make such other returns and comply with such rules and regulations as the secretary may from time to time prescribe sec_1_6001-1 in conjunction with sec_1_6001-1 provides that every organization exempt from tax under sec_501 and subject_to the tax imposed by sec_511 on its unrelated_business_income must keep such permanent books or accounts or records including inventories as are sufficient to establish the amount of gross_income deduction credits or other matters required to be shown by such person in any return of such tax such organization shall also keep such books_and_records as are required to substantiate the information required by sec_6033 sec_1_6001-1 states that the books_or_records required by this section shall be kept at all times available for inspection by authorized internal revenue officers or employees and shall be retained as long as the contents thereof may be material in the administration of any internal revenue law sec_1_6033-1 provides that every organization which has established its right to exemption from tax whether or not it is required to file an annual return of information shall submit such additional information as may be required by the district_director for the purpose of enabling him to inquire further into its exempt status and to administer the provisions of subchapter_f sec_501 and the following chapter of the code and sec_6033 form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service form 886-a rey date explanations of items schedule number or exhibit name of taxpayer org tax identification_number year period ended ein december 20xx revrul_59_95 1959_1_cb_627 concerns an exempt_organization that was requested to produce a financial statement and statement of its operations for a certain year however its records were so incomplete that the organization was unable to furnish such statements the service held that the failure or inability to file the required information_return or otherwise to comply with the provisions of sec_6033 and the regulations which implement it may result in the termination of the exempt status of an organization previously held exempt on the grounds that the organization has not established that it is observing the conditions required for the continuation of exempt status in accordance with the above cited provisions of the code and regulations under sec_6001 and sec_6033 organizations recognized as exempt from federal_income_tax must meet certain reporting requirements these requirements relate to the filing of a complete and accurate annual information and other required federal tax forms and the retention of records sufficient to determine whether such entity is operated for the purposes for which it was granted tax-exempt status and to determine its liability for any unrelated_business_income_tax conclusion it is the government's position that the organization failed to meet the reporting requirements under sec_6001 and sec_6033 to be recognized as exempt from federal_income_tax under sec_501 accordingly the organization's exempt status is revoked effective january 20xx form 886-a catalog number 20810w page publish no irs gov department of the treasury-internal revenue service


t c summary opinion united_states tax_court lazar simov kovachevich petitioner v commissioner of internal revenue respondent docket nos 4480-06s 4481-06s filed date lazar simov kovachevich pro_se patricia a rieggar for respondent dean special_trial_judge these consolidated cases were heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petitions were filed pursuant to sec_7463 the decisions to be entered are not reviewable by any other court and this opinion shall not be treated as precedent for any other case unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the years in issue and all rule references are to the tax_court rules_of_practice and procedure respondent determined deficiencies of dollar_figure and dollar_figure in petitioner’ sec_2002 and federal income taxes respectively with respect to petitioner’ sec_2002 taxable_year the issues for decision are whether petitioner is entitled to the following dollar_figure in dependency_exemption deductions a dollar_figure deduction for alimony and a dollar_figure casualty and theft_loss deduction with respect to petitioner’s taxable_year the issues for decision are whether petitioner is entitled to claim a dollar_figure loss and liable for a dollar_figure accuracy- related penalty under sec_6662 background some of the facts have been stipulated and are so found the stipulation of facts and the exhibits received into evidence are incorporated herein by reference at the time the petitions were filed petitioner resided in flushing new york petitioner timely filed hi sec_2002 and federal_income_tax returns on hi sec_2002 tax_return petitioner claimed personal_exemption deductions for his two sons who were age sec_23 and sec_25 and full-time students attending european schools petitioner also respondent conceded that petitioner was entitled to a dollar_figure moving_expense_deduction for and that he did not receive dollar_figure as nonemployee compensation in claimed a dollar_figure alimony deduction for which he listed his sons’ social_security numbers in the area titled recipient’s ssn lastly petitioner claimed a dollar_figure casualty and theft_loss for which he attached a form_4684 casualties and thefts to his tax_return petitioner’s form_4684 listed the values of various personal and business properties that he alleges were damaged or stolen from his storage shed petitioner stored the items from on his return petitioner claimed a dollar_figure casualty and theft_loss for which he had handwritten pro_se in court proceedings similarly on his schedule c profit or loss from business he claimed the dollar_figure as a legal and professional services expense for which he had handwritten pro_se court three months for extraordinary writ to be filed in s co u s shall appear in tax_return discussion the commissioner’s determinations in a notice_of_deficiency are presumed correct and the taxpayer has the burden to prove that the determinations are in error rule a 290_us_111 but the burden_of_proof on factual issues that affect a taxpayer’s tax_liability may be shifted to the commissioner where the taxpayer introduces credible_evidence with respect to such issue sec_7491 the burden will shift only if the taxpayer has complied with the substantiation requirements and has cooperated with the commissioner’s reasonable requests for witnesses information documents meetings and interviews sec_7491 petitioner has not alleged or proven that sec_7491 applies accordingly the burden remains on him to show that he is entitled to the claimed deductions a taxable_year i dependency_exemption deduction sec_151 in pertinent part allows a taxpayer to claim as a deduction the exemption_amount for each individual who is a dependent of the taxpayer as defined in sec_152 and who is the taxpayer’s child and satisfies certain age requirements in pertinent part sec_152 defines dependent to include the taxpayer’s son who either received or is treated as receiving over half of his support from the taxpayer for the calendar_year in which the taxpayer’s taxable_year begins sec_152 excepts from the definition of dependent any individual who is not a u s citizen or national unless the individual is a resident_of_the_united_states or of a country contiguous to the united_states the term resident of the the child has not attained the age of or is a student who has not attained the age of at the close of the calendar_year in which the taxable_year of taxpayer begins sec_151 united_states is defined as an individual who is a lawful permanent resident_of_the_united_states at any time during the calendar_year meets the substantial_presence_test ie present in the united_states at least days during the calendar_year and the total of the number of days that the individual was present during the calendar_year and the preceding years equals or exceed sec_183 days when multiplied by the applicable multiplier or makes a first-year election as prescribed by sec_7701 sec_7701 the court concludes that petitioner is not entitled to either dependency_exemption deduction the oldest son had already attained the age of before petitioner’ sec_2002 taxable_year began which excludes the son from the definition of a dependent petitioner merely testified that he thought that his younger son came to the united_states in the middle of the year or at the end of june after school petitioner did not establish the residency of his younger son to bring him within the definition of a dependent given the disposition of this issue on these elements we need not discuss the other elements accordingly respondent’s determination is sustained ii alimony deduction sec_215 allows a deduction for alimony paid during the taxable_year generally alimony is defined to include any payment in cash if the payment is received by or on behalf of a spouse under_a_divorce_or_separation_instrument the instrument does not designate the payment as a payment that is not includable in the recipient’s gross_income and not allowable as a deduction to the payor the payee and payor are not members of the same household at the time of payment and there is no liability to make any payments after the payee’s death sec_71 sec_215 because petitioner offered no evidence to show that the payments were made under_a_divorce_or_separation_instrument the payments do not constitute alimony and he is not entitled to the deduction see 66_tc_1058 66_tc_308 40_tc_57 given the disposition of this issue on this element we need not discuss the other elements accordingly respondent’s determination is sustained iii casualty_loss sec_165 allows a deduction for any loss sustained during the taxable_year and not_compensated_for_by_insurance_or_otherwise with respect to individuals deductions for losses are limited to losses incurred_in_a_trade_or_business incurred in a transaction for profit or of property not connected with a trade_or_business or a transaction entered into for profit if the losses arise from fire storm shipwreck or other_casualty or from theft sec_165 in order for the loss to be deductible the loss must be evidenced by closed and completed transactions fixed by an identifiable_event and actually sustained during the taxable_period year see sec_1_165-1 income_tax regs case law has defined the term casualty to include an event that is due to some sudden unexpected or unusual cause similar in nature to a fire storm or shipwreck 54_f2d_537 2d cir affg 18_bta_674 see 198_f2d_46 8th cir revg 16_tc_1360 petitioner testified that his dollar_figure casualty and theft_loss deduction was for damages sustained to his personal and business properties from raccoons birds vandals and thieves on his form_4684 petitioner represented that the storage shed was built of wood material with a foot high opening all along the wall below the roof and that he had insisted that the owner close the opening of the wall but the owner never did petitioner testified that some of the damage was due to vandals in either or with respect to the vandalism the damages were not sustained in the taxable_year therefore they are not deductible generally a loss arising from theft is treated as sustained during the taxable_year in which the taxpayer discovers such loss see sec_165 sec_1_165-1 sec_1_165-8 income_tax regs the amount of the deductible loss is limited to the lower_of the fair_market_value of the property immediately before the theft reduced by its fair_market_value immediately after the theft ie zero or its adjusted_basis and if the property was used in a trade_or_business or for the production_of_income and the fair_market_value of the property immediately before the theft is less than its adjusted_basis then its adjusted_basis is treated as the amount of the loss see sec_1_165-7 sec_1_165-8 income_tax regs and with respect to property that is neither used in a trade_or_business nor for the production_of_income the amount of the loss is limited to that portion of the loss that is in excess of dollar_figure see sec_1_165-8 income_tax regs petitioner must establish inter alia both the existence of a theft and the amount of the claimed theft_loss see 40_tc_304 in his form_4684 petitioner failed to identify specifically the items of property that he alleges were stolen petitioner also failed to establish the year that he discovered the theft he merely stated in his form_4684 that probably somethings were stolen when his storage shed was vandalized in and at trial he merely testified that somebody took the big_number square feet of marble he had stored finally petitioner failed to prove the amount of his loss by establishing the lower_of the properties’ adjusted bases ie by receipts or their fair market values immediately before the loss therefore petitioner is not entitled to a deduction for a theft_loss generally damages resulting from animals and insects are not deductible because they occur not from a sudden event but rather gradually over time unless it can be shown that the destruction was occasioned by a sudden invasion that occurred in a relatively short time ie months or year cf rosenberg v commissioner supra pincite 120_f2d_253 2d cir affg 42_bta_206 120_f2d_244 9th cir the destruction of petitioner’s properties that was caused by animals’ entering the wall’s opening is not a type of sudden unexpected or unusual cause within the definition of a casualty without evidence to the contrary the court surmises that petitioner’s damages were not occasioned by a sudden invasion of raccoons and birds within a short_period of time but rather occurred gradually over time ie from additionally the damages resulting from the inadequacy of the structure are neither unexpected nor unusual therefore they are not deductible and accordingly respondent’s determination is sustained b taxable_year i dollar_figure loss in general a taxpayer’s loss of time or value of his time is not deductible as a casualty_loss or otherwise cf 67_tc_784 stating that in using a valuation method to compute a loss for purposes of sec_165 the value of a person’s loss of time cannot be included in the computation wilhelm v commissioner tcmemo_1991_513 disallowing a taxpayer’s time spent handling an estate from his net_operating_loss computation o’connor v commissioner tcmemo_1981_151 disallowing a taxpayer’s deduction for the uncompensated value of his time as a classroom expense and a job-related expense the disallowance of a claimed deduction arising from the taxpayer’s loss of time or the value thereof results from the fact that he has not included any amount in gross_income and therefore he has no tax_cost_basis in the item that he can deduct see 17_tc_14 petitioner testified that his itemized_deductions represented in part a dollar_figure casualty or damages for his time fighting crime and criminals and defending himself and his business pro_se in the courts against the government petitioner concluded that since attorneys are paid when they practice in the court he too should be similarly compensated or rewarded for his pro_se appearances petitioner is claiming a deduction for his loss of time or the value thereof and he is not entitled to it accordingly respondent’s determination is sustained ii accuracy-related_penalty initially the commissioner has the burden of production with respect to any penalty addition_to_tax or additional_amount sec_7491 the commissioner satisfies this burden of production by coming forward with sufficient evidence that indicates that it is appropriate to impose the penalty see 116_tc_438 once the commissioner satisfies this burden of production the taxpayer must persuade the court that the commissioner’s determination is in error by supplying sufficient evidence of reasonable_cause substantial_authority or a similar provision id in pertinent part sec_6662 imposes an accuracy-related_penalty equal to percent of the underpayment that is attributable to negligence or disregard of the rules or regulations or a substantial_understatement_of_income_tax sec_6662 defines the term negligence to include any failure to make a reasonable attempt to comply with the provisions of this title and the term disregard to include any careless reckless or intentional disregard in interpreting sec_6662 this court has defined the term negligence as a ‘lack of due care or the failure to do what a reasonable and ordinarily prudent person would do under the circumstances’ 89_tc_849 quoting marcello v commissioner 380_f2d_499 5th cir affg on this issue 43_tc_168 and t c memo and citing 731_f2d_1417 9th cir affg 79_tc_714 if a taxpayer fails to make a reasonable attempt to ascertain the correctness of a deduction credit or exclusion on a return which would seem to a reasonable and prudent person to be ‘too good to be true’ under the circumstances then there is a strong indication of negligence sec_1_6662-3 income_tax regs sec_6664 is an exception to the sec_6662 penalty no penalty is imposed with respect to any portion of an underpayment if it is shown that there was reasonable_cause therefor and the taxpayer acted in good_faith sec_1_6664-4 income_tax regs incorporates a facts_and_circumstances_test to determine whether the taxpayer acted with reasonable_cause and in good_faith the most important factor is the extent of the taxpayer’s effort to assess his proper tax_liability id circumstances that may indicate reasonable_cause and good_faith include an honest misunderstanding of fact or law that is reasonable in light of the experience knowledge and education of the taxpayer id the court concludes that respondent has met his burden of production and that petitioner failed to persuade us that the determination was in error the court finds that petitioner was negligent because he failed to make a reasonable attempt to ascertain the correctness of his deduction since he merely testified without more that he thought he should be compensated for his pro_se work in the courts somebody has to pay this it is damage it is a casualty because petitioner failed to make a reasonable attempt to ascertain the correctness of his deduction he cannot establish a reasonable_cause and good_faith defense accordingly respondent’s determination is sustained to reflect the foregoing decision will be entered for respondent in docket no 4480-06s and decision will be entered under rule in docket no 4481-06s


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi plr-118199-99 date date re legend master_trust - subtrust - subtrust - independent_trustee - trustee - trustee - trustee - decedent - child - child - state x - cite - cite - dear this is in reference to your date correspondence and prior submissions requesting rulings regarding the effect of the division of trust assets and the judicial construction and modification of the trust instrument for federal income estate gift and generation-skipping_transfer_tax purposes the facts submitted are as follows decedent a resident of state x died testate in survived by a plr-118199-99 spouse three children and several grandchildren decedent’s spouse died in child and child two of decedent’s children are still living child has four children each of whom have issue child also has four children three of whom have issue under the terms of decedent’s will the residue of decedent’s estate was divided between trust no a marital trust and trust no a by-pass trust paragraph 7-a of the decedent’s will provides that assets of trust no that were not withdrawn by the decedent’s spouse during her lifetime or appointed by the spouse pursuant to the exercise of a testamentary general_power_of_appointment passed to trust no upon her death paragraph 7-a also provides that upon the spouse’s death the combined assets of trust no and trust no hereinafter referred to as master_trust is to be apportioned in two equal shares in trust subtrust and subtrust one share for the benefit of child or those representing him and the other share for the benefit of child or those representing her subtrust and subtrust may be kept in a consolidated fund by the trustee for administrative and investment convenience both shares are to continue in subtrust and subtrust until the death of the last to die of child and child under paragraph 7-e the independent_trustee of the master_trust has the discretion to distribute part or all of the income from subtrust and subtrust to or for the benefit of the trust beneficiaries for their maintenance support and education in addition under paragraph 8-k the independent_trustee may distribute corpus of any trust established under decedent’s will for the proper support maintenance or comfort of any income_beneficiary of that trust paragraph 7-b of decedent’s will provides that upon the death of the last to die of child and child the entire corpus of the trust estate shall be reapportioned in trust in equal parts one such equal part being apportioned in trust for the benefit of each of my grandchildren then living who is a child of child or child and one share for the benefit of the representatives of each predeceased child of child and child each separate share shall be held in a separate trust for the benefit of each respective beneficiary as with subtrust and subtrust these separate trusts may be kept in a consolidated fund by the trustee for administrative and investment convenience each separate trust for a female beneficiary will terminate when the beneficiary reaches age and each separate trust for a male beneficiary will terminate when the beneficiary reaches age upon termination the corpus and any accumulated income of each separate trust will be distributed to the trust_beneficiary under paragraph 7-c no trust may continue beyond twenty-one years after the death of decedent plr-118199-99 decedent’s spouse or children or any descendant of decedent living at the time of decedent’s death paragraph 7-e ii provides that during the term of each trust income from each respective trust may be distributed at the discretion of the independent_trustee for the maintenance support and education of the trust_beneficiary until the beneficiary reaches age at which time the entire income will be distributed to the beneficiary finally notwithstanding the language of paragraph 7-b possibly indicating a per capita distribution on the death of the last to die of child and child paragraph 7-f states in part in the event of the death of a descendant of mine all and every share and interest hereunder which such descendant would have taken or retained hereunder if living shall be apportioned and shall continue in trust subject_to the terms hereof for the use and benefit of the descendants per stirpes of such beneficiary but if there be no surviving descendant of such beneficiary then for the use and benefit of the then living brothers and sisters of such beneficiary and the descendants per stirpes of any deceased such brothers or sisters the master_trust and all other trusts established under the terms of decedent’s will are governed by the laws of state x the trustees in accordance with the authority granted under decedent’s will kept the corpus of subtrust and subtrust consolidated in the master_trust fund the current trustees of the master_trust are independent_trustee and trustee the applicable law of state x that addresses a judicial division of trusts provides that a upon petition by a trustee beneficiary or any party in interest for good cause shown a court having jurisdiction over a_trust after a hearing on notice to all parties_in_interest in such manner as the court may direct may divide a_trust into two or more single trusts or consolidate two or more trusts into a single trust upon such terms and conditions as it deems appropriate if the consolidation or division is not inconsistent with the intent of the trustor with regard to any trust to be consolidated or divided would facilitate administration of the trust s and plr-118199-99 would be in the best interest of all beneficiaries and not materially impair their respective interests b this section applies to all trusts whenever created whether inter_vivos or testamentary created by the same or different instruments by the same or different persons and regardless of where created or administered c this section shall not limit the right of a trustee acting in accordance with the applicable provisions of the governing instrument to divide or consolidate the trusts see state x code ann the trustees have obtained a court order dividing the master_trust assets equally between subtrust and subtrust the assets will be partitioned on a pro_rata basis taking into account the assets’ bases and holding periods after the division of the master_trust assets independent_trustee will remain the independent_trustee of both subtrust and subtrust trustee and trustee will be appointed to serve as co-trustees with independent_trustee of subtrust and trustee will continue to serve as the co-trustee with independent_trustee of subtrust the order also resolved the conflict between paragraphs 7-b and 7-f and construed the master_trust as providing that the apportionment required under paragraphs 7-a and 7-f will control the apportionment of subtrust and subtrust after the death of the last to die of child and child accordingly under the order on the death of the last to die of child and child subtrust will be apportioned into trust shares for the benefit of the descendants of child per stirpes and subtrust will be apportioned into trust shares for the benefit of descendants of child per stirpes in addition the court order construed the master_trust as providing that during the lives of child and child the independent_trustee has the discretion to distribute the net_income of each share to the beneficiaries of that share the court order also amended the master_trust consistent with this construction you have requested the following rulings the construction of the master_trust regarding the apportionment upon the death of the last to die of child and child between their descendants per plr-118199-99 stirpes will not cause the master_trust to become subject_to the generation- skipping transfer_tax the division of the assets of the master_trust between subtrust and subtrust will not cause the master_trust to lose its exempt status for generation-skipping_transfer_tax purposes following the division of the master_trust assets between subtrust and subtrust neither subtrust nor subtrust will be subject_to the generation- skipping transfer_tax the division of the master_trust assets between subtrust and subtrust will not constitute a taxable_termination taxable_distribution or a direct_skip to any beneficiary subject_to the generation-skipping_transfer_tax the division of the master_trust assets between subtrust and subtrust will not cause any trust_beneficiary to have made a transfer that constitutes a taxable_termination taxable_distribution or a direct_skip subject_to the generation- skipping transfer_tax and distributions from subtrust and subtrust will be exempt from generation-skipping_transfer_tax the division of the master_trust assets between subtrust and subtrust will not cause the interest of any trust_beneficiary to be includible in the beneficiary’s gross_estate for federal estate_tax purposes the division of the master_trust assets between subtrust and subtrust will not constitute a transfer by any beneficiary that will be subject_to the gift_tax under sec_2501 following the division of the master_trust assets between subtrust and subtrust subtrust and subtrust will each continue to be treated as a separate taxpayer under sec_643 the division of the master_trust assets between subtrust and subtrust will not result in the realization by any of the trusts of any income under sec_61 and specifically will not be considered to be a sale_or_other_disposition of property by the trusts which would result in the realization of any gain_or_loss under sec_1001 following the division of the master_trust assets between subtrust and plr-118199-99 subtrust each asset of subtrust and subtrust received from the master_trust by reason of the division will have the same basis it had when held by the master_trust following the division of the master_trust assets between subtrust and subtrust each asset of subtrust and subtrust received from the master_trust by reason of the division will have the same holding_period as the asset had when held by the master_trust following the division of the master_trust assets between subtrust and subtrust the resignation of trustee as individual co-trustee of subtrust and the appointment of trustee sec_2 as individual co-trustees of subtrust will not subject the master_trust subtrust subtrust or any beneficiary of those trusts to the generation-skipping_transfer_tax the appointment of trustee sec_2 as individual co-trustees of subtrust will not result in trustee sec_2 possessing a general_power_of_appointment within the meaning of sec_2514 or sec_2041 and the value of subtrust will not be includible in the gross_estate of either trustee sec_2 or under sec_2041 for federal estate_tax purposes ruling requests through and federal generation-skipping_transfer_tax consequences sec_2601 of the internal_revenue_code imposes a tax on every generation-skipping_transfer gst made after date a generation-skipping_transfer is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2612 provides that the term taxable_termination means a termination by death lapse of time release of a power or otherwise of an interest_in_property_held_in_trust where the property passes to a skip_person with respect to the transferor of the property sec_2612 provides that the term taxable_distribution means any distribution from a_trust to a skip_person other than a taxable_termination or a direct_skip under sec_2612 a direct_skip is a transfer subject_to federal estate or gift_tax made by a transferor to a skip_person sec_2613 defines a skip_person a sec_1 a natural_person who is plr-118199-99 assigned to a generation which is two or more generations below that of the transferor a_trust in which all the interests are held by skip persons or a_trust where after that transfer no trust distributions may be made to a non-skip_person under sec_26_2601-1 of the generation-skipping_transfer_tax regulations the gst tax does not apply to any generation-skipping_transfer under a_trust that was irrevocable on date however this exemption does not apply to additions actual or constructive that are made to the trust after date sec_26_2601-1 states that if an addition is made after date to a_trust which was irrevocable on date a pro_rata portion of subsequent distributions from and terminations of interests in property held in the trust is subject_to the gst tax provisions a modification of a_trust that is otherwise exempt for gst tax purposes will generally not result in a loss of its grandfathered exempt status if the modification does not change the quality value or timing of any powers beneficial interests rights or expectancies originally provided for under the terms of the trust in the present case the master_trust was irrevocable on date you have represented that no additions actual or constructive have been made to the trust after that date therefore unless the amendment to the master_trust is deemed an addition to the master_trust or the amendment changes the quality value or timing of the interests or powers provided for under the terms of the master_trust the master_trust will remain exempt from the gst tax the court order construed the master_trust and pursuant to that construction amended the terms of the master_trust regarding the apportionment of subtrust and subtrust after the death of the last to die of child and child the court order also divided the master_trust assets between subtrust and subtrust in addition the court order provides that trustee and trustee will be appointed to serve as co-trustees with independent_trustee of subtrust and trustee will continue to serve as the co-trustee with independent_trustee of subtrust under applicable state x law as set forth in cite the important plr-118199-99 consideration in the construction of the a instrument is to determine the intention of the settlor as evidenced by all the provisions of the instrument giving no portion any greater emphasis than any other in determining this the peculiar facts and circumstances are considered to determine what is this intention it is not necessarily so much the language that is used by the settlor as it is his or her evident intention that governs one clause in the instrument which might be in conflict another clause will not necessarily prevail over the other unless there is an evident and clear intention on the part of the maker that one clause should prevail over the other further state x courts have expressed a preference for interpreting an ambiguous instrument as providing for per stirpes rather than per capita distributions in the circumstances considered in those cases cite in this case based on a review of the instrument as a whole we conclude that the court’s construction of the inconsistent terms of paragraphs 7-b and 7-f of decedent’s will governing master_trust as providing for a per stirpes distribution of subtrust and subtrust on the death of the last to die of child and child is consistent with applicable state x law accordingly the construction and amendment of the master_trust pursuant to the court order will not constitute a change in the quality value or timing of any beneficial_interest provided for under the terms of master_trust the modification appointing trustee and trustee to serve with the independent_trustee with respect to subtrust is administrative in nature and does not confer any additional powers interests rights or expectancies upon the trustees or beneficiaries or change the quality value or timing of any of the existing powers interests rights or expectancies the division of the master_trust assets between subtrust for the benefit of child and his descendants and subtrust for the benefit of child and her descendants is authorized under the terms of decedent’s will after the division each subtrust will have substantive terms identical to those in the master_trust thus the parties beneficial interests in the subtrusts will not change we conclude that the division will not alter the quality value or timing of any powers or beneficial interests rights or expectancies originally provided for under the terms of the master_trust therefore based on the facts submitted and representations made we conclude that the construction and amendment of master_trust and the division of the master_trust assets will not be deemed an addition to master_trust subtrust or subtrust or a change in the quality value or timing of any beneficial_interest under the terms of master_trust subtrust or subtrust plr-118199-99 accordingly the terms of the master_trust as modified pursuant to the court order will not affect the gst status of the master_trust or subtrust or subtrust and will not result in a transfer of property that will subject the master_trust or subtrust or subtrust to the generation-skipping_transfer_tax imposed under sec_2601 in addition the division of the master_trust assets between subtrust and subtrust will not subject those trusts or any other trust created under their terms to the generation-skipping_transfer_tax likewise the amendment to master_trust and division of the master_trust assets will not constitute a taxable_termination taxable_distribution or a direct_skip to any beneficiary of the master_trust subtrust subtrust or any trust created thereunder that is subject_to the generation-skipping_transfer_tax ruling requests federal estate and gift_tax consequences sec_2001 imposes a tax on the transfer of a taxable_estate of a decedent who is a citizen or resident_of_the_united_states sec_2033 includes within the definition of a decedent’s gross_estate the value of all property in which the decedent held an interest at the time of the decedent’s death sec_2501 imposes a tax on the transfer of property by gift by an individual sec_2511 provides that the tax imposed by sec_2501 applies whether the transfer is in trust or otherwise whether the gift is direct or indirect and whether the property is real or personal tangible or intangible sec_2512 provides that if a gift is made in property the value thereof at the date of the gift will be considered the amount_of_the_gift sec_2512 states that where property is transferred for less than adequate_and_full_consideration in money or money’s worth the amount by which the value of the property exceeds the value of the consideration received shall be deemed a gift in this case as discussed above the court’s construction of the conflicting terms of the master_trust is consistent with applicable state law similarly as described above the division of the master_trust assets between subtrust and subtrust will not result in any change in the beneficial interests of any of the trust beneficiaries accordingly based on the facts submitted and the representations made the amendment of the master_trust and division of the master_trust assets will not cause any beneficiary of the master_trust subtrust subtrust or any plr-118199-99 trust created under the terms of those trusts to have made a taxable gift_for federal gift_tax purposes under sec_2501 likewise because there has been no change in the beneficial interests of the beneficiaries the amendment and division will not result in the inclusion under sec_2033 of any beneficiary’s interest in the beneficiary’s gross_estate for federal estate_tax purposes except to the extent that any interests may otherwise be includible ruling_request separate trust ruling sec_643 provides that for purposes of subchapter_j under regulations prescribed by the secretary two or more trusts shall be treated as one trust if such trusts have substantially the same grantor or grantors and substantially the same primary beneficiary or beneficiaries and a principal purpose of such trusts is the avoidance of the tax_imposed_by_chapter_1 for purposes of the preceding sentence a husband and wife shall be treated as one person while subtrust and subtrust have the same grantor they have different primary beneficiaries therefore based on the facts and representations submitted we conclude that subtrust and subtrust will be treated as separate trusts for federal_income_tax purposes under sec_643 and should continue to file separate federal fiduciary income_tax returns ruling requests through federal_income_tax consequences sec_61 provides that gross_income includes gains derived from dealings in property sec_1001 provides that the gain from the sale_or_other_disposition of property shall be the excess of the amount_realized therefrom over the adjusted_basis provided in sec_1011 for determining gain and the loss shall be the excess of the adjusted_basis over the amount_realized sec_1001 provides that except as otherwise provided in subtitle a the entire amount of gain_or_loss determined under sec_1001 on the sale_or_exchange of property shall be recognized sec_1_1001-1 of the income_tax regulations provides that generally the gain_or_loss realized from a conversion of property into cash or plr-118199-99 from an exchange of property for other_property differing materially either in_kind or extent is treated as income or as loss sustained revrul_69_486 1969_2_cb_159 holds that a non-pro rata distribution of trust corpus in_kind by mutual agreement of the beneficiaries is subject_to gain_or_loss recognition under sec_1001 in the revenue_ruling there was no provision in the trust instrument allowing the trustee to make non-pro rata distributions and local law did not authorize the trustee to make a non-pro rata distribution_of_property in_kind because neither the trust instrument nor local law authorized the trustee to make a non-pro rata distribution the beneficiaries were viewed as having an absolute right to a ratable in_kind distribution accordingly the revenue_ruling holds that the distribution was equivalent to a ratable distribution to the beneficiaries followed by an exchange of property between the beneficiaries that was subject_to sec_1001 revrul_56_437 1956_2_cb_507 holds that the severance of a joint_tenancy in stock under a partition action provided for by state law to compel issuance of separate stock certificates is not a sale_or_exchange under applicable state law the right of the owners of the property to pursue such a result is an inherent ownership right each had in the property involved an exchange of property results in the realization of gain_or_loss under sec_1001 if the properties exchanged are materially different 499_us_554 there is a material difference when the exchanged properties embody legal entitlements different in_kind or extent or if they confer different rights and powers u s pincite you have represented that the division of the master_trust assets into equal shares in the two trusts will be pro_rata and take into account the assets' bases and holding periods thus in this case unlike the situation in revrul_69_486 the formal division of assets in the master_trust will be pro_rata with each trust receiving its ratable portion of each asset of the master_trust a pro_rata division of jointly owned property is not a sale_or_other_disposition of property where as here the co-owners of the joint property sever their joint_interests but do not acquire new or additional interests as a result the independent_trustee joined by all interested persons has sought judicial construction and amendment of the trust provisions to more accurately reflect the intentions of decedent the appropriate local court has granted the relief sought by the independent_trustee including division of the assets plr-118199-99 between separate trusts assuming that any distribution of the assets will be pro_rata taking into account the basis and holding_period of the assets the division does not constitute a sale_or_other_disposition for purposes of sec_1001 the interests of the beneficiaries after the construction amendment and division will be the same as they were before the exchanged properties are not materially different because they do not embody legal entitlements that are different in_kind or confer different rights and powers we conclude that the division of the assets of the master_trust between subtrust and subtrust will not result in the realization by any of the trusts of any income under sec_61 of the code and specifically will not be considered to be a sale_or_other_disposition of property by the trusts that would result in the recognition of any gain_or_loss under sec_1001 sec_1223 provides that in determining the period for which the taxpayer has held property however acquired there shall be included in the period for which the property was held by any other person if under chapter such property has for the purpose of determining gain_or_loss from a sale_or_exchange the same basis in whole or in part in the taxpayer’s hands as it would have in the hands of such other person if the assets will have the same basis after the division as before the division under sec_1015 we conclude that following the proposed division of the assets of the master_trust between subtrust and subtrust each asset of subtrust and subtrust received from the master_trust by reason of the division will have the same holding_period as the asset had when held by the master_trust ruling_request power_of_appointment ruling sec_2041 provides that the gross_estate includes the value of any property with respect to which the decedent has a general_power_of_appointment created after date or with respect to which the decedent has at any time exercised or released a general_power_of_appointment by a transfer that had the property been owned by the decedent would cause the property to be includible in the decedent’s gross_estate under sec_2035 through sec_2041 defines a general_power_of_appointment as a power that is exercisable in favor of the individual possessing the power his estate his creditors or the creditors of his estate an exception is provided under plr-118199-99 sec_2041 for powers held by an individual that are limited by an ascertainable_standard relating to health education support or maintenance of the holder of the power sec_2514 provides that the exercise or release of a general_power_of_appointment created after date is deemed to be a transfer of property by the individual possessing the power for gift_tax purposes the definition of a general_power_of_appointment under sec_2514 is generally the same as provided in sec_2041 sec_20_2041-1 of the estate_tax regulations states that the mere power of management investment custody of assets or the power to allocate receipts and disbursements as between income and principal exercisable in a fiduciary capacity whereby the holder has no power to enlarge or shift any of the beneficial interests therein except as an incidental consequence of the discharge of such fiduciary duties is not a general_power_of_appointment sec_25_2514-1 of the gift_tax regulations contains a similar provision applicable for gift_tax purposes sec_25_2511-1 states that a transfer by a trustee of trust property in which he has no beneficial_interest does not constitute a gift by the trustee however if the trustee has a beneficial_interest in trust property sec_25 g provides that a transfer of property by the trustee is not a taxable transfer if it is made pursuant to a fiduciary power the exercise or nonexercise of which is limited by a reasonably fixed_or_ascertainable_standard which is set forth in the trust instrument in this case discretionary distributions may be made from corpus of any trust created under decedent’s will for the proper support maintenance and comfort of any beneficiary these discretionary distributions of corpus may only be made by the independent_trustee trustee and trustee may not participate in any decision to make these discretionary distributions thus although trustee sec_2 and will be trustees over a_trust in which they have a beneficial_interest trustee sec_2 and may not make discretionary distributions from subtrust to benefit themselves either directly or indirectly accordingly the appointment of trustee and trustee as individual co- trustees of subtrust will not result in trustee and trustee possessing a general_power_of_appointment within the meaning of sec_2514 or sec_2041 and the value of subtrust will not be includible in the gross_estate of either trustee or plr-118199-99 under sec_2041 for federal estate_tax purposes this ruling is directed only to the taxpayer s requesting it sec_6110 provides that it may not be used or cited as precedent 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 the appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as specifically ruled above no opinion is expressed as to the federal tax consequences of the facts described above under the cited provisions or any other provisions of the code or regulations a copy of this letter should be attached to any gift estate or generation- skipping transfer_tax returns that you may file relating to these matters copy for passthroughs and special industries sincerely yours george masnik chief branch office of the associate chief_counsel enclosure copy of sec_6110 purposes cc


number release date id office uilc cca-111342-09 ---------- from -------------------- sent monday date pm to -------------------- cc ---------------------------- subject t by e and revocable_trust hi ----- i didn't know of a case offhand i asked one of the ---- folks if they knew of any but haven't heard back yet still i agree with you even though for tax purposes a revocable_trust doesn't really change anything it is still regarded for state purposes as a separate_entity right it is considered a transfer it probably boils down to a question of state law my state maryland has t by e property when a married couple sells property the proceeds are considered t by e at least for a time depending upon what happens to them in md you can also hold personal_property as t by e so if they put it in a t by e bank account it is still t by e i am out tomorrow try running it by someone in ---- ------------worked on craft try her good luck --- ----------------------------------- -------------------


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 plr-130196-09 date date --------------------------------------------------------------------------------------------------- x ----------------------------------------- country date -------- ---------------------- dear -------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting that the service grant x an extension of time under sec_301_9100-3 of the procedure and administration regulations to make an entity classification election the information submitted states that x was formed under the laws of country x represents that x is a foreign_entity eligible to be treated as a partnership effective date however x failed to timely file a form_8832 entity classification election 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 a business_entity is any entity recognized for federal tax purposes that is not properly classified as a_trust under sec_301_7701-4 or otherwise subject_to special treatment under the internal_revenue_code sec_301_7701-3 provides guidance on the classification of a foreign_entity for federal_income_tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if the foreign eligible_entity has more than one owner it may elect to be treated as a partnership pursuant to the rules in plr-130196-09 sec_301_7701-3 sec_301_7701-3 provides that to elect to be classified other than as provided in sec_301_7701-3 an eligible_entity must file form_8832 with the designated service_center and that an entity classification election must be filed on form_8832 and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form 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 except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as 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_9100-1 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 extensions 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 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 the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government based solely on the information submitted and representations made we conclude that the requirements of 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 treated as a partnership effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose except as expressly provided herein we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-130196-09 in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representatives sincerely curt g wilson associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number --------------- ------------------- ----------------- ------------------------------------------- -------------------------- --------------------------------- in re --------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------ id no ------------- telephone number --------------------- refer reply to cc intl b06 plr-136346-11 date date legend taxpayer state company individual attorney law firm accountant accounting firm date date month year dear -------------- -------------------------------------- ------------- --------------- --------------- --------------------- ------------------------------------------------------ --------------- ----------------------------------- -------------------------- ------------------- ----------------- ------- this responds to a letter dated date supplemented by letters dated date and date submitted by law firm requesting that the internal_revenue_service service grant taxpayer an extension of time under sec_301_9100-1 and sec_301_9100-3 to file form 4876-a election to be treated as an interest_charge_disc for taxpayer’s first taxable_year the rulings contained in this letter are based upon information and representations submitted by taxpayer and law firm and accompanied by penalty of perjury statements executed by appropriate parties this office has not verified any of the material submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process plr-136346-11 facts taxpayer was formed to serve as an interest charge domestic_international_sales_corporation ic-disc acting as a commission agent with respect to company’s sales of export_property in late month individual an officer of company met with accountant from accounting firm and attorney from law firm to discuss the tax benefits of and process for forming an ic-disc law firm regularly advises clients on the formation of ic-discs and on its clients’ behalf files form 4876-a as a result of law firm’s advice and experience in ic-disc formation company engaged law firm to prepare certain documentation for the formation of taxpayer including the form 4876-a law firm prepared such documentation which was then forwarded to individual who obtained signatures on the documentation as necessary taxpayer was incorporated in state on date believing all the requirements to conduct business and to be treated as an ic-disc for its first taxable_year were satisfied taxpayer began acting as an ic-disc as of its date of formation accountant also believing all the requirements for taxpayer to be treated as an ic-disc were satisfied timely filed taxpayer’s form 1120-ic-disc interest charge domestic_international_sales_corporation return for the calendar_year year on or about date taxpayer received a letter from the service indicating that the service has no record of taxpayer’s filing form 4876-a based on a review of the files of both law firm and accountant taxpayer confirmed that the previously prepared form 4876-a had not been filed with the service by that time the deadline for filing a form 4876-a effective for taxpayer’s first taxable_year had passed taxpayer has requested a ruling that grants an extension of time of days from the date of the ruling letter to file form 4876-a and that such filing will be treated as a timely election to be treated as an ic-disc for taxpayer’s first taxable_year beginning date law and analysis sec_992 provides that an election by a corporation to be treated as a disc1 shall be made by such corporation for a taxable_year at any time during the 90-day period immediately preceding the beginning of the taxable_year except that the secretary may give his consent to the making of an election at such other times as he may designate temp sec_1_921-1t provides in part that a corporation electing ic- disc status must file form 4876-a a corporation electing to be treated as an ic-disc as used in this letter the terms ic-disc and disc have the same meaning plr-136346-11 for its first taxable_year shall make its election within days after the beginning of that year sec_301_9100-1 provides in part that the commissioner in exercising the commissioner’s discretion 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 under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that a regulatory election is 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 for this purpose an election includes an application_for relief in respect of tax 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 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 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 that the grant of relief will not prejudice the interests of the government in the present situation the election described in temp sec_1_921-1t is a regulatory election as defined in sec_301_9100-1 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant taxpayer an extension of time provided that taxpayer satisfies the standards for relief set forth in sec_301_9100-3 based on the facts and representations submitted with taxpayer’s ruling_request we conclude that taxpayer satisfies sec_301_9100-3 accordingly taxpayer is granted an extension of time of days from the date of this ruling letter to file form 4876-a as required by temp sec_1_921-1t such filing will be treated as a timely election to be treated as an ic-disc for taxpayer’s first taxable_year the granting of an extension of time to make the election is not a determination that taxpayer is otherwise eligible to make the election or to claim disc status or benefits the granting of an extension in this ruling letter is not a determination that taxpayer is otherwise eligible to make the election or to claim ic-disc status or benefits see sec_301_9100-1 a copy of this letter_ruling should be filed with the form 4876-a 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 except as expressly provided herein this ruling neither expresses nor implies any opinion concerning the tax plr-136346-11 consequences of any aspect of any transaction or item discussed or referenced in this letter pursuant to a power_of_attorney on file with this office a copy of this letter is being furnished to your authorized representative sincerely _____________________________________ christopher j bello chief branch office of associate chief_counsel international


internal_revenue_service p o box cincinnati oh release number release date date date department of the treasury employer_identification_number contact person - id number contact telephone number vil legend b city c city2 d city f school g school x dollar amount y dollar amount z dollar amount dear you asked for advance approval of your scholarship grant procedures under internal_revenue_code sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax you requested approval of your scholarship program to fund the education of certain qualifying students our determination we approved your procedures for awarding scholarships based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding scholarships meet the requirements of code sec_4945 as a result expenditures you make under these procedures will not be taxable also awards made under these procedures are scholarship or fellowship grants and are not taxable to the recipients if they use them for qualified_tuition_and_related_expenses subject_to the limitations provide in code sec_117 description of your request you will provide scholarship funding to high school students graduating from f and g you will also provide scholarships to adults wanting to go back to school to obtain a degree take classes to advance their work knowledge or learn a new trade letter catalog number 58263t the purpose of the high school scholarships is to encourage students to experience post- secondary education by defraying the cost of college university or trade school expenses you will fund up to four scholarships at x dollars each year for four years for a total award of y dollars students must maintain a grade-point-average gpa and payments are made directly to the university college or trade school the purpose of the adult scholarship is to promote lifelong learning and career advancement adult scholarship recipients must be over years of age scholarship awards are up to z dollars per year for multiple years dependent on the time it takes to finish a degree or training you will fund up to ten students per year you will advertise the scholarship application procedure and deadlines by placing ads in local papers sending out news releases to the media posting the information on your website and communicating through the local high schools high school students eligible to apply for scholarship awards must live in your service area of b c and d townships or any of the cities or villages therein and recipients must attend f or c high school adult scholarship recipients must be or older and a full time resident of the aforementioned service area you will inform students of their award and will give the recipients an unmet needs form this form is filled out by the financial aid office of the recipient's college or university and returned to you prior to each semester all other sources of funding are applied first before applying your scholarship you will pay the funds directly to the university at the end of each semester the student must provide you with their official grades ensuring they have maintained an overall gpa of as well as their class schedule for the upcoming semester prior to receiving additional scholarship funding for the subsequent semesters if a student's overall gpa falls below a they will no longer be eligible for future scholarship funding in the case of adult scholarship recipients you anticipate that many recipients will be attending job training or educational programming that may be graded as pass fail you will continue funding adult scholarship recipients as long as they are getting passing grades you will use a committee made up of three board members and your executive director who review all applications grade each applicant using a rubric and make recommendations to the entire board_of directors who then vote on the scholarship recipients the committee judges students on academics community service prepared essays and financial need and adults on need the ability to improve their job prepared essays community service and a biography while the likelihood of a relative or member of the selection committee applying for scholarship funding its extremely slim if it should happen you would ask that person to abstain from serving on the committee or voting on the scholarship awards during that scholarship award cycle you will arrange to receive and review grantee reports annually and upon completion of the purpose for which the grant was awarded and investigate diversions of funds from letter catalog number 58263t their intended purposes you will take all reasonable and appropriate steps to recover diverted funds ensure other funds held are used for their intended purposes and withhold further payments until you obtain assurances that future diversions will not occur and precautions have been taken to prevent future diversions from occurring you will maintain all records relating to individual grants including information obtained to evaluate grantees identify whether a grantee is a disqualified_person establish the amount and purpose of each grant and establish that you undertook the supervision and investigation of grants basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure e e e e the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant the grant is a scholarship or fellowship subject_to the provisions of code sec_117 the grant is to be used for study at an educational_organization described in code sec_170 a ii other conditions that apply to this determination e e e e e this determination only covers the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don’t differ significantly from those described in your original request this determination applies only to you it may not be cited as a precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes to your program to the cincinnati office of exempt_organizations at internal_revenue_service exempt_organizations determinations p o box cincinnati oh you cannot award grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives all funds distributed to individuals must be made on a charitable basis and further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 b letter catalog number 58263t e you should keep adequate_records and case histories so that you can substantiate your grant distributions with the irs if necessary please keep a copy of this letter in your records if you have questions please contact the person listed at the top of this letter sincerely director exempt_organizations letter catalog number 58263t


id office uilc cca_2010022408482637 ---------- number release date from ------------------- sent wednesday date am to ----------------- cc -------------------------------- subject re tefra sec_465 at risk limitations do not apply to partnerships 99_tc_298 sec_704 limiting losses to amount of basis does agents sometimes conflate or confuse the two terms but they are separate concepts with only basis limitations applying at the partnership level