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-117066-18 date date legend x ----------------------- ------------------------------------- state --------------------- date ------------------------ dear --------------------------------------------- this letter responds to your request dated date and subsequent correspondence submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code code facts x was incorporated under the laws of state on date it is represented that x intended to be an s_corporation effective date since date x has filed tax returns consistent with s_corporation treatment however x’s form_2553 election by a small_business_corporation was not timely filed x requests a ruling under sec_1362 that its sec_1362 election will be treated as timely made for its tax_year that began on date law and analysis plr-117066-18 sec_1361 provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1362 generally provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides when an s_corporation_election will be effective generally if an s_corporation_election is made within the first two and one half months of a corporation's taxable_year then that corporation will be treated as an s_corporation beginning the year in which the election is made sec_1362 provides that if an s_corporation_election is made after the first two and one half months of a corporation's taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making the election or no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for such taxable_year conclusions based upon the facts submitted and representations made we conclude that x has established reasonable_cause for not making a timely election and is eligible for relief under sec_1362 accordingly x’s s_corporation_election will be treated as timely made for its taxable_year that began on date this ruling is contingent on x filing form_2553 election by a small_business_corporation with an effective date of date with the appropriate service_center within days from the date of this ruling a copy of this letter should be attached to the form_2553 filed with the service_center except as specifically set forth above we express or imply no opinion concerning the federal tax consequences of the facts described above under any other provision of the code specifically we express or imply no opinion concerning whether x otherwise qualifies as an s_corporation for federal tax purposes this rule is directed only to the taxpayer who requested it according to sec_6110 of the code this ruling may not be used or cited as precedent plr-117066-18 this ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in the support of the ruling_request it is subject_to verification on examination sincerely associate chief_counsel passthroughs special industries wendy l kribell by wendy l kribell assistant to the branch chief branch passthroughs special industries enclosures copy of letter copy of letter for sec_6110 purposes cc


internal_revenue_service number info release date index number ------------------------------- --------------------- -------------------------------- --------------------------------- department of the treasury washington dc person to contact --------------------- id no ------------ telephone number --------------------- refer reply to cc psi b1 - genin-128282-04 date aug taxpayer dear ------------- ------------------------------ this responds to your letter dated date in which it was requested that we recognize taxpayer’s election to be an s_corporation effective for the tax_year a corporation which meets the definition of a small_business_corporation under sec_1362 of the internal_revenue_code may elect to be treated as an s_corporation in order for an s_corporation_election to be effective for the taxable_year in which it is made it must be made within the first two and one-half months of the corporation’s taxable_year sec_1362 if an s election is made after that time then the corporation will not be treated as an s_corporation until the taxable_year following the one in which the s election was filed sec_1362 an election made after the first two and one-half months of the taxable_year in which it is intended to be effective may be treated as effective if the secretary determines that there was reasonable_cause for the corporation’s failure to make a timely election sec_1362 based on the information contained in your recent correspondence you may be eligible to obtain relief under the provisions of revproc_2003_43 2003_23_irb_998 attached revproc_2003_43 provides relief for certain entities that fail to qualify for s_corporation status solely because of the failure_to_file an s_corporation_election when less than months have passed since the original due_date of the election and the entity has reasonable_cause for failing to make a timely election please carefully review revproc_2003_43 to determine if you qualify for relief under its provisions if you determine that you are eligible for relief under revproc_2003_43 the application_for relief should be filed with the service_center to which you would send your s_corporation_election if you do not qualify for relief under revproc_2003_43 relief for your late s_corporation may be obtained through a letter_ruling announcement copy enclosed provides guidance on seeking relief for late s_corporation elections generally to request relief for a late s_corporation_election you must request a private_letter_ruling from the national_office the procedures for requesting a private_letter_ruling are set out in revproc_2004_1 copy enclosed in addition revproc_2004_1 requires taxpayers to submit a user_fee along with their ruling_request the standard user_fee for a private_letter_ruling is dollar_figure however taxpayers with gross_income of less than dollar_figure million on their tax_return for the most recent 12-month taxable_year qualify for a reduced user_fee in the amount of dollar_figure if you qualify for the reduced fee you must include a statement certifying your gross_income for the last 12-month taxable_year otherwise the higher fee will apply if you decide to submit a formal request for a private_letter_ruling please review appendix b of revproc_2004_1 and be certain to include all required procedural statements also include the proper user_fee and any documents that substantiate your intent to be an s_corporation from inception please refer your request to our office by adding the following to the address attn cc pa lpd du p o box ben franklin station washington dc direct to cc psi room enclosures announcement revproc_2003_43 revproc_2004_1 please contact ----------------------at --------------------- not a toll-free call we hope that this information is helpful to you if you have additional questions s dianna k miosi sincerely dianna k miosi chief branch office of the associate chief_counsel passthroughs and special industries


internal_revenue_service number release date index number -------------------------------------- --------------------------------- ---------------------------- --------------------------- department of the treasury washington dc third party communication date of communication month dd yyyy person to contact ----------------- id no ----------- telephone number ---------------------- refer reply to cc psi plr-135441-18 date july legend x state d1 ----------------------------------------------- -------------------------- -------------- ---------------------- dear --------------- this responds to a letter dated date submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts according to the information submitted x was incorporated under the laws of state x intended to be treated as an s_corporation for federal tax purposes effective d1 but the proper election was not timely filed law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective sec_1362 provides that if an s election is made within the first two and one-half months of a corporation’s taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made if the election is made after the plr-135441-18 first two and one-half months of a corporation’s taxable_year then the corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if no election is made pursuant to sec_1362 or if made the election is made after the date prescribed for making such an election and the secretary determines there was reasonable_cause for the failure to timely make the election then the secretary may treat such election as timely made for such taxable_year and effective as of the first day of that year x did not file a timely election to be treated as an s_corporation under sec_1362 effective d1 x has however established reasonable_cause for not making a timely election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and representations made and provided that x otherwise qualifies as a subchapter_s_corporation we conclude that x will be recognized as an s_corporation effective d1 if within days from the date of this letter x submits a properly completed form_2553 with a copy of this letter attached to the appropriate service_center 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 specifically no opinion is expressed or implied concerning whether x otherwise qualifies as an s_corporation for federal tax purposes 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 sincerely joy c spies joy c spies senior technician reviewer branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes cc


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 b03 plr-123925-04 date date -------------------------------------------- -------------------------------------------- ------------------------------ ---------------------------- x ----------------------------------------- y ----------------------------------------- a ----------------------------------------- b state country d1 d2 d3 dear ----------------- ---------------------- ---------------------- --------------------- ------------ --------- this letter responds to a letter dated date written on behalf of x requesting a ruling under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations that x be granted an extension of time to file an election to be classified as an association_taxable_as_a_corporation under sec_301_7701-3 facts plr-123925-04 according to the information submitted x was formed on or about d1 as a limited_liability_company under the laws of state x owned percent of a a u s_corporation and percent of b a country corporation as of close of business on d2 x and its two subsidiaries were acquired by a consolidated_group of corporations whose common parent is y y intended x to be classified as an association_taxable_as_a_corporation for federal tax purposes however due to inadvertence x failed to file timely form_8832 entity classification election law and analysis 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 as provided in sec_301_7701-3 sec_301_7701-3 provides that unless it elects otherwise a domestic eligible_entity is i a partnership if it has two or more members or ii disregarded as an entity separate from its owner if it has a single owner sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided in sec_301_7701-3 by filing a form_8832 with the service_center designated on the form_8832 sec_301_7701-3 provides that an election made under sec_301_9100-1 provides that the commissioner has discretion to grant a sec_301_7701-3 will be effective on the date specified by the entity on form_8832 or on the date filed if no date is specified on the election form the effective date specified on form_8832 cannot be more than days prior to the date on which the election is filed and cannot be more than months after the date on which the election is filed reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register making certain elections 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 sec_301_9100-2 provides the rules governing automatic extensions of time for sec_301_9100-3 sets forth the standards the commissioner will use to plr-123925-04 commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government conclusion based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file form_8832 with the appropriate service_center and elect to be classified as an association_taxable_as_a_corporation for federal tax purposes effective d3 a copy of this letter should be attached to the form_8832 except as specifically set forth above no opinion is expressed or implied concerning the federal tax consequences of the transaction described above under any other provision of the code specifically no opinion is expressed or implied as to whether x is otherwise eligible to make the election this ruling is directed only to the taxpayer requesting it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to x s authorized representatives sincerely heather c maloy associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number --------------------------------------- ------------------------------------------------------ ---------- -------------------------------- --------------------------------------- ------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------- id no ------------- telephone number --------------------- refer reply to cc psi plr-136969-09 date november legend trust -------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- ------------------------- date ------------------------- grantor -------------------------------------------------------------------------------- original trust ------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- beneficiary spouse bank date trust -------------------------------------------------------------------- date grantor original trust ------------------------------------------------------------------------------------------------------------ -------------------------------------------------------------------- grantor 1’s father individual individual ----------------------- ------------------------- ------------------------------------------------------ ------------------------- --------------------------------------------------------------------- -------------------------- --------------------------------- -------------------------------------------------------------------------------- --------------------------- --------------------------- ------------------------------- dear ---------------- this responds to your authorized representative’s letter dated date and subsequent correspondence in which you request rulings concerning the generation- skipping transfer gst tax consequences of proposed distributions from two trusts to four new trusts plr-136969-09 trust on date before date grantor created original trust for the primary benefit of grantor 1’s son beneficiary and beneficiary’s children the provisions of original trust are as follows article third provides that the net_income of the trust in the sole and absolute discretion of the trustee and without any requirement to observe any precept or rule_of equality may be paid to or for the benefit of any one or more or none of the class of persons consisting of grantor 1’s spouse and the children and grandchildren of grantor which includes beneficiary and beneficiary’s children and two other individuals who are deceased any net_income not so paid or applied shall be accumulated and added to the trust estate article fourth provides that at any time during the term of the trust the trustee may in its sole and absolute discretion pay over all or part of the trust estate to or for the benefit of grantor 1’s spouse or beneficiary or the children of beneficiary article fifth provides that the trust shall terminate when the youngest of grantor 1’s children living on date shall have attained years of age or when grantor 1’s spouse shall have died whichever last occurs article sixth provides that upon termination the trustee shall pay and distribute the trust estate and any accumulated income to beneficiary if living if beneficiary is not then living the trustee shall pay and distribute the trust estate and any accumulated income to the child or children of beneficiary in equal shares but if there are none then to grantor 1’s issue then living per stirpes original trust was irrevocable on date it is represented that no additions were made to the trust since its creation on date the trustee of the trust is bank on date pursuant to article fourth of original trust bank as trustee exercised its power to transfer trust principal of original trust to trust it is represented that but for this distribution from original trust to trust no contributions or additions have been made to trust the provisions of trust are as follows article third provides that during the term of the trust the net_income or all of it in the sole and absolute discretion of the trustee and without any requirement to observe any precept or rule_of equality may be paid to or for the benefit of any one or more of the class of persons consisting of beneficiary and his children any net_income not so paid over or applied shall be accumulated and added to the trust estate plr-136969-09 article fourth provides that at any time during the term of the trust the trustee may in the exercise of sole and absolute discretion pay over all or part of the trust estate to or for the benefit of beneficiary or the children of beneficiary article sixth provides that the trust shall terminate when the youngest of grantor 1’s children living on date shall have attained years of age or when grantor 1’s spouse shall have died whichever last occurs article seventh provides that upon termination the trustee shall pay and distribute the trust estate and any accumulated income to beneficiary if living if beneficiary is not then living the trustee shall pay and distribute the trust estate and any accumulated income to the then living children of beneficiary in equal shares or if no child of beneficiary is then living to the then living descendants of grantor per stirpes trust on date before date grantor created original trust for the primary benefit of grantor 2’s grandson beneficiary and beneficiary’s children the provisions of original trust are as follows article second paragraph c provides that following the death of grantor and during the balance of the term of the trust the trustee shall distribute the net_income of the trust or apply the same for the benefit of all or any one or more or none of the class of persons consisting of grantor grantor 1’s spouse grantor 1’s children and grandchildren which includes beneficiary and beneficiary’s children in such proportions whether equal or unequal and even if all the net_income shall be distributed to one person as the trustee shall determine in its absolute discretion any net_income not so paid or applied shall be accumulated and added to the trust estate article third provides that the trust shall terminate upon the death of the survivor of grantor 1’s spouse or when beneficiary reache sec_30 years of age whichever last occurs upon termination the trustee shall distribute the trust estate to beneficiary if then living but if not to beneficiary’s then living lineal_descendants per stirpes if beneficiary has no living lineal_descendants the trustee shall distribute the trust estate to the then living lineal_descendants of grantor per stirpes and if there are none to the then living lineal_descendants of individual per stirpes article fourth provides that at any time after the death of the survivor of grantor and grantor 1’s father during the term of the trust the trustee may in its sole discretion pay over all or any part of the trust estate to or for the benefit of any one or more of the class of persons to whom the income from the trust estate shall or may then be paid plr-136969-09 original trust was irrevocable on date it is represented that no additions were made to the trust since its creation on date the trustee of the trust is bank on date pursuant to article fourth of original trust bank as trustee exercised its power to transfer trust principal of original trust to trust it is represented that but for this distribution from original trust to trust no contributions or additions have been made to trust the provisions of trust are as follows article second provides that the trustee shall distribute the net_income of the trust to or apply the same for the benefit of all or any one or more of the class of persons consisting of beneficiary and the beneficiary’s children in such proportions whether equal or unequal and even if all the net_income shall be distributed to one person as the trustee may determine in its sole and absolute discretion any net_income not so paid or applied shall be accumulated and added to the trust estate article third provides that the trust shall terminate upon the death of grantor 1’s spouse or when beneficiary reache sec_30 years of age whichever last occurs upon termination the trustee shall distribute the trust estate to beneficiary if then living or if not then living to beneficiary’s then living lineal_descendants per stirpes if beneficiary has no living lineal_descendants the trustee shall distribute the trust estate to the then living descendants of grantor per stirpes or if there are none to the then living lineal_descendants of individual per stirpes article fourth provides that the trustee may in its sole and absolute discretion pay over all or any part of the trust estate to or for the benefit of any one or more of the class of persons to whom the income from the trust estate shall or may then be paid child trusts grantor and grantor 1’s father are deceased beneficiary is over the age of and grantor 1’s spouse is still living_trust and trust will not terminate until grantor 1’s spouse dies bank as the trustee of trust and trust proposes to distribute trust and trust assets to four separate trusts one for the benefit of each of beneficiary’s four children child trusts the provisions of the proposed child trusts are as follows article third provides that the trustee shall pay over or apply the net_income and principal thereof to such extent if any including the whole thereof in such manner and at such time or times as the trustee in the exercise of absolute discretion may deem advisable to or for the benefit of the beneficiary a child of the beneficiary during the beneficiary’s life any plr-136969-09 net_income not so paid over or applied shall be accumulated and added to the principal of the trust estate at least annually and thereafter shall be held administered and disposed of as a part article fourth provides that upon the death of the beneficiary the principal of the trust estate as it is constituted and any net_income then remaining in the hands of the trustee shall be transferred conveyed and paid over to such person or persons or organization or organizations including the beneficiary’s estate the creditors of the beneficiary or the creditors of the beneficiary’s estate to such an extent in such amounts or proportions and in such lawful interests or estates whether absolute or in trust as the beneficiary may by written instrument executed and acknowledged by the beneficiary during the beneficiary’s life and delivered to the trustee or by the beneficiary’s last will and testament appoint by a specific reference to this power if the power_of_appointment is for any reason not effectively exercised in whole or in part by the beneficiary the principal of the trust as it is then constituted and any net_income then remaining in the hands of the trustee to the extent not effectively appointed shall upon the beneficiary’s death be transferred conveyed and paid over to the then living descendants of the beneficiary per stirpes or if no such descendant is then living to the then living descendants of beneficiary per stirpes or if none to the then living descendants of grantor per stirpes article fifth provides that if not sooner terminated child trust shall terminate upon the twenty-first anniversary of the death of the last to die of the descendants of grantor and the descendants of individual who were in being on date upon termination the principal and any accrued accumulated and undistributed_income shall be transferred conveyed and paid over to the beneficiary currently eligible to receive the income of such trust you are requesting the following rulings the proposed distributions from trust to the child trusts and any future distributions from a child trust of property which originated from trust to the beneficiary of that child trust will not be subject_to gst tax the proposed distributions from trust to the child trusts and any future distributions from a child trust of property which originated from trust to the beneficiary of that child trust will not be subject_to gst tax sec_2601 of the internal_revenue_code imposes a tax on every generation- skipping transfer which is defined under sec_2611 as a taxable_distribution a taxable_termination or a direct_skip under of the tax_reform_act_of_1986 the act gst tax is generally applicable to generation-skipping transfers made after date however plr-136969-09 under b a of the act and sec_26_2601-1 of the generation-skipping_transfer_tax regulations the tax does not apply to a transfer under a_trust that was irrevocable on date except to the extent the transfer is made out of corpus added to the trust by an actual or constructive_addition after date sec_26_2601-1 provides rules for determining when a modification judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the generation-skipping_transfer_tax under sec_26_2601-1 will not cause the trust to lose its exempt status these rules are applicable only for purposes of determining whether an exempt trust retains exempt status for generation-skipping_transfer_tax purposes the rules do not apply in determining for example whether the transaction results in a gift subject_to gift_tax or may cause the trust to be included in the gross_estate of a beneficiary or may result in the realization of capital_gain for purposes of sec_1001 under sec_26_2601-1 the distribution of trust principal from an exempt trust to a new trust will not cause the new trust to be subject_to the provisions of chapter if the terms of the governing instrument of the exempt trust authorizes distributions to the new trust without the consent or approval of any beneficiary or court and the terms of the governing instrument of the new trust do not extend the time for vesting of any beneficial_interest in the trust in a manner that may postpone or suspend the vesting absolute ownership or power of alienation of an interest in property for a period measured from the date the original trust became irrevocable extending beyond any life in being at the date the original trust became irrevocable plus a period of years plus if necessary a reasonable period of gestation sec_26_2601-1 example illustrates a situation in which trust that is otherwise exempt from the gst tax authorizes the trustee to distribute income and principal at the trustee's discretion for the benefit of a a's spouse and a's issue at the time trust was established a had two children b and c a corporate fiduciary is trustee and has the discretion to distribute all or part of the income to one or more of a group consisting of a a's spouse or a's issue the trustee is also authorized to distribute all or part of the principal to one or more trusts for the benefit of a a's spouse or a's issue any trust established must terminate years after the death of the last child of a to die who was alive at the time the trust was executed trust will terminate on the death of a at which time the remaining principal will be distributed to a's issue per stirpes the terms of trust authorize the trustee to make the distribution to a new trust without the consent or approval of any beneficiary or court in the trustee distributed part of trust's principal to a new trust for the benefit of b and c and their issue the new trust will terminate years after the death of the survivor of b and c at which time the trust principal will be distributed to the issue of b and c per stirpes the example concludes that under the facts presented the terms of the new trust do not extend the time for vesting of any beneficial_interest in a manner that may postpone plr-136969-09 or suspend the vesting absolute ownership or power of alienation of any interest in property for a period measured from the date of creation of trust extending beyond any life in being at the date of creation of trust plus a period of years plus if necessary a reasonable period of gestation therefore neither trust nor the new trust will be subject_to the provisions of chapter in the present case bank as the trustee for trust and trust is authorized under article fourth of trust and trust to distribute any part or all of the trust estate to or for the benefit of beneficiary or his children trustee proposes to distribute trust and trust assets to four child trusts created for each child of beneficiary moreover each beneficiary of a child trust will have a testamentary general_power_of_appointment over the trust which will cause the trust to be includible in such child’s estate at the child’s death under sec_2041 accordingly each beneficiary will be treated as the transferor of the trust corpus for gst tax purposes under sec_2652 under the circumstances in this case the proposed trust and trust distributions to a child trust will not extend the time for vesting of any beneficial_interest in the trust in a manner that may postpone or suspend the vesting absolute ownership or power of alienation of an interest in property for a period measured from the date the original trust became irrevocable extending beyond any life in being at the date the original trust became irrevocable plus a period of years plus if necessary a reasonable period of gestation therefore based on the facts submitted and the representations made we conclude that the proposed distributions from trust to the child trusts and any future distributions from a child trust of property which originated from trust to the beneficiary of that child trust will not be subject_to gst tax we also conclude that the proposed distributions from trust to the child trusts and any future distributions from a child trust of property which originated from trust to the beneficiary of that child trust will not be subject_to gst tax in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative 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 plr-136969-09 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 sincerely lorraine e gardner senior counsel branch passthroughs special industries enclosures copy for sec_6110 purposes copy of this letter


id office uilc cca-310110-09 -------------- number release date from ------------------- sent mon pm to -------------------- cc --------------------------------------------------------------------------------------------------------------------------- ------------------------- subject re question re sol extension for sec_1446 withholding a form 872-i for a partnership signed by its manager under state law is fine its tmp is not necessarily a manager under state law authorized to sign if the partnership is an llc - the tmp does not always have to be such a manager for llc's so the validity of the tmp signature under these facts depends on its status as a manager under state law authorized to bind the partnership i can't tell if this is the question that you are asking however you seem to be asking if a form 872-i signed by a corporate tmp for itself will bind the partnership it won't bind the partnership because it is not signed on behalf of the partnership -------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------if the entity that has the withholding obligation is itself a tefra partnership the tmp of the that entity can sign for that entity even if it is not otherwise separately authorized under state law to do so


------------------------------------------------------------------------------------------------------------- internal_revenue_service ------------------------------------------------------------------------ number release date index number ----------------------- ---------------------------------------------- ----------------------------------- ----------------------------- -------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------- id no ------------- telephone number --------------------- refer reply to cc corp b02 plr-138745-07 date date ------------------------- ------------------------------------ ------------------------------------------------- parent --------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------- sub ---------------------------------------------------------------------------- -------------------------------------------------------------------- holding ---------------------------------------------------------------------------- -------------------------------------------------------------------- operating ------------------------------ ---------------------------------------------------------------------------- -------------------------------------------------------------------- sub ---------------------------------------------------------------------------- -------------------------------------------------------------------- sub ---------------------------------------------------------------------------- -------------------------------------------------------------------- sub ---------------------------------------------------------------------------- ---------------------------------------- -------------------------------------- ----------------------- ------------------------------------------ ----------------------------------------------- ---------------------------------------------------------- ----------------------------------------------------------------------- ------------------------------------------------------------------------ plr-138745-07 -------------------------------------------------------------------- business a segment b -------------------------------------------------------------------------------------------------------------- product agreement ------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------- agreement ---------------- ----------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- agreement ----------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- agreement ----------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------- agreement --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------- agreement ----------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------- agreement ----------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ ------------------------------------------------------------------------ --------------------------------- ----------------------------------------------------------------------- ----------------------------------------------------------------------- ------- ------------------- ---------------------- plr-138745-07 date a date b year a b c dear ----------------- we respond to a letter dated date submitted on behalf of parent by its authorized representative requesting rulings concerning the federal_income_tax consequences of a proposed series of transactions additional information was submitted in letters dated date and date the information submitted is summarized below ----------------- ------- ----- facts parent is the common parent of an affiliated_group_of_corporations the parent group that files a consolidated federal_income_tax return on a calendar_year basis parent indirectly owns all of the outstanding_stock of sub sub owns all of the stock of holding which in turn owns all of the stock of operating sub also owns all of the stock of sub which owns all of the stock of sub which owns all of the stock of sub each of sub holding operating sub sub and sub is a member of the parent group on date a sub purchased for cash all of the stock of holding from parties unrelated to parent the acquisition at the time of the acquisition holding was a holding_company whose principal asset was the stock of operating no election under sec_338 was made with respect to the acquisition at the time of the acquisition operating was engaged in business a through the day before date b operating conducted business a in substantially the same manner as it had since the acquisition including engaging in segment b and owning managing and selling product in order to conduct business a operating maintained various licenses required by the states in which it operated plr-138745-07 on date b a date in year in order to achieve efficiencies associated with having a significant portion of business a governed by a single federal regulatory regime rather than by various state regimes operating sub sub and sub entered into agreement agreement agreement agreement agreement agreement and agreement the agreements the effect of the agreements as a whole was to transfer from operating to sub those assets including customer contracts necessary for sub to engage in segment b and to transfer from operating to sub the employees necessary for sub to engage in segment b the operations transferred pursuant to the agreements are collectively referred to as the transferred operations no money or other consideration other than the mutual undertakings provided for in the agreements was paid or received by operating sub sub or sub in connection with the parties’ entering into the agreements market conditions in business a had been deteriorating prior to date b but the management of operating and of sub planned for operating and sub to continue indefinitely in the conduct of business a following the execution of the agreements however business a market conditions deteriorated more rapidly than had been anticipated the volume of business in segment b has declined to the point that sub and operating have engaged in only a de_minimis amount of business in segment b during the current financial quarter although operating owns inventory of product with a fair_market_value in excess of dollar_figurea following date b but still in year the management of parent decided to cease engaging in business a by selling it the management of parent directed that the transferred operations including the remaining employees of those previously transferred pursuant to agreement the number of sub employees has been reduced during year from approximately b to approximately c be restored to operating in order to enable business a to be sold as a single integrated unit the management of parent directed that the stock of holding or the assets of business a be sold before the end of year rescission transactions prior to the planned sale therefore parent plans to engage in transactions intended to result in the parties' being placed in the position they would have been in had the agreements never been entered into for regulatory reasons however the transfers for no consideration other than the mutual undertakings that took place pursuant to the agreements cannot be simply reversed with the parties' agreeing that the transferred assets and employees would be directly transferred from sub and sub back to operating for no consideration parent therefore has completed some of the following series of transactions and intends to complete those transactions not yet completed in order to place the parties in the position they would have been in had there been no agreements the following transactions are collectively referred to as the rescission transactions plr-138745-07 sub has caused sub to convert from a corporation to a limited_liability_company sub llc disregarded as an entity separate from sub for federal tax purposes the conversion sub has transferred all of the membership interests in sub llc to operating for an amount of cash equal to their aggregate fair_market_value sub has transferred its rights in its business a customer contracts to operating in exchange for cash equal to their aggregate fair_market_value plus the assumption by operating of sub 3’s obligations in those contracts certain aspects of the agreements have been terminated and any remaining aspects of the agreements will be terminated sub has declared and paid a dividend payable to sub in an amount equal to the sum of a the cash transferred by operating to sub in respect of both the membership interests in sub llc transferred in step and the rights transferred in step and b the net cash sub derived in the course of conducting the transferred operations since date b through the date of the completion of the rescission transactions the amount of the dividend will be referred to as the restorative distribution amount sub has declared and paid a dividend of the restorative distribution amount to sub sub has contributed the restorative distribution amount to holding holding has contributed the restorative distribution amount to operating operating will indemnify sub for any claim resulting from sub 3’s operation of business a transferred pursuant to the agreements between date b and the date of the completion of the rescission transactions sub llc will be dissolved for state law purposes the series of transactions just described will take place prior to the end of year although not in the order described above representations parent has made the following representations with respect to the rescission transactions plr-138745-07 a the intent of the rescission transactions is and the effect of the rescission transactions will be to restore in all material respects the legal and financial arrangements with respect to the transferred operations between operating sub and sub that would have existed had the parties never entered into the agreements b for purposes of representation a sub will be treated as sub 4’s successor_in_interest after the time of the conversion so that sub is treated as if it had liquidated into sub and otherwise ceased to exist at such time and following the conversion sub llc will be disregarded for federal_income_tax purposes and the legal and financial arrangements involving the transferred operations with respect to sub will be restored for federal_income_tax purposes by sub c none of operating sub sub or any other member of the parent group has taken or will take any material position for federal_income_tax purposes inconsistent with the position that it would have taken had the parties not entered into the agreements d as a result of the rescission transactions the stock basis of each member of the parent group including holding operating sub sub and sub will be computed in all material respects as if the parties had not entered into the agreements e as a result of the rescission transactions all material items of income deduction gain and loss of each member of the parent group will be reflected on the parent group’s federal_income_tax returns as if the parties had not entered into the agreements ruling based solely on the facts and representations submitted we rule that for federal_income_tax purposes the agreements and the rescission transactions will be disregarded and all aspects of the transferred operations will be treated as having been conducted exclusively by operating at all times from date a through the effective date of the rescission transactions caveats 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 specifically no opinion is expressed that the conversion will in fact result in sub llc being disregarded as an entity separate from sub for federal_income_tax plr-138745-07 purposes additionally no opinion is expressed as to the tax consequences of any sale of holding or of the assets of business a procedural statements 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 this ruling is directed only to the taxpayer requesting it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely filiz a serbes chief branch office of associate chief_counsel corporate cc


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 b02 plr-105333-14 date date corporation ------------------------------------------- ---------------------- legend business ------------------------------------------------------------------------------- ------------------------------------------------------------ continuing shareholders -------------------------------------------------- ----------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ --------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------ ---------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ -------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- minority shareholder state a b dear -------------- --------------------------------------------------- ------------ ------- ------- plr-105333-14 this responds to a letter dated date submitted on behalf of corporation by its authorized representative requesting a ruling as to the federal_income_tax consequences of a proposed transaction the information submitted for consideration is summarized below corporation is a state corporation engaged in business corporation is an s_corporation the continuing shareholders own a percent of the total shares of corporation the minority shareholder owns the remaining b percent of the total shares of corporation stock in order to increase the operational flexibility of corporation and to reduce costs and eliminate administrative burdens associated with minority shareholder the continuing shareholders and corporation propose the following transaction i the continuing shareholders will form a new corporation newco solely for the purpose of effecting this transaction ii each of the continuing shareholders will contribute all of their shares of corporation to newco in exchange for shares of newco in equal proportions the contribution iii newco will merge into corporation with corporation surviving the merger in connection with the merger the minority shareholder will receive a specified cash amount per share in exchange for the minority shareholder’s corporation stock and such stock will be cancelled if the minority shareholder objects to the proposed transaction the minority shareholder will have the right to exercise dissenter’s rights and receive the fair value of minority shareholder’s shares also in connection with the merger the newco shares owned by the continuing shareholders will be cancelled and each will receive shares of corporation stock in the same proportions as the shares they held in newco in exchange for their previously held newco stock the share exchange after the completion of the proposed transaction each of the continuing shareholders will hold a number of shares in corporation equal to the proportions that those continuing shareholders held immediately before the proposed transaction based solely on the information submitted we rule as follows the creation of newco followed by the merger of newco into corporation will be disregarded for federal_income_tax purposes revrul_78_250 1978_1_cb_83 plr-105333-14 the proposed transaction will be treated as if the continuing shareholders never transferred their corporation stock for federal_income_tax purposes and thus the continuing shareholders will not recognize any gain_or_loss from the proposed transaction revrul_78_250 1978_1_cb_83 the transitory ownership of corporation by newco will not cause the termination of corporation’s s_corporation_election under sec_1362 the cash received by the minority shareholder in the proposed transaction will be treated as a distribution in redemption of the minority shareholder’s stock subject_to the provisions and limitations of sec_302 revrul_78_250 1978_1_cb_83 we express or imply no opinion about the tax treatment of the proposed transaction under other provisions of the code and regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the transaction that are not specifically covered by the above rulings this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent a copy of this letter must be attached to the taxpayer’s federal_income_tax return for the taxable_year in which the transaction is consummated alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of this letter sincerely melissa liquerman branch chief branch office of the associate chief_counsel passthroughs special industries cc


internal_revenue_service department of the treasury number release date index number 468a 468a washington dc person to contact telephone number refer reply to cc psi plr-112621-00 date date re request for a revised schedule of ruling amounts taxpayer parent plant location rules state commission a commission b director fund dear this letter responds to the request of taxpayer dated date and revised date for a revised schedule of ruling amounts in accordance with sec_1_468a-3 of the income_tax regulations taxpayer was previously granted a revised schedule of ruling amounts on date information for the schedule of ruling amounts was submitted on behalf of the taxpayer pursuant to sec_1_468a-3 taxpayer represents the facts and information relating to its request for a revised schedule of ruling amounts as follows taxpayer is percent owned by parent and files a consolidated federal_income_tax return with parent taxpayer has a direct ownership_interest of percent and a lessee ownership_interest of percent for a total ownership_interest of in plr-112621-00 plant which is situated at location taxpayer is under the audit jurisdiction of the director plant’s operating license expires in taxpayer is subject_to the jurisdiction of commission a which covers percent of the taxpayer’s total electric sales commission b which covers percent for a total of percent these percentages may vary slightly from year to year the estimated base cost for decommissioning the plant is based on an independent study and is premised on the decon method on rules became effective in state rules established a framework for introduction of competitive electric services in state after numerous amendments rules was stayed on on commission a approved a settlement agreement between taxpayer and its customers establishing terms and conditions for the introduction of competition in electric generation and other services the settlement also removes plant from taxpayer’s rate base as of the end of the transition_period additionally rules established that taxpayer will collect its nuclear decommissioning costs through a non-bypassable systems benefits charge sbc over the life of plant commission a in decision no effective authorized nuclear decommissioning costs to be included in the taxpayer’s cost of service for ratemaking purposes for the plant in the amount of and estimated an after-tax rate of return on assets of percent the commission also determined the total estimated cost of decommissioning to be this base cost escalated using an estimated inflation rate of percent results in an estimated future decommissioning cost of the tax and investment changes made to sec_468a of the internal_revenue_code by section of the energy policy act of were taken into consideration when estimating these costs commission b in docket no effective authorized nuclear decommissioning costs to be included in the taxpayer’s cost of service for ratemaking purposes for the plant in the amount of and estimated an after-tax rate of return on assets of percent the commission also determined the total estimated cost of decommissioning to be this base cost escalated using an estimated inflation rate of percent results in an estimated future decommissioning cost of the tax and investment changes made to sec_468a of the internal_revenue_code by section of the energy policy act of were not taken into consideration when estimating these costs there are no proceedings pending before either commission a or commission b that may result in an increase or decrease in the amount of decommissioning costs for the plant to be included in taxpayer’s cost of service for ratemaking purposes plr-112621-00 the funding_period and level_funding limitation period for the plant extends from for commission a the funding_period and level_funding limitation period for the plant extends from for commission b the estimated period for which the fund will be in effect is for commission a and for commission b the estimated_useful_life of the plant is for commission a and for commission b thus the taxpayer has calculated its qualifying percentage to be percent for commission a and percent for commission b sec_468a of the internal_revenue_code provides that a taxpayer may elect to deduct the amount of payments made to a qualified nuclear decommissioning fund however sec_468a limits the amount_paid into the fund for any taxable_year to the lesser_of the amount of nuclear decommissioning costs allocable to the fund that is included in the taxpayer’s cost of service for ratemaking purposes for the taxable_year or the ruling_amount applicable to that year sec_468a of the code provides that no deduction shall be allowed for any payment to the nuclear decommissioning fund unless the taxpayer requests and receives from the secretary a schedule of ruling amounts the ruling_amount for any taxable_year is defined under sec_468a as the amount which the secretary determines to be necessary to fund that portion of nuclear decommissioning costs which bears the same ratio to the nuclear power plant as the period for which the fund is in effect bears to the estimated_useful_life of the plant this term is further defined to include the amount necessary to prevent excessive funding of nuclear decommissioning costs or funding of these costs at a rate more rapid than level_funding taking into account such discount rates as the secretary deems appropriate sec_468a of the code provides that a taxpayer shall be deemed to have made a payment to the nuclear decommissioning fund on the last day of the taxable_year if the payment is made on account of the taxable_year within 2½ months after the close of the taxable_year sec_1_468a-1 of the regulations provides that an eligible_taxpayer may elect to deduct nuclear decommissioning costs under sec_468a of the code an eligible_taxpayer as defined under sec_1_468a-1 is a taxpayer that has a qualifying interest in a nuclear power plant as defined under sec_1_468a-1 a qualifying interest is among other things a direct ownership_interest including an interest held as a tenant in common or joint tenant sec_1_468a-2 of the regulations provides that the maximum amount of cash payments made or deemed made to a nuclear decommissioning fund during any taxable_year shall not exceed the lesser_of i the cost of service amount applicable to the nuclear decommissioning fund for such taxable_year or ii the ruling_amount applicable to the nuclear decommissioning fund for such taxable_year plr-112621-00 sec_1_468a-3 of the regulations provides that in general a schedule of ruling amounts for a nuclear decommissioning fund is a ruling specifying annual payments that over the taxable years remaining in the funding_period as of the date the schedule first applies will result in a projected balance of the nuclear decommissioning fund as of the last day of the funding_period equal to and in no event more than the amount of decommissioning costs allocable to the fund sec_1_468a-3 of the regulations provides that each schedule of ruling amounts shall be based on the reasonable assumptions and determinations used by the applicable public_utility commission s in establishing or approving the amount of decommissioning costs to be included in the cost of service for ratemaking purposes taking into account amounts that are otherwise required to be included in the taxpayer’s income under sec_88 of the code and the regulations thereunder each schedule of ruling amounts shall be based on the public_utility commission’s reasonable assumptions concerning i the after-tax rate of return to be earned by the amounts collected for decommissioning ii the total estimated cost of decommissioning the nuclear power plant and iii the frequency of contributions to the nuclear decommissioning fund for a taxable_year sec_1_468a-3 of the regulations requires the internal_revenue_service to provide a schedule of ruling amounts that is identical to the schedule proposed by the taxpayer but no such schedule shall be provided by the service unless the taxpayer’s proposed schedule is consistent with the principles and provisions of this section sec_1_468a-3 of the regulations provides that the ruling_amount specified in a schedule of ruling amounts for any taxable_year in the level_funding limitation period shall not be less than the ruling_amount specified in such schedule for any earlier taxable_year under sec_1_468a-3 the level_funding limitation period begins on the first day of the first taxable_year for which a deductible payment is made to the nuclear decommissioning fund and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer’s rate base for ratemaking purposes sec_1_468a-3 of the regulations provides that the funding_period for a nuclear decommissioning fund is the period that begins on the first day of the first taxable_year for which a deductible payment is made or deemed to be made to such nuclear decommissioning fund and ends the later of i the last day of the taxable_year that includes the estimated date on which decommissioning costs of the nuclear power plant to which the nuclear decommissioning fund relates will no longer be included in the taxpayer’s cost of service for ratemaking purposes or ii the last day of the taxable_year that includes the estimated date on which the nuclear power plant to which the nuclear decommissioning fund relates will no longer be included in the taxpayer’s rate base for ratemaking purposes plr-112621-00 sec_1_468a-3 of the regulations provides that the amount of decommissioning costs allocable to a nuclear decommissioning fund is the taxpayer’s share of the total estimated cost of decommissioning the nuclear power plant multiplied by the qualifying percentage sec_1_468a-3 of the regulations provides that in general the total estimated cost of decommissioning a nuclear power plant is the reasonably estimated cost of decommissioning used by the applicable public_utility commission in establishing or approving the amount of these costs to be included in cost of service for ratemaking purposes sec_1_468a-3 of the regulations provides that a taxpayer’s share of the total estimated cost of decommissioning a nuclear power plant equals the total estimated cost of decommissioning the plant multiplied by the taxpayer’s qualifying interest in the plant sec_1_468a-3 of the regulations provides that the qualifying percentage for any nuclear decommissioning fund is equal to the fraction the numerator of which is the number of taxable years in the estimated period for which the nuclear decommissioning fund is to be in effect and the denominator of which is the number of taxable years in the estimated_useful_life of the applicable nuclear power plant sec_1_468a-3 of the regulations provides that the estimated period for which a nuclear decommissioning fund is to be in effect begins on the later of the first day of the first taxable_year for which a deductible payment is made to the nuclear decommissioning fund or deemed made or the first day of the taxable_year that includes the date that the nuclear power plant begins commercial operations as determined by the applicable public_utility commission at the time the plant was first included in the taxpayer’s rate base and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer’s rate base for ratemaking purposes according to sec_1_468a-3 the estimated date on which the nuclear power plant will no longer be included in the taxpayer’s rate base for ratemaking purposes is determined under the ratemaking assumptions used by the applicable public_utility commission in establishing or approving rates during the first ratemaking proceeding in which the nuclear power plant was included in the taxpayer’s rate base sec_1_468a-3 of the regulations provides that the estimated_useful_life of a nuclear power plant begins on the first day of the taxable_year that includes the date that the plant begins commercial operations as determined by the applicable public_utility commission at the time the plant was first included in the taxpayer’s rate base and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer’s rate base for ratemaking purposes according to sec_1_468a-3 the estimated date on plr-112621-00 which the nuclear power plant will no longer be included in the taxpayer’s rate base for ratemaking purposes is determined under the ratemaking assumptions used by the applicable public_utility commission in establishing or approving rates during the first ratemaking proceeding in which the nuclear power plant was included in the taxpayer’s rate base sec_1_468a-3 of the regulations provides that if two or more public_utility commissions establish or approve rates for electric energy generated by a single nuclear power plant then the schedule of ruling amounts shall be separately determined pursuant to the rules of sec_1_468a-3 through e for each public_utility commission that has determined the amount of decommissioning costs to be included in the cost of service for ratemaking purposes for this plant under sec_1_468a-3 this separate determination shall be based on the reasonable assumptions and determinations used by the relevant public_utility commission and shall take into account only that portion of the total estimated cost of decommissioning that is properly allocable to the ratepayer whose rates are established or approved by the public_utility commission according to sec_1_468a-3 the ruling amounts for any taxable_year is the sum of the ruling amounts for such taxable_year determined under the separate schedules of ruling amounts sec_1_468a-3 of the regulations provides that the internal_revenue_service shall not provide a taxpayer with a schedule of ruling amounts for any nuclear decommissioning fund unless the public_utility commission that establishes or approves the rates for electric energy generated by the plant to which the nuclear decommissioning fund relates has determined the amount of decommissioning costs to be included in the taxpayer’s cost of service for ratemaking purposes and has disclosed the after-tax rate of return and any other assumptions and determinations used in establishing or approving the amount sec_1_468a-3 of the regulations enumerates the information required to be contained in a request for a schedule of ruling amounts filed by a taxpayer in order to receive a ruling_amount for any taxable_year sec_1_468a-3 of the regulations provides that a taxpayer is required to request a revised schedule of ruling amounts for a nuclear decommissioning fund if a any public_utility commission that establishes or approves rates for the furnishing or sale of electric energy generated by a nuclear power plant to which the nuclear decommissioning fund relates increases the proposed period over which decommissioning costs of the nuclear power plant will be included in cost of service for ratemaking purposes adjusts the estimated date on which the nuclear power plant will no longer be included in the taxpayer’s rate base for ratemaking purposes or reduces the amount of decommissioning costs to be included in cost of service for any taxable_year and b the taxpayer’s most recent request for a schedule of ruling amounts did not provide notice to the service of such action by the public_utility commission plr-112621-00 sec_1_468a-3 of the regulations provides that any taxpayer that has previously obtained a schedule of ruling amounts can request a revised schedule of ruling amounts such a request must be made in accordance with the rules of sec_1_468a-3 the internal_revenue_service shall not provide a revised schedule of ruling amounts applicable to a taxable_year in response to a request for a schedule of ruling amounts that is filed after the deemed payment deadline date for such taxable_year sections a and c of the energy act eliminated for taxable years beginning after date the investment restrictions contained in sec_468a of the code sections b and c of the energy act revised sec_468a by lowering the tax_rate applicable to a nuclear decommissioning fund for taxable years beginning after date we have examined the representations and information submitted by the taxpayer in relation to the requirements set forth in the sec_468a of the code and the regulations thereunder based solely on these representations of the facts we reach the following conclusions taxpayer has a qualifying interest in the plant and is therefore an eligible_taxpayer under sec_1_468a-1 of the regulations commissions a and b have determined the amount of decommissioning costs to be included in the taxpayer’s cost of service for ratemaking purposes as required by sec_1_468a-3 of the regulations taxpayer as owner of the plant has calculated its share of the total decommissioning costs under sec_1_468a-3 of the regulations taxpayer has determined that pursuant to sec_1_468a-3 of the regulations the qualifying percentage is percent for commission a and percent for commission b taxpayer has proposed a schedule of ruling amounts which meets the requirements of sec_1_468a-3 and of the regulations the annual payments specified in the proposed schedule of ruling amounts are based on the reasonable assumptions and determinations used by commissions a and b and will result in a projected fund balance at the end of the funding_period equal to or less than the amount of decommissioning costs allocable to the fund the maximum amount of cash payments made or deemed made to the fund during any taxable_year is restricted to the lesser amount of the decommissioning costs applicable to the fund or the ruling_amount plr-112621-00 applicable to the fund as set forth under sec_1_468a-2 of the regulations taxpayer subject_to the jurisdiction of two public_utility commissions for ratemaking purposes has calculated its share of the total decommissioning costs allocable to commissions a and b as required by sec_1_468a-3 of the regulations based on the above determinations we conclude that the taxpayer’s proposed schedule of ruling amounts satisfies the requirements of sec_468a of the code approved schedule of ruling amounts taxable_year sec_1 commissions a and b year comm a comm b total with agreement of the taxpayer this revised schedule of ruling amounts is limited to a 5-year period for the portion of the schedule of ruling amounts for commission b because this commission has not taken into account the statutory changes made to sec_468a of the code by the energy act the elimination of the investment restrictions and the reduction of the tax_rate applicable to income earned by the fund may result in a greater after-tax of return than was estimated prior to the enactment of the energy act by this commission this increased after-tax rate of return could over the life of the fund result in a balance in the fund on the last day of the funding_period that could exceed the amount of decommissioning costs allocable to the fund taxpayer was granted relief under section to include rates for in this revised schedule of ruling amounts plr-112621-00 thus in order to prevent the excess accumulation in the fund with respect to commission b a potion of this schedule of ruling amounts is being limited to a 5-year period approval of a revised schedule of ruling amounts may be granted after a determination by commission b of an after-tax rate of return that accounts for the reduced_tax_rate and unrestricted investments approval of the schedule of ruling amounts is contingent on there being no change in the facts and circumstances known or assumed at the time this ruling is issued if any of the events described in sec_1_468a-3 of the regulations occur in future years the taxpayer must request a review and revision of the schedule of ruling amounts generally the taxpayer is required to file such a request on or before the deemed payment deadline date for the first taxable_year in which the rates reflecting such action became effective when no such event occurs the taxpayer must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline of the tenth taxable_year following the close of the tax_year in which the most recent schedule of ruling amounts was received the approved schedule of ruling amounts is relevant only to those payments made to the fund payments allocable to any funds other than the fund cannot qualify for purposes of the deduction under the provisions of sec_468a of the code as stated above payments made to the fund can qualify only to the extent that they do not exceed the lesser_of the decommissioning costs applicable to the fund or the ruling amounts applicable to the fund in the taxable_year this letter_ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that this ruling may not be used or cited as precedent pursuant to sec_1_468a-7 of the regulations a copy of this letter must be attached with the required election statement to the taxpayer’s federal_income_tax return for each taxable_year in which the taxpayer claims a deduction for payments made to the fund in accordance with the powers of attorney a copy of this letter_ruling is being sent to your authorized representatives a copy of this letter_ruling also is being sent to the director sincerely yours enclosure copy peter c friedman senior technician reviewer branch office of the associate chief_counsel passthroughs and special industries


t c memo united_states tax_court richard brewster main petitioner v commissioner of internal revenue respondent docket no filed date richard brewster main pro_se nicholas r rosado for respondent memorandum findings_of_fact and opinion foley judge after concessions the issues for decision are whether petitioner is entitled to various deductions relating to his patent business and automobile activity liable for a sec_6662 accuracy-related_penalty and liable for a sec_6651 failure to timely file addition_to_tax unless otherwise indicated all section references are to the internal continued findings_of_fact during year in issue petitioner an attorney engaged in a patent business and an automobile activity petitioner’s patent business which experienced a downturn during the year in issue involved creating prototypes inventing electronics and filing patent applications his automobile activity related to and plymouth cars plymouths prior to petitioner determined that he could successfully buy restore and sell plymouths he advertised online in print publications and at live events and traveled throughout the western united_states to acquire bargain-priced plymouths his inventory at its peak reached cars which he stored in a large two-story barn on his ranch in livermore california plymouths were less popular than other 1950s vintage cars and replacement parts were difficult to find as a result petitioner sold some of the unrestorable automobiles and their related parts he also contracted with a retired jewelry maker and a rubber manufacturer to produce and supply unavailable parts these parts were used to renovate the cars in his inventory or sold to other plymouth restorers petitioner discovered however that the cost_of_producing these parts continued revenue code relating to the year in issue and all rule references are to the tax_court rules_of_practice and procedure exceeded the related sales revenue and ceased contracting for their production in petitioner’s ranch was sold in a foreclosure proceeding and petitioner leased the barn from the ranch’s buyer until when he realized that he had underestimated the time required to fully restore the cars in his plymouth inventory he then sold off some of the plymouths and transferred the remaining inventory to a storage_facility for which he paid dollar_figure during the year in issue during that year petitioner resided at a house in elk grove california which had an attached three-car garage paid tuff shed inc dollar_figure to build a separate garage and paid dollar_figure dollar_figure dollar_figure and dollar_figure relating to a gantry crane welding equipment a wireless router and a camcorder respectively after the construction of the separate garage ie during april of the year in issue petitioner moved the plymouths from storage to the separate garage and conducted his automobile activity from that location on date petitioner filed his form_1040 u s individual_income_tax_return on which he reported zero taxable_income a zero income_tax_liability a dollar_figure self-employment_tax liability and an dollar_figure amount owed after an examination of the return respondent in a notice_of_deficiency issued on date disallowed deductions relating to petitioner’s automobile activity on the grounds that petitioner lacked the requisite profit objective and had failed to substantiate the expenses underlying his deductions disallowed various deductions relating to petitioner’s patent business on the grounds that petitioner had failed to substantiate the expenses underlying his deductions and determined a dollar_figure deficiency a dollar_figure sec_6651 addition_to_tax and a dollar_figure sec_6662 accuracy-related_penalty on date petitioner while residing in california timely filed a petition with the court opinion sec_183 limits the deductions relating to an activity_not_engaged_in_for_profit petitioner bears the burden of proving that his primary objective relating to his automobile activity was to make a profit see 4_f3d_709 9th cir holding that profit must be the predominant primary or principal objective aff’g tcmemo_1991_212 864_f2d_93 9th cir aff’g 88_tc_1086 petitioner has established by a preponderance_of_the_evidence that his primary objective was to make a profit sec_1_183-2 income_tax regs sets forth a nonexclusive list of nine factors to guide courts in analyzing a taxpayer’s profit objective see 90_tc_960 aff’d without published opinion 899_f2d_18 9th cir petitioner undoubtedly enjoyed working with plymouths see sec_1_183-2 income_tax regs although his manner of carrying on this activity was unsophisticated it was businesslike see id subpara he had experience operating a business and expertise relating to plymouths advertised online in print and at live events traveled outside california to acquire cars at bargain prices contracted with third parties to manufacture parts for him to resell and use in restorations and abandoned unprofitable aspects of his automobile activity ie he downsized his inventory and stopped contracting for manufactured parts see id subparas furthermore he devoted considerable time to and handled all material aspects of his automobile activity see id subpara lastly petitioner’s patent business was undergoing a downturn during the year in issue and petitioner a prudent businessman would not have squandered his hard- earned money on an expensive hobby see id subpara in short petitioner’s automobile activity was a business and his primary objective was to make a profit petitioner contends that he is entitled to deductions on schedule c profit or loss from business relating to his automobile and patent businesses sec_3 pursuant to sec_7491 petitioner has the burden_of_proof unless he introduces credible_evidence relating to an issue that would shift the burden to respondent see rule a our conclusions however are based on a preponderance_of_the_evidence and thus the allocation of the burden_of_proof is continued a allows as a deduction all the ordinary and necessary expenses paid_or_incurred in carrying_on_a_trade_or_business petitioner is pursuant to sec_167 entitled to depreciation_deductions relating to the garage gantry crane and welding equipment and has established the cost useful_life and previously allowable deductions relating to these items see 105_tc_324 pursuant to sec_280f his camcorder and wireless router however were listed_property because we are convinced that his camcorder was not used exclusively in connection with his primary business and that both items were not used exclusively at his regular business establishment see sec continued immaterial see 110_tc_189 ndollar_figure the garage has a dollar_figure cost_basis and a 39-year recovery_period and was placed_in_service during april of the year in issue ie petitioner had no previously allowable_depreciation deductions see sec_168 the gantry crane and welding equipment have dollar_figure and dollar_figure cost bases respectively and 12-year useful lives and were placed_in_service during the year in issue ie petitioner had no previously allowable_depreciation deductions relating to these items see sec_168 stating that class lives are determined pursuant to sec_167 and as if the taxpayer has made the election pursuant to that subsection m before repeal in stating the secretary may prescribe class lives sec_1 a - b ii income_tax regs stating that asset guideline classes asset guideline periods and asset depreciation ranges will be established supplemented and revised in the internal_revenue_bulletin revproc_87_56 1987_2_cb_674 establishing the class lives of automobile manufacturing equipment revproc_88_22 1988_1_cb_785 revising the description of automobile manufacturing equipment 280f-6 b income_tax regs petitioner did not meet the requisite substantiation requirements and thus is not entitled to depreciation_deductions relating to these items see sec_162 sec_274 122_tc_305 112_tc_183 sec_1_274-5 income_tax regs sec_1_274-5t temporary income_tax regs fed reg date he established however that he incurred and is entitled to deduct a dollar_figure storage expense relating to his plymouths but did not substantiate the remainder of the expenses at issue and is not entitled to deductions relating to them see sec_162 sec_6001 65_tc_87 aff’d per curiam 540_f2d_821 5th cir sec_1_6001-1 income_tax regs petitioner’s underpayment_of_tax relates to unsubstantiated deductions and thus he is liable for a sec_6662 accuracy-related_penalty for negligence see sec_6662 c sec_1_6662-3 income_tax regs petitioner has neither contended nor established reasonable_cause for his underpayment see respondent bears and has met his burden of production relating to the sec_6662 and b accuracy-related_penalty see sec_7491 116_tc_438 petitioner’s understatement of income_tax relating to the year in issue will be determined pursuant to rule if the understatement exceeds both of continued sec_6664 116_tc_438 he is also liable for a sec_6651 addition_to_tax for failure to timely file a return see 469_us_241 even if established his contention ie that he did not timely file his return because he was not aware of his tax_liability does not constitute reasonable_cause see 26_tc_528 aff’d 243_f2d_954 4th cir contentions we have not addressed are irrelevant moot or meritless to reflect the foregoing decision will be entered under rule continued the tax required to be shown on the return and dollar_figure it will be substantial and petitioner will be liable alternatively for a sec_6662 and b accuracy-related_penalty see sec_6662 respondent bears and has met the burden of production relating to the sec_6651 addition_to_tax see sec_7491 higbee v commissioner pincite petitioner bears the burden_of_proof relating to reasonable_cause see higbee v commissioner t c pincite


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 b01 plr-110144-06 date date ------------------------------------------ ---------------------- legend x ----------------------- y state ------------- d1 --------------------------- d2 ---------------------- dear -------------- this is in reply to your letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under ' c of the procedure and administration regulations to elect to treat y as a qualified_subchapter_s_subsidiary qsub for federal tax purposes facts the information submitted states that x was incorporated on d1 under the laws of state on the same date x formed y a wholly owned subsidiary under the laws of state x made an election to be treated as an s_corporation effective d2 x intended to treat y as a qsub effective d2 however x inadvertently failed to timely file the proper election plr-110144-06 law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1361 provides that a qsub shall not be treated as a separate corporation and all assets liabilities and items of income deduction and credit of a qsub shall be treated as assets liabilities and such items as the case may be of the s_corporation sec_1361 defines a qsub as a domestic_corporation that is not an ineligible_corporation if percent of the stock of the corporation is owned by an s_corporation and the s_corporation elects to treat the corporation as a qsub a taxpayer makes a qsub election with respect to a subsidiary by filing a form_8869 qualified_subchapter_s_subsidiary election with the appropriate service_center sec_1_1361-3 of the income_tax regulations provides that a qsub election will be effective on the date specified on the election form or on the date the election is filed if no date is specified the effective date specified on the election form cannot be more than two months and days prior to the date of filing and cannot be more than months after the date of filing sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in ' to make a regulatory election sec_301_9100-1 defines a regulatory election as an election with a due_date prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin requests for relief under '301 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 conclusion based solely on the facts submitted and the representations made we conclude that x has satisfied the requirements of and as a result x is granted an extension of time of days from the date of this letter to file a form_8869 plr-110144-06 for y to elect to treat it as a qsub effective d2 a copy of this letter should be attached to the election and is included for that purpose 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 specifically no opinion is expressed concerning whether x is a valid s_corporation or whether y is a valid qsub this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent under a power_of_attorney on file in this office a copy of this letter will be sent to x’s authorized representative sincerely heather c maloy office of associate chief_counsel passthroughs and special industries copy of this letter copy for sec_6110 purposes enclosures


internal_revenue_service number release date index number cc psi 6-cor-121473-00 date re request to revoke sec_179 election tax_year dear this letter is in response to your letter dated date to commissioner of internal revenue requesting permission to revoke the election made under sec_179 of the internal_revenue_code on your federal_income_tax return in order for us to respond to your specific request you must submit a request for a private_letter_ruling the request must comply with all the requirements of section of revproc_2001_1 2001_1_irb_1 we hope that you find the following general information to be helpful revproc_2001_1 provides the general procedures the internal_revenue_service follows in issuing rulings and the related instructions for the submission of ruling requests by taxpayers in addition taxpayers are required by statute to pay user fees for requests for letter rulings under sec_15 of revproc_2001_1 the user_fee must accompany the request in order to be processed by the service in general the user_fee is dollar_figure for private letter rulings mailed before date and is dollar_figure for private letter rulings mailed on or after date however there is a reduced fee of dollar_figure for a request involving a business-related tax issue from a taxpayer with a gross_income of less than dollar_figure million see appendix a of revproc_2001_1 i am enclosing a copy of sec_179 of the code and the regulations under that section you may find sec_179 of particular interest under sec_179 an election made under sec_179 and any specification contained in any such election may not be revoked except with the consent of the commissioner such consent to revoke an election under sec_179 however will be granted only in cor-121473-00 extraordinary circumstances emphasis added see sec_1_179-5 of the income_tax regulations if you should decide to request a private_letter_ruling section of revproc_2001_1 provides information as to where to send the request also as we have noted above section of revproc_2001_1 provides general instructions for requesting a private_letter_ruling a private_letter_ruling request for revocation of an election made under sec_179 of the code presupposes that the election is a valid election under sec_179 emphasis added see sec_179 and sec_179 sec_179 allows a taxpayer to elect to deduct all or part of the cost of certain qualifying property in the year the taxpayer places it in service the election made under sec_179 is made in lieu of recovering the cost by taking depreciation_deductions over a specified recovery_period under sec_168 thus the general principles of depreciation that apply to sec_168 also apply to sec_179 in general a taxpayer must have an economic_interest ie an ownership_interest in depreciable_property in order to take the depreciation deduction under sec_168 the purchaser of depreciable_property involved in a sales agreement in which the purchaser is deemed the owner for tax purposes should depreciate the property and provided the requirements of sec_179 and sec_179 are met may make a valid election under sec_179 with respect to the cost of the property however a lessee leasing depreciable_property as a result of a leasing agreement which is deemed a lease for tax purposes should not depreciate the property or make a valid election under sec_179 the determination of whether in a particular transaction the taxpayer is a purchaser or a lessee of depreciable_property in the year the property is placed_in_service requires the analysis of the underlying agreement to the transaction and the particular facts and circumstances surrounding the agreement cor-121473-00 this letter has called your attention to certain general principles of tax law it is intended for informational purposes only and does not constitute a ruling see section dollar_figure of revproc_2001_1 we hope the materials enclosed will be helpful to you however if you should have any additional questions or comments please contact our office at sincerely yours kathleen reed kathleen reed senior technician reviewer branch office of associate chief_counsel passthroughs and special industries enclosures