department of the treasury employer_identification_number person to contact employee id number tel fax refer reply to ap fe ap4 in re application_for recognition of exemption - sec_501 form required to be filed tax years and subsequent years last day to file a petition with the united_states tax_court internal_revenue_service appeals_office marrows road suite newark de date war ai uil index certified mail dear this is a fin the internal revenue income_tax under section al adverse determination as to your exernpt status under sec_501 of e code it is determined that you do not qualify as exempt from federal c of the internal_revenue_code effective december our adverse determination was made for the following reason s based on the facts and information submitted you are not operated exclusively for exempt purposes as is required under sec_501 based on the facts and information submitted your purposes are contrary to a fundamental public policy contributions to your organization are not deductible under code sec_170 you are re quired to file federal_income_tax returns on the form indicated above f any taxes due will not be delayed in the processing of income_tax returns and assessment event that you file petition for declaratory_judgment under code se ction u decide to contest this determination under the declaratory_judgment provisions of a petition to the united_states tax_court the united_states court of claims fthe united_states for the district of columbia must be filed before the 91st was mailed to you contact the clerk of the if yo code section or the district_court ninety-first day after the date this determination appropriate court for rules for filing petitions for declaratory_judgment to secure a petition from the united_states tax_court write to united_states tax_court second street nw washington d c we will notify the appropriate state officials of this action as required by code sec_6104 ou have any questions please contact the person whose name and telephone number if y are shown in the he ading of this letter you also have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance 1s not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate is not able to reverse legally correct_tax determinations nor extend the time fixed by law that you have to file a petition in the u s tax_court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling if you want taxpayer_advocate assistance please see the contact the taxpayer_advocate for the irs office that issued this notice_of_deficiency enclosed notice helpful contacts for your notice_of_deficiency for taxpayer_advocate telephone numbers and addresses thank you for your cooperation sincerely charles fisher appeals team manager enclosures notice - helpful contacts for your deficiency_notice department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division date legend a applicant organization b state located c nonprofit state code d founder’s name e date of incorporation f filing_date g beginning date referred to by the founder h ending date referred to by the founder contact person identification_number contact number fax number employer_identification_number uil index dear we have considered your application_for recognition of exemption from federal_income_tax under internal_revenue_code sec_501 based on the information provided we have concluded that you do not qualify for exemption under code sec_501 the basis for our conclusion is set forth below facts article iii of the articles of incorporation states the purposes for which the corporation was on e the applicant organization a was incorporated pursuant to the b nonprofit corporation act under c organized are charitable working for law change to protect the rights of sexual active consenting kids and adults and to amend child sexual photography law to provide counseling to sexual active kids and adults and scientific studies educational artistic the applicant organization filed its form_1023 application on f the narrative description of activities in the attachment to part v of the form_1023 application states that the organization's activities are to executive scientific study and research into the pros and cons of decriminalizing natural consensual sexual behaviors between adults and underagers and decriminalizing what is defined as child pornography such research and studies will consist from secondary anaalysis a research method in which a researcher uses data collected by others also research and study will be recorded from oral visitation and observation of consenting participants also such studies and research will include trips of travel world-wide and will be executed by myself or by paid part-time employees or by volunteers such study and research will also look into the relationship of forced abstinence and why it produces hateraid and violense such findings or conclusive facts will be converted into educational material and will be distributed to the general_public and legislatures for tconsideration for use in law reforming repeals decriminalization or use in making new law bills secondary programs will promoot safe sex promoot friendship peace and love undiscriminally world-wide another program will advocate suicide preventions another program will use any surplues funds to provide food in life or death situations to the hungary world-wide another program provides mentoring to any aged person whom either asks for mentoring or whom feel is consenting to my mentoring and may better their need from it another program will advocate anti- illegal drugs overall a research and studies will show and tell the facts of how human-kind have naturally experimented in sexual behaviors with one-another and-other creatures or and material objects sense the beginning of time a will in the futurer host a show and tell room of artifacts displaying nudity sexual behaviors etc in statue or and in historic replicas staue and painting forms and in possible preserved cadaverous nude poses with educational material attachments evidence of today factually shows a sharp increase in adult and underagers hateraided and violense as result of bills being made into law or by the strenghentened old sexual behavior and pornography law reforms that fruited from the political haste from the 1980tys ronald reagan administration's appointed meese commission as a ouick-fix to remedy a small percentage of unconsenting human while those well intended laws remedied a small sexual behaviors that fruited a few victoms percentage of those sex abuse cases those laws went-on to perpetually to victimoze the general_public at the larger percentage and today yet no one to my knowledge realizes the harms these precieved to be ex post facto laws have done and continue to do to society at large and its justice system that is nagativally effecting the united_states reputation and creditability country-wide asa clairvoyant have the god and mother_natures gift of the future insight toa serious problem that could eventually harm the united_states beyond repair if left unintended in addition to a’s show room the organization has acquired books for its library and will publish its own educational books and artworks the show and tell room and library are open to the general_public and there will be no admission charges dis currently the sole officer and board member the founder and executive director of ais d the attachment to part v of the form_1023 application states that the qualifications of d are life- long bisexual identy creditable on former seasonal employment jobs held management owned operated myown profitable salage yard posisions from business with some ten part_time employees college diplomaed in graphic arts and theology and ordained minister am presentally continuing my college rducation as a full time student working to a degree in psychology and social science already oualified as a natural scientist by till my through a court of law of a felony of mis-using the incorporations funds for his her own unioue life-long study and research as an outgoing active bisexual who has been there done that with all the differing sexual identified sexed humans formarally a boy scout and little leage baseball player life-long b u s a citizen mentored adults and juvenile delinkouents for some 40ty years on-going today legally operated and founded a a disadvantaged organization because as a first time of lack of funds a nd because was inprisoned from felone on two counts of sex abuse its district_court documented on trial transcripts where the alleged two teenaged male victoms testified under oath they were not victoms and d did not harm them on the alleged two sexual behavior acts they consented to and they stated the hate-monger by putting his gun to their some pound deputy sheriff coercored them into perjury against d heads with death threats the prosecutor aggreed with the victoms testimoinie but denyed any wrong doing by the deputy sheriff officials fabricated those two criminal charges in retaliation for d former criminal whistle-blowings against that local sheriff his deputies and prosecutor also d had a pending civil suit filed in the u s district_court that was nearing its docketed jury trial date in and because all law enforcement preknew that sex offender crimes regardless december of of innocence or guilt is the easiest crime to obtain a conviction on is why the civil suit defendents retaliated with the sex charges unstood of fabricating a different type of crime the bylaws state in part under item that c no member will have the voting power to remove the executive director unless said director is found guilty in d in the event of death of the executive director all members shall be notified within days personal gain and members shall hold a special vote to elect a new executive director e the executive director is to have over ten years of scientific study research into human sexuality psychosexuality criminology mystics no college degrees are required but natural experiences are required said director shall be open minded to every form of human sexuall identities preferences and shall not discriminate to any adult or child and said director members included shall assist any non member or even member who may be in need of counseling or in need of any other form of assistence a sec_4 last resort to safe guard their life said members shall report them to the incorporations office immeditally so that the incorporation can consider assisting them in any way posible within the incorporations goal carrying-out programs f menbers shall not promoot but will not deny the fact of past present human history that humankind from youth on-through adulthood has in majority been sexual active whether be in promisious deventcy or experimentation sexual acts and menbers will proroot safe sex education and say no to illegal drugs uses until the event that they become legalized rmenbers will promoot feed the hungary sueicide prevention and any amended programs as the incorporation finds such a public need to add such programs that will benefit society at large no menber shall promoot any kind or form of laws of advocacy person or organization whos goals promoot of influence hateraid or and violence the bylaws further state in part that the executive director shall act as officer treasurer until at such a time a need arises to appoint officers and a treasurer of at a time when the corporation has funds on hand exceeding five million dollars and that the executive director officers directors treasure and all members shall at all times promoot educational nudist camps organizations family or single nudists and that in acts of harmless consensual sex that abstance is the safest way but that sexual experimentation is a natural act and safe-sex is a must members will also promoot that artistic use of human nudity young and old plues promoot all other of the incorporations programs memsioned so far in these by-laws at hand j di the appli file os life time study and researcher first time felon on two counts of sex abuse executive director d’s qualifications include management dis alsoa scientist and a ative alifies as a natural lance writer and artist the administr experience qu practicing free- the file also states that a is a disadvantaged organization because of lack of funds and because was imprisoned from g through h as a a copy of a newsletter published by the organization was submitted by things it indicated that b's attorney_general has falsely inprisoned wie asa pei tine hall a ee 22-years ongoing today for personal financial gain motives and the two counts of sex abuse charges were fa pricated for the purpose of deceiting the general_public and the appeals courts the newsletter further states that the organization was not founded for myown personal_use the fact my sexual conviction case is one case out of millions of other adults and juveniles saxuel m abuse criminal and civil cases that have occurred over the last 30ty some years accross the u it states plues a educational goal is aimed at every human being in the world and it is not anned solely at those who are or have been accused of convicted at sexual crimes the newsletter al natural scientist who has discovered scientific and other evidense facts that indicates that d wa sec_2 prove beyond doubt that there is a mandatory need to preserve human sexual experimentati - human kind regardless of age indifferences and that some governmental made sexual laws th prohibit such natural acts of consensual sexual behaviors are on a destructive course that is destroying societies best interests at large and such as bearing fruit of hate and violense human being against another human being later the newsletter indicates that a was ores i and is operating primarily not for influencing a change in the laws concerning sexual ex sarge children a was and is organized to execute natural scientific study research on me ro ea nae cons of human sexual behaviors and to convert the conclusive findings into educational matenis and advocacy and to make such available to the general_public at large worldwide in the addition information_letter sent to the applicant the comment on statements made in the court_of_appeals of b about the formation ofa asked to on his civil commitment as a sexually violent predator the founder had filed an appeal on f the court records noted the founder's formation of a corporation with a stated purpose of advocating for reform ane repeal of sex abuse laws them the founders recorded reply was yes do ' founder was asked i ne elieved that sex between children and adults could actually it was also recorded by the court that th organization’s founder fi st mene helpful to ization’ fe d be be y h the b court_of_appeals concluded that the district_court did evidence and affirmed the decision that d was a sexually ‘ici not ab its di i o n j sys in admitting the tax law sec_501 of the code exempts from federal_income_tax corporations organized and operated an a b in order to be exempt as is not exempt c - its articles of organization limit the purposes of such organization to one or more exempt purposes and do not expressly empower the organization to engage otherwise than as an insubstantial part exclusively for charitable educational and other purposes including the prevention of cruelty to children or animals provided that no part of its net_earnings inures to the benefit of any private_shareholder_or_individual and no substantial part of the activities of which is carrying on propaganda of otherwise attempting to influence legislation us code title prohibits the sexual exploitation of a minor of the income_tax regulations states organization described in sec_501 an organization must be both organized and operated section if an organization fails to meet exclusively for one or more of the purposes specified in such section either the organizational or operational_test it sec_1_501_c_3_-1 b i of the regulations provides that an organization is organized exclusively for one or more exempt purposes only if of its activities in activities that in themselves are not in furtherance of one or more exempt purposes sec_4 -1 of the regulations states that an organization will be regarded as it engages primarily in activities operated exclusively’ for one or more exempt purposes only if which accomplish one or more of such exempt purposes specified in sec_501 c of the code an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose revrul_75_384 4975_2_cb_204 holds that an organization formed to promote world peace that planned and sponsored protest demonstrations at which members were urged to commit acts of civil disobedience did not qualify for sec_501 or exemption violation of constitutionally valid laws is inconsistent with exemption under ifrrc c asa matter of trust law one of the main sources of the general law of charity pla nned activities that violate laws are not in furtherance of a charitable purpose a_trust cannot be created for a purpose if the trust tends to induce the commission of crime or if the accomplishment of the purpose is otherwise against public policy where a policy is articulated in which is illegal the putpose is illegal a statute making certain conduct a criminal offense then it tends to encourage such conduct lv scott on trusts section 3d ed thus all charitable trusts and by implication all charitable organizations involves such criminal conduct or if regardless of their form are subject_to the requirement that their purpose may not be illegal or contrary to public policy revrul_71_447 1971_2_cb_230 restatement second of trusts moreover by conducting criminal activities an organization increases the burden of government and thus thwarts a well recognized charitable goal ie relief of section comment the burdens of government if its performance a_trust is illegal application of law sec_501 of the code exempts from federal_income_tax corporations organized and o exclusively for charitable educational and other purposes including the prevention of cruelty to i i erated children a was not formed for any charitable or educational purpose but was formed to sexually exploit children by promoting the repeal of child pornography and exploitation laws in addition the organization's primary a was formed for the purpose of working for law change activity is to ‘resea rch the pros and cons of decriminalizing sex between adults and minors and decriminalizing child pornography the research is to be converted into educational materials to be distributed to the general_public and legislatures for consideration for use in law reforming repe als decriminaliza tion or use in making new law bills the application form_1023 articulates the organization's primary activity and purpose is to in addition the policy decriminalize or change laws that prohibit the sexual exploitation of a minor working for law change concerning the rights of sexual active consenting kids and adults is stated in the purpose claus of the organizing documents therefore the purpose for which the organization is formed is contrary to public policy to protect the sexual exploitation of children the purpose claus in a’s organizing document does not meet the organizational_test c states that exempt purposes include the prevention of cruelty to children and that no part of its net_earnings inures to the benefit of any private_shareholder_or_individual and no substantial part of the activities of which is carrying on propaganda or otherwise attempting to influence legislation the bylaws provide d a lifetime position as executive director to ensure the furtherance of the organization's purpose and goals court documents report the founder’s views are in favor of sex between children and adults and that the formation of d’s corporation a is to work towards reform and repeal of sex abuse laws the court documents and decision to affirm the classification that d as a violent sexual predator supports the fact that d formed a to change laws that adversely affect the founder of a therefore the formation of a corporation to work towards reforming laws to legalize sexual abuse of minors is for the private benefit of the founder and not in furtherance of a charitable purposé- us code title prohibits the sexual exploitation of a minor the purpose and activities of the organization involve the purposeful sexual exploitations of minors like the organization in revrul_75_384 that did not qualify for c or c exemption this organization encourages individuals to violate the law irc applicants position the executive pirector founder for a stated in response to the additional information_letter that his corporation was no founded for my own personal_use gain the fact my sexual conviction case is one case out of millions of other adults and juveniles sexual abuse criminal and civil cases that have occurred over the last some years across the united_states plus a educational goal is aimed at every human being in the world and it is not aimed solely at those who are or have been accused of convicted at sexual crimes in reference to the comments made in the court_of_appeals d explained that a lot of the statements in that page civil appeal at hand are false propaganda that was written by the said official first time felon conspirators in conspiracy b's attorney_general had falsely imprisoned me as a for over years ongoing today for personal financial gain motives and the two counts of sex abuse charges were fa pricated for the purpose of deceiving the general_public and the appeals courts shortly after foun ded a the department of corrections in conspiracy with the attorney_general attempted to destroy a because it would give d to much credibility with the state and federal political authorities and might be able to publicly expose the corruptions within the b justice system along with ex post facto sexual laws do plan a future u s civil suit against the b attorney_general for bringing up a's name fabricating mistruths about a at my civil prosecution trials in support of the qualifications for exemption under sec_501 the applicant stated that a is an educational_organization and it’s in the prevention of cruelty to children and adults a’s educational advocacy is directed to society at large there is no direct influence to legislation the fact a is mandated py law to make it’s financial log books open to the general_public a is licensed to be an educational advocacy there is no way humanly possible to stop a legislature from reading a’s educational materials if she or he decides to take it on themselves to read or view it any educational statements from a can be defended with either scientific facts or from secondary facts from governmental public files or other expert’s files etc the applicant also stated that change in the laws concerning sexual exploitation of children a was and is organized to execute natural scientific study research on the pros and cons of human sexual behaviors and to convert the conclusive findings into educational materials and advocacy and to make such available to the general_public at lar ge worldwide a was organized and is operating primarily not for influencing a response to applicant's position the applicant's position that a is educational and not organized and operating for influencing a change in the laws does not agree with the stated purposes for which the organization was formed the purpose clause in the articles of incorporation says that the corporation was organized to work for law change to protect the rights of sexual active consenting kids and adults and to amend child sexual photography law the application states that the activities include the study and research into the pros and cons of decriminalizing what is defined as child pornography to decriminalize child pornography the organization’s activities would require working for law change as stated in a’s organizing documents the founder is the sole officer and the executive director provisions in the bylaws say that the executive director 's responsible in carrying out the corporation’s goals and the executive director position is for the life time of that individual the b court_of_appeals records referred to in the additional information requests show that the founder formed a with a stated purpose of advocating for reform and repeal of sex abuse laws the documented statements the founder stated that statistics discovered by a shows that sex between children and adults is beneficial to society the court affirmed d’s classification as a sexually violent predator the public court records provide further evidence that d's purpose for in forming a is to work for law changes that support d's criminal defense the founder's position that the b attorney_general and the department of corrections are in conspiracy to destroy a are only accusations and are not found to be factual statements in the courts conclusion leer children violent sexual predator the organization's primary activity and purpose is to decriminalize or change laws that prohibit the sexual exploitation of minors the founder sole officer and executive director of the organization d has been affirmed by the u s court system as a sec_501 of the code exempts from federal_income_tax corporations organized and operated exclusively for charitable educational and other purposes including the prevention of cruelty to a was not formed for any charitable or educational purpose but was formed to sexually exploit children by promoting the repeal of child pornography and exploitation laws us code title prohibits the sexual exploitation of a minor the purpose and activities of the organization involve the purposeful sexual exploitations of minors accordingly a does not qualify for exemption under sec_501 of the code you have the right to file a protest if you believe this determination is incorrect to protest you must submit a statement of your views and fully explain your reasoning you must submit the statement signed py one of your officers within days from the date of this letter we will consider your statement and decide if the information affects our determination lf your statement does not provide basis to reconsider our determination we will forward your case to our appeals_office you can find more information about the role of the appeals_office in publication exempt_organization appeal procedures for unagreed issues an attorney certified_public_accountant or an individual enrolled to practice before the internal_revenue_service may represent you during the appeal process if you want representation during a proper power_of_attorney form_2848 power_of_attorney and declaration of representative if you have not already done so you can find more information the appeal process you must file all forms about representation in publication practice_before_the_irs and power_of_attorney and publications mentioned in this letter can be found at www irs gov forms and publications a suit for declaratory_judgment in court because the internal_revenue_service irs will consider the failure to appeal as a failure if you do not file to exhaust available administrative remedies code sec_7428 provides in part that a declaratory_judgment or decree shall not be issued in any proceeding unless the tax_court united_states court of federal claims or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted all of the administrative remedies available to if we if you do not intend to protest this determination you do not need to take any further action do not hear from you within days we will issue a final adverse determination_letter that letter will provide information about filing tax returns and other matters a protest within days you will not be able to file it within the irs the please send your protest statement form_2848 and any supporting documents to the applicable address mail to internal_revenue_service eo determinations quality assurance room p o box cincinnati o h deliver to internal_revenue_service eo determinations quality assurance main street room cincinnati oh you may fax your statement using the fax number shown in the heading of this letter your statement please call the person identified in the heading of this letter to confirm that he or she received your fax lf you have any questions please contact the person whose name and telephone number are shown in the heading of this letter if you fax sincerely rob choi director exempt_organizations rulings agreements


internal_revenue_service number release date index number --------------------------------- ------------------------- ------------------------------- ----------------------------------- legend 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-137231-08 date date x ----------------------------------------- -------------------------- d1 d2 d3 ------- ---------------------- ------------------ dear ------------- this responds to the letter dated date and subsequent correspondence submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts according to the information submitted x made an election to be treated as an s_corporation in d1 on d2 an ineligible shareholder became a shareholder of x in d3 the termination of the s election was discovered and steps were taken so that x is a small_business_corporation x and its shareholder agree to make any adjustments consistent with the treatment of x as an s_corporation as may be required by the secretary with respect to the period specified by sec_1362 plr-137231-08 law and analysis sec_1361 defines an s_corporation as a small_business_corporation for which an election under sec_1362 is in effect sec_1361 defines a small_business_corporation as a domestic_corporation which is not an ineligible_corporation which does not a have more than shareholders b have as a shareholder a person other than an estate and a_trust described in subsection c or an organization described in subsection c who is not an individual c have a nonresident_alien as a shareholder and d have more than class of stock sec_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the 1st day of the taxable_year for which the corporation is an s_corporation such corporation ceases to be a small_business_corporation sec_1362 provides in part that if an election under sec_1362 by any corporation was terminated under sec_1362 the secretary determines that the circumstances resulting in the termination were inadvertent no later than a reasonable period of time after the discovery of the circumstances resulting in the termination steps were taken so that the corporation for which the termination occurred is a small_business_corporation and the corporation for which the termination occurred and each person who was a shareholder in such corporation at any time during the period of inadvertent termination of the s election agrees to makes such adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in the termination the corporation is treated as an s_corporation during the period specified by the secretary conclusion based solely on the facts submitted and representation made we conclude that x’s election to be treated as an s_corporation terminated on d2 we also conclude that the termination constituted an inadvertent termination within the meaning of sec_1362 under the provisions of sec_1362 x will be treated as continuing to be an s_corporation from d2 and thereafter provided that x’s s_corporation_election is not otherwise terminated under sec_1362 except as expressly provided herein no opinion is expressed or implied as to the federal tax consequences of the facts described above under any other provision of the plr-137231-08 code in particular no opinion is expressed as to whether x is 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 pursuant to the power_of_attorney on file with this office a copy of this letter will be sent to x’s authorized representative sincerely david r haglund david r haglund senior technician reviewer branch office of associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index numbers ------------------------------------ ----------------------------- --------------------------------------- ---------------------------------------- department of the treasury washington dc person to contact ----------------------- id no ------------------- --------------------------------------------------- telephone number ---------------------- refer reply to cc psi b03 - plr-134146-15 date date legend x ------------------------------------------------------------ -------------------------------------- a ------------------------ -------------------------------------------------------------- territory d1 d2 dear ----------------- ----------------------------- ---------------------- -------------------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be classified as a disregarded_entity for federal tax purposes the information submitted discloses that x was organized on d1 under the laws of territory a became sole owner of x on d2 and intended x to be treated as a facts plr-134146-15 disregarded_entity for federal tax purposes effective d2 however x failed to timely file form_8832 entity classification election to be classified as a disregarded_entity for federal tax purposes law and analysis sec_301_7701-3 provides in part 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 an eligible_entity with at least two members can elect to be classified as either an association and thus a corporation under sec_301_7701-2 or a partnership and an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that except as provided in sec_301 b unless the entity elects otherwise a foreign eligible_entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides in part that for purposes of sec_301_7701-3 a member of a foreign eligible_entity has limited_liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member sec_301_7701-3 provides in part that except as provided in sec_301_7701-3 and v an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 with the service_center designated on form_8832 sec_301_7701-3 provides in part that an election made under sec_301_7701-3 will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time 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 internal_revenue_code code except subtitles e g h and i sec_301_9100-1 provides that the term regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an plr-134146-15 election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely on the facts and representations submitted we conclude that x has satisfied the requirements of sec_301_9100-1 and sec_301_9100-3 consequently x is granted an extension of time of one hundred twenty days from the date of this letter to elect under sec_301_7701-3 to be treated as a disregarded_entity effective d2 x must file form_8832 within the extension period with the appropriate service_center with a copy of this letter attached except for the specific ruling above we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the code in addition sec_301_9100-1 provides that the granting of an extension of time for making an election is not a determination that the taxpayer is otherwise eligible to make the election this ruling is directed only to the taxpayer requesting it according to sec_6110 of the code this ruling may not be used or cited as precedent under a power_of_attorney on file with this office we are sending a copy of this letter to x’s authorized representative plr-134146-15 the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the ruling_request it is subject_to verification on examination sincerely associate chief_counsel passthroughs special industries by __ s ___________________________ richard t probst senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


t c summary opinion united_states tax_court francis j maguire and lisa a maguire petitioners v commissioner of internal revenue respondent docket no 18214-12s filed date francis j maguire and lisa a maguire pro sese jonathan e behrens for respondent summary opinion lauber judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code pursuant to sec_7463 the decision to all statutory references are to the internal_revenue_code_of_1986 as amended and in effect for the tax years at issue all references to rules are to the tax_court rules_of_practice and procedure we round all dollar amounts to the nearest dollar be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case this case was tried in philadelphia pennsylvania and petitioners resided in new jersey when they petitioned this court they commenced this proceeding to contest deficiencies additions to tax and penalties that respondent determined for tax years and after concessions by each party the issues remaining for decision are whether petitioners are entitled to deduct expenses reported on schedule c profit or loss from business related to petitioner husband’s business whether petitioners are entitled to claimed medical expense deductions and whether petitioners are liable for accuracy-related_penalties under sec_6662 and additions to tax under sec_6651 background before trial the parties filed a stipulation of facts and related exhibits with the court we incorporate the stipulation of facts and the accompanying exhibits by this reference petitioners conceded that they failed to report wages of dollar_figure and dollar_figure for and respectively respondent conceded deductible medical and dental expenses of dollar_figure and dollar_figure for and respectively and deductible office expenses of dollar_figure for respondent also conceded that petitioners are not liable for a sec_6651 addition_to_tax for or francis maguire was self-employed during the years at issue as an insurance broker his business consisted principally of marketing annuities and other estate_planning insurance products chiefly to church groups and police benevolent associations during and mr maguire resided in little egg harbor new jersey which he referred to as south jersey he traveled almost daily either to bayonne or hackensack which he referred to collectively as north jersey while in north jersey mr maguire met with clients worked to develop his business and tried to build a sales force of independent contractors mr maguire maintained no office space in north jersey rather he used the offices or conference rooms of business associates when in the area he introduced no evidence that he maintained an office or principal_place_of_business near or at his home in south jersey petitioners did not claim any deductions attributable to a home_office on their or federal tax_return lisa maguire francis’ wife while a named petitioner on account of the filing of a joint_return had no significant involvement in her husband’s business activities in a notice_of_deficiency respondent determined the following deficiencies penalties and additions to tax_year total deficiency dollar_figure big_number big_number penalty sec_6662 addition_to_tax sec_6651 dollar_figure big_number dollar_figure big_number the deficiencies resulted from the complete disallowance of petitioners’ claimed deductions for schedule c car and truck expenses travel_expenses and meals and entertainment_expenses coupled with the partial_disallowance of petitioners’ claimed deductions for medical and dental expenses and schedule c office expenses the disallowance of the schedule c expenses generated computational adjustments not directly at issue here discussion a burden_of_proof the commissioner’s determinations set forth in a notice_of_deficiency are generally presumed correct and the taxpayer bears the burden of proving them erroneous rule a 290_us_111 petitioners do not contend that the burden_of_proof as to any factual issue should shift to respondent under sec_7491 and if they had advanced this contention it would lack merit as explained below petitioners have not complied with the substantiation and recordkeeping requirements of sec_7491 and b b schedule c expenses the principal issue is whether petitioners are entitled to deduct certain expenses reported on schedule c related to mr maguire’s business sec_162 allows a taxpayer to deduct all the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business a necessary expense is one that is appropriate and helpful to the taxpayer’s business while an ordinary_expense is one that is common or frequent in the type of business in which the taxpayer is engaged 308_us_488 welch v helvering u s pincite the taxpayer bears the burden of proving that claimed expenses are ordinary and necessary rule a and also bears the burden of substantiating claimed deductions sec_6001 65_tc_87 aff’d per curiam 540_f2d_821 5th cir in certain circumstances the court may estimate the amount of a deductible expense if a taxpayer establishes that an expense is deductible and furnishes some documentation but is unable to substantiate the precise amount see 39_f2d_540 2d cir 85_tc_731 sec_274 imposes more rigorous substantiation requirements for certain types of expenses in particular sec_274 disallows deductions for travel_expenses expenses for business meals and entertainment and expenses related to listed_property unless the taxpayer substantiates by adequate_records or by sufficient evidence corroborating the taxpayer’s own statement the amount of the expense the time and place of the travel or entertainment the business_purpose of the expense and in the case of meals and entertainment the business relationship to the taxpayer of the persons entertained see sec_274 flush language the court may not apply the cohan_rule to estimate expenses when the heightened substantiation requirements of sec_274 apply 50_tc_823 aff’d 412_f2d_201 2d cir sec_1_274-5t temporary income_tax regs fed reg date car and truck expenses respondent completely disallowed petitioners’ mileage-based deductions for car and truck expenses of dollar_figure for and dollar_figure for these expenses fall into two categories--four trips to florida and almost daily trips from petitioners’ home to north jersey for routine business mr maguire testified in support of the claimed deductions and petitioners entered into evidence a travel log that he prepared the travel log consists of month-by-month calendar pages for each day on which he traveled mr maguire entered an abbreviation for his destination eg bay for bayonne or hack for hackensack in the margins he entered beginning mileage and ending mileage for each year and the round trip mileage of a trip to bayonne miles and to hackensack miles all told he recorded approximately round trips to bayonne approximately round trips to hackensack and four round trips to florida the florida trips require only brief discussion the sole evidence of the business nature of these trips was mr maguire’s testimony that he visited florida in an effort to recruit his two sisters into his insurance_business mr maguire did not explain how he tried to recruit his sisters why they were qualified for the work he was allegedly recruiting them to do one is a retired schoolteacher and one a retired church administrator which of the four trips to florida entailed recruiting or why each trip lasted a full week we accordingly conclude that petitioners have failed to establish the business nature of these trips the bulk of mr maguire’s automobile expenses involved travel from his home in south jersey to his business destinations in north jersey respondent urges two distinct grounds for disallowing a deduction for these expenses that they were nondeductible commuting expenses and that if they would otherwise qualify for deduction under sec_162 they fail the substantiation tests of sec_274 we agree with respondent on both counts sec_262 provides that no deduction shall be allowed for personal living or family_expenses many expenses that are helpful to a person’s employment--such as the cost of clothing worn to work and of purchasing meals during the business day--are inherently_personal and hence nondeductible see eg 80_tc_1073 disallowing deduction of petitioner’s share of daily office lunch expenses aff’d 758_f2d_211 7th cir 74_tc_1266 disallowing deduction of business wardrobe and cleaning expenses the costs of commuting from home to work are a prime example of personal or living_expenses the nature and length of the commute depend entirely on the taxpayer’s personal choice about where to live see 326_us_465 bogue v commissioner tcmemo_2011_164 commuting expenses generally constitute nondeductible personal expenses aff’d fed appx wl 3d cir date sec_1_162-2 income_tax regs in order for daily travel_expenses to be deductible under sec_162 they must be expenses not of commuting from home to work but of traveling from one worksite to another see eg 76_tc_839 car expenses qualify as deductible business travel_expenses not commuting expenses if the taxpayer’s residence is his principal_place_of_business mr maguire testified that he originally resided in north jersey and spent time developing business relationships in that part of the state he moved his residence to south jersey years ago but many of his clients business associates and prospective customers remained concentrated in north jersey he introduced no evidence that he maintained an office or place of business at or near his home in south jersey he did not claim deductions attributable to a home_office for or and no evidence was introduced at trial to show that his residence in south jersey constituted his principal_place_of_business to the contrary the evidence before us indicates that mr maguire’s principal_place_of_business was in north jersey and that he conducted his business from the offices and conference rooms of his business associates there it appears from his testimony and the travel log he submitted that mr maguire traveled to north jersey four to six times a week for a total of approximately round trips during and considering that the round trip drive to each of the two cities he frequented exceeded miles and would take approximately hours without traffic it is hard to see how mr maguire could have maintained a principal_place_of_business at his home during these years for these reasons we conclude that his travel_expenses from his home to north jersey were not deductible business_expenses but rather were personal commuting expenses that are nondeductible under sec_262 even if we were to conclude that mr maguire’s automobile expenses were business_expenses they would be nondeductible because he has not met the rigorous substantiation requirements of sec_274 the travel log he proffered does not constitute an adequate record because it does not contain sufficient information as to each element of every business use sec_1 5t c ii c temporary income_tax regs supra the log simply indicates that mr maguire visited certain cities in north jersey on certain days no detail is provided concerning the business_purpose of any individual trip his log does not negate the possibility that some trips may have focused on visiting family or friends in north jersey where he previously lived in addition we question whether mr maguire maintained the travel log at or near the time of the expenditure as required to generate an adequate record see sec_1_274-5t temporary income_tax regs supra the log entries the abbreviations bay and hack bear a striking resemblance to one another many appear to have been written using the same pen and are recorded at the same angle and in the same size and manner while an individual can no doubt exercise consistent penmanship the court has reason to question mr maguire’s testimony that all of these log entries were recorded contemporaneously with his travels other documents produced at trial reinforce the court’s credibility concerns on one of the days that mr maguire was supposed to have traveled to bayonne saturday date a document he provided respondent as evidence of a deductible business_expense shows a purchase at the u s post office in little egg harbor new jersey pincite p m considering that he faced a 5-hour round trip commute to bayonne one may reasonably question whether mr maguire did in fact make this trip when he was engaged in a commercial transaction near his home at noon on a saturday mr maguire also provided at least four documents to the irs during the examination process that he admitted at trial were fraudulently prepared by his tax_return_preparer in the absence of adequate_records the substantiation requirements of sec_274 can be met by other_sufficient_evidence corroborating the taxpayer’s own statement see sec_1_274-5t temporary income_tax regs supra but petitioners failed to provide such other evidence or testimony that was both relevant and credible mr maguire admitted at trial that he could not orally reconstruct the business conducted or the people he met with on each of the days in question over the course of two years when this lack of evidence is coupled with the questionable nature of his travel log we have no alternative but to conclude that petitioners have not substantiated their automobile expenses with the rigor that sec_274 requires other travel_expenses petitioners claimed schedule c deductions for travel apparently attributable to airplane travel of dollar_figure for and dollar_figure for these expenses which respondent completely disallowed are likewise subject_to the heightened substantiation requirements of sec_274 when asked about these travel_expenses at trial mr maguire mentioned a trip to florida but that trip appears to have been an automobile trip the expenses for which we have discussed previously he also mentioned that he might have taken a trip to green bay wisconsin but the only airplane travel for which he provided documentation was a trip to indianapolis in date which he did not mention in his testimony had mr maguire offered detailed testimony about the business nature of the indianapolis trip the receipts he provided may have been sufficient corroborating evidence to substantiate the deduction under sec_274 as it is we are forced to conclude that he failed to substantiate his travel_expenses and that respondent properly disallowed deductions for them in their entirety meals and entertainment petitioners claimed schedule c deductions of dollar_figure and dollar_figure for meals and entertainment for and respectively these expenses which respondent completely disallowed are likewise subject_to the heightened substantiation requirements of sec_274 the evidence submitted to substantiate the meal expenses is incomplete and inconsistent petitioner offered a meal log that he testified was maintained contemporaneously with the events many of the accompanying receipts are unreadable while others paint an inconsistent picture when asked about a receipt for a meal expense incurred on date with a st john’s church minister mr maguire testified that would have been st john’s byzantine church in bayonne although bayonne was one of the two cities that mr maguire often visited his own travel log does not place him in bayonne that saturday and the meal receipt places him in little egg harbor his hometown when asked whether another purported expense from the same day was related to the meeting with st john’s church he testified no i’m just up in north jersey tried to maximize my time regarding the claimed entertainment_expenses petitioners submitted three receipts--two for tutankhamun golden age of pharaohs and one for thomas friends live each ticket has broker drawing contest written on the back in mr maguire’s handwriting but no other evidence or testimony was offered to support the business nature of this entertainment we note that both shows were in the philadelphia area the closest large metropolitan area to petitioners’ home presumably events in the new york city area would have been a greater draw for business associates based in bayonne and hackensack than admission to a museum exhibit pincite a m on a thursday or the opportunity to see thomas the tank engine in a city more than miles away because of inconsistencies in the documents presented as well as the dearth of documentation overall we find that petitioners failed to carry their burden_of_proof they have not shown that they are entitled to deduct any meals and entertainment_expenses under sec_162 and they have not adequately substantiated those expenses as required by sec_274 office expenses petitioners reported on schedule c office expenses of dollar_figure and dollar_figure for and respectively respondent has allowed deductions for dollar_figure of the expenses and dollar_figure of the expenses while office expenses are not subject_to the heightened substantiation requirements of sec_274 petitioners still bear the burden of proving that the claimed deficiency is in error petitioners put forth no evidence at trial to substantiate the additional claimed office expenses when asked about the additional office expenses at trial mr maguire provided no testimony to support the claimed deductions and simply reiterated that the car and truck expenses were the most important issue to him because petitioners failed to meet their burden respondent’s disallowance of a deduction for the remaining office expenses was proper c medical_expenses petitioners claimed schedule a deductions for medical and dental expenses of dollar_figure for and dollar_figure for respondent allowed dollar_figure of the expenses and dollar_figure of the expenses before application of the statutory floor imposed by sec_213 sec_213 permits a taxpayer to deduct expenses for medical_care not_compensated_for_by_insurance_or_otherwise to the extent that such expenses exceed of the taxpayer’s adjusted_gross_income a taxpayer claiming a deduction under sec_213 must furnish the name and address of each person to whom payment for medical_expenses was made and the amount and date of the payment thereof in each case sec_1_213-1 income_tax regs petitioners offered no testimony at trial and few receipts by way of stipulated documents to substantiate their disallowed medical_expenses however upon review of the submitted documentation we determine that petitioners substantiated dollar_figure of additional medical_expenses for and dollar_figure of additional medical_expenses for to the extent these expenses exceed the applicable statutory floor a deduction should be allowed d penalties and additions to tax sec_6662 penalty sec_6662 imposes a accuracy-related_penalty upon the portion of any underpayment_of_tax that is attributable to among other things n egligence or disregard of rules or regulations sec_6662 negligence is defined as any failure to make a reasonable attempt to comply with the provisions of the code sec_6662 the commissioner bears the burden of production with respect to a sec_6662 penalty sec_7491 once the commissioner satisfies his burden the burden shifts to the taxpayer to prove that the penalty does not apply 116_tc_438 the sec_6662 accuracy-related_penalty does not apply to any portion of an underpayment if it is shown that there was a reasonable_cause for such portion and that the taxpayer acted in good_faith with respect to it sec_6664 the decision whether the taxpayer acted with reasonable_cause and in good_faith is made on a case-by-case basis taking into account all pertinent facts and circumstances sec_1_6664-4 income_tax regs generally the most important factor is a taxpayer’s effort to assess correctly his or her tax_liability ibid respondent met his burden of production by showing that petitioners did not maintain appropriate records to substantiate their claimed deductions thus shifting the burden_of_proof to petitioners petitioners in turn offered little evidence to show that they tried to assess their tax_liability correctly mr maguire testified that he thought keeping the travel log would be enough to substantiate the car and truck expenses but he offered no explanation of where he received that information or why it was reasonable to rely on it petitioners provided no evidence of reasonable_cause or good_faith with respect to any of the other disallowed deductions mr maguire did testify that petitioners used a tax_return_preparer but that testimony does not establish a defense of reliance on professional advice this defense is available only where the taxpayer relies on the advice of a competent tax professional sec_1_6664-4 income_tax regs petitioners did not establish that they ever received advice from their tax_return_preparer that they relied on the advice or that the preparer was a competent tax professional at trial mr maguire seemed to admit that his return preparer had created and submitted fraudulent documents to the irs which inspires little confidence in that person’s competence for the foregoing reasons we find that petitioners were negligent and failed to show that any portion of their or underpayments met the reasonable_cause exception the accuracy-related_penalties were properly imposed under sec_6662 for both and petitioners would also be liable for a substantial_understatement_penalty pursuant to b for having found petitioners liable for an accuracy- related penalty under sec_6662 for both years we need not consider the substantial_understatement issue see sec_1_6662-2 income_tax regs only one accuracy-related_penalty may be imposed for any_tax year sec_6651 addition_to_tax sec_6651 provides for an addition to the tax in case of a taxpayer’s failure timely to file a return unless the taxpayer proves that such failure is due to reasonable_cause and not due to willful neglect the evidence is uncontroverted that petitioners filed their tax and tax returns on date well past the statutory deadline for each year petitioners put on no evidence to show reasonable_cause for their late filings reliance on a return preparer--even if petitioners had established it which they did not do--is not available as a defense to the addition_to_tax for late filing of a tax_return see 469_us_241 decision will be entered under rule


t c summary opinion united_states tax_court daye calvert petitioner v commissioner of internal revenue respondent docket no 23246-04s filed date daye calvert pro_se linda a neal for respondent couvillion special_trial_judge this case was heard pursuant to sec_7463 in effect when the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority 1unless otherwise indicated section references hereafter are to the internal_revenue_code in effect for the year at issue this case is decided without regard to the burden_of_proof in some instances sec_7491 shifts the burden_of_proof to respondent since this case involves only a question of law sec_7491 is not applicable here respondent determined a deficiency of dollar_figure in petitioner’s federal_income_tax for the year the sole issue for decision is whether social_security_benefits received by petitioner during are includable in gross_income under sec_86 some of the facts were stipulated those facts and the accompanying exhibits are so found and are incorporated herein by reference petitioner’s legal residence at the time the petition was filed was shreveport louisiana petitioner was married and lived with his wife at shreveport louisiana petitioner has a degree in architectural engineering and during the year at issue was employed as construction superintendent on a 2-year project at reno nevada for the duration of his employer’s construction_contract which included the year petitioner rented an apartment at reno nevada his spouse did not move to reno but continued occupying their residence at shreveport louisiana at trial petitioner acknowledged that from time to time he visited his spouse at their shreveport home during the 2-year period he was at reno he also acknowledged that he and his spouse were not separated 2in the notice_of_deficiency respondent determined that petitioner earned interest_income of dollar_figure during the year at issue petitioner did not address this determination at trial consequently it is considered to be conceded by petitioner due to marital discord and they were separated during the year at issue solely because of his employment during the year petitioner received dollar_figure in social_security_benefits for that year petitioner filed a federal_income_tax return with the filing_status of married_filing_separately he reported the dollar_figure in social_security_benefits on his return and based on his computation on a social_security_benefits worksheet he calculated that dollar_figure of the dollar_figure constituted the taxable_portion of his social_security_benefits however petitioner relied upon the language on line of the worksheet which states but if you are married_filing_separately and you lived apart from your spouse for all of enter -0- on line 20b be sure you entered ‘d’ to the right of the word ‘benefits’ on line 20a because petitioner lived at reno nevada the entire year except for periodic visits to his wife and since he was filing his return separately he accordingly did not enter any amount as income on line 20b of his return however he entered the dollar_figure on line 20a and entered the letter d pursuant to the directions of the social_security_benefits worksheet petitioner claims therefore that no portion of his social_security_benefits is taxable he claims that he lived apart from his wife for the year in the notice_of_deficiency respondent determined that the taxable_portion of the social_security_benefits was dollar_figure and accordingly determined the deficiency of dollar_figure the fundamental question in this case is whether petitioner and his spouse lived apart from each other during the taxable_year as noted above petitioner lived at reno nevada that year because of his employment but admitted that he occasionally visited his spouse at their matrimonial domicile in 118_tc_373 the court concluded that for purposes of sec_86 living apart means living in separate residences at all times during the taxable_year this means that the taxpayer and his or her spouse live in separate residences on each day of the year dubois v commissioner tcmemo_2003_222 the fact that petitioner in this case lived in reno nevada away from hi sec_3the social_security_benefits worksheet is not required to be filed as part of the return at trial however the parties offered into evidence the worksheet and it shows that even though petitioner concluded that no portion of his social_security_benefits was taxable he made the computation for that portion of the worksheet lines through and that computation reflected the taxable_portion of his social_security_benefits to be dollar_figure the identical amount determined by respondent petitioner ignored that result because he considered such result to be inconsistent with the fact that he lived separate and apart from his spouse during that year and since line of the form stated that if he lived apart from your spouse for all of enter -0- on line 20b he followed that directive and entered zero taxable social_security income on his return 4the deficiency includes additionally the dollar_figure in interest_income determined in the notice_of_deficiency wife and occasionally visited his wife does not establish that petitioner and his spouse were living apart in mcadams v commissioner supra pincite the court noted petitioner also argues that he merely ‘visited’ his wife and did not live with her in costa v commissioner t c memo we concluded that intermittent visits sufficed to establish that the spouses did not live apart the court also cited sec_1_85-1 income_tax regs relating to employment compensation which states a taxpayer does not live apart from his or her spouse at all times during a taxable_year if for any period during the taxable_year the taxpayer is a member of the same household as such taxpayer’s spouse a taxpayer is a member of a household for any period including temporary absences due to special circumstances during which the household is the taxpayer’s place of abode a temporary absence due to special circumstances includes a nonpermanent absence caused by illness education business vacation or military service the court concludes that petitioner in this case did not live separate and apart from his wife during the year at issue therefore dollar_figure of the social_security_benefits paid to him that year constituted gross_income respondent is sustained on this issue reviewed and adopted as the report of the small_tax_case division decision will be entered for respondent


number release date id office uilc cca_2011032112062926 -------------- from ----------------- sent monday date pm to --------------------------- cc subject fw llc wrongful_levy case --------- this is to confirm your opinion that the service can’t levy on the property of a disregarded llc to satisfy the tax_liability of the llc’s sole member as you’ve noted the sole member has no ownership_interest in llc’s property under local law and disregarding the llc for federal tax purposes doesn’t allow the service to disregard the entity for purposes of collection a levy might be made for distributions by the llc that are based on the sole member’s interest in llc eg if tp is supporting himself from the net_income of the llc the lien attaching to tp’s interest in llc should allow the service to issue a levy notice to llc for the distributions of that income compare 603_f3d_162 2d cir frequent and regular partnership draws which are advances or loans on annual profits are subject_to a lien any may be levied as salary or wages and as you said the ro could consider whether an alter_ego_lien is appropriate the lien might be based on the common_law concept of piercing the corporate veil which courts generally apply to llcs and which some llc statute reference a reverse veil piercing in some states would subject the llc property to the claims of a member's creditors some states set a high standard for piercing eg piercing must be needed to prevent an injustice or acts approaching fraud in some states an alter ego analysis is used to allow piecing and in others it’s a separate approach for disregarding an entity and the standards vary state by states in some states a member’s control of the llc might make the two indistinguishable eg the books_and_records may show the sole member and the llc don’t have a separate economic existence the government has argued for the application of a federal common_law of alter ego but that argument was rejected in 605_f3d_856 11th cir


internal_revenue_service department of the treasury washington dc person to contact telephone number refer reply to cc psi plr-130843-01 date date number release date index number company state shareholder a b dear this letter responds to a letter dated date from your authorized representative submitted on behalf of company requesting a ruling under sec_1362 of the internal_revenue_code regarding company's late s_corporation_election facts company was incorporated in state on a shareholder is the sole owner of company company represents that it intended to be an s_corporation effective b however form_2553 election by a small_business_corporation was not timely filed with the internal_revenue_service company’s form_1120s u s income_tax return for an s_corporation for its tax_year beginning b is on extension law and analysis sec_1362 provides that in general that an election by a small_business_corporation under sec_1362 to be an s_corporation may be made for any taxable year-- a at any time during the preceding_taxable_year or b at any time during the taxable_year and on or before the 15th day of the 3d month of the taxable_year sec_1362 provides that if-- a a small_business_corporation makes an election under sec_1362 for any taxable_year and b that election is made after the 15th day of the 3d month of the taxable_year and on or before the 15th day of the 3d month of the following taxable_year plr-130843-01 then that election shall be treated as made for the following taxable_year sec_1362 provides that if-- a an election under sec_1362 is made for any taxable_year determined without regard to sec_1362 after the date prescribed by this subsection for making the election for that taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make the election the secretary may treat such election as timely made for that taxable_year and sec_1362 shall not apply based solely on the facts and representations submitted by company we conclude that there was reasonable_cause for company’s failure to make a timely s_corporation_election therefore we conclude that company's late election under sec_1362 is to be treated under sec_1362 as filed timely for its tax_year beginning b this ruling is contingent however on company filing form_2553 to be effective on b with the appropriate service_center no later than days from the date of this letter a copy of this letter should be attached to the form_2553 except for the specific ruling above we express or imply no opinion concerning the federal_income_tax consequences of the facts of this case under any other provision of the code specifically we express or imply no opinion on whether company otherwise is eligible to be an s_corporation under a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative this ruling is directed only to the taxpayer who requested it according to sec_6110 this ruling may not be used or cited as precedent sincerely jeanne e sullivan senior technician reviewer branch office of associate chief_counsel passthroughs and special industries enclosure copy of this letter copy for sec_6110 purposes


internal_revenue_service index number number release date cc dom corp plr-107515-98 date re distributing controlled holding_company state a busine sec_1 busine sec_2 z zf x p q r s t u m date n date dear this is in reply to a letter dated date requesting rulings as to the federal_income_tax consequences of certain proposed transactions additional information was submitted by letters dated date and date the information submitted for consideration is substantially as set forth below the rulings contained in this letter are predicated upon facts and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of this request_for_ruling verification of the factual information representations and other data may be required as part of the audit process distributing is a state a corporation which is engaged in busine sec_1 a regulated business distributing is also engaged in busine sec_2 through controlled its wholly- owned unregulated state a subsidiary distributing is publicly traded and as of date had authorized p shares of common_stock of which q shares were issued and outstanding as of date distributing also had authorized r shares of nonvoting cumulative preferred_stock of which s shares were issued and outstanding in six series as of december controlled had authorized t shares of common_stock of which u shares were issued and outstanding financial information has been received which indicates that distributing and controlled each have had gross_receipts and operating_expenses representative of the active_conduct_of_a_trade_or_business for each of the past five years distributing’s busine sec_1 is subject_to the regulatory authority of z a state a agency and zf a federal_agency under the state a regulatory law distributing must obtain approval from z each time it invests in or loans money to its nonregulated subsidiary controlled the taxpayer has represented that the approval process is expensive and time-consuming and that processing delays have caused controlled to lose out on business opportunities on m date z issued an order recommending that companies including distributing divest themselves of x assets after negotiations with z a settlement agreement which was later modified by z was approved by z the settlement agreement provides that distributing will structurally separate its x assets by n date or earlier if required by z therefore to comply with the settlement agreement the taxpayer proposes the following steps to separate its regulated and nonregulated businesses i distributing will form holding_company ii holding_company will exchange all of its common_stock with distributing’s shareholders on a share for share basis for all of the outstanding shares of distributing’s common_stock iii when the share exchange is consummated holders of distributing common_stock who do not vote for the holding_company formation and who timely dissent will have certain statutory appraisal rights the terms of the share exchange require that anyone choosing to dissent must surrender all of their distributing stock iv upon consummation of the share exchange each nondissenting holder of distributing’s common_stock immediately prior to the share exchange will own a corresponding number of shares and percentage of the outstanding holding_company common_stock holding_company will own all of the outstanding shares of distributing’s common_stock not subject_to appraisal rights vi following the share exchange distributing will distribute to holding_company all of the stock of controlled the following representations have been made in connection with the proposed transaction a there will be no transfers of property by distributing to controlled in connection with the transaction controlled is not assuming liabilities nor receiving assets subject_to liabilities b no part of the consideration to be distributed by distributing will be received by holding_company as a creditor employee or in any capacity other than that of a shareholder of the corporation c no part of the consideration to be distributed by distributing will be received by a security holder as an employee or in any capacity other than that of a security holder of the corporation d the five years of financial information submitted on behalf of distributing and controlled is representative of each corporation’s present operations and with regard to each corporation there have been no substantial operational changes since the date the last financial statements were filed e following the transaction distributing and controlled will each continue the active_conduct of their respective businesses independently and with their separate employees f the distribution of the stock of controlled is carried out for the following corporate business purposes to implement the corporate restructuring authorized by the settlement agreement whereby among other things distributing is authorized to divest itself of controlled and to provide financial flexibility to act quickly to take advantage of business opportunities and to respond to changes in the business environment the distribution of the stock of controlled is motivated in whole or substantial part by one or more of these corporate business purposes g there is no plan or intention by holding_company and the management of distributing to its best knowledge is not aware of any plan or intention on the part of any particular remaining shareholder or security holder of distributing to sell exchange transfer by gift or otherwise dispose_of any stock in or securities of either distributing or controlled after the share exchange other than in the ordinary course of business h there is no plan or intention to liquidate either distributing or controlled to merge either corporation with any other corporation or to sell or otherwise dispose_of assets of either corporation subsequent to the transaction except in the ordinary course of business and except as required by the settlement agreement regarding x assets of distributing i no intercorporate debt will exist between distributing and controlled at the time of or subsequent to the distribution of controlled stock j immediately before the distribution items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations see sec_1_1502-13 and sec_1 as in effect before the publication of t d 1995_32_irb_6 and as currently in effect sec_1_1502-13 as published by t d further distributing’s excess_loss_account with respect to the controlled stock will be included in income immediately before the distribution see sec_1_1502-19 k payments made in connection with all continuing transactions if any between distributing and controlled will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm's length l distributing controlled and the shareholders of distributing will each pay their own expenses if any incurred in connection with the distribution m distributing shareholders will not increase their basis in the enterprise conducted by holding_company as a result of the transfer n within the five year period preceding the date holding_company acquires control of distributing no person including all persons related to such person within the meaning of sec_267 and sec_707 of the code or any group of persons acting in concert purchased as much a sec_50 percent of the outstanding_stock of distributing o the distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of either distributing or controlled or stock possessing percent or more of the total value of all classes of stock of either distributing or controlled based solely on the information submitted and on the representations set forth above it is held as follows controlled stock sec_355 c the controlled stock sec_355 a no gain_or_loss will be recognized to distributing on the distribution of the no gain_or_loss will be recognized by holding_company upon the receipt of the basis of the stock of distributing and controlled in the hands of holding_company after the distribution will be the same as the aggregate basis of the distributing stock held immediately before the distribution allocated in proportion to the fair_market_value of each in accordance with sec_1_358-2 a of the income_tax regulations sec_358 the holding_period of the controlled stock received by holding_company willl include the holding_period of distributing stock with respect to which the distribution will be made provided that distributing stock is held as a capital_asset on the date of the exchange sec_1223 as provided in sec_312 h proper allocation of earnings_and_profits between distributing and controlled will be made under sec_1_312-10 b no opinion is expressed about the tax treatment of the proposed transaction under any 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 proposed transaction that are not specifically covered by the above rulings in particular pursuant to revproc_98_3 sec_3 we express no opinion regarding whether sec_351 applies to the formation of holding_company temporary or final regulations pertaining to one or more of the issues addressed in this ruling letter including regulations under sec_358 have not yet been adopted therefore this ruling will be modified or revoked if adopted temporary or final regulations are inconsistent with any conclusions in the ruling see dollar_figure of revproc_98_1 1998_1_irb_7 however when the criteria in dollar_figure of revproc_98_1 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances this ruling is directed only to the taxpayer who requested it sec_6110 k of the code provides that it may not be used or cited as precedent it is important that a copy of this letter be attached to the federal_income_tax returns of the taxpayers involved for the taxable_year in which the transaction covered by this letter is consummated pursuant to the power_of_attorney on file in this office a copy of this letter has been sent to your authorized representatives sincerely assistant chief_counsel corporate by___________________________ howard staiman assistant branch chief branch


department of the treasury internal_revenue_service washington d c date number info release date uilc cc tege eoeg et1 genin-118159-02 memorandum for director internal_revenue_service center kansas city mo attn entity control from subject office of division counsel associate chief_counsel tax exempt and government entities cc tege eoeg et1 - genin-118159-02 railroad retirement act tax status in accordance with the coordination procedure established between the service and the railroad retirement board rrb the rrb has provided us with its opinion that the following business ceased to be an employer under the railroad retirement act and the railroad unemployment insurance act effective date we have reviewed the opinion of the rrb and based upon the information submitted to the rrb we also conclude that ceased to be an employer under the railroad_retirement_tax_act effective date please take the appropriate action regarding this business will e mcleod 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 plr-103888-18 date date legend x ------------------------------------------------------------- ---------------------------------------------- y ------------------------------------------------------------- --------------------------- trust ------------------------------------------------------------- ---------------------------------------------------------------- state date date date date ----------- ---------------------- -------------------- ---------------------- ----------------- dear ---------------- this letter responds to a letter dated date and subsequent plr-103888-18 correspondence requesting a ruling under sec_1362 of the internal_revenue_code code and sec_301_9100-3 of the procedure and administration regulations facts according to the information submitted x and y were incorporated under the laws of state on date x an s_corporation acquired all of the stock of y x failed to timely file form_8869 qualified_subchapter_s_subsidiary qsub election which was intended to be effective on date on date trust acquired all of the stock of y on date y filed form_2553 election by a small_business_corporation to elect s status for what was intended to be an s election effective on date as part of the ruling_request the following representations were made the circumstances resulting in the ineffectiveness of y’s qsub and s_corporation elections were inadvertent and were not motivated by tax_avoidance or retroactive tax planning law 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 which is not an ineligible_corporation if percent of the stock of the corporation is held by an s_corporation and the s_corporation elects to treat the corporation as a qsub sec_1_1361-3 of the income_tax regulations provides the time and manner for making a qsub election a taxpayer makes a qsub election with respect to a subsidiary by filing form_8869 qualified_subchapter_s_subsidiary election with the appropriate service_center effective up to two months and days prior to the date the election is filed or not more than months after the election is filed sec_301_9100-1 provides that the commissioner in exercising the commissioner’s discretion may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but not more than months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register plr-103888-18 sec_301_9100-2 provides the standards the commissioner will use to determine whether to grant an automatic_extension of time for making certain elections sec_301_9100-3 provides the guidelines for granting extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government 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 in relevant part 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 under sec_1362 however if an s election is made after the first two and one-half months of a corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is filed sec_1362 provides that if a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year conclusion based solely on the facts submitted and representations made we conclude the requirements of sec_301_9100-1 and sec_301_9100-3 have been met accordingly an extension of time of days from the date of this letter to elect to treat y as a qsub effective date is granted the election should be made by filing form_8869 with the appropriate service_center a copy of this letter should be attached to form_8869 based solely on the facts submitted and representations made we conclude that y established reasonable_cause for failing to make a timely s_corporation_election thus we conclude that y is eligible for relief under sec_1362 accordingly if y makes an election to be an s_corporation by filing with the appropriate service_center a completed form_2553 that contains an effective date of date within days following the date of this letter the election shall be treated as timely made a copy of this letter should be attached to form_2553 plr-103888-18 except as expressly provided herein we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we express or imply no opinion regarding whether x or y was or is otherwise eligible to be treated as a qsub or s_corporation this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file we are sending a copy of this letter to the designated authorized representatives the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the ruling_request it is subject_to verification on examination sincerely ______________________________ richard t probst senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


t c memo united_states tax_court melvin l levinson petitioner v commissioner of internal revenue respondent docket no filed date melvin l levinson pro_se brendan g king for respondent memorandum findings_of_fact and opinion foley judge by notice dated date respondent determined the following deficiencies and penalties relating to petitioner's federal income taxes penalty year deficiency sec_6662 a dollar_figure dollar_figure dollar_figure dollar_figure all section references are to the internal_revenue_code in effect for the years in issue and all rule references are to the tax_court rules_of_practice and procedure after concessions by the parties the remaining issues for decision are whether petitioner is liable for self-employment_tax entitled to deduct expenses relating to his patents and liable for accuracy-related_penalties findings_of_fact petitioner resided in edison new jersey at the time his petition was filed from until his retirement in petitioner operated a retail store that sold electronic goods and collectibles e comic books baseball cards and stamps while operating his retail business petitioner in his spare time created and patented inventions his inventions ranged from microwave power sources to methods for preparing beverages in petitioner was issued a patent for a microwave cookware container in petitioner filed a civil suit against northland aluminum products inc d b a nordic and regal ware inc regal for infringing upon petitioner's patent that same year petitioner and nordic entered into a settlement agreement in which nordic agreed to pay petitioner dollar_figure in five installments for the past use of petitioner's patent petitioner and nordic also entered into a license agreement relating to nordic's continued use of petitioner's patent in petitioner and regal entered into a settlement agreement in which regal agreed to pay petitioner dollar_figure in three installments for the past use of petitioner's patent petitioner and regal also entered into a license agreement relating to regal's continued use of petitioner's patent on his and returns petitioner reported royalties of dollar_figure ie dollar_figure relating to regal's settlement payments and dollar_figure from various companies and dollar_figure ie dollar_figure relating to nordic's settlement payment and dollar_figure from various companies respectively petitioner also reported dollar_figure and dollar_figure of business_expenses relating to and respectively opinion respondent contends that the settlement awards and royalties petitioner received in and are subject pursuant to sec_1401 to self-employment_tax petitioner contends he is not in the trade_or_business of inventing and therefore not liable for self-employment_tax sec_1401 imposes a tax on the self-employment_income of every individual in general self-employment_income consists of the net_earnings from a trade_or_business carried on by an individual see sec_1402 and b an individual is engaged in a trade_or_business if such individual's activities are conducted with continuity and regularity and primarily for income or profit see sec_1402 stating that the term trade_or_business for the purposes of self-employment_income generally has the same meaning as it does for the purposes of sec_162 480_us_23 petitioner was not engaged in the trade_or_business of inventing he did not develop or design inventions ona continuous or regular basis petitioner testified i could sit here in front of you all for the next year and i might not even think of an invention never even come to my mind all of a sudden i'll get two more ideas in a stroke of genius they say but it's really not a stroke of genius it's just luck indeed petitioner conducted his activities sporadically accordingly the settlement awards and royalties petitioner received in and are not subject_to self-employment_tax respondent determined that petitioner is not entitled to deductions for the following dollar_figure of automobile expenses relating to dollar_figure and dollar_figure of depreciation relating to and respectively dollar_figure and dollar_figure of utility expenses relating to and respectively and dollar_figure and dollar_figure of miscellaneous expenses relating to and respectively petitioner bears the burden_of_proof yet has failed to present sufficient evidence to establish that respondent's determinations are incorrect see 290_us_111 accordingly respondent's determinations are sustained respondent determined that petitioner is liable for sec_6662 a accuracy-related_penalties for failing to pay self- employment_tax and failing to substantiate deductions relating to petitioner's patents the penalty applies to the portion of petitioner's underpayment that is attributable to negligence or disregard of the rules or regulations sec_6662 petitioner is not liable for self-employment_tax and he acted in good_faith and had reasonable_cause for claiming the disallowed deductions see sec_1_6664-4 income_tax regs at trial petitioner failed to substantiate a portion of the expenses he deducted on his return at the time he filed his return however he made reasonable efforts to determine the deductibility of these expenses eg he relied on his records conducted tax research and attended tax seminars accordingly petitioner is not liable for the accuracy-related_penalties contentions we have not addressed are irrelevant moot or meritless to reflect the foregoing decision will be entered under rule