internal_revenue_service number release date index number ---------------------------- ---------------------------------- ----------------------------- re ------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------- id no ------------------ telephone number -------------------- refer reply to cc psi b04 plr-106162-17 date date legend ------------------------------- decedent ---------------------------------------------------- ------------------- spouse ----------------------------------- date date -------------------------- --------------------------- dear ---------------------- this letter responds to your personal representative’s letter of date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election under sec_2010 of the internal_revenue_code portability election to allow a decedent’s surviving_spouse to take into account that decedent’s deceased spousal unused exclusion dsue amount the facts and representations are as follows decedent died on date survived by spouse date is a date after the effective date of the amendment to sec_2010 which provides for portability of a dsue amount to a surviving_spouse to obtain the benefit of portability of decedent’s dsue amount to spouse decedent’s estate was required to file form_706 united_states estate and generation-skipping_transfer_tax return on or before the date that is nine months after decedent’s date of death or the last day of the period covered by an extension decedent’s form_706 was due on date but the estate did not file a form_706 to make plr-106162-17 the portability election the estate discovered its failure to elect portability after the due_date for making the election it is represented that the value of decedent’s gross_estate is less than the basic exclusion amount in the year of decedent’s death including any taxable_gifts made during his lifetime you request an extension of time pursuant to sec_301_9100-3 to elect portability of decedent’s dsue amount pursuant to sec_2010 law and analysis sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2010 provides that a credit of the applicable credit_amount shall be allowed to the estate of every decedent against the tax imposed by sec_2001 sec_2010 provides that the applicable credit_amount is the amount of the tentative_tax that would be determined under sec_2001 if the amount with respect to which such tentative_tax is to be computed were equal to the applicable_exclusion_amount on date congress amended sec_2010 effective for estates of decedents dying and gifts made after date to allow portability of a decedent’s unused applicable_exclusion_amount between spouses tax relief unemployment insurance reauthorization and job creation act of pub_l_no sec_303 124_stat_3296 sec_2010 provides that the applicable_exclusion_amount is the sum of the basic exclusion amount and in the case of a surviving_spouse the dsue amount sec_2010 generally provides that the basic exclusion amount is dollar_figure to be adjusted for inflation annually after calendar_year sec_2010 defines the dsue amount to mean the lesser_of a the basic exclusion amount or b the excess of -- i the applicable_exclusion_amount of the last deceased spouse of the surviving_spouse over ii the amount with respect to which the tentative_tax is determined under sec_2001 on the estate of such deceased spouse sec_2010 provides that a dsue amount may not be taken into account by a surviving_spouse under sec_2010 unless the executor of the estate of the deceased spouse files an estate_tax_return on which such amount is computed and makes an election on such return that such amount may be so taken into account the election plr-106162-17 once made shall be irrevocable no election may be made if such return is filed after the time prescribed by law including extensions for filing such return sec_2010 provides that the secretary shall prescribe regulations as may be necessary or appropriate to implement sec_2010 sec_20_2010-2t a of the estate_tax regulations as in effect on date provides that to allow a decedent’s surviving_spouse to take into account that decedent’s dsue amount the executor of the decedent’s estate must elect portability of the dsue amount on a timely-filed form_706 under sec_20_2010-2t a the due_date of an estate_tax_return required to elect portability is nine months after the decedent’s date of death or the last day of the period covered by an extension if an extension of time for filing has been granted under sec_20_2010-2t a the portability election is made by timely filing a complete and properly prepared estate_tax_return unless the executor satisfies the requirements for the election not to apply in sec_20_2010-2t a i sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term statutory election means an election whose due_date is prescribed by statute the term regulatory election means an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute a request for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer failed to make the election because after exercising reasonable diligence taking into account the taxpayer’s experience and the complexity of the return or issue the taxpayer was unaware of the necessity for the election plr-106162-17 the due_date for the portability election is prescribed by statute in the case of an estate required to file an estate_tax_return under sec_6018 see sec_2010 sec_6075 and sec_6018 in the case of an estate that is not required to file an estate_tax_return under sec_6018 the due_date is prescribed by regulation see sec_20_2010-2t a see also sec_20_2010-2 and revproc_2014_18 2014_7_irb_513 sec_2 accordingly in the latter case a taxpayer may seek an extension of time to elect portability under the provisions of sec_301_9100-3 sec_6018 requires the filing of an estate_tax_return in all cases where the gross_estate exceeds the basic exclusion amount in effect under sec_2010 for the calendar_year which includes the date of death for purposes of this determination under sec_6018 the basic exclusion amount is reduced but not below zero by the sum of -- a the amount of the adjusted_taxable_gifts within the meaning of sec_2001 made by the decedent after date plus b the aggregate amount allowed as a specific exemption under sec_2521 as in effect before its repeal by the tax reform act of with respect to gifts made by the decedent after date it is represented that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is not required to file an estate_tax_return under sec_6018 under these facts the commissioner has discretionary authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly we grant an extension of time of days from the date of this letter in which to elect portability under sec_2010 the election should be made by filing a complete and properly-prepared form_706 and a copy of this letter within days from the date of this letter to the cincinnati service_center at the following address internal_revenue_service cincinnati service_center stop cincinnati oh for purposes of electing portability a form_706 filed by decedent’s estate within days from the date of this letter will be considered to be timely filed the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination if it is later determined that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is required to file an estate_tax_return pursuant to sec_6018 the commissioner is without authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability and the grant of the extension referred to in this letter is deemed null and void plr-106162-17 this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely associate chief_counsel passthroughs special industries lorraine e gardner by _____________________________ lorraine e gardner senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court billye s cannon petitioner v commissioner of internal revenue respondent docket no filed date billye s cannon pro_se charles pillitteri for respondent memorandum findings_of_fact and opinion dawson judge this case was assigned to special_trial_judge lewis r carluzzo pursuant to sec_7443a and rule sec_180 sec_181 and sec_183 the court agrees with and adopts the opinion unless otherwise indicated section references are to the internal_revenue_code_of_1986 as amended and in effect at the time that the petition was filed rule references are to the tax_court rules_of_practice and procedure - - of the special_trial_judge which is set forth below opinion of the special_trial_judge carluzzo special_trial_judge in this case filed pursuant to sec_6404 petitioner claims that respondent’s failure to abate interest with respect to her federal_income_tax liability is an abuse_of_discretion findings_of_fact some of the facts have been stipulated and are so found at the time that the petition was filed petitioner resided in biloxi mississippi and her net_worth did not exceed dollar_figure million petitioner filed a timely federal_income_tax return attached to that return are several forms w-2 wage and tax statement from the following employers in the following amounts employer amount solo serve corp sec_530 wolf camera inc big_number pca national inc big_number temporaries inc big_number total big_number petitioner also worked as a paralegal for the law firm of smith currie hancock the law firm during at the time she filed her return she could not locate any yearend earnings statements from the law firm so she estimated those earnings to after the petition was filed in this case sec_6404 was redesignated sec_6404 by the victims of terrorism tax relief act of publaw_107_134 b f stat be dollar_figure as indicated by a calculator tape attached to her return the dollar_figure reported as wages salaries tips etc on petitioner’s return is the sum of the wages reported on the forms w-2 listed above plus petitioner’s estimate of her earnings from the law firm taking into account unchallenged deductions her return lists her federal_income_tax liability as dollar_figure federal_income_tax withholdings of dollar_figure are applied against this liability resulting in a federal_income_tax of dollar_figure to be paid with her return no income_tax payment however was submitted with petitioner’s return statements contained in a letter attached to petitioner’s return suggest that petitioner might have been experiencing financial difficulties at the time her return was filed on date respondent assessed the income_tax_liability of dollar_figure reported on petitioner’s return plus a late payment penalty of dollar_figure and interest of dollar_figure the late payment penalty and interest take into account the federal_income_tax withholdings reported on petitioner’s return as it turned out petitioner underestimated and underreported her earnings from the law firm on date respondent reacting to information received from the law firm sent petitioner a notice of proposed changes to her return in that notice respondent proposed to increase - petitioner’s income by dollar_figure the amount reported on a form 1099-misc nonemployee compensation issued to petitioner by the law firm respondent further proposed that the increased income constituted net_earnings_from_self-employment by letter dated date petitioner disagreed with the adjustments proposed by respondent in that letter petitioner indicated that the income from the law firm was still in dispute and challenged respondent’s claim that she was self- employed during attached to her letter is a copy of a form ss-8 information for use in determining whether a worker is an employee for federal employment_taxes and income_tax_withholding no deficiency has been determined with respect to petitioner’s federal_income_tax although the timing is not entirely clear at some point after receipt of petitioner’s date letter respondent recognized that dollar_figure of the dollar_figure reported on the above-mentioned form_1099 had been included in the wages reported on petitioner’s return after further examination respondent also accepted petitioner’s claim that she was an employee of the law firm during and therefore not liable for any self-employment_tax petitioner was notified of respondent’s decision as to her employment status by letter dated date - thereafter in a form 1040x amended u s individual_income_tax_return dated date petitioner reported an increase in taxable_income of dollar_figure which includes the difference between her actual and estimated earnings from the law firm and a resultant additional income_tax_liability of dollar_figure no payment was submitted with the amended_return on date petitioner filed a form_843 claim_for_refund and request for abatement requesting abatement of interest on her federal_income_tax liability respondent concluded that the delay in payment of petitioner’s federal_income_tax liability was not attributable to a ministerial error on respondent’s part and therefore denied petitioner’s claim ina notice of final_determination dated date opinion subject_to exceptions not relevant here interest on an underpayment of income_tax begins to accrue on the due_date of the return for such tax and continues to accrue compounding daily until payment is made sec_6601 sec_6622 the commissioner may abate the assessment of interest with respect to a taxpayer’s federal_income_tax liability if the delay in a payment of such tax is attributable to an official or employee of the internal_revenue_service being erroneous or dilatory in performing a ministerial_act after the internal_revenue_service has contacted the taxpayer in writing with -- - respect to the tax and no significant aspect of such delay can be attributed to the taxpayer involved sec_6404 in accordance with the provisions of sec_6404 a taxpayer whose claim_for_abatement under sec_6404 has been denied may petition this court for a determination whether the commissioner’s failure to abate interest was an abuse_of_discretion in this case petitioner seeks abatement of interest with respect to a federal_income_tax liability assessed pursuant to amounts reported on her original and amended returns generally the relief provided by sec_6404 is not available under those circumstances as noted in the legislative_history of that section if a taxpayer files a return but does not pay the taxes due sec_6404 would not permit abatement of this interest regardless of how long the irs took to contact the taxpayer and request payment s rept 1986_3_cb_1 see also smith v commissioner tcmemo_2002_1 moreover petitioner has failed to demonstrate that the in sec_6404 was amended by sec_301 of the taxpayer bill of right sec_2 publaw_104_168 110_stat_1457 to permit the secretary to abate interest with respect to unreasonable error or delay resulting from managerial and ministerial acts this amendment however applies to interest accruing with respect to deficiencies or payments for tax years beginning after date this case involves petitioner’s tax_year therefore the amendment is inapplicable here 112_tc_19 n - delay in payment of her federal_income_tax liability is attributable to anything other than her own conduct she certainly has not demonstrated that the delay is attributable to an official or employee of respondent being erroneous or dilatory in performing a ministerial_act to the extent that petitioner suggests that the relevant delay is measured by the time it took for respondent to resolve the dispute involving her employment status we note that the determination of employee status involves the exercise of judgment and the proper application of federal tax and common_law sec_3121 117_tc_263 as such it is not a ministerial_act and cannot provide the requisite basis for abating interest under sec_6404 sec_301 2t b temporary proced admin regs fed reg date as we view the matter the interest that accrued on petitioner’s federal_income_tax as a result of any delay in the payment of that tax is simply put attributable to her failure for financial or other undisclosed reasons to pay such tax when due consequently petitioner is not entitled to an abatement of interest under sec_6404 with respect to her federal_income_tax it follows that respondent’s failure to abate such interest is not an abuse_of_discretion to reflect the foregoing decision will be entered for respondent


cca_2015022411291246 id uilc number release date from sent tuesday date am to cc bcc subject power_of_attorney question you have asked us whether the power_of_attorney given on form_2848 from the taxpayer to the indicated representative is valid and allows the irs to communicate with the indicated representative regarding the taxpayer’s case a power_of_attorney that satisfies the requirements of sec_601_503 is presumed valid unless revoked per sec_601_505 when a power_of_attorney is granted on form_2848 any notice or other written communication with regard to matters before the irs must generally be given to both the taxpayer and her representative per sec_601_506 once a taxpayer’s representative enters an appearance before the tax_court model rule proscribes the irs from communicating directly with the taxpayer on the subject of representation unless otherwise authorized here the form_2848 satisfies the requirements of sec_601_503 and it has not been revoked per sec_601_505 accordingly the form_2848 is valid you indicated that the taxpayer’s representative suggested that at one time the taxpayer may not have had capacity to sign other forms but this would not invalidate the form_2848 because there is nothing to indicate that the taxpayer did not have the capacity to appoint a representative at the time she signed the form_2848 with a valid form_2848 on file both the taxpayer and the indicated representative must be given notices regarding the taxpayer’s matters before the irs per sec_601_506 if the taxpayer’s representative enters an appearance in tax_court the irs must communicate only with the representative unless otherwise authorized to contact the taxpayer directly per model rule please let me know if you have any further questions or need clarification regards


internal_revenue_service department of the treasury significant index no washington oc cantact parson telephone number in reference to t ep ra t a1 date sep amo in re this is in response to your request dated date for a ruling regarding the above-named trust the trust specifically you asked that we rule as to whether the trust satisfies certain requirements under sec_419a of the internal_revenue_code code facts the version of the trust described herein is the third amended and restated version dated date the trust by its terms provides death and severance benefits to eryployees who are specified in the adoption_agreement signed by those employers who have chosen to participate in the trust death_benefits are provided to all participants in the trust severance benefits are provided only to those participants whose employers elected in the adoption_agreement to provide such benefits each participating employer is declared to be a plan_administrator and is given all discretionary and other authority to control and manage the operation and administration of the trust however the trust requires each plan_administrator to delegate various duties and responsibilities to a contract administrator specified in the trust document amongst the delegated duties and responsibilities are i directing the trust's trustee as to the crediting and distribution of funds ii making claims decisions and iii maintaining accounting_records dry death_benefits are equal to a specified percentage of compensation but no less than a minimum dollar amount specified in the trust the specified percentage is chosen by the employer at the time the trust is adopted by the employer the death_benefit provided to each participant is based on compensation at the time the trust is adopted by the employer and thus does not become automatically adjusted for subsequent changes in compensation the trust provides that a participant's right to receive death_benefits is forfeited upon a termination of employment or a discharge for cause also if the employer has elected to provide severance benefits in addition to the death_benefits owners of a significant amount of the total combined voting power or value of all classes of stock in the employer forfeit their right to receive death_benefits upon the attainment of the later of i age or ii ten years of participation if death_benefits are forfeited by a participant the participant has the option of purchasing the insurance_policy that was providing the death_benefit severance benefits are payable upon a termination of employment under the provisions of the trust a termination of employment occurs when the participant becomes totally disabled resigns or is discharged without cause a participant who is discharged for cause or voluntarily terminates without good cause forfeits severance benefits a participant's right to receive severance benefits is forfeited upon death or actual retirement for participants who own at least of the employer severance benefits are forfeited upon the attainment of the later of i age or ii ten years of participation the amount of an employee's severance benefit is determined under one of several formulas set forth in the trust's adoption_agreement there are four such formulas the particular formula that applies to the employees of an employer is chosen by the employer at the time the trust is adopted each formula sets the employee’s severance benefit equal to a specified percentage of average compensation multiplied by years_of_service as a participant in the trust but subject_to a maximum number of creditable years ' provides a graded_vesting schedule that calls for the total forfeiture of all severance benefits by any employee who has fewer than four years_of_service with the employer for employees with at least four years_of_service but less than ten years the graded_vesting schedule calls for a partial forfeiture of severance benefits under this graded schedule employees with four years_of_service receive of the benefit that would otherwise have been payable to them this percentage increases by ten percentage points for each additional year_of_service after ten years_of_service with the employer the employee is fully vested in the severance benefit in addition the trust ' each of the potential formulas is structured so that the maximum severance benefit will be either or of average_annual_compensation an employer can withdraw from the trust this action gives rise to termination distributions that are received by those participants who are employed by the withdrawing employer the termination distribution made to a participant is equal to a pro-rated portion of the withdrawing employer's excess_assets the value of the excess_assets is equal to the portion of the employer's allocable share as described in the next paragraph of the trust's assets in excess of the amounts required to pay the benefits earned under the trust as well as any fees costs and other_amounts accrued by the employer termination distributions are also payabl upon termination of the trust itself the trust's assets are invested in individual insurance contracts tax- exempt securities and cash each participating employer has an allocable share of the trust's assets generally equal to the amounts held under the individual insurance contracts covering the employees of that employer plus the value of any additional assets being held in the employer's side fund the trust also provides that some of its assets will be held in certain special-purpose accounts as described in the trust these special-purpose accounts are as follows tax reserve_account this account is funded by amounts withheld at the discretion of the trust's contract administrator from termination distributions ie those that are made on account of either the termination of the trust or the withdrawal from the trust by an employer funds in the tax reserve_account are used to pay various tax_liabilities of the trust professional fee reserve_account this account holds funds that are used to retain professionals on behalf of the trust it is funded by amounts withheld at the discretion of the contract administrator from termination distributions the contract administrator has the authority to require employers to make annual contributions into this account reserve_account this account is used to pay benefits to participants but only to the extent that such benefits have not been funded by the employer of that participant it is funded by one-time contributions made by the employer at the time the employer the trust document contained conflicting statements as to whether the participants would receive payment of their vested severance benefits prior to the calculation of the excess_assets adopts the trust the amount of the contribution is determined under a formula established by the contract administrator surplus account this account is used to pay benefits to participants but only to the extent that such benefits have not been funded by the employer of the participant and only to the further extent that the funds in the reserve_account have been exhausted it is funded by the experience gains of those employers who have achieved full funding of their benefit obligations neither of the terms experience gain and full funding are defined in the trust document however the trust document does describe two situations that might give rise to an experience gain first the non- vested portion of a severance benefit that was otherwise payable to a participant will be forfeited to the surplus account but as just noted only if the employer had already fully funded its benefit obligations second the trust document provides the contract administrator with the authority to withhold a portion of the excess_assets that would otherwise be distributed to participants as part of a termination distribution and to forfeit this portion to the surplus account the trust document does not indicate the circumstances under which the contract administrator may take this action the sample insurance policies provided along with your request are self- described as flexible premium adjustable life policies ie a type of policy commonly known as universal_life_insurance the policy permits the payment of additional premiums at any time during the life of the insured subject_to any maximums or other restrictions that might be imposed by the insurer the policies pay annual dividends which are either paid to the policyholder in cash or added to the policy’s account value sec_8_1 of the trust document requires each employer to make contributions in amounts sufficient to pay the severance benefits for its employees if the employer fails to make such required contributions the contract administrator must take whatever actions are necessary to collect the contributions from the employer the contract administrator also may unilaterally terminate the employer's participation in the trust for failure to make required the formula varies depending on whether the employer elects to provide death_benefits only or death_benefits and severance benefits for the death_benefit only employers the contribution to the reserve_account is equal to one-fourth of of the employer's deposit subject_to a minimum amount equal to the greater of dollar_figure or one-twelfth of the term cost of insurance attributable to the employees of that employer for the employers that provide both death_benefits and severance benefits the contribution to the reserve_account is equal to of the employer's deposit subject_to a minimum amount of dollar_figure if an employer has not fully funded its benefit obligations then none of its experience gains are forfeited to the surplus account contributions and may offset the value of such unpaid contributions against an benefit distributions including termination distributions or roll-over payments furthermore if an owner or highly-compensated employee terminates employment at a time when the employer's allocable share of the trust assets is not sufficient to pay the full severance benefits for all of the employer's employees then the contract administrator shail limit the severance benefit payable to the amount that can be paid from his or her employer's allocable share of the trust's assets as reduced by the amount of severance benefit earned by employees of that employecwho are not owners or highly- compensated in the case of employers that have chosen to provide death_benefits only and these are the majority of the employers section of the trust document requires the employers to make contributions that the insurer determines to be necessary to fund the death_benefits nonetheless certain marketing material used by the trust described in more detail below states that the funding of death_benefit only plans’ is flexible and further states that there is no maximum contribution under such plans in operation the individual insurance policies purchased under the death_benefit only plans have developed substantial cash values thus indicating that contributions under these policies have been in excess of the amounts needed to provide current insurance protection in support of your requested rulings you provided us with copies of marketing material developed by the trust this material included a brochure entitled increase benefits reduce taxes which contained descriptions of the trust and its operations in question-and-answer format you also provided a document entitled answers to commonly-asked questions’ the trust is currently in operation you provided us with account summaries and billing invoices for approximately participating employers of these participating employers approximately were providing severance-pay benefits in addition to death_benefits most of the billing invoices were dated at various points in the tweive- month period starting in the second quarter of and ending in the first quarter of inclusive the aggregate amount billed on the invoices was approximately dollar_figure you also provided us with a copy of the trust's form_5500 filing this filing indicates that contributions received by the trust during were in the amount of approximately dollar_figure sec_12_3 of the trust document permits the roll-over to another welfare_benefit_plan of amounts that would otherwise have been paid as termination distributions a few invoices were dated earlier than the second quarter of o2f6 regarding the charge for the reserve_account the invoices provided to us showed a charge only for invoices dated date or later although a few invoices with such dates did not show a charge in all cases the charge was dollar_figure even though the formula described in our earlier footnote would have produced a larger amount in some cases one of the invoices called for an insurance premium of approximately dollar_figure this amount is in excess of of the aggregate amount billed on the invoices provided to us contributions reported on the trust's dollar_figure f orm filing it is also in excess of of the annual the account summaries are pravided to the sponsoring employers under the title annual company report hereinafter company report or report’ these reports do not provide any information about the total amount of assets held in the trust rather they contain information on the value of assets allocable to that particular employer for employers who offer severance benefits in addition to death_benefits the company report also indicates whether the severance benefits are overfunded or underfunded each company report also lists the amounts being held in the reserve_account and the professional fee reserve_account the reports provided to us indicated that the reserve_account held assets of approximately dollar_figure they also indicated that the professiona fee ixeserve account held approximately dollar_figure the reports did not indicate ‘nat there were any amounts being held in the surplus account and the tax reserve_account other than the trust's form_5500 filing you did not provide any comprehensive financial statement relating to the trust requested rulings you asked us to rule that the trust provides welfare benefits and is not a plan of deferred_compensation my the trust is a single plati and not an aggregation of individual plans and the trust maintains no arrangements for experience rating on the basis of such findings you further asked that we rule that the trust satisfies the requirements of code sec_419a and as a consequence that all contributions made to the trust by sponsoring employers would be currently deductible gl law sec_404 of the code provides that if compensation is paid_or_accrued on account of any employee under a plan deferring the receipt of such compensation such compensation shall not be deductible under chapter of the code but if it would otherwise be deductible it shall be deductible under code sec_404 subject_to various limitations sec_404 of the code provides that if contributions are paid to a plan that is not described in paragraphs or of code sec_404 then such contributions shall be deductible in the taxable_year in which an amount attributable to the contribution is includible in the gross_income of the employees participating in the plan but in the case of a plan in which more than one employee participates only if separate_accounts are maintained for each - employee sec_404 of the code provides that any plan providing for deferred benefits other than compensation_for employees their spouses or their dependents shall be treated as a plan deferring the receipt of compensation sec_404 provides that sec_404 shall not apply to any benefit provided through a welfare_benefit_fund as defined in sec_419 sec_419 of the code provides that contributions paid_or_accrued by an employer to a welfare_benefit_fund siiall not be deductible under chapter of subtitle a of the internal_revenue_code but if they would otherwise be deductible shall be deductible under code sec_419 for the taxable_year in which paid subject_to the limitation of code sec_419 sec_419 of the code provides that the amount of the deduction allowable under code sec_419 shall be limited to the welfare_benefit fund’s qualified_cost for the taxable_year the term qualified_cost is defined in code sec_419 sec_419 of the code defines the term welfare_benefit to mean any benefit other than a benefit to which code sec_83 code sec_404 determined without regard to sec_404 or code sec_404a applies sec_419a f a of the code provides that subpart d of chapter of subtitle a of the internal_revenue_code shall not apply to any welfare_benefit_fund which is part of ten or more employer plan subpart d consists of sec_419 and sec_419a however sec_419a f a further provides that this exception shall not apply to any plan which maintains experience-rating arrangements with respect to individual employers oh sec_419a of the code provides that the term ten or more employer plan means a plan to which more than one employer contributes and to which no employer normally contributes more than ten percent of the total contributions contributed under the plan by all employers sec_1_162-10 of the income_tax regulations the regulations provides that amounts paid_or_accrued within a taxable_year for dismissal wages unemployment benefits or a welfare or similar benefit plan are deductible under code sec_162 if they are ordinary and necessary expenses of the trade_or_business however except in the-case c certain negotiated plans such amounts shall not be deductible undzr code sec_162 if they may be used to provide benefits under a plan of deferred_compensation of the type referred to in code sec_404 in such event the extent to which these amounts are deductible shall be governed by the provision of code sec_404 and the regulations issued thereunder however regulation sec_1_162-10t q a-2 provides that sec_419 governs the deduction of contributions paid or acgrued by an employer with respect to a welfare_benefit_fund within the meaning of sec_419 sec_1_404_a_-1 of the regulations provides that code sec_404 does not apply to contributions to a plan which is solely a dismissal wage or unemployment benefit plan welfare or similar benefit plan or a combination thereof sec_1_404_a_-1 of the regulations provides that if contributions to a plan of deferred_compensation can be used to provide any of the benefits described in sec_1_404_a_-1 of the regulations then code sec_404 applies to the entire contribution to the plan except as provided under code sec_404 relating to certain negotiated plans established before date sec_1_404_b_-1t q a-2 a of the regulations provides that for purposes of sec_404 b and d a plan defers the receipt of compensation or benefits to the extent it is one under which an employee receives compensation or benefits more than a brief period of time after the end of the employer's taxable_year in which ths services creating the right fo such compensation or benefits are performed sec_1_404_b_-1t q a-2 b of the temporary regulations provides that a plan shall be presumed to be one deferring the receipt of compensation_for more than a brief period of time after the end of an employer's taxable_year to the extent that compensation is received after the day of the calendar month after the end of the employer's taxable_year in which the related_services are rendered analysis as a preliminary matter we note that nondeductible constructive distributions to employee owners can take place under arrangements whereby contributions to a_trust are used to pay insurance premiums in amounts that are in excess of those needed to provided current insurance protection for the employee owners see neonatology associates p a et al vs commissioner t c no issued date in the instant case most of the employers have made contributions well in excess of the amounts needed to provide current protection as we have not been asked to rule as to whether the trust provides for constructive distriputt ns to owner employees we do not consider this question however we note that to the extent the trust provides constructive distributions the issues that you raise and we address below would not need to be considered whether the trust is a plan of deferred_compensation you take the position that the trust is a welfare_benefit_fund within the meaning of sec_419 on the basis that death and severance benefits provided through the trust are welfare benefits within the meaning of sec_419 if those death or severance benefits are deferred benefits other than compensation that would be treated as deferred_compensation under sec_404 they would nevertheless be treated as welfare benefits under sec_419 because they are not within the exception under sec_419 for benefits to which sec_404 applies they would not be within that exception because the reference in sec_419 to sec_404 is to sec_404 determined without regard to sec_404 however here the trust in effect provides deferred_compensation because of the virtual certainty that the benefits will be provided in one form or another see 31_f3d_569 cir holding that a severance_pay benefit was actually deferred_compensation because it was payable upon termination for any reason except dishonesty or fraud or if the employee took a leave of absence or converted to part time employment because the trust provides deferred_compensation sec_404 governs the deductibility of the entire contribution to the trust regulation sec_1 a - a in the remainder of this section we discuss our finding that the trust is providing deferred_compensation we provide separate analyses for those plans that provide only death_benefits and those that also provide severance benefits -10- plans providing only death_benefits in addition to providing benefits on account of death the trust also provides benefits on account of employer withdrawal from the trust and on account of termination of the trust itself in this regard the information furnished by you shows that even those employers who have elected to provide only death_benefits have made contributions substantially in excess of the cost of current insurance protection it appears that these excess amounts to the extent that they are not used to provide insurance protection will become available to participants because the participants wil be able to receive termination distributions either in cash or in_kind indeed the trust's marketing material states that one of the benefits provided by the trust is a post retirement income stream from your paid up life_insurance_policy - tax free the owners of the participating employers generally possess the ability to cause the employer to withdraw from the trust at will because the trust provides for termination distributions there is not a realistic risk that the excess_contributions described above will be forfeited as a result the death_benefit only plans do not operate to provide insurance in the case of a contingent event rather because of the virtual certainty that the excess_contributions will be provided to the participants in one form or another the plans provide deferred_compensation plans providing severance benefits the severance benefits provided under the trust are payable if a participant becomes totally disabled resigns for good cause or is discharged without cause severance benefits also appear to be available under circumstances that cause the benefits to be provided not as insurance against a contingent event but rather as an expected source_of_income the marketing material distributed by the trust in particular the answers to commonly asked questions provides two examples of such circumstances first when discussing the possibility that severance benefits might be forfeited on account of retirement the marketing material states there is no reason for forfeiture due to retirement to occur this is an event controlled by the employee he she should delay receiving social_security and other retirement benefits until his her severance benefits expire ’ see the brochure entitled increase benefits reduce taxes -i1- second in its discussion of the definition of severance benefits the marketing material states that such benefits will be paid to owners upon the sale of the business in addition to its provisions for severance benefits the trust also provides benefits on account of employer withdrawal from the trust and on account of termination of the trust itself an owner in particular would have control_over withdrawal from the trust on the basis of the above there js-ittle realistic potential for the forfeiture of benefits accordingly the plans p iding severance benefits are providing deferred_compensation we also note that because the termination distributions are payable when the insured is alive and still working for the employer they are not either death or severance benefits but rather constitute a form of deferred_compensation whether the trust is an aggregation of individual plans and is not a single plan pursuant to its sec_11 entitled accounting the trust maintains a separate_accounting of each employer's allocable share of the trust's assets the trust further requires that the severance benefit for an owner or highly- compensated employee be limited to the amount that can be paid from his or her employer's allocable share of the trust's assets as reduced by the amount of severance benefit earned by employees of that employer who are not owners or highly-compensated you assert that the existence of the reserve_account and the surplus account causes the trust to become a single_plan you have not provided any support for this assertion moreover the provisions of the trust that serve to limit the severance benefits that might otherwise be payable to owners and highly- compensated employees on account of insufficient funds in the employer's allocable share of the trust's assets make it very unlikely that either the reserve_account or the surplus account will ever be called upon to provide substantial amounts of funding this po n is stated clearly in the marketing material provided by you in suppor of ‘our request a brochure entitled in this regard we note that the same marketing material advises potential participating employers that employees with many years_of_service will gain the most from a establishing a severance_pay plan in ruling we determine that the trust is a plan of deferred_compensation to which sec_404 deduction rules apply rather than the deduction rules of sec_419 given that determination the other issues you raise are arguably moot because the ultimate issue presented is the application of sec_419a we are addressing the alternative reasons that that section does not apply increase benefits reduce taxes the brochure contains the questions are participating employers liable to meet employee claims if both the reserve_account and surplus account are exhausted the answer is yes but the answer goes on to state that the contract administrator annually reviews all employer groups to determine if their funding is adequate if a group is underfunded and unable to increase funding the contract administrator has the authority to modify the group's adoption_agreement to decrease their benefits thereby insuring the group‘is fundsd appropriately also it is unclear whether the reserve_account represents funds that are separate from the allocable shares of the individual employers when describing the reserve_account the brochure states it's funded by a one-time fee from each participating group the fee is deducted from their contribution but remains an asset of their plan even if the reserve_account does consist of funds that are separate from the allocable shares of the individual employers the amount of assets in the account is relatively insignificant according to the individual company reports provided to us the funds in the reserve_account as of the end of date comprised only about of the total funds held by the trust we have a similar concern about the materiality of the surplus account the financial records provided by you did not reflect any funds being held in the surplus account under the terms of the trust i individual employers are given the authority to select many of the relevant terms under which their employees might collect benefits ii each employer's contributions serve to benefit primarily its own employees and not the employees of other employers iii a severed prohibited_group member owner or highly_compensated_employee might receive less the full promised benefit even though the plan as a whole has sufficient assets for paying the full benefit and iv the trust maintains a separate_accounting of the funds contributed by and credited to each employer also the adoption_agreement signed by each employer is very similar to adoption agreements used to establish separate plans under the terms of a master_plan in summary there does not appear to be a substantive mechanism whereby assets or liabilities are pooled shared or distributed among the plans of the various individual employers also the trust has several characteristics that are typical of arrangements in which separate plans share a common administrator consequently the trust is an aggregation of separate plans with a common administrator the contract administrator’ it is not a single_plan -13 - whether the trust maintains an arrangement for experience rating with respect to individual sponsors the exception under code sec_419a is not available to plans that maintain experience-rating arrangements with respect to individual employers in the instant case we are asked to rule whether the trust maintains any arrangement for experience rating the term experience-rating-arsaisgements is not defined in the code the term experience rating is uses i sis conference_report accompanying the deficit_reduction_act_of_1984 c b val pincite although the term is not defined there the conference_report states that under plans that use experience rating the employer's interest with respect to the plan is more similar to the relationship of an employer to a fund than an insured to an insurer with regard to owners and highly-compensated employees the trust maintains an arrangement whereby benefits are adjusted to refiect the amounts credited to each employer's account and accordingly maintains an experience rating arrangement see 108_tc_524 as described earlier in this letter article four of the trust entitled severance benefits provides that participants who are either owners or highly-compensated employees do not necessarily receive the severance benefits called for under the employer's adoption_agreement ever such participants would otherwise be eligible for those benefits instead the trust requires the contract administrator to limit severance benefits to the lesser_of i the amount called for under the adoption_agreement and ii the amount of assets that constitutes the employer's allocable share of the trust reduced by the amount of severance benefit that might have been earned by employees who are not owners or highly compensated this limiting of severance benefits is reinforced in trust sec_8_1 entitled funding of severance benefits which authorizes the contract administrator to offset the amount of any benefit distribution by the amount of any unpaid employer contributions furthermore this trust section clarifies the aforementioned provisions of article four stating that the limitation of severance benefits fo owners and highly-compensated employees shail take place whenever there are not sufficient assets allocable to the employer to pay all participant employees’ full severance_pay benefits at the time of a participant's termination of employment furthermore the trust's provision for crediting its surplus account with experience gains will take effect with respect to any particular employer only after ' also see trust sec_11 entitled accounting which requires the contract administrator to maintain accounting_records that reflect each employer's share of the plan's assets - that employer has achieved full funding of its benefits any experience gains that are attributable to the employees of an employer remain within that employer's allocable share of the trust's assets prior to such full funding based upon the information you have provided it appears that the net effect of the various trust provisions is to limit the use of an employer's allocable share of the trust's assets essentially to providing benefits for its own employees with respect to death_benefits we ncte that sec_5 a of the trust document provides that death_benefits shall be funded primarily through the purchase of life_insurance contracts from the insurer sec_5 c provides that the insurer or contract administrator shall provide each employer annually with the amount of the minimum premium payments that must be paid to keep the policies in force on the lives of the employer's employee group section further provides that if the employer does not make the required_payments the trustee makes the payments from the side fund assets allocable to the employer’s employee group and places a lien on the policy equal to the payments made from the side fund plus interest when such a lien has been placed on the policy the actual death_benefit provided to the beneficiary by the policy will be reduced by the amount of the lien sec_5 c thus the lien provides a mechanism whereby beneficiaries do not necessarily receive the death_benefits called for under the emplgyer's adoption_agreement even if such beneficiaries would otherwise be eligible for those benefits thus the trust maintains an arrangement whereby death_benefits might be adjusted to reflect the amounts paid into each employer's account and accordingly maintains an experience rating arrangement with respect to those benefits this - the trust's provision for termination distributions also indicates that there is experience rating with respect to individual employers the funds used to make such distributions to the employees of any particular employer represent the excess of contributions made by that employer plus investment earnings allocated to that employer's allocable share of the trust's assets over the amounts needed to provide for benefits attributable to the employees of that employer plus related expenses as such the termination distributions function as experience refunds consequently the trust's provision for the payment of such refunds can be viewed as an arrangement for experience rating you assert that the plan does not maintain any arrangement for experience rating because the reserve_account and the surplus account serve to supplement losses of the individual employers as noted above it is very unlikely that any employer would sustain such losses furthermore as discussed in the previous section neither the reserve_account not the surplus account appear to contain significant amounts of funds and it is unlikely that they would materially affect the amount of benefits provided to participants 27s based on the above the trust maintains an experience-rating arrangement with respect to individual employers finally as noted above from the information we have it appears that one of the participating employers contributed in excess of ten percent of the total contributions contributed under the plan by all employers if one employer normally contributes more than ten percent of the total contributions the plan fails to satisfy the definition of 10_or_more_employer_plan under sec_419a conclusion based on the material provided we find that the trust assuming that it is not an arrangement that provides constructive distributions to employee owners is a plan of deferred_compensation the trust is an aggregation of individual plans and is not a single_plan and the trust maintains an arrangement for experience rating with respect to individual employers as a consequence of these findings we further find that the trust does not satisfy the requirements of code sec_419a f this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited by others as precedent a copy of this letter is being sent to your authorized representative pursuant to a power-of-attorney form on file with us sincerely wallin pr james e holland jr manager employee_plans actuarial group tax_exempt_and_government_entities_division pb


seti ep lat department of the treasury internal_revenue_service tax_exempt_and_government_entities_division washington d c jun uniform issue list legend taxpayer a ira b ira c amount amount amount financial_institution d financial_institution e state m dear this is in response to your request dated date in which you request through your authorized representative a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested e taxpayer a represents that she received a distribution equal to amount from ira b which was maintained by financial_institution d taxpayer a asserts that her failure to accomplish a rollover within the 60-day period prescribed by sec_408 of the code was due to financial_institution error taxpayer a was the owner of ira b which was maintained by financial_institution d taxpayer a is retired and on date she received her required_minimum_distribution from ira b on date taxpayer a received notice that her ira cd would mature and absent any_action on her part it would automatically renew at the interest rate on date on date taxpayer a received a date through date financial statement that showed that on date financial_institution d distributed_amount amount less withholding to state m as unclaimed property on date taxpayer a received a form 1099-r stating that amount had been distributed from ira b state m issued taxpayer a the unclaimed property in the form of a check equal to amount amount plus interest on date taxpayer a rolled over amount to ira c with financial_institution e on date taxpayer a represents that amount has not been used for any other purpose based on the above facts and representations taxpayer a requests a waiver of the 60-day rollover requirement with respect to the distribution of amount from ira b sec_408 of the code defines an ira to mean a_trust created or organized in the united_states and requires that the trustee be a bank or an approved non- bank trustee sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 sec_408 of the code provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money or any other_property is paid into an ira for the benefit of such individual not later than the 60th day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary_of_the_treasury may waive the 60-day requirement under sec_408 and sec_408 where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement revproc_2003_16 2003_4_irb_359 provides that the service will issue a ruling waiving the 60-day rollover requirement in cases where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the taxpayer in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information and documentation submitted are consistent with taxpayer a’s assertion that the failure to accomplish a rollover within the 60-day period prescribed by d a of the code was due to financial_institution error therefore pursuant to sec_408 of the code the service waives the _ day rollover requirement with respect to the distribution of amount from ira b provided all other requirements of sec_408 except the 60-day requirement were met with respect to the contribution of amount to ira c such contribution will be considered a rollover_contribution within the meaning of sec_408 this ruling does not authorize the rollover of amounts that are required to be distributed by sec_408 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_61 k of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter_ruling is being sent to your authorized representative if you wish to inquire about this ruling please contact at please address all correspondence to se t ep ra t1 carlton a watkins manager employee_plans technical group ce enclosures notice of intention to disclose deleted copy of this letter


department of the treasury internal_revenue_service washington d c date conex-147387-02 cc psi b8 number info release date index uil no dear i am responding to your inquiry dated date on behalf of wrote about a notice of proposed rulemaking on the definition of a highway vehicle for federal excise_tax purposes this proposed rule was published in the federal_register on date copy enclosed although we do not respond to individual comments during the rulemaking process we will consider i appreciate any questions please contact me at comments thank you for forwarding his letter if you have comment before we finalize the regulations sincerely associate chief_counsel passthroughs and special industries by richard a kocak chief branch enclosure


t c summary opinion united_states tax_court tomasz koziej petitioner v commissioner of internal revenue respondent docket no 28875-08s filed date tomasz koziej pro_se michael t shelton for respondent dean special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the years in issue and all rule references are to the tax_court rules_of_practice and procedure respondent determined the following deficiencies in and the following accuracy-related_penalties under sec_6662 on petitioner’s federal income taxes year deficiency dollar_figure big_number accuracy-related_penalty sec_6662 dollar_figure dollar_figure the issues for decision1 are whether amounts deposited in petitioner’s bank accounts in excess of his reported income for and constitute income and petitioner is liable for accuracy-related_penalties under sec_6662 for and background some of the facts have been stipulated and are so found the stipulation of facts the stipulation of settled issues and the attached exhibits are incorporated herein by reference when petitioner filed his petition he resided in illinois petitioner timely filed his and federal_income_tax returns he reported total gross_receipts of dollar_figure for and dollar_figure for 1petitioner’s eligibility for the earned_income_credit is a computational adjustment to be determined consistent with this opinion during the years at issue petitioner worked for a construction business in a notice_of_deficiency respondent determined that petitioner failed to report income of dollar_figure for and dollar_figure for respondent further determined that petitioner was liable for accuracy-related_penalties of dollar_figure and dollar_figure for and respectively petitioner agrees that the disputed amounts were deposited in his bank accounts in and and not reported as income petitioner asserts however that these deposits constituted loan repayments and are thus nontaxable discussion i evidentiary matters in general the court conducts trials in accordance with the rules of evidence for trials without a jury in the u s district_court for the district of columbia and accordingly follows the federal rules of evidence sec_7453 rule a 119_tc_183 however rule b carves out an exception for trials of small tax cases under the provisions of sec_7463 under rule b the court conducts small tax cases as informally as possible and consequently may admit any evidence that the court deems to have probative value schwartz v commissioner 128_tc_6 respondent objects to several documents proffered by petitioner arguing that they constitute inadmissible hearsay a statements petitioner proffered two statements from friends averring that they had paid petitioner money in and as repayments of previous loans there is no corroborating evidence however beyond petitioner’s testimony that the payments petitioner received constituted loan payments in addition petitioner did not present any evidence that he entered into a loan agreement with any of the parties or that the parties intended to repay him the lent funds therefore the court will sustain respondent’s objections see rule b b checks petitioner proffered copies of the front of two checks made out to cash petitioner alleges that these checks were repayments of loans he previously made to those parties there is no evidence other than petitioner’s own testimony that the checks constituted loan payments as opposed to income in addition there is no evidence that these checks were actually presented for payment because there is no indication that these checks constituted loan payments or that they were presented for payment sufficient grounds exist to sustain respondent’s evidentiary objection ii burden_of_proof generally the commissioner’s determinations are presumed correct and the taxpayer bears the burden of proving that those determinations are erroneous rule a see 503_us_79 290_us_111 iii unreported income respondent determined deficiencies in petitioner’s federal income taxes for and by using the bank_deposits method the bank_deposits method assumes that all money deposited in a taxpayer’s bank account during a given period constitutes taxable_income but the government must take into account any nontaxable source or deductible expense of which it has knowledge 102_tc_632 the use of the bank_deposit_method for computing income has long been sanctioned by the courts 64_tc_651 and cases cited thereat affd 566_f2d_2 6th cir a bank deposit is prima facie evidence of income and respondent need not prove a likely source of that income 87_tc_74 2petitioner has not claimed or shown that he meets the requirements under sec_7491 to shift the burden_of_proof to respondent as to any factual issue relating to his liability for tax citing estate of mason v commissioner supra pincite the burden of showing duplications is on the taxpayer 48_tc_213 petitioner reported gross_receipts of dollar_figure for that year deposits in his bank accounts totaled dollar_figure respondent determined that dollar_figure of petitioner’s unreported deposits in was not income for petitioner reported gross_receipts of dollar_figure respondent calculated that deposits totaled dollar_figure in petitioner’s bank accounts in but found that dollar_figure of the unreported deposits was not income petitioner does not contest that unreported amounts of dollar_figure in and dollar_figure in as determined by respondent were deposited into his bank accounts petitioner asserts that these amounts constituted loan payments nontaxable returns of capital see eg franks v commissioner tcmemo_1990_189 and are thus nontaxable petitioner testified that he received loan payments from friends in and he provided multiple bank statements to corroborate his testimony the bank statements however are uninformative the statements simply provide the date and the 3marian czarnik also testified that he made a loan payment to petitioner in the amount of dollar_figure in there is no corroborating evidence however that petitioner lent any money to mr czarnik or that mr czarnik’s payment to petitioner constituted a loan payment amount of each deposit and the subject indicates deposit the statements do not indicate the source of any of the deposited funds furthermore petitioner did not present evidence that he executed or entered into a loan agreement with any of the parties such agreement may demonstrate that petitioner intended to lend money and that the parties intended to repay petitioner the lent funds on the basis of the foregoing the court is unable to find that the unreported income is attributable to loan payments and is nontaxable accordingly respondent’s determinations are sustained iv accuracy-related_penalty sec_6662 and b and imposes a 20-percent accuracy-related_penalty for any portion of an underpayment that is attributable to negligence or disregard of rules or regulations or a substantial_understatement_of_income_tax sec_6662 defines negligence to include any failure to make a reasonable attempt to comply with the provisions of this title and disregard to include any careless reckless or intentional disregard negligence also includes any failure 4several statements contained indecipherable codes 5because the court finds that petitioner was negligent or disregarded rules or regulations the court need not discuss whether there is a substantial_understatement_of_income_tax see sec_6662 by the taxpayer to keep adequate books_and_records or to substantiate items properly sec_1_6662-3 income_tax regs the commissioner bears the burden of production with respect to the applicability of an accuracy-related_penalty determined in a notice_of_deficiency see sec_7491 in order to meet the burden of production under sec_7491 the commissioner need only make a prima facie case that imposition of the penalty or addition_to_tax is appropriate 116_tc_438 once he has met his burden the burden_of_proof is upon the taxpayer to prove that the accuracy-related_penalty does not apply because of reasonable_cause substantial_authority or the like see sec_6662 sec_6664 higbee v commissioner supra pincite respondent determined accuracy-related_penalties of dollar_figure and dollar_figure for and respectively petitioner’s tax_liabilities for and are attributable to his failure to report as income his claimed receipt of loan payments petitioner did not keep the records required by the code to substantiate receipt of loan payments failure to keep adequate_records is evidence not only of negligence but also of intentional disregard of regulations see sec_1_6662-3 and income_tax regs see also 73_tc_980 petitioner has failed to demonstrate that he was not negligent and the court finds that respondent has met his burden of production under sec_7491 an accuracy-related_penalty is not imposed on any portion of the underpayment as to which the taxpayer acted with reasonable_cause and in good_faith sec_6664 sec_1 b income_tax regs incorporates a facts_and_circumstances_test to determine whether the taxpayer acted with reasonable_cause and in good_faith the most important factor is the extent of the taxpayer’s effort to assess his proper tax_liability id petitioner failed to present any evidence or argument as to why he should not be subject_to the accuracy-related_penalties for and accordingly respondent’s determinations of accuracy-related_penalties for and are sustained to reflect the foregoing decision will be entered for respondent


department of the treasury internal_revenue_service p o box irs cincinnati oh release number release date uil code date date employer id number contact person id number contact telephone number form you must file tax years dear this letter is our final_determination that you don’t qualify for tax-exempt status under sec_501 of the internal_revenue_code the code recently we sent you a proposed adverse determination in response to your application the proposed adverse determination explained the facts law and basis for our conclusion and it gave you days to file a protest because we didn’t receive a protest within the required days the proposed determination is now final you must file federal_income_tax returns for the tax years listed at the top of this letter using the required form also listed at the top of this letter within days of this letter unless you request an extension of time to file we’ll make this final adverse determination_letter and the proposed adverse determination_letter available for public inspection as required under sec_6110 of the code after deleting certain identifying information please read the enclosed notice notice of intention to disclose and review the two attached letters that show our proposed deletions if you disagree with our proposed deletions follow the instructions in the notice on how to notify us if you agree with our deletions you don’t need to take any further action if you have questions about this letter you can contact the person listed at the top of this letter if you have questions about your federal_income_tax status and responsibilities call our customer service number pincite-829-1040 tty for deaf or hard of hearing or customer service for businesses pincite-829-4933 letter rev catalog number sincerely stephen a martin director exempt_organizations rulings and agreements enclosures notice redacted letter proposed adverse determination under sec_501 other than c redacted letter final adverse determination under sec_501 other than c - no protest letter rev catalog number department of the treasury internal_revenue_service irs p o box cincinnati oh legend v name of state law w formation date x state dear date date employer id number contact person id number contact telephone number contact fax number uil we considered your application_for recognition of exemption from federal_income_tax under sec_501 a of the internal_revenue_code the code based on the information provided we determined that you don’t qualify for exemption under sec_501 of the code this letter explains the basis for our conclusion please keep it for your records do you qualify for exemption under sec_501 of the code no for the reasons stated below you were incorporated on w in the state of x your articles of incorporation state in pertinent part the following purposes facts issues in your form_1024 schedule b response for activities you state the specific and primary purpose of this corporation is to be a condominium development management association formed organized and operated under the v act to provide for the acquisition construction management maintenance and care of property owned by this corporation property commonly owned by the members of this corporation and property within this corporation privately owned by its members collectively referred to as association_property the x secretary of state’s website indicates that your corporate status is suspended and that you are currently not in good standing with the state the members of the condominium association are the owners of its ten dwelling units each unit owner also owns an undivided one-tenth interest in the association’s other_property the common areas the homeowners_association is maintaining the common area and the exterior of the building the association is paying for gardening and landscaping insurance utilities for the common area waste disposal and repairs to the exterior of the building upon dissolution your assets if any will be divided equally among the owners law sec_501 of the internal_revenue_code provides that civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare or local associations of employees the membership of which is limited to the employees of a designated person or persons in a particular municipality and the net_earnings of which are devoted exclusively to charitable educational or recreational purposes and no part of the net_earnings of such entity inures to the benefit of any private_shareholder_or_individual may be exempt from federal_income_tax sec_1_501_c_4_-1 provides that an organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community an organization embraced within this section is one which is operated primarily for the purpose of bringing about civic betterments and social improvements and is not an action_organization as set forth in paragraph c of regulation sec_1_501_c_3_-1 in revrul_74_17 1974_1_cb_130 an organization formed by the unit owners of a condominium housing project to provide for the management maintenance and care of the common areas of the project with membership assessments paid_by the unit owners does not qualify for exemption under sec_501 of the code condominium ownership involves ownership in common by all condominium unit owners of a great many so-called common areas the maintenance and care of which necessarily constitutes the provision of private benefits for the unit owners since the organization's activities are for the private benefit of its members it cannot be said to be operated exclusively for the promotion of social welfare revrul_74_99 1974_1_cb_131 states that to qualify for exemption under sec_501 a homeowners_association must meet the following requirements to ensure that community benefit is primary - it does not perform exterior maintenance on private dwellings and most of the facilities maintained are open to the general_public rather than only to the members application of law you are not described under sec_501 of the code because you are not operated exclusively for the promotion of social welfare you are operated primarily for the benefit of your association members managing maintaining and caring for property commonly owned by the members of this corporation and property within this corporation privately owned by its members you do not meet the requirements of sec_1 c -1 because you are not primarily engaged in promoting the common good and general welfare of the people of the community the sole beneficiaries of your activities are the unit owners your members you have not provided any evidence that you engage in promoting in any way the common good and general welfare of the people of the community letter rev catalog number 47628k you are identical to the organization that was denied exemption in revrul_74_17 you are like that organization a condominium housing project that provides for the management maintenance and care of the common areas of the project with membership assessments paid_by the unit owners since like the members of the condominium association described in the revenue_ruling your members have joint_ownership of your common areas the maintenance and care of them necessarily constitutes the provision of private benefits for your members therefore since your activities primarily benefit your members you cannot be said to be operated exclusively for the promotion of social welfare you do not meet the requirements of revrul_74_99 because you perform exterior maintenance on private dwellings which are association_property owned in common by the members and you own no non-residential facilities which might be open to the general_public these factors show your purposes and activities are not exclusively promoting social welfare and are not primarily promoting the common good and general welfare of the community instead you are furthering the private interests of your members in addition your net assets upon dissolution will be divided equally among your members this fact further illustrates that you are serving the private interests of the member owners not the wider community conclusion because you operate only for the benefit of your members and not for the social welfare or common good of the community in general you do not qualify for exemption under sec_501 c of the code if you don’t agree e e e e e the law or authority if any you are relying on acopy of this letter highlighting the findings you disagree with an explanation of why you disagree including any supporting documents your name address employer_identification_number ein and a daytime phone number you have a right to file a protest if you don’t agree with our proposed adverse determination to do so you must send a statement to us within days of the date of this letter the statement must include the signature of an officer director trustee or other official who is authorized to sign for the organization or your authorized representative for an officer director trustee or other official who is authorized to sign for the organization under penalties of perjury i declare that i examined this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete letter rev catalog number 47628k one of the following declarations e for authorized representatives under penalties of perjury i declare that i prepared this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete your representative attorney certified_public_accountant or other individual enrolled to practice_before_the_irs must file a form_2848 power_of_attorney and declaration of representative with us if he or she hasn’t already done so you can find more information about representation in publication practice_before_the_irs and power_of_attorney we’ll review your protest statement and decide if you provided a basis for us to reconsider our determination if so we’ll continue to process your case considering the information you provided if you haven’t provided a basis for reconsideration we’ll forward your case to the office of appeals and notify you you can find more information about the role of the appeals_office in publication how to appeal an irs decision on tax- exempt status if you don’t file a protest within days you can’t seek a declaratory_judgment in court at a later date because the law requires that you use the irs administrative process first sec_7428 of the code where to send your protest please send your protest statement form_2848 if needed and any supporting documents to the applicable address u s mail street address for delivery service internal_revenue_service eo determinations quality assurance room p o box cincinnati oh internal_revenue_service eo determinations quality assurance main street room cincinnati oh you can also fax your statement and supporting documents to the fax number listed at the top of this letter if you fax your statement please contact the person listed at the top of this letter to confirm that he or she received it if you agree if you agree with our proposed adverse determination you don’t need to do anything if we don’t hear from you within days we’ll issue a final adverse determination_letter that letter will provide information on your income_tax filing_requirements letter rev catalog number 47628k you can find all forms and publications mentioned in this letter on our website at www irs gov formspubs if you have questions you can contact the person listed at the top of this letter sincerely stephen a martin director exempt_organizations rulings and agreements enclosure publication letter rev catalog number 47628k


office_of_chief_counsel internal_revenue_service memorandum number release date cc tege eoeg et1 postn-125614-08 uilc date date to director submission processing cincinnati oh attn entity unit from office of division counsel associate chief_counsel tax exempt government entities subject railroad_retirement_tax_act 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 ------------------ ------------------------------------- ------------------------------ ----------------------------------------------- -------------------------------------- we have reviewed the opinion of the rrb and based upon the information submitted to us by the rrb we also conclude that -------------------------------------ceased to be an employer under the railroad_retirement_tax_act no later than ------------------ the date it sold its remaining assets it had previously ceased operations please take the appropriate action regarding this business cc _____________________________ janine cook


internal_revenue_service number release date index number ---------------------------------- ------------------------------------------ ----------------------- ----------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------- telephone number --------------------- refer reply to cc psi b03 plr-154286-06 date date ---------------------- -------------------------------------- legend x ----------------------------------------- a ------------------------ ------------------------------------------- d1 d2 state dear --------------- requesting a ruling under sec_1362 of the internal_revenue_code ---------------------- --------- facts this letter responds to a letter dated date written on behalf of x x was incorporated under state law on d1 x’s sole shareholder a intended for x to be an s_corporation as of d2 however x’s form_2553 election by a small_business_corporation was not filed timely x requests a ruling that it will be recognized as an s_corporation effective d2 plr-154286-06 law and analysis sec_1362 provides that if a small_business_corporation makes an sec_1362 provides that an election under sec_1362 may be made by a sec_1362 provides that a small_business_corporation may elect to be an s_corporation small_business_corporation for any taxable_year at any time during the preceding_taxable_year or at any time during the taxable_year and on or before the 15th day of the third month of the taxable_year election under sec_1362 for any taxable_year and the election is made after the 15th day of the third month of the taxable_year and on or before the 15th day of the third month of the following taxable_year then the election is treated as made for the following taxable_year sec_1362 provides that if an election under sec_1362 is made for any taxable_year determined without regard to sec_1362 after the date prescribed by sec_1362 for making the election for the taxable_year or no election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for the taxable_year and sec_1362 shall not apply conclusion based on the facts submitted and representations made we conclude that x has established reasonable_cause for failing to make an s_corporation_election in a timely manner thus we conclude that x is eligible for relief under sec_1362 accordingly if x makes an election to be an s_corporation by filing with the appropriate service_center a completed form_2553 with an effective date of d2 within days following the date of this letter then such election shall be treated as timely made a copy of this letter should be attached to the form_2553 filed with the service_center a copy is enclosed for that purpose 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 concerning whether x is otherwise eligible to be an s_corporation for federal tax purposes is being sent to x’s authorized representative in accordance with a power_of_attorney on file with this office a copy of this letter except as expressly provided herein we express or imply no opinion concerning plr-154286-06 this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent sincerely s mary beth collins senior technician reviewer branch office of associate chief_counsel passthroughs special industries enclosures a copy of this letter a copy for sec_6110 purposes