tcmemo_2001_313 united_states tax_court sybil m smith petitioner v commissioner of internal revenue respondent docket no filed date william burwell sellers for petitioner linda j wise for respondent memorandum findings_of_fact and opinion cohen judge this is a proceeding commenced under section based on respondent’s determination that petitioner is not entitled to relief from joint_and_several_liability for and with respect to joint returns filed with hugh v smith jr h smith petitioner has now conceded that she is not entitled to relief for because she was not a party to a - joint_return for that year unless otherwise indicated 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 findings_of_fact some of the facts have been stipulated and the stipulated facts are incorporated in our findings by this reference petitioner resided in albertville alabama at the time that she filed the petition from date until date petitioner was married to h smith h smith was a lawyer on date petitioner and h smith filed a joint federal_income_tax return for on which they reported a tax_liability of dollar_figure no part of that liability was paid at the time of filing of the return audit of the return commenced in date during petitioner was employed at bullock county hospital as a nurse on date petitioner and h smith filed a joint federal_income_tax return for on which they reported a tax_liability of dollar_figure no payments were made or credited at the time of filing of the return on date assessments were made for the tax reported on the return of dollar_figure for an estimated_tax penalty dollar_figure fora failure to pay penalty and dollar_figure for accrued interest collection costs of dollar_figure were assessed on date on - date a deficiency in the amount of dollar_figure was assessed based on a defaulted notice_of_deficiency no payments were made on the account prior to date petitioner originally sought administrative relief from the internal_revenue_service under prior sec_6013 for respondent determined that petitioner was entitled to relief from liability with respect to a deficiency determined for that year but not with respect to the tax reported on the return but not paid and penalties relating thereto when sec_6015 was adopted in repealing sec_6013 petitioner’s claim was reconsidered under the new code section petitioner through her counsel was invited to supply additional information that would be relevant under sec_6015 no further information was provided ina notice of final_determination sent date respondent determined that petitioner was entitled to the partial relief for described above respondent further determined that petitioner had not shown that she met the requirements of sec_6015 or c for and that she did not file a joint_return for petitioner had not claimed relief under sec_6015 and no determination was made specifically referring to that section at the time of trial in date the original returns filed by petitioner and h smith for and were no longer available q4e- opinion the above findings_of_fact are sparse the record in this case does not include either the tax returns for the years in issue or the notices of deficiency and therefore we cannot determine the nature of the adjustments leading to the deficiencies and unpaid taxes and whether they are solely attributable or allocable to h smith sec_6015 provides in pertinent part as follows sec_6015 relief from joint_and_several_liability on joint_return b procedures for relief from liability applicable to all joint filers --- in general ---under procedures prescribed by the secretary if-- a a joint_return has been made for a taxable_year b on such return there is an understatement_of_tax attributable to erroneous items of individual filing the joint_return c the other individual filing the joint_return establishes that in signing the return he or she did not know and had _ no reason to know that there was such understatement d taking into account all the facts and circumstances it is inequitable to hold the other individual liable for the deficiency in tax for such taxable_year attributable to such understatement and --- - eb the other individual elects in such form as the secretary may prescribe the benefits of this subsection not later than the date which i sec_2 years after the date the secretary has begun collection activities with respect to the individual making the election then the other individual shall be relieved of liability for tax including interest penalties and other_amounts for such taxable_year to the extent such liability is attributable to such understatement apportionment of relief --if an individual who but for paragraph c would be relieved of liability under paragraph establishes that in signing the return such individual did not know and had no reason to know the extent of such understatement then such individual shall be relieved of liability for tax including interest penalties and other_amounts for such taxable_year to the extent that such liability is attributable to the portion of such understatement of which such individual did not know_and had no reason to know understatement ---for purposes of this subsection the term understatement has the meaning given to such term by sec_6662 d a c procedures to limit liability for taxpayers no longer married or taxpayers legally_separated or not living together --- in general --except as provided in this subsection if an individual who has made a joint_return for any taxable_year elects the application of this subsection the individual’s liability for any deficiency which is assessed with respect to the return shall not exceed the portion of such deficiency properly allocable to the individual under section d burden_of_proof --except as provided in subparagraph a ii or c of paragraph each individual who elects the application of this subsection shall have the burden_of_proof with respect to establishing the portion of any deficiency allocable to such individual blection --- a individuals eligible to make election --- in general --an individual shall only be eligible to elect the application of this subsection if-- i at the time such election is filed such individual is no longer married to or is legally_separated from the individual with whom such individual filed the joint_return to which the election relates or ii such individual was not a member of the same household as the individual with whom such joint_return was filed at any time during the 12-month_period ending on the date such election is filed certain taxpayers ineligible to elect --if the secretary demonstrates that assets were transferred between individuals filing a joint_return as part of a fraudulent scheme by such individuals an election under this subsection by either individual shall be invalid and sec_6013 shall apply to the joint_return b time for election ----an election under this subsection for any taxable_year may be made at any time after a deficiency for such year is asserted but not later than years after the date on which the secretary has begun collection activities with respect to the individual making the election c brlection not valid with respect to certain deficiencies --if the secretary - jj - demonstrates that an individual making an election under this subsection had actual knowledge at the time such individual signed the return of any item giving rise toa deficiency or portion thereof which is not allocable to such individual under subsection d such election shall not apply to such deficiency or portion this subparagraph shall not apply where the individual with actual knowledge establishes that such individual signed the return under duress d allocation of deficiency --for purposes of subsection c -- in general --the portion of any deficiency on a joint_return allocated to an individual shall be the amount which bears the same ratio to such deficiency as the net amount of items taken into account in computing the deficiency and allocable to the individual under paragraph bears to the net amount of all items taken into account in computing the deficiency separate treatment of certain items - if a deficiency or portion thereof is attributable to-- a the disallowance of a credit or b any_tax other than tax imposed by sec_1 or required to be included with the joint_return and such item is allocated to one individual under paragraph such deficiency or portion shall be allocated to such individual any such item shall not be taken into account under paragraph allocation of items giving rise to the deficiency ---for purposes of this subsection--- a in general --except as provided in paragraphs and any item giving rise to a deficiency on a joint_return shall be allocated to individuals filing the return in the same manner as it would have been allocated if the individuals had filed separate returns for the taxable_year b exception where other spouse benefits ---under rules prescribed by the secretary an item otherwise allocable to an individual under subparagraph a shall be allocated to the other individual filing the joint_return to the extent the item gave rise to a tax_benefit on the joint_return to the other individual f equitable relief ---under procedures prescribed by the secretary if-- taking into account all the facts and circumstances it is inequitable to hold the individual liable for any unpaid tax or any deficiency or any portion of either and relief is not available to such individual under subsection b or c the secretary may relieve such individual of such liability emphasis added petitioner requests that we find that the underpayment for and the deficiency for are entirely attributable and allocable to h smith and that she was abused emotionally and physically by a spouse who kept her ignorant of their tax_liabilities based on her uncorroborated conclusory testimony in response to leading questions the unsatisfactory quality of petitioner’s testimony is shown by the following excerpts q by petitioner’s counsel and during the time that you were married to mr smith did he ever abuse you emotionally or physically a q finances a q accounts a a q yes who handled--who primarily handled the family he did did you know the balances in any bank no were you able to sign on all the accounts no what accounts could you sign on the one that was specific for the home bills and would you have an estimate of how much money on a monthly basis would have been in that account a depending qo totaled a q a q he would deposit a certain amount each month on what the bills totaled and would you tell him what the bills yes is that how it worked yes did you have any input in any investments that he made a no did you have any investments of your own no during were you employed no -- - q were you employed during a yes q now as it relates to paying taxes did you ever have a discussion with your husband about who was responsible for paying taxes a no not-- q did you--how did you think the taxes were going to get paid each month a he handled all the taxes at the end of the year i would---he--i just assumed that he was handling what was owed or not owed or-- q okay a --those items q so ms smith is it your testimony the only financial aspect of the family when you were married to hugh v smith was that you would pay basically the household expenses is that correct a yes q okay why was it that your husband handled all the financial matters a that’s what he wanted to do that was-- q okay a --just the way it had been for 20-some-odd years is he handled everything but the basic home expense q did he insist that they be done that way a yes q did you have any say-so at all a no q did you believe that your husband was paying the family taxes a yes q was there anything at all in just how your husband behaved that would indicate that he didn’t have the financial ability to pay the taxes a no qo were you aware that he was ever negligent in paying taxes at the time a at that time q yes a no q there was nothing that made you think that he wasn’t going to pay taxes for a year a no qo as far as you knew did he make all the tax_payments on time a as far as i knew on cross-examination petitioner testified qo x you stated that you believed your husband was paying taxes what do you base your belief on a nothing was said that there were--there was nothing told to me that bills were not being paid qo did you ever ask him if he would be paying the taxes a i don’t recall i could have but i don’t recall asking him that without any elaboration on the subject matter of petitioner’s testimony and based on her own words rather than her counsel’s we are not satisfied that her conclusions are based on facts petitioner testified in a similar manner that all income other than her salary reported on the return was attributable to her husband and that income taxes were withheld from her earnings during the stipulated facts however contradict petitioner’s recollection of income taxes being withheld according to the stipulation no payments on the liabilities were made before any withholding from petitioner’s wages would have been reflected as of date in the absence of either the tax_return or the notice_of_deficiency for we cannot tell whether the deficiency resulted from unreported income from petitioner’s or h smith’s income or from disallowed deductions that were apparent on the face of the return petitioner claims that she is entitled to relief under sec_6015 c or f for and under sec_6015 for she concedes that with respect to liabilities reported on the return but not paid relief is available only under sec_6015 petitioner relies on the above testimony to establish that the understatement_of_tax for was attributable to h smith and that she had no reason to know of the deficiency petitioner argues that it would be ineguitable to hold her responsible for the understatement based on her response to questions about vacations and jewelry and separate_accounts she relies on the absence of the factors listed in the statute as disqualifications such as fraudulent intent or transfers of property to avoid tax otherwise she has not cited any evidence from which we could conclude that respondent abused his discretion in denying relief under sec_6015 see 115_tc_183 because of the gaps in the record we need not discuss the separate elements of each type of relief provided by sec_6015 the record is insufficient for us to conclude that petitioner is entitled to relief at the time of trial the original returns that were sent to the internal_revenue_service were not available petitioner’s counsel stated at trial that we've got unsigned copies but the copies were not produced during the administrative consideration of petitioner’s claim for relief under sec_6015 petitioner was invited to present additional information but no further information was provided by petitioner the absence of corroborative testimony or documentation in this case is troublesome petitioner’s counsel claimed to have served a subpoena duces tecum for trial on h smith and only belatedly stated to the court that the subpoena had been disregarded counsel cited h smith’s failure to appear as indicative of the fact that he is not cooperating petitioner complains in her posttrial brief that respondent would not agree to a posttrial deposition of h smith but petitioner has not shown any reason why the record should be reopened after trial for the purpose of receiving evidence that cannot be described as newly discovered petitioner argues that she had a reasonable belief that the tax_liability reported on the joint returns would be paid her alleged belief however was based only on the absence of knowledge that payment would not be made she testified that she did not inquire or did not recall inguiring whether or how that amount would be paid the liability shown on the return exceeded dollar_figure petitioner is neither uneducated nor unintelligent we do not believe that she would have been disinterested in how such a large amount would have been paid or oblivious about the family resources from which the taxes could have been paid the parties’ briefs dispute whether certain case precedents are persuasive or distinguishable the record however does not support findings sufficient to make a comparison to the circumstances in prior cases petitioner’s briefs assert facts that are not in the record see rule b and petitioner seeks to impose on respondent the burden of negating conclusory testimony such as that quoted above we cannot on this record -- - attribute or allocate the items giving rise to the deficiency to h smith we cannot conclude that it would be inequitable to hold petitioner to the consequences of filing a joint_return on consideration of the entire record we conclude that petitioner’s bald assertions are not reliable we conclude further that petitioner is not entitled to relief with respect to the underpayment and penalties for or the deficiency and penalties for to reflect the foregoing decision will be entered for respondent


department of the treasury i n t e r n al r e v e n u e s e r v i c e w as h i n g t o n d c offic e of c h ief c o u n sel number release date tl-n-1440-00 cc dom it a uilc date memorandum for kenneth j rubin assistant district_counsel pennsylvania district_counsel from attention david a breen lewis j fernandez by george baker deputy assistant chief_counsel cc dom it a subject significant service_center advice this responds to your request for significant advice dated date in connection with a question posed by the customer quality review site of the philadelphia service_center issue the first question you ask is if a married taxpayer who files as head_of_household itemizes his or her deductions may the taxpayer’s spouse claim the full standard_deduction for married taxpayers filing separately the second question is if the spouse who files as married_filing_separately elects to itemize deductions may the spouse who files as head_of_household claim the standard_deduction for head_of_household status conclusion first if a married individual files a separate_return with head_of_household status and elects to itemize deductions and if the other spouse continues to file as a married individual filing a separate_return then that other spouse is not eligible for the full standard_deduction second if the other spouse who files as married_filing_separately elects to itemize deductions then the spouse who files a separate_return with head_of_household status may still use the full standard_deduction available for head_of_household status the facts given are that two taxpayers are legally married at the end of the tax_year they do not elect to file a joint tax_return one taxpayer qualifies to file as unmarried_head_of_household the other taxpayer files as married_filing_separately discussion tl-n-1440-00 these questions all have a common thread they involve situations in which a legally married taxpayer may be considered to be unmarried for purposes of filing a tax_return as unmarried_head_of_household or for claiming the standard_deduction several provisions of the internal_revenue_code set forth circumstances in which an individual who is legally married may not be considered as married the general_rule in sec_7703 provides that an individual legally_separated from his spouse under a decree of divorce or of separate_maintenance shall not be considered as married under sec_7703 an individual who is married shall not be considered as married if an individual maintains as his home a household which constitutes for more than one-half of the taxable_year the principal_place_of_abode of a child with respect to which such individual is entitled to a deduction for the taxable_year such individual furnishes over one-half of the cost of maintaining such household during the taxable_year and during the last months of the taxable_year such individual’s spouse is not a member of such household sec_63 and sec_63 provide for another situation in which an individual who is married may be considered as not married those sections provide that the marital status of an individual is also determined under sec_7703 when applying the limitation concerning the eligibility to take the full standard_deduction when filing a separate_return the principle of treating a married individual as unmarried in certain situations also applies to the tax_tables set forth in sec_1 in general a married individual may file a joint_return with his or her spouse under sec_1 or file a separate_return under sec_1 and pay the tax imposed on taxable_income in accordance with the tables set forth therein however a married individual may also have an additional choice of filing_status under sec_1 if that individual is a head_of_household as defined in sec_2 and c although sec_2 specifically refers to an individual who is not married in order to be considered for head_of_household status sec_2 provides that an individual shall be treated as not married at the close of the taxable_year if such individual is so treated under the provisions of sec_7703 thus a legally married individual may also use the head_of_household filing_status so long as the requirements of sec_2 and b are satisfied if a legally married individual uses the head_of_household filing_status then under these facts the status of the other spouse continues as a married individual who files a separate_return under sec_1 next we next consider the relationship of one spouse filing as head_of_household and the other spouse married_filing_separately with the eligibility of the spouses to use the standard_deduction and the right to elect to itemize deductions sec_63 provides in general that unless an individual makes an election under this subsection for the taxable_year no itemized_deduction shall be allowable for the taxable_year sec_63 provides in part that if an individual does not elect to itemize his tl-n-1440-00 deductions then adjusted_gross_income is instead reduced by the standard_deduction this right of a taxpayer to elect to itemize deductions or use the standard_deduction is generally limited by sec_63 this limitation provides that a married individual filing a separate_return where either spouse itemizes deductions shall have a standard_deduction of zero so this limitation then applies to taxpayers who are married individuals filing separate returns under sec_1 but does not apply to a spouse who qualifies for and files as head_of_household because the spouse with head_of_household status is not considered a married individual under sec_7703 therefore the spouse who filed head_of_household may use the full standard_deduction and is not limited under sec_63 by the other spouse’s election to itemize deductions also if the head_of_household spouse elects to itemize deductions then the general limitation of sec_63 continues to apply to the other spouse because the other spouse is a married individual filing a separate_return we also refer you to page of publication entitled exemptions standard_deduction and filing information for a general discussion on spouses who elect to file as married_filing_separately and how one spouse may be able to file as head_of_household if the spouses live apart and meet certain tests in that discussion there is also a statement applicable to the second question you asked which provides that the head_of_household filing_status allows a taxpayer to choose the standard_deduction even if the taxpayer’s spouse chooses to itemize deductions if you have any additional questions please contact george baker at


number release date id office uilc cca-715140-10 ---------------------------- from --------------------------- sent thursday pm to -------------------- cc ----------------------------------- subject with respect to sec_2032 and sec_2056a sec_301_9100-2 applies if the taxpayer timely filed the form_706 failed to make the election on that return and took the corrective action described in sec_301_9100-2


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division aug uniform issue list legend taxpayer a irax amount financial_institution financial_institution c account y individual d dear this is in response to your request signed on april29 as supplemented by correspondence dated june and date from your authorized representative in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code page the following facts and representations have been submitted under penalties of perjury in support of the ruling requested taxpayer a represents that she received a distribution from ira x totaling amount taxpayer a asserts that her failure to accomplish a rollover of amount within the 60-day period prescribed by sec_408 of the code was due to error by financial_institution c in depositing amount into a non-ira account instead of an ira taxpayer a further represents that amount has not been used for any other purpose taxpayer a maintained ira x at financial_institution b ira x was invested in a certificate of deposit cd taxpayer a also maintained non-ira cos at financial_institution c taxpayer a wanted to have all of her cos with one financial_institution upon maturity of the ira x cd on date taxpayer a took a complete distribution in the form of a cashier's check from financial_institution band closed the ira x account the cashier's check did not indicate that it was a distribution from an ira taxpayer a represents that on date she gave the check to a financial_institution c representative told the representative that the funds were from an individual ira and then discussed investment of the funds taxpayer a does not recall signing paperwork creating account y taxpayer a assumed that the money would be invested in a similar retirement account but financial_institution c set up a non-ira account account y and invested the funds in a month cd issued june held in the name of taxpayer a taxpayer a received regular statements from financial_institution c listing account y and several other cos account y was not identified in the statements as an ira additionally the statement included year-to-date tax summary information that separately listed ira ytd dividends and other ytd dividends although account y had dividends taxpayer a's statement showed zero dividends under ira ytd dividends after establishing account y taxpayer a asked financial_institution c to change account y to a joint account with her daughter individual d similar to other cos taxpayer a held jointly with individual d at financial_institution c the date statement lists individual d as joint owner of account y taxpayer a represents that she took required minimum distributions from ira x while it was at financial_institution b taxpayer a took no distributions from account y taxpayer a represents that she was not aware that account y was not an ira until she received a tax nptice dated date taxpayer a represents that if page she had known about the tax consequences she would not have transferred the funds from ira x to account y based on the facts and representations you request a ruling that the internal_revenue_service waive the 60-day rollover requirement contained in sec_408 of the code with respect to the distribution of amount from ira x sec_408 of the code provides that an individual_retirement_account is for the exclusive benefit of an individual or his beneficiaries sec_408 d 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 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code 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 and 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 --- page4 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 may waive the day requirement under sec_408 and sec_408 of the code 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 only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 i r s date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 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 taxpayer a has not presented sufficient evidence showing that financial_institution c erred in setting up non-ira account y upon approaching financial_institution c with the cashier's check from ira x taxpayer a had the option of requesting a rollover ira or a non-ira account taxpayer a has not provided evidence that she instructed financial_institution c to set up an ira account for the deposit of amount from ira x additionally taxpayer a's transactions after the transfer were consistent with maintaining a non-ira account after establishing account y taxpayer a received statements that not only did not list account y as an ira but also reported zero ira ytd dividends which was inconsistent with account y's actual earnings even though taxpayer a had been receiving required minimum distributions from ira x taxpayer a did not take any required minimum distributions from account y further taxpayer a instructed financial_institution c to convert account y to joint_ownership a request for joint_ownership is inconsistent with maintaining an ira since under sec_408 of the code an ira can be established and owned by only one individual and maintained for the exclusive benefit of that individual or his or her beneficiaries therefore pursuant to sec_408 of the code the service declines to waive the 60-day rollover requirement with respect to the date distribution of amount from ira x no opinion is expressed as to the tax treatment of the transaction described in this ruling under the provisions of any other section of either the code or regulations which may be applicable this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent page pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative if you wish to inquire about this ruling please contact id at se t ep ra t1 please address all correspondence to sincerely yours car - w iikins carlton a watkins manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose cc


carol diane gray petitioner v commissioner of internal revenue respondent docket no 27849-09l filed date p moved for interlocutory appeal pursuant to sec_7482 of an order dismissing for lack of jurisdiction on account of an untimely petition that portion of the case seeking review under sec_6330 of r’s determina- tion to proceed with collection actions held p’s contention that the period in which to file a petition for review of a collection action determination under sec_6330 affecting the underlying tax_liability is the this opinion supplements our previously filed opinion 138_tc_295 verdate nov jul jkt po frm fmt sfmt v files bound vol without crop marks b v gray jamie united_states tax_court reports day period provided in sec_6213 rather than the 30-day period provided in sec_6330 does not demonstrate a substantial ground for difference of opinion within the meaning of sec_7482 held further p has failed to show that an immediate appeal from the order may materially advance the ultimate termination of this litigation within the meaning of sec_7482 consequently p’s motion will be denied jonathan p decatorsmith for petitioner john spencer hitt for respondent supplemental opinion gale judge in an opinion previously issued in this case 138_tc_295 we held that we lacked jurisdiction to review respondent’s determination to proceed with certain collection actions set forth in a notice_of_determination issued to petitioner notice_of_determination because the petition was untimely not having been filed within days of the notice_of_determination as required by sec_1 d the notice_of_determination had deter- mined that respondent could proceed with a lien and a levy to collect unpaid income_tax reported as due by petitioner on untimely joint returns filed for and and assessed by respondent pursuant to sec_6201 petitioner had challenged the underlying tax_liabilities at her hearing provided pursuant to sec_6330 and the notice_of_determination abated a portion of the income_tax assessment for each of and the notice also abated the sec_6651 additions to tax that had been assessed pursuant to sec_6665 for each taxable_year at issue in accordance with our opinion we issued an order dismissal order dis- missing this case for lack of jurisdiction insofar as it con- cerned review of the determination to proceed with the collec- tion actions challenged in the petition petitioner now seeks an interlocutory appeal of the dismissal order pending all section references are to the internal_revenue_code_of_1986 in effect at all relevant times and all rule references are to the tax_court rules_of_practice and procedure in addition we held that the petition was timely for purposes of our jurisdiction to review respondent’s failure to abate interest under sec_6404 and that further proceedings were necessary to determine whether we had jurisdiction under sec_6015 to determine the appropriate relief available to petitioner under sec_6015 verdate nov jul jkt po frm fmt sfmt v files bound vol without crop marks b v gray jamie gray v commissioner before the court is petitioner’s motion for certification of question for appeal wherein she seeks an amendment to the dismissal order to include a statement allowing an interlocu- tory appeal petitioner asserts in her motion that the adjustments made in the notice_of_determination to her federal_income_tax liabilities for the years at issue constitute deficiency determinations that entitle her to a 90-day period for filing a petition with this court for review of a deficiency deter- mination see sec_6213 rather than the 30-day period for filing a petition for review of a collection action determina- tion under sec_6330 see sec_6330 petitioner asks us to certify for immediate appeal the issue whether defi- ciency procedures instituted during a sec_6330 hearing have a day or day period for timely filing peti- tions to the tax_court for review respondent filed an objec- tion to petitioner’s motion i sec_7482 in general sec_7482 provides that a u s court_of_appeals upon a timely request by a party to litigation in this court may permit an immediate appeal of an interlocutory_order of this court when it contains a statement that a controlling question of law is involved with respect to which there is a substantial ground for difference of opinion and that an immediate appeal from that order may materially advance the ultimate termination of the litigation see also rule a accordingly this court may certify an interlocu- tory order for immediate appeal if we conclude that a controlling question of law is involved substantial grounds for a difference of opinion are present as to that question of law and an immediate appeal may materially advance the ultimate termination of the litigation see sec_7482 91_tc_74 new york football giants inc v commissioner tcmemo_2003_28 each of these requirements must be met before we certify an interlocutory_order for immediate appeal see kovens v commissioner t c pincite the proper application of sec_7482 requires bal- ancing of the policies favoring interlocutory appeals-ie avoidance of wasted trial and harm to litigants-against the verdate nov jul jkt po frm fmt sfmt v files bound vol without crop marks b v gray jamie united_states tax_court reports policies underlying the so-called final judgment rule that is avoidance of piecemeal litigation and dilatory and harassing appeals kovens v commissioner t c pincite our certifi- cation of an interlocutory_order for an immediate appeal is an exceptional measure that we employ sparingly see gen signal corp subs v commissioner 104_tc_248 aff ’d on other grounds 142_f3d_546 2d cir kovens v commissioner t c pincite see also 437_us_463 as we stated in kovens interlocutory orders should be granted only in exceptional cases kovens v commissioner t c pincite citing u s c c a n such an approach reflects a strong policy in favor of avoiding piecemeal review see id we decline to certify the dismissal order for interlocutory appeal we are not persuaded that there are substantial grounds for a difference of opinion regarding the applicable petitioning period or that the interlocutory appeal will mate- rially advance the ultimate termination of the litigation we explain our reasoning below ii whether substantial grounds for a difference of opinion are present as to the question of law petitioner contends that there is a substantial basis for a difference of opinion on the issue of the period for filing a petition with this court for review of a determination under sec_6330 when it affects a taxpayer’s underlying tax_liability petitioner contends that sec_6330 does not explicitly state whether a determination concerning the tax- payer’s underlying tax_liability must be appealed to the tax_court within the 30-day period provided in that section in petitioner’s view different periods for filing a petition for tax_court review apply depending on the issues raised in the sec_6330 hearing such as interest abatement see gray v commissioner t c pincite spousal relief see 119_tc_191 or as in this case the underlying tax_liability petitioner asserts that allowing only days to file a petition when the underlying tax_liability is properly at issue frustrates congressional intent to allow taxpayers sufficient time to evaluate their position con- cerning the underlying tax_liability we disagree verdate nov jul jkt po frm fmt sfmt v files bound vol without crop marks b v gray jamie gray v commissioner generally the substantial ground for difference of opinion test is interpreted by the courts to involve questions that present serious and unsettled legal issues kovens v commissioner t c pincite citing 337_us_541 the law con- cerning the period for filing a petition under sec_6330 involving review of the underlying tax_liability is not unsettled for a taxpayer seeking review of a determination under sec_6320 or sec_6330 sec_6330 provides that the petition must be filed with the tax_court within days of the determination regardless of whether the underlying tax_liability is at issue as we stated in gray v commis- sioner t c pincite the statutory scheme of sec_6330 clearly contemplates that the underlying tax_liability may be challenged in designated circumstances in a sec_6330 proceeding and requires the determination to consider such a challenge when properly made see sec_6330 b how- ever the statute does not distinguish between determinations where the underlying tax_liability is properly at issue and those where it is not the same 30-day period to appeal the determination applies across the board see sec_6330 some of the arguments petitioner advances in her motion warrant further discussion petitioner contends that con- gress is silent as to whether or not underlying liability issues discussed and ultimately determined during the course of a cdp hearing are governed by the 90-day filing period applicable to deficiency determinations under u s c sec_6213 we disagree there is no gap in the statute con- cerning the period for filing a petition for review of a sec_6330 determination concerning an underlying tax_liability under sec_6330 if a taxpayer has timely requested a hearing he may raise at the hearing any relevant issue relating to the unpaid tax including in designated cir- cumstances challenges to the existence or amount of the underlying tax_liability sec_6330 if the taxpayer chal- lenges the underlying tax_liability as permitted under sec_6330 t he determination by an appeals officer under this subsection shall take into consideration the issues raised under sec_6330 which include any challenge to the underlying tax_liability raised by the taxpayer sec_6330 the foregoing determination is then subject_to judicial review as provided in section verdate nov jul jkt po frm fmt sfmt v files bound vol without crop marks b v gray jamie united_states tax_court reports d the person may within days of a determina- tion under this section appeal such determination to the tax_court and the tax_court shall have jurisdiction with respect to such matter emphasis added the statute leaves no room for an alternate petitioning period as petitioner sug- gests citing the fact that petitioning periods greater than days are triggered when a taxpayer raises a claim in a sec_6330 proceeding for spousal relief days or interest abatement days petitioner suggests that a similar prin- ciple should apply in the case of a challenge to the under- lying tax_liability and trigger the 90-day petitioning period applicable to deficiency determinations since adjustments to the underlying tax_liability in petitioner’s view constitute deficiency determinations petitioner’s comparison of underlying tax_liability deter- minations in a sec_6330 proceeding to those covering spousal relief or interest abatement is misplaced however when a taxpayer raises in a sec_6330 proceeding a claim for spousal relief under sec_6015 or interest abatement under sec_6404 the internal_revenue_code provides separate and independent bases besides sec_6330 for tax_court jurisdiction to review the commissioner’s determinations concerning relief namely sec_6015 and sec_6404 respectively the statutory petitioning periods provided for those independent grants of tax_court jurisdiction accordingly apply see gray v commissioner t c pincite interest abatement raymond v commissioner t c pincite spousal relief by contrast both the taxpayer’s entitlement to dispute the underlying tax_liability -which in a sec_6330 collection proceeding is necessarily an already assessed tax or penalty -and the tax court’s jurisdiction to review the commissioner’s deter- mination concerning the liability are derived entirely from sec_6330 but for that section a taxpayer liable for an assessed income_tax generally could dispute it only by paying it and instituting suit for a refund see generally sec_7422 u s c sec_1346 the 30-day petitioning period provided in sec_6330 is thus the exclusive statutorily prescribed petitioning period for tax_court review of a determination concerning an underlying tax verdate nov jul jkt po frm fmt sfmt v files bound vol without crop marks b v gray jamie gray v commissioner underlying tax_liability as those terms are employed in sec_6330 moreover petitioner’s contention that the adjustments made in the notice_of_determination to the income_tax liabil- ities for and and to the additions to tax for all years constitute deficiency determinations is in clear con- flict with the statutory definition of a deficiency a defi- ciency is a fundamental term of art in tax_procedure it is defined in sec_6211 for all internal_revenue_code pur- poses as follows sec_6211 definition of a deficiency a for purposes of this title in the case of income taxes imposed by subtitle a the term deficiency means the amount by which the tax imposed by subtitle a exceeds the excess of- the sum of a the amount shown as the tax by the taxpayer upon his return if a return was made by the taxpayer and an amount was shown as the tax by the taxpayer thereon plus b the amounts previously assessed or collected without assess- ment as a deficiency over- the amount of rebates as defined in subsection b made simply put a deficiency in income_tax generally exists where the amount of tax imposed by subtitle a of the code exceeds the amount of tax shown by the taxpayer on his return when the secretary or_his_delegate the commis- sioner determines that a deficiency exists he is author- ized to send a notice of such deficiency to the taxpayer sec_6212 and the taxpayer is entitled generally within days thereafter to petition the tax_court for a redeter- mination of that deficiency sec_6213 for the years at issue in this case no deficiency was ever determined by respondent that is respondent has at no point ever asserted that the amounts of tax imposed by sub- title a for these years are greater than those petitioner reported on her returns instead respondent assessed the income_tax at issue for these years in the amounts reported as due by petitioner and her former spouse on late-filed joint returns without resort to the deficiency procedures of sec_6212 and sec_6213 see sec_6201 likewise the addi- the period i sec_150 days where the notice is addressed to a person out- side the united_states sec_6213 verdate nov jul jkt po frm fmt sfmt v files bound vol without crop marks b v gray jamie united_states tax_court reports tions to tax under sec_6651 and were also sum- marily assessed by respondent without resort to the defi- ciency procedures as he is authorized to do pursuant to sec_6665 in short these additions to tax did not give rise to a deficiency as defined for internal_revenue_code purposes the assessed but unpaid income_tax and additions to tax for the years at issue constitute an underlying tax_liability for each year as that term is used in sec_6330 because they are amounts owe d pursuant to the tax laws that are the subject of the commissioner’s collection activities see 130_tc_44 but they are not deficiencies for internal_revenue_code purposes and the sec_6330 notice_of_determination action to reduce or eliminate them in no way constitutes a deficiency determination these liabilities and the notice_of_determination action with respect to them simply cannot be fitted within the parameters of sec_6212 and sec_6213 con- sequently the 90-day petitioning period provided in sec_6213 has no application to them any claim to the contrary ignores the definition of a deficiency that underlying presumably the more circumscribed 30-day petitioning period for tax_court review of sec_6330 determinations concerning underlying tax_liabilities reflects congressional recognition liabilities represent assessed taxes whereas deficiencies do not as assessed taxes the liabilities making up the underlying tax_liability have already been accorded the various preassessment proce- dural that congress deemed appropriate including the 90-day petitioning period for tax_court review in the case of taxes eligible for deficiency procedures in safeguards tax the notice_of_determination abated all of the sec_6651 additions to tax at issue we find it unnecessary to consider whether in the event peti- tioner’s petition had been timely with respect to respondent’s collection ac- tion determinations under sec_6330 there would have been a justiciable issue to review concerning the additions to tax see 126_tc_1 as no deficiencies were ever determined with respect to the years at issue the additions to tax at issue would not have been eligible for defi- ciency procedures by virtue of sec_6214 see 118_tc_22 in the case of income_tax and other taxes eligible for deficiency proce- dures they may be assessed-and therefore become part of an underlying verdate nov jul jkt po frm fmt sfmt v files bound vol without crop marks b v gray jamie gray v commissioner any event the statutorily prescribed review provided for deficiency determinations and for determinations under sec_6330 of challenged underlying tax_liabilities are not equivalent cf 125_tc_14 tax_court review of underlying tax_liability in sec_6330 proceeding does not satisfy taxpayer’s right to a defi- ciency proceeding to establish the liability petitioner’s suggestion that they be treated as equivalent is contrary to the statute the fault in petitioner’s reasoning is perhaps best illus- trated by the anomalous results it produces the underlying tax_liabilities that were adjusted in this case consist of income_tax reported as due on returns that respondent assessed pursuant to sec_6201 -ie without defi- ciency procedures-and additions to tax under sec_6651 that respondent likewise was entitled to assess under sec_6665 without resort to deficiency procedures that is to say in both instances congress concluded that deficiency procedures were not warranted to establish these liabilities yet petitioner would have us interpret sec_6330 so that we extend the 90-day petitioning period for defi- ciency determinations to two categories of tax_liabilities that congress expressly decided did not warrant deficiency proce- dures and the problem does not stop there the phrase underlying tax_liability encompasses other taxes that are not eligible for deficiency procedures such as for example employment_taxes imposed by subtitle c of the internal rev- enue code see salazar v commissioner tcmemo_2008_38 aff ’d 338_fedappx_75 2d cir and sec_6702 tax_liability -only after the commissioner has mailed a notice of defi- ciency to the taxpayer’s last_known_address extending to him a 90-day or 150-day period for petitioning the tax_court for review secs further in these circumstances the taxpayer may challenge underlying tax_liabilities that have been the subject of a properly addressed notice_of_deficiency only if the taxpayer can show that he did not receive the no- tice of deficiency sec_6330 see kuykendall v commissioner 129_tc_77 tatum v commissioner tcmemo_2003_115 our jurisdiction to review the commissioner’s determination to proceed with collection of these two categories of tax_liabilities as underlying tax_liabilities in a sec_6330 proceeding is well established see 122_tc_1 taxpayer-reported tax assessed pursu- ant to sec_6201 downing v commissioner t c pincite sec_6651 additions to tax assessed pursuant to sec_6665 verdate nov jul jkt po frm fmt sfmt v files bound vol without crop marks b v gray jamie united_states tax_court reports frivolous_return penalties see callahan v commissioner t c pincite yet under petitioner’s theory adjustments to these taxes in a sec_6330 proceeding would likewise entitle the taxpayer to the 90-day petitioning period intended for deficiency determinations in summary we conclude petitioner has not shown that there are any substantial grounds for a difference of opinion concerning the petitioning period applicable to determina- tions under sec_6330 affecting the underlying tax_liability iii whether an immediate appeal would materially advance the ultimate termination of the litigation we also conclude that an immediate appeal would not materially advance the ultimate termination of the litigation within the meaning of sec_7482 petitioner con- tends that in the interest of judicial economy this court should hear all justiciable issues at the same time after the u s court_of_appeals for the seventh circuit remands the case to the tax_court for further proceedings however an immediate appeal would produce two litigation tracks for substantively intertwined issues in addition petitioner already has two cases raising the identical issue pending before the court_of_appeals see gray v commissioner docket no 27850-09l date appeal filed 7th cir date gray v commissioner docket no 3260-08l date appeal filed 7th cir date accordingly our holding concerning the untimeliness of the petition in this case for purposes of review pursuant to sec_6330 does not fall within the exceptional category of cases contemplated by congress when enacting sec_7482 and we conclude that the requirements for an interlocutory appeal have not been met verdate nov jul jkt po frm fmt sfmt v files bound vol without crop marks b v gray jamie gray v commissioner to reflect the foregoing an order denying petitioner’s motion will be issued f verdate nov jul jkt po frm fmt sfmt v files bound vol without crop marks b v gray jamie


office_of_chief_counsel internal_revenue_service memorandum number release date cc ita b05 rfboone preno-126819-06 uilc date date to victoria m diegel wage investment customer account services third party communication none date of communication not applicable from william a jackson chief branch income_tax accounting subject katrina rita and wilma nol questions this chief_counsel_advice responds to your request for assistance this advice may not be used or cited as precedent this memorandum addresses certain questions relating to nols attributable to hurricanes katrina rita or wilma posed by service personnel from atlanta and austin this memorandum does not address questions that relate only to the application of sec_165 to casualty losses the questions posed refer to casualty losses without drawing any distinction between the different types of losses attributable to the various hurricanes that damaged the gulf coast in however most of the questions relate to gulf_opportunity_zone losses go_zone losses only casualty losses that meet the definition of qualified gulf_opportunity_zone casualty losses qgozcl may generate go_zone losses the portion of an nol that qualifies as a go_zone loss qualifies for a taxable_year carryback period a go_zone loss may be generated by five types of deductions one of which is a deduction for a qgozcl sec_1400n defines a qgozcl as any uncompensated loss as defined in sec_1231 of property located in the gulf_opportunity_zone go_zone preno-126819-06 if such loss is deductible under sec_165 for the taxable_year and such loss is by reason of hurricane katrina sec_1231 losses include certain losses pertaining to property used in a trade_or_business or certain losses associated with certain capital assets held for more than one year in connection with a trade_or_business or a transaction entered into for profit consequently casualty losses of property held for personal_use cannot generate a go_zone loss likewise losses of property not located in the go_zone as defined in sec_1400m or caused by hurricanes wilma or rita rather than hurricane katrina cannot generate a go_zone loss most of the nol questions submitted appeared to assume that the casualty_loss at issue constitutes a qgozcl unless stated otherwise each of our answers assumes that type of casualty_loss comments on statements by the field the loss can be taken in or correct except for certain qgozcls sec_165 allows taxpayers to elect to take certain losses attributable to disasters into account for federal_income_tax purposes for the taxable_year immediately preceding the taxable_year in which the disaster occurred losses eligible for the election generally include any loss attributable to a disaster occurring in an area subsequently determined by the president of the united_states to warrant assistance by the federal government under the robert t stafford disaster relief and emergency assistance act therefore if the casualty_loss was attributable to hurricane katrina rita or wilma and was incurred in the go_zone rita_go_zone or wilma_go_zone the taxpayer is generally entitled to make a sec_165 election with regard to the loss the sec_165 election allows the taxpayer to treat the loss as incurred in rather than however sec_1400n in conjunction with sec_1400n provides that sec_165 shall not apply to any qgozcl to the extent such loss is taken into account in determining the amount of a go_zone loss the apparent purpose of this provision is to ensure that t o the extent that a casualty_loss is included in the eligible nol and carried back as a go_zone loss the taxpayer is not eligible to also treat the loss as having occurred in the prior taxable_year under sec_165 staff of the joint_committee on taxation technical explanation of the revenue provisions of h_r the gulf_opportunity_zone act of as passed by the house of representatives and the senate pincite jcx-88-05 date it is not clear why congress decided to restrict a taxpayer’s right to make a sec_165 election for qgozcls if its purpose was to ensure that such losses could not be deducted for the prior taxable_year and also deducted for purposes of determining the amount of the current taxable_year go_zone loss making a sec_165 election causes the loss to be treated as incurred in the prior taxable_year for federal_income_tax preno-126819-06 purposes which prevents it from being taken into account in determining the amount of a go_zone loss for the current taxable_year nevertheless the restriction on making sec_165 elections for qgozcls is the law and must be applied the mechanics of applying this restriction however are far from self-evident there are at least two possible interpretations to these statutory provisions first provided that the deductions at issue are allowable in computing an nol it may be demonstrated that all of those deductions are necessary to produce the actual amount of the nol that is a reduction in any of the taxpayer’s deductions would result in a corresponding reduction in the taxpayer’s nol until eliminated likewise if a taxpayer has an nol that qualifies as a go_zone loss and also has deductions for qgozcls reducing the amount of the taxpayer’s deductions for qgozcls results in a corresponding reduction of the taxpayer’s nol until eliminated because of this a strong argument can be made that if any portion of an nol qualifies as a go_zone loss a sec_165 election cannot be made with regard to any of the taxpayer’s qgozcls this is the most straightforward reading of the statute but it can lead to harsh results if the taxpayer has a small go_zone loss but a large amount of qgozcls that would otherwise be eligible for a sec_165 election second one could interpret the restriction as only applying to the extent of the actual go_zone loss this appears to be the view taken by the joint_committee staff see page of the technical explanation taking this approach would require adopting an ordering rule to determine which deductions eligible to generate a go_zone loss are treated as offsetting gross_income and which deductions are treated as actually generating the loss under this interpretation qgozcls that offset gross_income would be eligible for the sec_165 election and those which are treated as actually generating the nol would not be eligible for the sec_165 election upon adopting an ordering rule applying the second interpretation is straightforward if all of the qgozcls are treated as offsetting gross_income the sec_165 election applies to all of the qgozcls or if all of the qgozcls are treated as generating the nol none of the qgozcls are eligible for the sec_165 election implementing the second interpretation presents complications if part of the qgozcls offset gross_income and part of them generate the nol for example a taxpayer has dollar_figure of gross_income and dollar_figure of qgozcls thus prior to any sec_165 election the taxpayer has a dollar_figure nol all of which qualifies as a go_zone loss in this instance dollar_figure of the taxpayer’s qgozcls are treated as offsetting gross_income and dollar_figure of the qgozcls are treated as generating the go_zone loss at first glance then it appears that dollar_figure of the qgozcls qualify for the sec_165 election and dollar_figure of them do not however if the taxpayer makes a sec_165 election with regard to dollar_figure of the qgozcls the deduction for those losses will be taken into account for the prior taxable_year rather than the current taxable_year this change means that the remaining dollar_figure of qgozcls no longer produce an nol which qualifies as a go_zone loss but simply offset gross_income for preno-126819-06 the current taxable_year arguably this qualifies the remaining dollar_figure of qgozcls for the sec_165 election if a sec_165 election with respect to any casualty_loss has the effect of qualifying additional qgozcls for the sec_165 election it may be demonstrated that if any of the qgozcls qualify for the sec_165 election all of the qgozcls qualify for the sec_165 election under the second interpretation the sec_1400n prohibition on making a sec_165 election applies to a taxpayer’s qgozcls only if all of the qgozcls are treated as generating the taxpayer’s nol if this is not the case the taxpayer may make a sec_165 election with regard to all of the taxpayer’s qgozcls in determining whether a taxpayer’s qgozcls generate an nol the qgocls should be treated as taken into account last in computing the nol unless there are other deductions such as allocable_interest deductions attributable to a certified equity reduction transaction that take priority over qgozcls in determining the character of the nol we believe the service should adopt the second interpretation in applying the limitations on making sec_165 elections with regard to qgozcls this interpretation avoids the harsh results that may occur under the first interpretation it does not run afoul of congress’ intent that the taxpayer not obtain the benefits of a sec_165 election and a taxable_year nol_carryback period with regard to the same loss this interpretation also harmonizes with the rule that when a taxpayer makes a sec_165 election the casualty is treated as if it actually occurred in the preceding_taxable_year see sec_165 sec_1_165-11 in other words under sec_165 a taxpayer is prohibited from treating part of its losses attributable to a disaster as occurring in the actual year of the disaster and the remainder of its losses attributable to that disaster as occurring in the preceding_taxable_year if taken in the loss may not generate a go_zone loss however it may generate an nol that qualifies for a taxable_year carryback period under sec_172 correct sec_1400n which defines and addresses the application of go_zone losses is effective for losses arising in taxable years ending on or after date therefore a taxpayer may not incur a go_zone loss for calendar_year for individual taxpayers sec_172 in conjunction with sec_172 provides a taxable_year carryback period for the portion of any nol generated by deductions for losses of property arising from fire storm shipwreck or other_casualty or from theft pursuant to sec_1400n a qgozcl must be attributable to hurricane katrina a major storm therefore if a taxpayer elects under sec_165 to treat a qgozcl incurred in as if incurred in to the extent that loss generates an nol the nol will qualify for a taxable_year carryback period under sec_172 preno-126819-06 if the loss is claimed in the taxpayer can elect to treat it as a go_zone loss and carry it back years rather than an eligible_loss with a 3-year carryback not exactly sec_1400n provides for a taxable_year carryback period for a go_zone loss sec_1400n prevents the loss from being taken into account in determining how much of an nol qualifies for the taxable_year carryback period sec_1400n and removes the percent of amti limitation on the allowance of such losses in computing amti sec_1400n sec_1400n provides in part that rules similar to those in sec_172 shall apply with respect to a go_zone loss this raises the question of whether an election made pursuant to sec_1400n prevents the application of all of the provisions of sec_1400n or simply waives the taxable_year carryback period provided for by sec_1400n sec_172 provides that a taxpayer may elect to have the carryback period for a farming_loss determined without regard to sec_172 sec_172 provides for a taxable_year carryback period for the portion of an nol that qualifies as a farming_loss there is very little legislative_history on the go_zone loss waiver the staff of the joint_committee print simply indicates that an election may be made to waive the taxable_year carryback period see page of the technical explanation finally we note that with regard to an analogous provision the taxable_year carryback period for nols incurred in taxable years ending in or the waiver statute only provides for the waiver of the taxable_year carryback period the waiver does not affect the exemption of the deduction of such losses from the percent of amti limitation see sec_172 sec_172 and sec_56 because the cross-referenced statute sec_172 only deals with the waiver of the carryback period because the joint_committee print only specifically talks about the waiver of the taxable_year carryback period and because of how the analogous provisions relating to the special rules for and nols apply we believe that the election provided by sec_1400n only results in the waiver of the taxable_year carryback period for go_zone losses the election does not otherwise change the character of or alter the tax treatment of the loss consequently even if the election is made the amount of the go_zone loss determined for amt purposes will still be exempt from the percent of amti deduction limitation the go_zone loss will also continue to be subject_to sec_1400n making it ineligible for the taxable_year carryback period provided for by sec_172 therefore if a taxpayer waives the taxable_year carryback period with regard to a go_zone loss that loss is carried back under the normal taxable_year carryback rule_of sec_172 question sec_1 a do the extended due dates also extend the date for filing the election to forgo the carryback period preno-126819-06 yes sec_172 provides that an election to waive the taxable_year carryback period for a farming_loss shall be made in such manner as may be prescribed by the secretary_of_the_treasury and shall be made by the due_date including extensions of time for filing the taxpayer’s return for the taxable_year of the nol sec_1400n provides in part that rules similar to those in sec_172 shall apply with respect to a go_zone loss likewise the sec_172 election to waive all of the carryback periods with regard to an nol must be made by the extended due_date of the return sec_7508a authorizes the irs to postpone deadlines for certain time-sensitive acts including the filing of federal_income_tax returns for up to one year for taxpayers the irs determines are affected by a presidentially_declared_disaster if a taxpayer qualifies for an extended federal_income_tax return filing due_date for a taxable_year pursuant to sec_7508a the taxpayer may also make a timely election to waive carryback periods for any nol incurred in that taxable_year by the extended due_date b what can we accept for a valid election is a chart just showing the amount to go forward acceptable no each of the statutory provisions providing for the waiver of any carryback period pertaining to any portion of an nol requires that the election be made in the manner specified by the secretary_of_the_treasury to date the only regulations that have been issued that address the waiver of nol_carryback periods pertain to the sec_172 election to waive all of the carryback periods pertaining to an nol an election that traces it origins to the tax reform act of with regard to that election sec_301_9100-12t provides unless otherwise provided in the return or in a form accompanying a return for the taxable_year the elections described shall be made by a statement attached to the return or amended_return for the taxable_year the statement required when making an election pursuant to this section shall indicate the section under which the election is being made and shall set forth information to identify the election the period for which it applies and the taxpayer's basis or entitlement for making the election the case law dealing with elections to waive nol_carryback periods generally address what it is required pursuant to sec_172 to waive all of the carryback periods with regard to an nol1 to date no case has addressed the requirements to waive one of the special nol_carryback periods such as that pertaining to a go_zone loss nevertheless the principles established in the sec_172 waiver cases also apply to elections to waive special nol_carryback periods some of the cases address the issue of whether a taxpayer may make a split election with regard to a regular_tax nol and an amt nol those cases are not relevant to this issue preno-126819-06 a sec_172 election to waive all of the carryback periods with respect to an nol must be unequivocal and unambiguous 43_f3d_172 5th cir in the absence of a line item or check off block on a tax form to indicate waiver of the carryback period this intent is communicated by an express and unambiguous written_statement from the taxpayer indicating that the taxpayer is foregoing the carryback period a taxpayer’s method of reporting an nol on the taxpayer’s tax returns does not constitute a binding election with regard to that nol in garland v commissioner t c memo the taxpayers noted nol carryovers on their schedule c forms for various taxable years but did not file any timely statements electing to forego the carryback period with regard to such nols under these circumstances no valid election to forego the carryback periods was made showing the amount of an nol_carryover on a chart even if the chart is attached to a timely filed return for the taxable_year the nol is incurred does not constitute a valid sec_172 election to forego all of the carryback periods with regard to that nol simply showing the amount of nol_carryover on a chart does not even allow a reader of the chart to infer that the taxpayer might desire to waive the carryback period the carryover may be attributable to the fact that there is no modified_taxable_income in the carryback years available to absorb any portion of the nol cf 783_f2d_1201 5th cir including the amount of an nol_carryover on a minimum_tax form failed to indicate why the nol was being carried over a taxpayer might include a very detailed nol absorption chart with the tax_return for the taxable_year of the nol such a chart typically shows both the modified_taxable_income for all of the potential carryback years as well as the identity and amount of any nols absorbed in those years if the chart showed unabsorbed modified_taxable_income in taxable years to which the nol could be carried back without any of the nol being absorbed in those years this would at least justify speculation that the taxpayer planned to carry the nol only forward and not back nevertheless such a chart would not constitute an express statement binding the taxpayer to a course of action even if the taxpayer subsequently only carried the nol forward this action would not qualify as an election a taxpayer’s treatment of an nol does not constitute an election with regard to that nol likewise if a taxpayer only carries an nol back taxable years when that nol is eligible for a taxable_year carryback and shows this carryback on a schedule attached to a timely filed return for the taxable_year the nol is incurred the taxpayer’s actions do not constitute a waiver of the taxable_year carryback period the taxpayer’s actions are just an erroneous treatment of the nol to waive an nol_carryback period a taxpayer must do so expressly if the loss is claimed on the return does the tp have the choice to carry it back years eligible_loss or years go_zone loss preno-126819-06 see the above discussion under comments on statements by the field item number a go_zone loss does not qualify as an eligible_loss if a taxpayer elects to waive the taxable_year carryback period for a go_zone loss the taxpayer may only carry the loss back taxable years under the normal carryback rule how are we to determine what the tp is electing to do as far as actual nol carrybacks do they have to specifically say i am electing or is the filing of the correct form with a or year carryback sufficient see the above discussion under comments on statements by the field item number a go_zone loss does not qualify as an eligible_loss if the taxpayer does not timely elect to waive the taxable_year carryback period for a go_zone loss the taxpayer must first carry the loss back to the 5th preceding_taxable_year if the taxpayer files a timely election to waive the taxable_year carryback period but does not elect to waive all of the carryback periods the taxpayer must carry the loss back under the normal taxable_year carryback rule


department of the treasury internal_revenue_service washington d c date number release date uil 07a-00 gl-605607-00 cc pa cbs br2 memorandum for associate area_counsel small_business self-employed area from kathryn a zuba chief branch collections bankruptcy summonses subject in re legend taxpayer suba subb x date1 ____ x consultant by memorandum dated date you asked us to review and comment on the debtor’s proposed chapter plan we read your request as covering the following specific issues the treatment of class r5a on page of the plan the class r6 claims the approval of the stock incentive plan on page the treatment of the stock group of debtors on page the scheme outlined under section vii on pages to convert the company’s assets to a liquidating_trust whether section vii creates a need to obtain and review the committee settlement agreement the consequences of issuing stock to satisfy claims as proposed in section x-f on page and any attendant valuation problems the consequence of issuing debt to satisfy claims in section x-g on page and the propriety of the tax reporting provisions on page other documents to passthroughs and special industries for their review and received their response on date we have incorporated the gist of their response in this memorandum as modified slightly by further conversations with them accordingly we forwarded the plan and summary of the facts taxpayer and its subsidiaries the debtors filed chapter bankruptcy in in the united_states bankruptcy court for the district of _______ and its debtor subsidiaries have filed a plan_of_reorganization that consists of x sub-plans one for each debtor at the time taxpayer filed bankruptcy it owned subb corporation subb which manufactured and marketed during the course of the bankruptcy the debtors were divided into two groups - the reorganizing debtors and the liquidating debtors the liquidating debtors are subb and certain other subsidiaries through court approved transactions the assets of the liquidating debtors have either been sold or are in the process of being sold and their businesses liquidated the plan provides that shortly after confirmation of the plan the effective date all of the capital stock of subb issued before the effective date will be deemed canceled and subb shall be deemed to transfer to a liquidating_trust the trust all of its right title and interest in all of its assets and the trust shall assume all of subb’s obligations under the consultant contract the plan defines the trust as the trust to be created on the effective date in accordance with the plan for the benefit of the holders of allowed claims against the liquidating debtors it should be noted that the assets of the other liquidating debtors are not transferred to the trust under the terms of the plan law and analysis sec_301_7701-4 of the procedure and administration regulations provides that certain organizations which are commonly known as liquidating trusts are treated as trusts for purposes of the internal_revenue_code the code an organization will be considered a liquidating_trust if it is organized for the primary purpose of liquidating and distributing the assets transferred to it and if its activities are all reasonably necessary to and consistent with the accomplishment of that purpose a liquidating_trust is treated as a_trust for purposes of the code because it is formed with the objective of liquidating particular assets and not as an organization having as its purpose the carrying on of a profit-making business which normally would be conducted through business organizations classified as corporations or partnerships however if the liquidation is unreasonably prolonged or if the liquidation purpose becomes so obscured by business activities that the declared purpose of liquidation can be said to be lost or abandoned the status of the organization will no longer be that of a liquidating_trust revproc_94_45 provides conditions under which the irs will consider issuing an advance_ruling classifying an entity created pursuant to a bankruptcy plan under chapter of the bankruptcy code u s c sec_1101 et seq as a liquidating_trust under sec_301_7701-4 in the instant case business_purpose provides that the trust shall assume all of subb’s obligations under the contract to the extent subb and consultant consultant have entered into the contract the plan defines the contract as a contract between subb and consultant in which consultant will provide services with respect to analysis and resolution of claims and avoidance actions under the bankruptcy code sales and divestitures of assets and other matters described in the contract section vii a taxation of the transfer the property transfer from the estate to the trust will be taxable to the estate under sec_1001 of the code the estate is treated as having transferred its property to its creditors in return for relief from an amount of debt equal to the fair_market_value of the property see 73_tc_370 the estate will realize gain_or_loss on the difference between subb’s basis in the property and its fair_market_value this gain_or_loss will most likely be capital in nature because subb is in bankruptcy the fair_market_value of any property to be transferred to the trust presumably will be less than the amount of debt being discharged therefore the estate will probably realize cod income under sec_61 of the code on the difference between the amount of debt discharged and the total of the cash and fair_market_value of the property transferred however due to the bankruptcy proceeding the cod income will be excluded from the estate’s gross_income and will reduce any of subb’s tax_attributes transferred to the estate sec_108 and b this will not affect however potential capital_gains from the property transfer for example if subb owes its creditors dollar_figure and transfers property into the trust that has a fair_market_value of dollar_figure in which it has a basis of dollar_figure then subb would realize dollar_figure of cod income and dollar_figure of capital_gain while the dollar_figure would be subject_to the rules under sec_108 the dollar_figure would not while the dollar_figure would be unlikely to result in taxable_income because of sec_108 the dollar_figure would be more likely to cause a tax_liability taxation of the trust generally liquidating trusts are taxed as grantor trusts with the creditors treated as the grantors and deemed owners the theory is that the debtor transferred its assets to the creditors in exchange for relief from its indebtedness to them and that the creditors then transferred those assets to the trust for purposes of liquidation the transfer to the creditors need not actually take place it is deemed to have occurred the beneficiaries of the bankruptcy_estate will be the grantors of the liquidating_trust they will be treated as the deemed owners of the trust because the property used to fund it came from them and all the income will be distributed to them or used to pay the expenses of their trusts the beneficiaries must report each item_of_income or gain as it is earned by the trust conclusions we hope this adequately addresses your concerns please contact bryan camp pincite-3834 if you have any further questions


department of the treasury internal_revenue_service washington d c jun s tepplat tax_exempt_and_government_entities_division u i l legend taxpayer a taxpayer b ira x ira y bank b company p employee e dear this is in response to your letter dated date as supplemented by correspondence dated date date date and date submitted on your behalf by your authorized representative in which you request a ruling from the internal_revenue_service service with respect to attempted conversions from traditional individual_retirement_arrangements ira to roth iras for the tax_year the following facts and representations have been made in support of your ruling_request nheretenenennennnes taxpayer a and taxpayer b maintained traditional_ira x and traditional_ira y respectively with bank b ira x and ira y were established in with distributions of cash and stock taxpayer a and taxpayer b received from qualified_retirement_plans bank b subsequently determined that it could not hold the stock because of a relationship it shared with company p taxpayer a and taxpayer b agreed to allow company p to establish new traditional iras for them to hold the cash and stock you represent that it was taxpayer a and taxpayer b’s intent to then have these newly established company p traditional iras converted to roth iras also with company p taxpayer a and taxpayer b represent that they signed the on necessary documentation with company p to establish traditional iras taxpayer a and taxpayer b further state that the necessary paper work was completed to convert these newly established traditional iras to roth iras and that this request was made in a time fashion during tax_year employee e an employee of taxpayer a and taxpayer b on contacted company p to verify that the traditional iras taxpayer a and taxpayer b established on company p informed employee e that it could not locate taxpayer a and taxpayer b’s paperwork and that ira accounts had not been established for taxpayer a and taxpayer b had been converted to roth iras on to establish new traditional ras and roth iras for taxpayer a and taxpayer b taxpayer a and taxpayer b signed the new traditional_ira application forms on _employee e completed new company p ira application forms taxpayer a signed his roth_ira_conversion form on and taxpayer b signed her roth_ira_conversion form on taxpayer a and taxpayer b then signed distribution forms to transfer the cash and stock from traditional iras to roth iras or in taxpayer a and taxpayer b’s ira conversions company p that a transfer of funds from bank b to company p was made on _ employee e contacted company p to ascertain the status of employee e was informed by on taxpayer a and taxpayer b’s accountant requested a copy of their ira statements employee e’s review of these statements revealed that they were not for roth iras or employee e contacted company p to ascertain the status of taxpayer a and taxpayer b’s ira conversions and was informed that the ira conversions had not been made on or aboui employee e that it had fatind the original distribution forms taxpayer a and taxpayer b completed in iras to roth iras company p has acknowledged its error in not converting taxpayer a and taxpayer b's traditional iras to roth iras as instructed by taxpayer a and taxpayer b ‘hat authorized the conversion of two traditional _ company p informed sesesnnnneeetensen jue to circumstances beyond their control was less than dollar_figure tax_return taxpayer a and taxpayer a and taxpayer b state that they did not timely filed their federal_income_tax return for tax_year and that their adjusted_gross_income for tax_year the ira conversions were not reported on the taxpayer b further assert that their modified_adjusted_gross_income in subsequent tax years has been more than dollar_figure and consequently they have been unable to convert their traditional iras to roth iras taxpayer a and taxpayer b believe that they should be allowed to treat the conversions as having taken place in instructions to convert their traditional iras to roth iras taxpayer a and taxpayer b’s iras maintained with company p continue to be designated as traditional iras even though company p failed to follow their based on the foregoing facts and representations you request that the service deem that the ira conversions you attempted to make ir qualified rollover_contributions from traditional iras to roth iras under sec_408a of the internal_revenue_code code constitute sec_408a was added to the code by sec_302 of the taxpayer_relief_act_of_1997 publaw_105_34 effective for tax years beginning after date this section created roth ras as a new type of nondeductible individual_retirement_arrangement code sec_408a of the code provides that the term roth_ira means an individual_retirement_plan which is designated at the time of establishment of the plan as a roth_ira roth iras except as specifically provided in code sec_408a are subject_to the same rules that apply to traditional iras code sec_408a of the code provides that an individual shall not be allowed to make a qualified_rollover_contribution to a roth ra from an ira other than a roth_ira during any taxable_year if for the taxable_year of the distribution to which such contribution relates- i ii the taxpayer's adjusted_gross_income exceeds dollar_figure or the taxpayer is a married individual filing a separate_return q a-1 a of sec_1_408a-4 of the income_tax regulations regulations provides in part that an individual can convert an amount in his or her traditional_ira to a roth_ira if two requirements are satisfied first the ira owner must satisfy the modified_adjusted_gross_income limitation described in a-2 a and if married the joint filing requirement described in a-2 b second the amount contributed to the roth_ira must satisfy the definition of a qualified_rollover_contribution in sec_408a ie it must satisfy the requirements for a rollover_contribution as defined in code sec_408 except that the one-rollover- per-year limitation in sec_408 does not apply seeeeeeeeneseeineeseue q a-1 b of sec_408a-4 of the regulations provides in part that an amount can be converted from a traditional_ira to a roth_ira by any of three methods- an amount distributed from a traditional_ira is contributed rolled over to a roth_ira within the 60-day period described in sec_408 an amount in a traditional ra is transferred in a trustee-to-trustee transfer from the trustee of the traditional_ira to the trustee of the roth_ira or an amount in a traditional_ira is transferred to a roth_ira maintained by the same trustee for purposes of sec_408 and sec_408a redesignating a traditional_ira as a roth_ira is treated as a transfer of the entire account balance from a traditional_ira to a roth_ira under limited circumstances the service has the authority to waive certain requirements where the failure to do so would be against equity and good conscience for example under code sec_408 the service has the authority to waive the 60-day rollover requirement where among other things a rollover was not completed within days because of an error committed by a financial_institution the waiver of the 60-day rollover requirement is effective for distributions that occur after date further under sec_301_9100-1 of the procedure and administration regulations regulations the commissioner of the service in his discretion may grant a reasonable extension of time fixed by a regulation a revenue_ruling a revenue_procedure a notice or an announcement published in the internal_revenue_bulletin for the making of an election or application_for relief in respect of tax under among others subtitle a of the code provided the grant for relief will not prejudice the interests of the government sec_301 c of the regulations provides that ordinarily the interests of the government will not be treated as prejudiced and that ordinarily the service will not grant relief when tax years that would have been affected by the election had it been timely made are closed by the statute_of_limitations before the taxpayer’s receipt of a ruling granting the relief under this section or if granting relief would result in a taxpayer having a lower tax_liability taxpayers who subsequently discovered that they were ineligible to convert traditional iras to roth iras have been granted relief under sec_301_9100-3 of the regulations to recharactrerize roth iras as traditional iras provided they meet the requirements of sec_301_9100-1 and sec_301_9100-3 of the regulations and further provided that the tax_year for which the relief is requested is not a closed tax_year in this case you represent that traditional ras were in fact established for you with company p in necessary documentation in to convert your traditional iras to roth iras you further represent that you completed the jussi ia oobi also with company p but that company p failed to follow your instructions and the ira conversions never took place you assert that your modified_adjusted_gross_income for tax_year - your modified_adjusted_gross_income has not been less than dollar_figure in subsequent tax years to allow you to convert your traditional iras to roth iras did not exceed dollar_figure you further assert that from the information submitted it appears that you attempted to convert your traditional iras to roth iras pursuant to method three of q a-1 b of sec_1_408a-4 of the regulations by having amounts in your company p traditional ras transferred to company p roth iras under this method for purposes of code sec_408 and code sec_408a redesignating a traditional_ira as a roth jra is treated as a transfer of the entire account balance from a traditional_ira to a roth_ira provided that both iras are maintained by the same trustee the iras that you represent were established with company p ir traditional iras and are subject_to the rules of code sec_408 a roth_ira must be designated as a roth_ira at the time it is established and must comply with the rules under code sec_408a no provision of the code or regulations would permit the service to subsequently designate a_trust established under code sec_408 as meeting the requirements of code sec_408a are taxpayer a and taxpayer b did not report the ira conversions on thei income_tax return and therefore did not satisfy the conditions for relief under sec_301_9100-1 of the regulations under the principles of sec_301 of the regulations the grant of relief cannot prejudice the interest of the government however the interest of the government is prejudiced if you are allowed to treat the ira conversions as having been made when the tax_year for which the conversions should have been reported in income is a closed_year in other words to allow taxpayer a and taxpayer b to deem the ira conversions as having occurred in calendar_year would allow them to avoid the income_tax consequences associated with ira conversions because the a closed_year ie the return for that year cannot be amended to reflect the inclusion of the ira conversions in gross_income and the payment of the additiénal income taxes that would be due on such converted amounts tax_year is accordingly we conclude that since company p failed to transfer or designate your traditional iras as roth iras in _ amounts in your traditional iras were not converted to roth jras in accordance with q a-1 b of sec_408a-4 of the regulations thus the traditional_ira conversions you attempted to make in tax_year do not constitute qualified rollover_contributions to roth ras under code sec_408a no opinion is expressed as to the tax consequences of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto ecere rrr rere teer tee es vy ‘d q v4 this ruling is based on the assumptions that the iras established by taxpayer a and taxpayer b meet the requirements of code sec_408 this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney form on file in this office a copy of this letter has been sent to your authorized representative if you have any questions concerning this ruling please contact rrkkeraireaeara ere r ere sf ‘t ep ratt qdr rr re re rrer rr rrr ir ir rr rh sincerely yours signed joyce eb floyd joyce e floyd manager employee_plans technical group enclosures deleted copy of this ruling notice of intention to disclose


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 intl br1 plr-130380-03 date date legend a date b date c date d date e country f year g dear ---------------- ------------------------ ---------------- ----------------------- ------------------ --------------------------- --------- ------ this is in response to a letter from a’s authorized representative dated b as supplemented by a letter dated c requesting a ruling under sec_877 of the internal_revenue_code_of_1986 code that a’s loss of long-term_resident status did not have for one of its principal purposes the avoidance of u s taxes under subtitle a or subtitle b of the code the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed 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 a a long-term_resident of the united_states within the meaning of sec_877 relinquished his u s lawful permanent resident status expatriated on date d a has been a citizen of country f during his entire life by reason of his birth on date e in country f a became a permanent resident_of_the_united_states and obtained his green card in year g on the date of a’s expatriation his net_worth exceeded the threshold required under sec_877 plr-130380-03 sec_877 generally provides that a citizen who loses u s citizenship or a u s long-term_resident who ceases to be taxed as a lawful permanent resident individuals who expatriate within the 10-year period immediately preceding the close of the taxable_year will be taxed under sec_877 and sec_877 for such taxable_year unless such loss did not have for one of its principal purposes the avoidance of u s taxes sec_2107 and sec_2501 provide special estate and gift_tax regimes respectively for individuals who expatriate with a principal purpose to avoid u s taxes a former citizen or former long-term_resident will be treated as having expatriated with a principal purpose to avoid u s taxes for purposes of sec_877 sec_2107 and sec_2501 if the individual's average income_tax_liability or the individual's net_worth on the date of expatriation exceeds certain thresholds see sec_877 sec_2107 and sec_2501 under notice_98_34 1998_2_cb_29 modifying notice_97_19 1997_1_cb_394 a former u s citizen or former long-term_resident whose net_worth or average tax_liability exceeds the applicable_threshold will not be presumed to have a principal purpose of tax_avoidance if that former citizen or former resident is described within certain categories and submits a complete and good_faith request for a ruling as to whether such loss had for one of its principal purposes the avoidance of u s taxes a is eligible to request a ruling pursuant to notice_98_34 because on the date of expatriation a was a resident and fully liable to income_tax in country f the country where a was born notice_98_34 requires that certain information be submitted with a request for a ruling that an individual's expatriation did not have for one of its principal purposes the avoidance of u s taxes a submitted all the information required by notice_98_34 including any additional information requested by the service after review of the submission based solely on the information submitted and the representations made we conclude that a has made a complete and good_faith submission in accordance with sec_877 and notice_98_34 therefore a will not be presumed under sec_877 to have as one of his principal purposes for expatriating the avoidance of u s taxes it is further concluded that a will not be treated under sec_877 as having as one of his principal purposes of expatriating the avoidance of u s taxes except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in addition no opinion is expressed as to a's u s tax_liability for taxable periods prior to his loss of permanent resident status or for taxable periods after his loss of permanent resident status under sections of the code other than sec_877 sec_2107 and sec_2501 this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-130380-03 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to a’s representative sincerely s m grace fleeman senior counsel office of associate chief_counsel international


cca_2018020712040453 id uilc number release date from sent wednesday february pm to cc bcc subject re are you available for a quick consult hello ------ under h the exam teams can disclose information and documents among themselves to the extent that it is needed by the recipient exam team for their tax_administration duties let me know if you have further questions --------- ---------------- ---------------------- -------------------------------------- --------------------