t c summary opinion united_states tax_court teddy r mcginty jr and cheryl d mcginty petitioners v commissioner of internal revenue respondent docket no 10925-01s filed date teddy r mcginty jr and cheryl d mcginty pro sese william t murphy for respondent goldberg special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year at issue and all rule references are to the tax_court rules_of_practice and procedure respondent determined a deficiency of dollar_figure in petitioners’ federal_income_tax for the taxable_year the issues for decision are whether petitioners failed to report dollar_figure of income and whether petitioners are liable for self- employment_tax on the dollar_figure some of the facts in this case have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference at the time the petition was filed petitioners lived in long beach california references to petitioner in the singular are to cheryl d mcginty petitioners were married in date from date through date petitioner attended the university of california at berkeley university petitioner used her maiden name cheryl gomez while in college during most of petitioner’s college years her husband was in the united_states marine corps stationed at camp pendleton in southern california during the summer of petitioner lived with her husband in southern california upon returning to the university for the fall semester petitioner sought housing on a housing list provided by the university petitioner found a listing placed by harry s dixon the listing provided for room and board for a student in exchange for services provided at mr dixon’s home petitioner interviewed with mr dixon and was told that her duties would include preparing meals cleaning laundry typing letters and answering the phone after petitioner agreed to perform the duties mr dixon offered her the room and board on date petitioner signed an occupancy agreement prepared by mr dixon and moved into the residence the agreement contained the following terms and conditions petitioner was to occupy a room at mr dixon’s residence for a continued period of time which could be terminated by either party with 1-week notice petitioner was to perform various duties at the residence for hours per week in exchange for the room and board petitioner was to pay percent of the monthly utilities used at the residence during the occupancy the utilities could be paid_by providing additional work credited at a rate of dollar_figure per hour and mr dixon reserved the right to terminate the agreement immediately for any misconduct nuisance or failure to perform any duties petitioner never filled out a form_w-4 employee’s withholding allowance certificate nor discussed with mr dixon how she would be treated for tax purposes she testified that mr dixon told her the room and board would not be taxable petitioner believed that the hours per week consisted of hours for the room and board and hours for the utilities although not specifically mentioned in the occupancy agreement petitioner testified that she was paid dollar_figure an hour for each hour she worked in excess of the required hours per week after month of service the hourly rate was increased to dollar_figure per hour petitioner’s duties included preparing meals for mr dixon at specific times during the day mr dixon demanded a strict breakfast and lunch diet to be prepared by petitioner further mr dixon required petitioner to work hours each day on dinner petitioner was required to grocery shop prepare each dinner set the table serve the meal eat dinner with mr dixon provide dinner conversation and clean the kitchen after dinner mr dixon provided all cooking utensils and cleaning supplies and he paid for all the food petitioner testified that she was not a friend of mr dixon’s and that she viewed the required dinner conversation strictly as a business relationship petitioner stated that the dinner conversation was just one of the jobs she did to keep her room mr dixon required the housecleaning to be performed in a specific manner he dictated how and with what supplies each aspect of cleaning the residence was to be performed mr dixon required certain rugs to be cleaned with a dry brush that he provided mr dixon would not allow these rugs to be vacuumed although vacuuming was required in other rooms of the house the furniture floors and bathrooms were to be cleaned with various products provided by mr dixon petitioner reported her work hours on a weekly time card listing the duties performed and time spent completing each task petitioner submitted the time card to mr dixon and was paid for hours in excess of the required hours work week petitioner resided in the residence and provided services for mr dixon for weeks petitioner was not completely satisfied with her living arrangements and decided to terminate the relationship at the end of the semester after providing mr dixon with the appropriate notice petitioner moved out of the residence in date for the tax_year mr dixon under the name dix-en a partnership issued a form 1099-misc miscellaneous income form_1099 to petitioner under the name cheryl gomez the form_1099 reported nonemployee compensation of dollar_figure and contained a note that dollar_figure of the compensation was associated with a nontaxable barter transaction petitioner testified that she never received a form_1099 from mr dixon prior to petitioners’ filing their tax_return after receiving the notice_of_deficiency petitioner contacted mr dixon and received a copy of the form_1099 and an accompanying calculation worksheet the worksheet detailed the calculation used to determine the total amount reported on the form_1099 the worksheet consisted of a separate calculation for the room the board and the funds paid for work in excess of the required hours per week the calculation for the room was for hours per week for weeks at a value of dollar_figure per hour for a total of dollar_figure of nonemployee compensation the calculation for the board was for hours per week for weeks at a value of dollar_figure per hour for a total of dollar_figure of nonemployee compensation the additional dollar_figure represents funds paid_by mr dixon to petitioner in for work performed in excess of the required hours per week after reviewing the form_1099 and the calculation worksheet petitioner concedes that dollar_figure of the reported nonemployee compensation is includable in income however petitioner argues that dollar_figure of reported nonemployee compensation is excludable pursuant to sec_119 further petitioner argues that she was an employee of mr dixon’s and therefore any amount that may be taxable is not subject_to self-employment_tax respondent argues that petitioner performed duties for mr dixon as an independent_contractor and that the fair_market_value of the services received is income subject_to self-employment_tax further respondent argues that petitioner fails to qualify for income exclusion provided by sec_119 we decide the deficiency issues in this case on the basis of the record without regard to the burden_of_proof accordingly we need not decide whether the general_rule of sec_7491 is applicable in this case see 116_tc_438 we note at the outset that gross_income refers to all income from whatever source derived including compensation_for services sec_61 gross_income includes income realized in any form whether in money property or services sec_1 a income_tax regs when services are paid for in property or in exchange for other services the fair_market_value of such property or other services must be included in income as compensation sec_1_61-2 income_tax regs the stipulated price of services rendered will be presumed to be the fair_market_value of the compensation received in the absence of evidence to the contrary id it is clear that petitioner received money meals_and_lodging in exchange for services she provided to mr dixon consequently the money received and the value of the meals_and_lodging received are includable in petitioners’ gross_income unless specifically excludable under a provision of the internal_revenue_code petitioner concedes that the money she received from mr dixon is includable in gross_income however petitioner asserts that the value of the meals_and_lodging furnished by mr dixon is excluded from gross_income pursuant to sec_119 sec_119 provides for the exclusion from an employee’s gross_income of the value of meals or lodging furnished by the employer if certain criteria are met the exclusion_from_gross_income under sec_119 applies to employees only and is not allowed to independent contractors accordingly as a threshold matter petitioner must establish that she was an employee of mr dixon’s to invoke sec_119 to determine if sec_119 has any applicability in this case we must first decide whether petitioner was a common_law_employee receiving compensation or an independent_contractor receiving self-employment_income answering this question will also resolve the issue of whether petitioner is subject_to self- employment_tax sec_1401 imposes an additional tax on the self- employment income of every individual for old-age survivors disability insurance and for hospital insurance the term self-employment_income refers to the net_earnings derived by the individual from self-employment in a trade_or_business sec_1402 and b 102_tc_394 trade_or_business for purposes of self-employment_income tax has the same meaning as when used in sec_162 except that it does not include the performance of service by an individual as an employee sec_1402 the definition of an employee applicable to this case is any individual who under the usual common_law rules applicable in determining the employer-employee relationship has the status of an employee sec_3121 see sec_1402 the question of whether an individual performs services for another as an employee or independent_contractor is generally considered a question of fact 63_tc_621 this court has enumerated seven factors that should be considered in determining whether an individual is a common_law_employee the degree of control exercised over the details of the work the individual’s investment in the work facilities the individual’s opportunity for profit or loss whether the work is part of the principal’s regular business the principal’s right to discharge the individual the permanency of the relationship and the relationship the parties think they are creating 89_tc_225 affd 862_f2d_751 9th cir these factors are not weighted equally but must be evaluated according to their significance in each particular case teschner v commissioner tcmemo_1997_498 although no one factor is controlling the most fundamental is the degree of the principal’s control_over the details of the work packard v commissioner supra generally the common_law employer-employee relationship exists when the person for whom services are performed has the right to control and direct the individual who performs the services not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished sec_31 d - c employment_tax regs see also gamal-eldin v commissioner tcmemo_1988_150 affd without published opinion 876_f2d_896 9th cir with that guidance we consider whether petitioner was a common_law_employee or independent_contractor mr dixon controlled the details of when and how the work was to be performed at his residence he dictated the means by which the duties were to be accomplished mr dixon supplied all the food cooking utensils and cleaning supplies he specifically described how certain things were to be cleaned and what supplies were to be used mr dixon controlled the times meals were to be served and what was to be prepared petitioner had no investment_expense nor was she responsible for work expenses petitioner had no opportunity for income or loss and mr dixon could terminate petitioner at any time for cause as we view the facts in this case in light of the factors enumerated above we find that petitioner was an employee of mr dixon’s for weeks during the year at issue because petitioner has established she was mr dixon’s employee for weeks in she has met the threshold requirement to invoke sec_119 accordingly we must determine whether petitioner has met the remaining elements of sec_119 to exclude from gross_income the value of the meals_and_lodging she received the value of meals furnished to an employee by his employer shall be excluded from the employee’s gross_income if the meals are furnished on the business_premises of the employer and the meals are furnished for the convenience_of_the_employer sec_119 if an employer provides meals to an employee without charge as a means of providing additional compensation to the employee and not for a substantial noncompensatory business reason of the employer the meals are not regarded as furnished for the convenience_of_the_employer and the value of the meals is included in the employee’s gross_income sec_1 a i income_tax regs here petitioner was furnished meals as compensation_for services that she provided the meals petitioner received were not additional compensation the meals were part of her total compensation the meals provided to petitioner were not for a substantial noncompensatory business reason of her employer accordingly the meals furnished to petitioner were not for the convenience of mr dixon and the value of the meals may not be excluded from gross_income pursuant to sec_119 the value of lodging furnished to an employee by his employer shall be excluded from the employee’s gross_income if the lodging is furnished on the business_premises of the employer the lodging is furnished for the convenience_of_the_employer and the employee is required to accept such lodging as a condition_of_employment sec_119 failure to establish any one of these criteria precludes application of sec_119 the convenience of employer and condition_of_employment tests are essentially the same tyler v commissioner tcmemo_1982_557 both tests require a direct nexus between the lodging furnished and the asserted business interests of the employer served thereby 66_tc_223 an employee has not met the tests by simply establishing that his or her employer required the employee to accept lodging as a requisite of employment the condition_of_employment test requires that the lodging be more integrally related to the various facets of an employee’s position id pincite the lodging will meet the tests if the employee is required to accept the lodging in order to enable him properly to perform the duties of employment sec_1_119-1 income_tax regs lodging will be regarded as furnished to enable the employee properly to perform the duties of his employment when for example the lodging is furnished because the employee is required to be available for duty at all times or because the employee could not perform the services required of him unless he is furnished such lodging id the evidence presented at trial establishes that petitioner was involved in a wide range of duties at mr dixon’s residence however petitioner did not show that she could not have performed the required duties had she lived at another location petitioner introduced no evidence to establish that residing at mr dixon’s residence was necessary in order for her to perform properly the duties of cooking and cleaning petitioner was required to work only hours per week at the residence while the occupancy agreement required petitioner to live at the residence petitioner was not on duty at all times and could have properly completed her hours of weekly work while residing elsewhere accordingly petitioner may not exclude the value of lodging from gross_income pursuant to sec_119 because we have determined that the value of the entire hours of work per week is includable in petitioners’ gross_income we need not allocate the hours worked between meals_and_lodging to determine the includable income amount the original agreement between petitioner and mr dixon stipulated the value of services rendered at dollar_figure per hour after month weeks of service the hourly rate was increased to dollar_figure per hour accordingly the fair_market_value of services received by petitioner for the first weeks that she worked is dollar_figure per hour and the remaining weeks of work is valued at dollar_figure per hour petitioner worked hours per week for weeks at a value of dollar_figure per hour for a total value received of dollar_figure petitioner worked hours per week for weeks at a value of dollar_figure per hour for a total value received of dollar_figure thus we conclude that the value of meals_and_lodging received by petitioner was dollar_figure in addition petitioner received cash compensation of dollar_figure therefore petitioners must include dollar_figure of compensation in their gross_income for the year at issue because we have determined that petitioner was mr dixon’s employee during the 15-week period in she is not subject_to self-employment_tax on any portion of the dollar_figure of compensation reviewed and adopted as the report of the small_tax_case division decision will be entered under rule


internal_revenue_service department of the treasury washington dc index number person to contact number release date telephone number refer reply to cc dom p si - plr-101053-00 date date x y a d1 state dear this letter responds to a letter dated date and subsequent correspondence written on behalf of x by its authorized representative requesting that the service grant x an extension of time to make an election under sec_301_7701-3 of the procedure and administration regulations the information submitted states that x was created d1 as a result of articles of conversion filed by y converting that entity into a state limited_partnership a as a partner of x under state law intended for x to be a classified as a c_corporation for federal tax purposes a relied on x’s attorney and accountant to take care of all tax elections and filing_requirements a was not aware that in order for x to be a corporation as of d1 for federal tax purposes an election needed to be made by filing form_8832 entity classification election within days of d1 because of confusion between x’s attorney and x’s accountant a form_8832 was not filed for x sec_301_7701-3 provides guidance on the classification of domestic eligible entities for federal tax purposes generally a domestic eligible_entity with two or more members is classified as a partnership unless the entity elects otherwise while a domestic eligible_entity with a single owner is disregarded as a separate_entity unless the entity elects otherwise sec_301_7701-3 provides that an eligible_entity mr david wight may elect to be classified other than as provided under sec_301_7701-3 by filing form_8832 entity classification election with the appropriate service_center under sec_301_7701-3 the election under sec_301_7701-3 will be effective on the date specified on the form_8832 or on the date filed if no such date is specified on the form the effective date specified on form_8832 cannot be more than days prior to the date on which the election is filed and cannot be more than months after the date on which the election is filed sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election sec_301_9100-1 defines a regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 sets forth the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government based on the information submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time for making the election to be classified as an association_taxable_as_a_corporation for federal tax purposes until days following the date of this letter the election should be made by following the procedure set forth in sec_301_7701-3 including filing form_8832 a copy of this letter should be attached to the form except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code 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 mr david wight pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely yours paul f kugler assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ---------------------------------- ------------- --------------------------------- -------------------------------------------- -------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------ id no ------------- telephone number --------------------- refer reply to cc psi b02 plr-104643-11 date date legend legend x y state date date date date --------------------------------- ----------------------- ------------------------------------- ----------------------- ------------- --------------------- --------------------- ---------------------- ---------------------- dear ------------------- this responds to a letter dated date and additional correspondence submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated in state on date x made an election to be treated as an s_corporation effective date x’s election was inadvertently terminated effective date when y an ineligible shareholder acquired x stock on date y entered into an agreement to return x stock to eligible s_corporation shareholders x represents that the termination was not motivated by tax_avoidance or retroactive tax planning x and its shareholders have agreed to make any adjustments that the commissioner may require consistent with the treatment of x as an s_corporation plr-104643-11 sec_1362 provides that if an election under sec_1362 by any corporation a was not effective for the taxable_year for which made determined without regard to sec_1362 by reason of a failure to meet the requirements of sec_1361 or to obtain shareholder consents or b was terminated under sec_1362 or the secretary determines that the circumstances resulting in the ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in the ineffectiveness or termination steps were taken a so that the corporation is a small_business_corporation or b to acquire the shareholder consents and the corporation and each person who was a shareholder of the corporation at any time during the period specified pursuant to sec_1362 agrees to make such adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in the ineffectiveness or termination the corporation will be treated as an s_corporation during the period specified by the secretary based solely on the facts submitted and the representations made we conclude that the termination of x’s s_corporation_election on date was inadvertent within the meaning of sec_1362 we further hold that pursuant to the provisions of sec_1362 x will be treated as continuing to be an s_corporation from date to date and thereafter provided x’s s_corporation_election was valid and provided that the election was not otherwise terminated under sec_1361 except as specifically ruled above we express no opinion concerning the federal tax consequences of the transactions described above under any other provisions of the code this ruling is directed only to the taxpayer that requested it sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file a copy of this letter is being sent to x’s authorized representatives sincerely bradford r poston senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc corp b03 plr-149206-01 date date distributing sub sub controlled shareholder business m business n date date date date date date date date plr-149206-01 date aa yy zz we respond to your representative’s letter dated date for rulings concerning the federal_income_tax consequences of a proposed and partially consummated transaction additional information was submitted in letters dated january february and the material information submitted for consideration is summarized below distributing a publicly traded domestic_corporation is the common parent of an affiliated_group_of_corporations that files a consolidated federal_income_tax return prior to date distributing owned all of common_stock and series a preferred_stock of controlled which together comprise aa greater than of the total voting power of all classes of controlled stock entitled to vote controlled owns shares in other foreign subsidiaries which are otherwise not relevant for the transaction proposed herein distributing and controlled both use the accrual_method of accounting for its federal_income_tax return and have a taxable_year ending on date distributing is directly engaged in business m controlled is directly engaged in business n controlled was incorporated by distributing on date on date distributing contributed all its assets relating to business n to controlled in a transaction represented to qualify under sec_351 shareholder is currently a member of the boards of directors of distributing and controlled before the proposed and partially consummated transaction shareholder owned directly or beneficially yy greater than of distributing common_stock and after the proposed transaction is expected to own directly or beneficially zz greater than of controlled common_stock the taxpayer represents that shareholder will resign from the board_of directors of either distributing or controlled within months after the proposed transaction takes place distributing and controlled will enter into several transitional agreements transitional agreements which will provide for a smooth transition from a corporate structure that includes both companies and in which certain knowledge or expertise may exist in one or the other company to two separate and independent publicly traded companies all of the transitional agreements will terminate on or before date we have received financial information indicating that business m currently conducted through distributing and business n currently conducted through controlled each have had gross_receipts and operating_expenses representative of an plr-149206-01 active trade_or_business for each of the past five years problems have arisen in connection with controlled’s customers and suppliers who object to doing business with controlled while controlled is a subsidiary of distributing distributing has submitted information indicating that the potential loss of income from losing these customers and suppliers is significant accordingly to address these issues the following transaction was proposed and has been partially consummated i on date distributing formed sub a domestic holding_company as a wholly owned subsidiary ii on date distributing contributed all of its controlled stock to sub iii on date and date distributing contributed cash and certain investment_assets to sub iv controlled will form a wholly owned limited_liability_company and contribute all of its operating_assets and liabilities to that limited_liability_company controlled will retain certain investment_assets the limited_liability_company will be treated as an entity disregarded from controlled for federal_income_tax purposes pursuant to an election under sec_301_7701-3 v sub will contribute the cash it received on date and date from distributing to controlled sub will transfer its other assets to distributing in connection with a merger of sub back up into distributing vi distributing will distribute all of its controlled stock to its shareholders the distribution the distribution will be pro_rata among distributing common stockholders series d stockholders on an as-converted basis and series e stockholders on an as-converted basis following the proposed transaction both distributing and controlled will be publicly owned companies and sub will be eliminated the taxpayers have made the following representations in connection with the proposed transaction a b any indebtedness owed by controlled to distributing after the distribution will not constitute stock_or_securities no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of distributing plr-149206-01 c d e f g h i j the five years of financial information submitted concerning business m represents its present operations and there have been no substantial operational changes concerning business m since the date of the last financial statements submitted the five years of financial information submitted concerning business n represents its present operations and there have been no substantial operational changes concerning business n since the date of the last financial statements submitted following the distribution distributing and controlled each will continue independently and with its separate employees the active_conduct of its business the distribution is carried out for the following corporate business_purpose to resolve problems controlled has had with customers and suppliers who object to doing business with controlled because of distributing’s competing business the distribution is motivated in whole or substantial part by this corporate business purposes there is no plan or intention by any shareholder who own sec_5 percent or more of the stock of distributing and the management of distributing to its best knowledge is not aware of any plan or intention on the part of any particular remaining shareholder of distributing to sell exchange transfer by gift or otherwise dispose_of any stock in or securities of either distributing or controlled after the transaction there is no plan or intention by either distributing or controlled directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the distribution other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 there is no plan or intention to liquidate either distributing or controlled to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after the distribution except in the ordinary course of business and except that distributing may sell or otherwise dispose_of the assets of sub either before or after the distribution no intercorporate debt will exist between distributing or any of its subsidiaries and controlled or any of its subsidiaries at the time of or after the distribution other than intercompany payables and receivables between members of the distributing group incurred in the ordinary course of business plr-149206-01 k l m n immediately before the distribution items of income gain loss deduction and credit will be taken into account as required by the applicable intercompany_transaction regulations further any excess_loss_account distributing may have in controlled stock will be included in income immediately before the distribution payments made in connection with all continuing transactions if any between distributing or any of its subsidiaries and controlled or any of its subsidiaries will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length except for payments made under the transitional agreements neither distributing nor controlled is an investment_company as defined in sec_368 and iv the distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock of either distributing or controlled or stock possessing percent or more of the total value of all classes of stock of distributing or controlled based solely on the information submitted and the representations as set forth above we hold as follows for federal tax purposes steps i ii iii and v above will be treated as if distributing transferred cash to controlled in constructive exchange for additional stock of controlled the transitory existence of sub will disregarded the contribution followed by the distribution will constitute a reorganization within the meaning of sec_368 distributing and controlled each will be a_party_to_a_reorganization within the meaning of sec_368 controlled will recognize no gain_or_loss on the receipt of the cash in constructive exchange for additional controlled stock sec_1032 distributing will recognize no gain_or_loss on the distribution sec_361 distributing’s shareholders will recognize no gain_or_loss and no amounts will be included in their income upon the receipt of the controlled stock sec_355 the aggregate basis of the distributing stock and the controlled stock in the hands of each distributing shareholder immediately after the distribution will equal the basis of the distributing stock held by each plr-149206-01 shareholder immediately prior to the distribution allocated between the distributing and controlled stock in proportion to the fair_market_value of each immediately after the distribution in accordance with sec_1_358-2 sec_358 b and c the holding_period of the controlled stock received by each distributing shareholder in the distribution will include the holding_period of the distributing stock on which the distribution is made provided that the distributing stock is held as a capital_asset on the date of the distribution sec_1223 proper allocation of earnings_and_profits between distributing and controlled will be made under sec_1_312-10 and sec_1_1502-33 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the proposed transaction under any other provision of the code and regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the proposed transaction the rulings contained in this letter are predicated upon the facts and representations submitted by the taxpayers and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for a ruling verification of the information representations and other data may be required as part of the audit process see section dollar_figure of revproc_2002_1 2002_1_irb_1 which discusses in greater detail the revocation or modification of ruling letters however when the criteria in section dollar_figure of revproc_2002_1 i r b pincite are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter should be attached to the federal_income_tax returns of the taxpayers involved for the taxable_year in which the transaction covered by this ruling letter is consummated pursuant to a power_of_attorney on file in this office a copy of this letter has been sent to your authorized representative sincerely yours ken cohen senior technician reviewer branch office of associate chief_counsel corporate cc


department of the treasury internal_revenue_service washington d c date o f f i c e o f c h i ef c o u n s el number release date uil cc pa cbs br1 gl-132553-01 memorandum for area_counsel sbse area nashville from mitchel s hyman senior technician reviewer branch collection bankruptcy summonses subject disposition of rings forfeited for the benefit of the united_states treasury this memorandum responds to your request for advice in the above-referenced matter in accordance with sec_6110 this chief_counsel_advice should not be cited as precedent this writing may contain privileged information any unauthorized disclosure of this writing may have an adverse effect on privileges such as the attorney client privilege if disclosure becomes necessary please contact this office for our views question presented what action if any should the service take with regard to two rings now in the possession of the general services administration that a taxpayer who has outstanding tax_liabilities forfeited for the benefit of the united_states treasury conclusion we agree with your conclusion that the general services administration be informed that the service does not plan to take any_action or request that the gsa take any_action with respect to the rings the gsa may dispose_of the rings as it sees fit if the gsa decides to sell the rings no sale proceeds should be remitted to the service facts on the taxpayer who has outstanding tax_liabilities sent a letter to enclosing two rings that belonged to the the value of the rings has not been determined the taxpayer’s letter stated that he was forfeiting the rings for the benefit of the united_states treasury and asked that forward them to the treasury the taxpayer conceded defeat in an apparent dispute with the service over his tax_liabilities after an unsuccessful attempt to return the rings to the taxpayer on date sent them to the general services administration gsa the gsa contacted the which in turn asked the service whether it wished to seize the rings and sell them the service indicated that it did not wish to seize the rings but suggested that the gsa sell them and forward the net sale proceeds to the service discussion it is an established practice of the service recognized by the courts to proceed against property in the hands of other federal agencies by a formal levy see eg 444_f2d_1387 9th cir 286_f2d_841 2d cir cert_denied 366_us_944 271_f2d_450 4th cir see also i r m citing the procedural requirements of levying on the rings the service indicated that it does not wish to pursue this avenue we find no authority for asking the gsa to sell the rings and forward the proceeds to the service furthermore we advise against any course of action that may appear to circumvent the code’s requirements in the case of seizures and sales see sec_6330 sec_6331 sec_6335 we therefore agree with your determination to advise the gsa that the service does not plan to take any_action or request that the gsa take any_action with respect to the rings the gsa may dispose_of the rings as it sees fit if the gsa decides to sell the rings no sale proceeds should be remitted to the service please call the attorney assigned to this case at with any further comments or questions


department of the treasury employer_identification_number contact person - id number contact telephone number uil internal_revenue_service p o box cincinnati oh number release date date date number legend ww x fund name y dollars amount z dollars amount dear you asked for advance approval of your educational grant procedures under internal_revenue_code sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax our determination we approved your procedures for awarding educational grants based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding educational grants meet the requirements of code sec_4945 as a result expenditures you make under these procedures won't be taxable description of your request you are creating x to award grants to individuals who work at your grantee organizations for professional development opportunities specifically individuals or organizations may request funding for conferences training seminars courses and other professional development opportunities x will be publicized through email to all past grantees which includes over entities your board approved y dollars to be allocated to x and you expect to award up to w grants applicants may request up to z dollars per organization grantee organizations are located in approximately different counties and several issues areas your goal is to select grantees that represent this diversity potential recipients must submit an application form and provide specific details about the cost of the program or opportunity they want to pursue grant recipients are selected based on the strength of their request including relevance to their organization need quality of proposal and how it will benefit both the individual and organization grant funds are remitted directly to the nonprofit_organizations the purpose of the funds will be specified in the grant contract a status report will be requested after the opportunity concludes the grant recipients will be asked how the funds were used what benefits the applicant and the organization received and how the opportunity will strengthen the organization any violations of the grant agreement will be dealt with on a case by case basis likely requesting repayment of the grant if the original intention can no longer be executed basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure e e e the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant the grant is - - - ascholarship or fellowship subject_to sec_117 and is to be used for study at an educational_organization described in sec_170 or a prize or award subject_to the provisions of sec_74 if the recipient of the prize or award is selected from the general_public or to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar skill or talent of the recipient to receive approval of its educational grant procedures sec_53_4945-4 requires that a private_foundation show e e e the grant procedure includes an objective and nondiscriminatory selection process the grant procedure results in the recipients performing the activities the grants were intended to finance the foundation plans to obtain reports to determine whether the recipients have performed the activities that the grants were intended to finance other conditions that apply to this determination e this determination covers only the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don’t differ significantly from those described in your original request e this determination applies only to you it may not be cited as precedent letter catalog number 58222y you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes in your program to the cincinnati office of exempt_organizations at p internal_revenue_service exempt_organizations determinations p o box cincinnati oh you cannot make grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives all funds distributed to individuals must be made on a charitable basis and must further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 you should keep adequate_records and case histories so that you can substantiate your grant distributions with the irs if necessary lease keep a copy of this letter in your records i you have any questions please contact the person listed at the top of this letter sincerely stephen a martin director exempt_organizations rulings and agreements letter catalog number 58222y


internal_revenue_service number release date index number ------------------------------------------------------------ ------------ ---------------------- --------------------------- ----------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------------------- id no ---------- ------------------ telephone number -------------------- refer reply to cc psi b03 plr-115267-18 date date legend x state date ---------------------------------------------------------------------------------------------- ---------------------------------------------------- ---------- ----------------- dear ----------------- this letter responds to your letter dated date submitted on behalf of x by x's representative requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as an association_taxable_as_a_corporation for federal tax purposes facts according to the information submitted x was formed as a limited_liability_company in state x intended to be treated as an association_taxable_as_a_corporation for federal tax purposes effective date x represents that at all times it intended to be treated as an association however x’s advisors failed to advise x of the requirement that x elect to be an association for federal tax purposes by filing form_8832 entity classification election effective as of date consequently x did not file an election to be classified as an association for federal tax purposes x represents that granting relief will not prejudice the interests of the government and that hindsight is not involved in seeking relief to file a late election x further represents that such relief would not result in a lower tax_liability in the aggregate for all years to which the request applies finally x represents that it acted reasonably and in good_faith plr-115267-18 law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with at least two members can elect to be classified as either an association_taxable_as_a_corporation or a partnership sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date the form is filed sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly x is granted an extension of time of days from the date of this letter to elect to be classified as an association_taxable_as_a_corporation for federal tax purposes effective date the election should be made by filing a form_8832 with the appropriate service_center and a copy of this letter should be attached to the election this ruling is contingent on x filing within days of this letter all required returns or amended returns consistent with the requested relief in this letter except as specifically set forth above no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to x's authorized representative plr-115267-18 in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representatives sincerely associate chief_counsel passthroughs special industries by adrienne m mikolashek branch chief branch passthroughs special industries enclosures copy of letter copy for purposes


internal_revenue_service number release date index number -------------------------- -------------------------- -------------------------------------- ------------------------------------ department of the treasury washington dc person to contact --------------------- id no ------------- telephone number --------------------- refer reply to cc psi b1 - plr-118341-03 date march legend legend h w x ------------------------------------------- ---------------------------------------------------------------------------------------- ---------------------- --------------------- y grat a grat b exempt qsst a non exempt qsst a exempt qsst b non exempt qsst b ----------------------- ---------------------------- ------------------------ ---------------------------------------------- ----------------------- ----------------------------------------- ----------------------- --------------------------------------------------- ----------------------- --------------------------------------------------------- ----------------------- --------------------------------------------------- ----------------------- --------------------------------------------------------- ----------------------- ---------------------------- -------------------------- -------------------------- -------------------------- ------------------- ------------ -------- ----- ---------- ------------------ plr-118341-03 d1 d2 d3 d4 d5 n1 n2 n3 n4 state dear ------------------------ this responds to your letter dated date on behalf of the taxpayer exempt qsst a requesting rulings under d and of the internal_revenue_code facts x is a corporation organized under the laws of state it filed an election to be treated as an s_corporation under ' a effective d1 h and w as grantors formed grat a and grat b under the laws of state on d2 for the benefit of y on d2 grat a and grat b each acquired n1 shares of x nonvoting common_stock and n2 shares of x voting common_stock the instruments creating the grats provide in part that article from the date of this agreement until the fifth anniversary of the date of this agreement or the grantor s earlier death athe trust term the trustee shall pay to the grantor the aannuitant an aannuity amount plr-118341-03 article the trust term expires on the fifth anniversary of the date of this agreement and grantor s daughter y or any of her descendants is living the trustee shall divide the trust assets as provided in article article if the trust term expires on the fifth anniversary of the date of this agreement and y or any of y s descendants is then living the trustee shall divide the trust assets as follows a the trustee shall first set apart property in an amount equal in value to the grantor s unused generation-skipping tax exemption as defined in article this amount shall be distributed to and held by the trustee of the exempt trusts under article b the balance of the trust assets shall be distributed to and held by the trustee of the nonexempt trusts under article for the benefit of y if and while y is living and her decedents article if y is living at the time the trust estate is received by the trustee the trustee shall hold the property of the trust estate as a separate exempt trust for the benefit of y under the provisions of this article article during y s lifetime the trustee may distribute to or for the benefit of y so much of the net_income and principal of the trust up to the whole thereof as the trustee determines is required to provide for the beneficiary s health support maintenance and education article any income of the trust not distributed in a calendar_year shall be accumulated and added to principal at or prior to the end of such year plr-118341-03 article if any time during y s lifetime the trustee other than y determines that prevailing circumstances no longer justify the continuation of the trust that trustee may terminate the trust and distribute all the remaining trust property to y article unless the trust has been terminated earlier under the provisions of article the trust shall terminate upon y’s death upon termination the trustee shall distribute the property of the trust as y by will appoints outright or in trust to and among h’s and w’s descendents or if none are living to any one or more of the spouses of h’s and w’s descendants and any one or more organization to which a gift may qualify as a charitable_contribution under sec_170 and qualifies for a charitable deduction under sec_2055 and sec_2522 the power_of_appointment may not be exercised to postpone the vesting of any interest in the trust for a period longer than years after the death of the last to die of all of the beneficiaries of the trusts created under this agreement who were living or conceived on the date of this agreement article the trustee of two or more trusts created by this or any other instrument may merge such trusts if the beneficiary or beneficiaries are the same and the terms of the trusts are substantially the same article the beneficiary or the beneficiary s legal_representative may elect to have sec_1361 of the code apply to one or more of such corporations if such an election is made all provisions of the trust shall be interpreted construed and administered in a manner consistent with the grantor s intention that the trust be treated for all purposes as a qualified_subchapter_s_trust article notwithstanding any provision of this agreement directing otherwise if rules applicable to a qualified_subchapter_s_trust at the time when subchapter_s stock is distributable to the trust in monthly or quarterly installments to or for the benefit of the beneficiary and no distributions of income or principal from the trust go to any other person except the beneficiary during the beneficiary s lifetime plr-118341-03 on d3 grat a s term expired resulting in exempt qsst a and non exempt qsst a being formed on d4 grat a transferred n3 shares of x nonvoting common_stock to exempt qsst a equaling the grantor s unused gst tax exemption grat a transferred n2 shares of x voting common_stock and n4 shares of x nonvoting common_stock to non exempt qsst a exempt qsst a and non exempt qsst a each filed a qualified_subchapter_s_trust aqsst election under ' d effective d4 on or about d5 h and w allocated their remaining gst_exemption amounts to exempt qsst a on a form_709 united_states gift and generation-skipping_transfer_tax return on d3 grat b s term also expired resulting in exempt qsst b and non exempt qsst b being formed on d4 grat b also transferred n3 shares of x nonvoting common_stock to exempt qsst b equaling the grantor s unused gst tax exemption grat b transferred n2 shares of x voting common_stock and n4 shares of x nonvoting common_stock to non exempt qsst b exempt qsst b and non exempt qsst b each filed a qsst election effective d4 on or about d5 h and w allocated their remaining gst_exemption amounts to exempt qsst b on a form_709 united_states gift and generation-skipping_transfer_tax return exempt qsst b proposes to merge with and into exempt qsst a pursuant to article of the grat agreements in addition to the facts discussed above the taxpayer represents the following dollar_figure no additions have been made to exempt qsst a or to exempt qsst b since initial funding dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure the terms and provisions of exempt qsst a and exempt qsst b are substantially identical y is the beneficiary of both exempt qsst a and exempt qsst b exempt qsst a and exempt qsst b have continuously qualified as qssts since the d3 effective date of their qsst elections x has consistently treated y as the owner of the x stock held by exempt qsst a and exempt qsst b and all of y s tax returns have been filed consistent with that status the merger will not change the quality or value of y s interest in either exempt qsst a s or exempt qsst b s assets and that it will not confer upon y any additional powers or beneficial interests the merger is being proposed to simplify the management and administration of the trusts plr-118341-03 following the merger the terms of exempt qsst a will continue to provide that during the life of the current income_beneficiary there shall be only one income_beneficiary of trust any corpus distributed during the life of the current income_beneficiary may be distributed only to the income_beneficiary the income_interest of the current income_beneficiary in the trust shall terminate on the earlier of the beneficiary s death or termination of the trust and upon the termination of the trust during the life of the current income_beneficiary the trust shall distribute all of its assets to that beneficiary and all of the income will be distributed or required to be distributed currently to one individual who is a citizen or resident_of_the_united_states law and analysis sec_61 and sec_1001 ruling sec_61 of the code provides that gross_income means all income from whatever source derived sec_61 provides that gross_income includes gains derived from dealings in property sec_1001 provides that the gain from the sale_or_other_disposition of property shall be the excess of the amount_realized therefrom over the adjusted_basis provided in ' for determining gain and the loss shall be the excess of the adjusted_basis provided in such section for determining loss over the amount_realized sec_1001 provides that the amount_realized from the sale_or_other_disposition of property shall be the sum of any money received plus the fair_market_value of the property received sec_1001 provides that except as otherwise provided in subtitle a the entire amount of the gain_or_loss determined under ' on the sale_or_exchange of property shall be recognized sec_1_1001-1 of the income_tax regulations provides that the gain_or_loss realized from the conversion of property into cash or from the exchange of property for other_property differing materially either in_kind or in extent is treated as income or as loss sustained in 499_us_554 the supreme court addressed whether a sale_or_exchange has taken place that results in a realization of gain_or_loss under ' of the code the court stated that an exchange of property gives rise to a realization event under ' a if the properties exchanged are materially different consequently the court held that an exchange of mortgages constituted a realization event under ' a because the exchanged interests - loans that were made to different obligors and secured_by different homes - were legally distinct entitlements plr-118341-03 sec_1361 ruling sec_1361 defines an s_corporation as a small_business_corporation for which an election under ' a is in effect sec_1361 defines asmall business corporation as a domestic_corporation that is not an ineligible_corporation and that does not a have more than shareholders b have as a shareholder a person other than an estate a_trust described in ' c or an organization described in c who is not an individual c have a nonresident_alien as a shareholder and d have more than one class of stock sec_1361 provides that a_trust all of which is treated under subpart e of part i of subchapter_j of chapter as owned by an individual who is a citizen or resident_of_the_united_states may be a subchapter_s_corporation shareholder sec_1361 provides that a qsst with respect to which a beneficiary makes an election under ' d will be treated as a_trust described in ' c a i and the qsst s beneficiary will be treated as the owner for purposes of ' a of that portion of the qsst s s_corporation stock to which the election under ' d applies under ' d a the beneficiary of a qsst may elect to have ' d apply under ' d d this election will be effective up to days and two months before the date of the election sec_1361 provides that a qsst is a_trust the terms of which require that i during the life of the current income_beneficiary there shall be only income_beneficiary of the trust ii any corpus distributed during the life of the current income_beneficiary may be distributed only to such beneficiary iii the income_interest of the current income_beneficiary in the trust shall terminate on the earlier of such beneficiary s death or the termination of the trust and iv upon the termination of the trust during the life of the current income_beneficiary the trust shall distribute all of its assets to such beneficiary in addition ' d b requires that the trust distribute all of its income within the meaning of ' b currently to one individual who is a citizen or resident_of_the_united_states sec_1_1361-1 provides that the beneficiary of the qsst who is treated as the owner of that portion of the trust that consists of s_corporation stock is treated as the shareholder for the purpose of ' b defining the term asmall business corporation sec_2601 ruling plr-118341-03 sec_2601 of the internal_revenue_code imposes a tax on each generation- skipping transfer gst which includes under sec_2611 a taxable_distribution a taxable_termination and a direct_skip under a of the tax_reform_act_of_1986 the gst tax is generally applicable to generation-skipping transfers made after date sec_2602 provides that the amount of the tax imposed by sec_2601 is the taxable_amount determined under subchapter_c multiplied by the applicable_rate determined under subchapter_e sec_2641 provides that the term applicable_rate means with respect to any gst the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer sec_2631 provides that for purposes of determining the inclusion_ratio every individual is allowed a gst_exemption of dollar_figure adjusted for inflation that may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2642 provides that the inclusion_ratio is the excess if any of over the applicable_fraction determined for the trust from which the transfer is made or in the case of a direct_skip the applicable_fraction determined for the skip the applicable_fraction is a fraction in which the numerator is the amount of the gst_exemption allocated to the trust or in the case of a direct_skip allocated to the property transferred in the skip and the denominator is the value of the property transferred to the trust or transferred in the direct_skip reduced by any federal estate_tax or state death_tax actually recovered from the trust attributable to the property and any charitable deduction allowed under and with respect to the property sec_26_2654-1 of the generation-skipping_transfer_tax regulations provides that if there is more than one transferor with respect to a_trust the portions of the trust attributable to the different transferors are treated as separate trusts for purposes of chapter conclusion sec_61 and sec_1001 ruling in the present case the terms and conditions of each of the merged trusts are substantially identical to the terms and conditions of the surviving trust because the property interests and legal entitlements of the beneficiaries will remain unchanged by the proposed mergers it is consistent with cottage savings to find that the beneficiaries interests after the proposed mergers will not differ materially from the beneficiaries interests before the proposed merger thus the proposed mergers will plr-118341-03 not result in the realization of any gain_or_loss or other taxable_event under or of the code to the current trust_beneficiary sec_1361 ruling article of the instrument creating exempt qsst a and exempt qsst b allows for a merger of similar trusts only when the trusts have the same income_beneficiary under '1 j the x shares which make up the corpus of exempt qsst a and exempt qsst b are treated as directly owned by y any transfer of the x shares pursuant to a merger under article would effectively be a transfer of the shares from y to y therefore inclusion of article permitting the merger of similar trusts did not make either trust ineligible to be a qsst provided that both exempt qsst a and exempt qsst b qualified as qssts on the date that exempt qsst b transferred its x shares to exempt qsst a the transfer did not terminate exempt qsst a s qsst election sec_2601 ruling in the present case the terms of exempt qsst a and exempt qsst b are identical and each trust has an inclusion_ratio of zero h is the transferor for gst purposes with respect to exempt qsst a and w is the transferor with respect to exempt qsst b after the merger the portion of the successor trust exempt qsst a attributable to w and the portion of the successor trust attributable to h will be treated as separate trusts for purposes of chapter and each portion will have a zero inclusion_ratio for purposes of ' therefore based on the facts submitted and representations made we conclude after the merger the inclusion_ratio with respect to exempt qsst a will continue to be zero the act of merging the trusts will not cause any distributions from exempt qsst a to become subject_to gst tax provided there are no post-merger additions to exempt qsst a except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code specifically no opinion is expressed on whether x is a subchapter_s_corporation for federal tax purposes or whether any of the trusts discussed qualify as qssts a b plr-118341-03 this ruling is directly only to the taxpayer that requested it sec_6110 of the code provides that if may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer sincerely s dan carmody dan carmody senior counsel branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc --------------------------------------------------- ---------------------------------- -------------------------------------- -------------------------------- ---------------------- ------------------- -------------------------- ----------------------------------- ------------------------- ------------------------------------ -------------------- -------------------- ------------------------


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc te_ge eb hw plr-106840-01 date date city plan dear this responds to your request of date on behalf of city concerning whether line of duty disability benefits paid to disabled participants in the plan or to the survivor or survivors of deceased participants are excludable from the gross_income of the recipients under sec_104 of the internal_revenue_code the code the plan was established by city ordinance to provide retirement benefits disability benefits and survivor’s benefits to certain full-time employees of the city's police department and their beneficiaries sec_5 of the plan sets forth the disability benefits under the plan and provides as follows a ordinary disability if a participant is credited with at least five years of eligibility service and reaches a termination_date by reason of total and permanent disability as defined in this sec_5 the participant shall be entitled to receive a monthly disability benefit equal to the participant's accrued_benefit based upon the participant's actual years of credited service and average compensation at his or her termination_date without an actuarial reduction for payment prior to normal_retirement_date and notwithstanding the provisions of c below hereof without reduction for any benefits payable under the workers'_compensation law of state b line of duty disability a participant regardless of his length of service who terminates employment by reason of total and permanent disability which as determined in accordance with rules established by the administrator is incurred as a result of an accident or injury which has been sustained as an active covered_employee and which has been ruled compensable under the workers’ compensation law of state shall be entitled to receive a monthly benefit equal to the greater of a the benefit determined pursuant to a above or b c if the line of duty disability is a catastrophic disability as defined below the greater of i a monthly benefit equal to the greater e of the participant’s_compensation or ii the participant's employee contributions benefit or if the line of duty disability is a non-catastrophic disability as defined below the greater of i a monthly benefit equal to the greater of d of the participant’s_compensation or ii the participant's employee contributions benefit sec_5 b a of the plan defines line of duty disability as a total and permanent disability incurred as a result of an accident or injury which has been sustained as a result of service for the city as a covered individual and which has been ruled compensable under the workers’ compensation law of state sec_5 b b of the plan defines catastrophic disability as a line of duty disability i by reason of which the participant will be permanently prevented from engaging in any substantial gainful employment or ii which severely limits one or more major life activities sec_5 b c of the plan defines non-catastrophic disability as a line of duty disability which is not a catastrophic disability sec_5 b of the plan provides for a line of duty death_benefit as follows in the event of the death of a participant prior to the participant's benefit_commencement_date while in the line of duty as defined below the participant's beneficiary shall be entitled to receive the benefits described in subparagraphs or as applicable general benefit the beneficiary shall be entitled to receive a the participant's employee contributions benefit payable in one or more installments over a period which meets the requirements of sec_40 and which is designated by the participant or if the participant has made no designation by his or her beneficiary plus b an amount payable as a single lump sum equal to the participant’s annualized compensation determined as of the date of death provided however that the benefit provided by this subparagraph ii shall be payable only if the participant has died while a covered_employee surviving_spouse benefit a b if all of the following conditions are met then the surviving_spouse of a deceased participant shall be entitled to receive a survivor benefit in lieu of any other plan benefit for purposes of this subsection the line of duty survivor benefit is a monthly income commencing in the month next following the participant’s death and continuing for the remainder of the spouse’s life in an amount equal to 66e of the participant’s_compensation determined as of the day before the participant’s death sec_5 c of the plan defines line of duty death for purposes of sec_5 as death from accident or injury sustained as a result of service for the city as a covered individual and which has been ruled compensable under the workers'_compensation law of state you request a ruling that sec_5 b and b of the plan are statutes in the nature of workmen’s compensation acts and benefits paid thereunder are excludable from the gross_income of the recipients under sec_104 of the code sec_61 of the code provides that except as otherwise provided by law gross_income means all income from whatever source derived including compensation_for services sec_104 of the code provides that gross_income does not include amounts received under workmen's_compensation acts as compensation_for personal injuries or sickness sec_1_104-1 of the income_tax regulations states that sec_104 of the code excludes from gross_income amounts received by an employee under a workmen's_compensation_act or under a statute in the nature of a workmen's_compensation_act that provides compensation to the employee for personal_injury_or_sickness incurred in the course of employment sec_104 also applies to compensation which is paid under a workmen’s compensation act to the survivor or survivors of a deceased employee sec_104 does not apply to a retirement pension or annuity to the extent it is determined by reference to the employee's age or length of service or the employee's prior contributions even though the employee's retirement is occasioned by an occupational injury or sickness sec_104 also does not apply to amounts which are received as compensation_for a non-occupational injury or sickness nor to amounts received as compensation_for an occupational injury or sickness to the extent that they are in excess of the amount provided in the applicable workmen's_compensation_act or acts benefits payable under sec_5 b of the plan are limited to total and permanent disabilities that have been ruled compensable under the workers'_compensation law of the state accordingly sec_5 b constitutes a statute in the nature of a workmen's_compensation_act a participant who terminates employment by reason of a catastrophic disability is entitled to receive a monthly benefit equal to the greater of the amount provided under sec_5 b a or b a participant who terminates employment by reason of a non-catastrophic disability is entitled to receive a monthly benefit equal to the greater of the amount provided under sec_5 b a or c the monthly benefits payable under sec_5 b b ii and c ii of the plan the participant's employee contributions benefit are determined by reference to the participant's prior contributions accordingly monthly benefits payable under sec_5 b a b ii and c ii are not excludable from gross_income because they are based on age length of service or prior contributions however the monthly benefits payable under sec_5 b b i and b c i of the plan e and d of compensation respectively are not determined by reference to the participant’s age length of service or prior contributions sec_5 b of the plan provides benefits which are limited to survivors of employees who die as a result of accident or injury sustained in the line of duty accordingly sec_5 b of the plan is a statute in the nature of a workmen's_compensation_act a participant's beneficiary is entitled to receive the benefits described in sec_5 b or b as applicable sec_5 b provides that the beneficiary shall receive the participant's employee contributions benefit b a plus a lump sum equal to the participant's annualized compensation b b benefits payable under sec_5 b a are determined by reference to the participant's prior contributions accordingly amounts payable under sec_5 b a are not excludable from the recipient's gross_income however the benefits payable under sec_5 b b are not determined by reference to the participant's age length of service or prior contributions sec_5 b provides that a surviving_spouse shall be entitled to receive monthly benefit of e of the participant’s_compensation which is not determined by reference to the participant’s age length of service or prior contributions in revrul_80_44 1980_1_cb_34 a statute in the nature of a workmen’s compensation act provided for an allowance of the greater of a percent of the individual’s average final compensation or b the amount to which the individual would be entitled under the normal years_of_service retirement_plan the ruling concluded that the benefits under the statute were excludable under sec_104 of the code to the extent that they did not exceed percent of the final_average_compensation any excess over percent of final_average_compensation was attributable to length of service and therefore not excludable from gross_income based on the authorities cited above and on the representations made we conclude as follows sec_5 b and b of the plan constitute statutes in the nature of workmen’s compensation acts under sec_1_104-1 of the regulations monthly benefits received under sec_5 b b for catastrophic disability are excludable under sec_104 of the code to the extent they do not exceed e of the participant’s_compensation amounts in excess of e of the participant’s_compensation are not excludable from gross_income because they are determined by reference to age length of service or prior contributions amounts received under sec_5 b c of the plan for non-catastrophic disability are excludable under sec_104 of the code to the extent they do not exceed 33d of the participant’s_compensation amounts in excess of 33d of the participant’s_compensation are not excludable from gross_income because they are determined by reference to age length of service or prior contributions an employee contributions benefit received under sec_5 b a of the plan is not excludable from a survivor's gross_income under sec_104 of the code because it is determined by reference to the employees prior contributions a lump sum payment of a participants annualized compensation received under sec_5 b b of the plan is excludable from a survivor's gross_income under sec_104 of the code amounts received by a surviving_spouse under sec_5 b of the plan are excludable from the surviving spouse's gross_income under sec_104 of the code except as specifically ruled upon above no opinion is expressed or implied with respect to the application of any other provisions of the code or the regulations to the benefits described this ruling 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 sincerely felix zech assistant chief health welfare branch office of division counsel associate chief_counsel tax exempt government entities enclosures copy of this letter copy for sec_6110 purposes


number release date id office uilc cca_2010081014012030 ----------------------------- from ------------------ sent tuesday date pm to --------------- cc --------------- subject fw sec_3121 hi --------- thank you for your question i am sorry that i could not get back to you last week but i was attending our ---------conference in chicago i hope the following information will be helpful to you but if not please let me know the first step would be to determine if the district manager is a common_law_employee under the common_law standard the question is whether the person for whom services are performed has the right to control and direct the individual who performs the services regarding not only the result but also the details and means if the manager is a common_law_employee under this standard then the manager cannot be a statutory_employee or an independent_contractor and your inquiry ends if the firm did not check box statutory_employee on the w-2 and withheld federal_income_tax from payments to the manager those are potential facts favorable toward common_law_employee status i am not specifically aware of a case or ruling concerning the employment status of a district manager but you should check further if you would like me to help assist with this search please let me know if you determine that the district manager is not a common_law_employee then he is either an independent_contractor or a statutory_employee see reg d -1 d ii t c summ op and rev_rul for some general authority as to who a full time life_insurance salesman is in order to qualify for treatment as a statutory_employee a statutory_employee may claim deductions related to his income on schedule c and reports fica tax rather than self employment_tax however it seems unlikely that a district manager can establish that he satisfies the statutory_employee test for being a full-time_life_insurance_salesman whose entire or principal business activity is devoted to the solicitation of life_insurance or annuity_contracts or both primarily for one life_insurance_company


internal_revenue_service index no number release date date cc dom p si - plr-108849-99 x a d1 year dear this responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 of year the sole shareholder of x is a the action by unanimous written consent of the board_of directors in lieu of organizational meeting and x’s form ss-4 application_for employer_identification_number reflect that it was a’s intent to have x treated as an s_corporation for x’s first taxable_year year a as x's president represents that x relied on its attorney to prepare and file the necessary documents for purposes of obtaining s_corporation status however the service has no record of a form_2553 election by a small_business_corporation for x sec_1362 provides that if-- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x’s first taxable_year year accordingly provided that x makes an election to be an s_corporation by filing a form_2553 with the appropriate service_center effective for its year taxable_year within days following the date of this letter then such election will be treated as timely made for x’s year taxable_year a copy of this letter should be attached to the form_2553 except as specifically ruled upon above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provisions of the code including whether x was or is a small_business_corporation under sec_1361 this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely yours h grace kim branch office of the assistant chief_counsel passthroughs and special industries assistant to the chief enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ---------------------- ---------------------------------- ------------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------- telephone number -------------------- refer reply to cc ita plr-117569-08 date july ty ------- ty ------- legend taxpayer ---------------------- b --------------------- c --------- residence -------------------------------- -------------------------------------------------------- residence ----------------------------------- -------------------------------------------------- date -------------- date ------- date --------------------- date ------------- date -------------------- date ------------- date -------------- date ------------------ dear ------------------ this letter responds to your request for a ruling under sec_121 of the internal_revenue_code specifically you requested a ruling that the gain on the sale of residence may be excluded from gross_income under the reduced maximum exclusion in sec_121 facts on date taxpayer purchased and began residing in residence between date sec_2 and date sec_3 taxpayer did not reside in residence on date taxpayer moved back to residence taxpayer began dating b on date became engaged to b on plr-117569-08 date and married b on date on date taxpayer and b purchased residence on date taxpayer sold residence b ha sec_2 children a boy and a girl taxpayer has a longstanding father-daughter relationship with c after taxpayer moved back to residence c regularly visited taxpayer on weekends and school holidays taxpayer works from home residence had a small office small bedrooms and bathrooms residence ha sec_4 bedrooms full baths half baths and an office for taxpayer residence allows taxpayer to suitably accommodate his family which includes children of the opposite sex and different ages law and analysis sec_121 provides that gain from the sale_or_exchange of property is not included in gross_income if during the 5-year period ending on the date of the sale_or_exchange the taxpayer has owned and used the property as the taxpayer’s principal_residence for periods aggregating years or more sec_121 states the general_rule for the maximum exclusion_of_gain sec_121 provides that subsection a shall not apply to any sale if during the 2-year period ending on the date of the sale there was any other sale_or_exchange by the taxpayer to which subsection a applied sec_121 provides for a reduced maximum exclusion when a taxpayer fails to satisfy the ownership and use requirements of subsection a if the primary reason for the sale is the occurrence of unforeseen circumstances the reduced maximum exclusion is computed by multiplying the applicable maximum exclusion by a fraction the numerator of the fraction is the shortest of the following periods the period of time that the taxpayer owned the property during the 5-year period ending on the date of the sale the period of time that the taxpayer used the property as the taxpayer’s principal_residence during the 5-year period ending on the date of the sale or the period of time between the date of a prior sale_or_exchange of property for which the taxpayer excluded gain under sec_121 and the date of the recent sale the numerator of the fraction may be expressed in days or months the denominator of the fraction is days or months depending on the measure of time used in the numerator sec_1_121-3 of the income_tax regulations provides that all the facts and circumstances of a sale will determine whether the primary reason for the sale is the occurrence of unforeseen circumstances factors that may be relevant in determining the primary reason for a sale include the following the suitability of the property as the taxpayer’s residence materially changes the circumstances giving rise to the sale are not reasonably foreseeable when the taxpayer begins using the property as the plr-117569-08 taxpayer’s principal_residence and the circumstances giving rise to the sale occur during the period of the taxpayer’s ownership and use of the property as the taxpayer’s principal_residence sec_1_121-3 provides that a sale is by reason of unforeseen circumstances if the primary reason for the sale is the occurrence of an event that the taxpayer could not reasonably have anticipated before purchasing and occupying the residence sec_1_121-3 states that the commissioner may issue rulings addressed to specific taxpayers identifying events or situations as unforeseen circumstances with regard to those taxpayers based on the facts representations and the relevant law we conclude that the primary reason for the sale of residence was the occurrence of unforeseen circumstances the suitability of residence as taxpayer’s principal_residence materially changed with the need to accommodate an expanded family the occurrence of these unforeseen circumstances was the primary reason for the sale of residence by taxpayer accordingly the gain on the sale of residence which taxpayer used as a principal_residence for less than of the years preceding the sale may be excluded under the reduced maximum exclusion_of_gain in sec_121 caveats except as expressly stated we provide no opinion concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter must be attached to any income_tax return to which it is relevant alternatively a taxpayer filing a return electronically may satisfy this requirement by attaching a statement to the return that provides the date and control number of the letter_ruling the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by the taxpayer while this office has not verified any of the material submitted in support of the request for a ruling it is subject_to verification on examination sincerely donna welsh senior technician reviewer branch income_tax accounting