internal_revenue_service number release date index number ------------------------ ------ --------------------------------- -------------------------------------- ----------------------------------------- -- re ----------------------------- ------------------------ ----------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------- id no ----------------- ----------------------------------------------------- telephone number --------------------- refer reply to cc corp b05 plr-145740-10 date march legend taxpayer sub2 date1 date2 unrelated buyer company official ------------------------------------------------------------------------------------------ --------------------- ------------------------------------------------------------------------------------------ ---------------------- -------------------- -------------------------- --------------------------------------- ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ ---------------------------------- tax professional ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ --------------- dear ----------------- this letter responds to a letter dated date requesting on behalf of taxpayer an extension of time under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to file a statement under sec_1_337_d_-2 of the income_tax regulations hereinafter referred to as the election that was required to be filed plr-145740-10 with taxpayer’s consolidated federal_income_tax return for the taxable_year ending date2 additional information was received in subsequent correspondence dated march the material information is summarized below taxpayer is the common parent of a consolidated_group that included among other subsidiaries sub2 on date1 taxpayer sold stock of sub2 to unrelated buyer recognizing a loss on the sale an election under sec_1_337_d_-2 to deduct the loss recognized on the disposition of sub2 stock was required to be filed with or as part of the taxpayer consolidated group's consolidated federal_income_tax return for the year of the disposition however for various reasons the election was not filed subsequently this request was submitted under sec_301_9100-3 for an extension of time to file the election taxpayer represents that the period of limitations on assessment under sec_6501 has not expired for the taxpayer group’s consolidated_income_tax_return for the taxable_year ending date or any subsequent tax_year sec_1_337_d_-2 provides a general_rule that no deduction is allowed for any loss recognized by a member of a consolidated_group with respect to the disposition of stock of a subsidiary sec_1_337_d_-2 provides that a disposition means any event in which gain_or_loss is recognized in whole or in part sec_1_337_d_-2 provides that sec_1_337_d_-2 applies with respect to stock of a subsidiary only if a separate statement entitled sec_1_337_d_-2 statement is included with the return in accordance with sec_1_337_d_-2 sec_1_337_d_-2 provides that loss is not disallowed under sec_1_337_d_-2 to the extent the taxpayer establishes that the loss is not attributable to the recognition of built-in_gain net of directly related expenses on the disposition of an asset including stock and securities sec_1_337_d_-2 provides that the statement required under sec_1_337_d_-2 must be included with or as part of the taxpayer's return for the year of the disposition or deconsolidation generally sec_1_337_d_-2 applies with respect to dispositions and deconsolidations on or after date and before date sec_301_9100-1 cites sec_301_9100-1 through as providing the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory plr-145740-10 election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-2 provides automatic extensions of time for making certain elections while sec_301_9100-3 provides for extensions of time for making regulatory elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides requests 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 that granting relief will not prejudice the interests of the government in this case the time for filing the election is fixed by the regulations ie sec_1 d - c therefore the commissioner has discretionary authority under sec_301_9100-3 to grant an extension of time for taxpayer to file the election provided taxpayer establishes that it acted reasonably and in good_faith that the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and that granting relief will not prejudice the interests of the government information affidavits and representations submitted by taxpayer company official and tax professional explain the circumstances that resulted in the failure to timely file a valid election the information establishes the request for relief was filed before the failure to make the election was discovered by the internal_revenue_service and taxpayer reasonably relied on a qualified_tax professional who failed to make or advise taxpayer to make the election see sec_301_9100-3 and v based on the facts and information submitted including the representations that have been made we conclude that taxpayer has established it acted reasonably and in good_faith in failing to timely file the election for sub2 the requirements sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly we grant an extension of time under sec_301_9100-3 until days from the date on this letter for taxpayer to file the election with respect to the disposition of sub2 the 60-day extension of time is conditioned on taxpayer's consolidated group's tax_liability if any not being lower in the aggregate for all years to which the election applies than it would have been if the election had been made timely taking into account the time_value_of_money we express no opinion with respect to whether taxpayer qualifies substantively to make the election no opinion is expressed as to the tax effects or consequences of filing the election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-3 we relied on certain statements and representations made by the taxpayer and its representatives plr-145740-10 however all of the essential facts must be verified in addition notwithstanding that an extension is granted under sec_301_9100-3 to file the election penalties and interest that would otherwise be applicable if any continue to apply no opinion is expressed as to taxpayer's consolidated group's tax_liability for the years involved a determination thereof will be made upon audit of the federal_income_tax returns involved 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 taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely _ken cohen__________________ ken cohen senior technician reviewer branch office of associate chief_counsel corporate


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-114598-15 date date legend x y u s parent country date date date dear ---------------- -------------------------------------------------------------------------------------------- ------------------------------------- -------------------------------------------------------------------------------------------- ------------------------------------- -------------------------------------------------------------------------------------------- ---------------------------------- ---------- ----------------- ------------------- ------------------- this responds to a letter dated date and additional information submitted on behalf of x by its authorized representative requesting a ruling under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations that x be granted an extension of time to file an election to be classified as a disregarded_entity under sec_301_7701-3 facts plr-114598-15 x was formed on date under the laws of country by y which is wholly owned by u s parent by default classification x was an association for federal tax purposes u s parent attempted to file timely a form_8832 entity classification election to be classified as a disregarded_entity for federal tax purposes effective date however the entity classification election was not effective on date x converted under local law to an entity that is classified as a corporation under sec_301_7701-2 law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 under sec_301_7701-3 an eligible_entity with at least two members can elect to be classified as either an association and thus a corporation under sec_301_7701-2 or a partnership and an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that unless an entity elects otherwise a foreign eligible_entity is an association if all members have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided in sec_301_7701-3 or to change its classification by filing a form_8832 with the service_center designated on the form_8832 sec_301_7701-3 provides that an election made under sec_301 c i will be effective on the date specified by the entity on form_8832 or on the date filed if no date is specified on the election form the effective date specified on form_8832 cannot be more than days prior to the date on which the election is filed and cannot be more than months after the date on which the election is filed sec_301_7701-3 provides that if an eligible_entity classified as an association elects to be classified as a disregarded_entity the following is deemed to occur the association distributes all of its assets and liabilities to its single owner in liquidation of the association sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register plr-114598-15 sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied for an effective date of date as a result x is granted an extension of time of days from the date of this letter to make an election to be treated as a disregarded_entity for federal tax purposes effective date until date x must make the election by filing a properly executed form_8832 with the appropriate service_center a copy of this letter should be attached to the form this ruling is contingent on x and the owners of x filing all required federal_income_tax and informational returns including amended returns consistent with the requested relief granted in this letter a copy of this letter should be attached to any such return to the extent appropriate these returns or amended returns must include form_8858 return of u s persons with respect to foreign disregarded entities such that these forms reflect the consequences of the relief granted in this letter copies of this letter should be attached to any such returns or amended returns except as expressly provided herein we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter in addition sec_301_9100-1 provides that the granting of an extension of time for making an election is not a determination that the taxpayer is otherwise eligible to make the election this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office we are sending a copy of this letter to x’s authorized representative plr-114598-15 the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the ruling_request it is subject_to verification on examination sincerely associate chief_counsel passthroughs special industries by ___________________________________ james a quinn senior counsel branch passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index number ------------------------ ---------------- ------------------------------------------------ -------------------------------------- ------------------------ in re ------------------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------------------- id no --------- ------------------ telephone number ---------------------- refer reply to cc psi b05 plr-117149-17 date date legend taxpayer year bin ------------------------------------------ ------------------------- ------- ------------------ address --------------------------------------------------- -------------------- dear ---------------- this letter responds to your authorized representative's letter dated date submitted on behalf of taxpayer requesting an extension of time to make an election under sec_42 of the internal_revenue_code code pursuant to sec_301_9100-1 of the procedure and administration regulations according to the information submitted taxpayer owns a single-building project that was placed_in_service in year the building_identification_number assigned to the building is bin the building is located at address taxpayer inadvertently failed to make a timely correct election for the building under sec_42 consistent with taxpayer’s intent as evidenced by taxpayer’s contemporaneous documentation sec_42 defines the term qualified_low-income_housing_project as any project for residential_rental_property if the project meets the requirements of sec_42 or b whichever is elected by the taxpayer the project meets the requirements of sec_42 if percent or more of the residential rental units in the project are both rent-restricted and occupied by individuals whose income i sec_50 percent or less of area_median_gross_income the project meets the requirements of sec_42 if plr-117149-17 percent or more of the residential rental units in the project are both rent-restricted and occupied by individuals whose income is percent or less of area_median_gross_income sec_301_9100-7t of the temporary procedure and administration regulations provides that for elections made under the tax_reform_act_of_1986 the election under sec_42 must be made for the taxable_year in which the project is placed_in_service and is to be made in the certification required to be filed pursuant to sec_42 sec_301_9100-7t provides that the election under sec_42 is irrevocable sec_42 provides that following the close of the first taxable_year in the credit_period for any qualified_low-income_building the taxpayer is to certify to the secretary at the time and in the form and in the manner as the secretary prescribes the election made under sec_42 for the qualified_low-income_housing_project of which the building is a part in the case of a failure to make the certification required by the preceding sentence on the date prescribed for it unless it is shown that the failure is due to reasonable_cause and not to willful neglect no credit is to be allowable by reason of sec_42 for the building for any taxable_year ending before the certification is made sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 defines the term regulatory election as including 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 under sec_301_9100-1 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 or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except e g h and i sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government in the instant case based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been met accordingly taxpayer is granted an extension of time to make the election under sec_42 for the building identified by bin by filing within days from the date of this plr-117149-17 letter an amended form_8609 that includes the intended election the amended form_8609 along with a copy of this letter is to be filed with the philadelphia service_center at the address provided for the service_center in that form a copy of this letter is enclosed for this purpose no opinion is expressed or implied regarding the application of any other provisions of the code or regulations specifically we express no opinion on whether the form_8609 for the building was timely or correctly filed the effect of taxpayer's election under sec_42 for any closed_year or whether the building otherwise qualifies for low-income_housing tax_credit under sec_42 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 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely associate chief_counsel passthroughs and special industries by _____________________________ christopher j wilson senior counsel branch office of associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


yg4adollar_figure -os department of the treasury 9q qq internal_revenue_service washington d c date dec op -e-ed t contact person id number telephone number legend vez we x y z dear taxpayer this is in response to a ruling_request dated date on the application of sec_4942 and sec_4945 of the internal_revenue_code facts v is a nonprofit corporation organized under the laws of the state of z and is a private non- operating_foundation described in sec_501 and sec_509 of the code v's office is located in the city of x vis proposing to finance the creation and development of a state-of-the-art scientific high-technology research and business incubator and educational program at w the program the program will be a critical component of w's on-going scientific and educational mission to provide its faculty its students and the business community in the state of z with the cutting-edge knowledge experience and scientific skills needed to succeed in an increasingly high technology-driven economy w is a private accredited college of engineering science and mathematics founded in'the 1800s w's campus is located in the city of y seventy miles west of x wis an exempt educational_organization described in sec_501 a and b a i w offers a rigorous education in engineering mathematics and the physical and computer sciences that stresses both technical and interpersonal skills integral to the course of study at wis a commitment to the belief that the best way to learn is by doing therefore w uses a hands-on educational approach w consistently ranks at or near the top of specialized engineering schools in the country and its students and faculty regularly receive national awards and honors recently w has struggled with a serious problem that exists in and around y and the state of z generally w's students and faculty are handicapped by inadequate practical learning and teaching ll opportunities in the surrounding community and its graduates are lured to other parts of the country to find rewarding work and business opportunities the state of z ranks among the lowest in the nation in terms of the proportion of residents with a baccalaureate or higher educational degree and in the percentage of its workforce in professional specialty occupations including high-technology careers the y area in particular with an unemployment rate well above the national average and an economy dependent upon heavy industrial and manufacturing businesses provides few opportunities for highly qualified engineering and science graduates this problem has a chilling effect on w's capacity to maintain and expand its scientific and educational programs and y's ability to attract new industry one of w's primary objectives for the program is to foster the development of an innovation economy in z that will provide w's students and faculty with cutting-edge engineering experience and opportunities w believes that to retain more of 2's college graduates in the state particularly those trained in science and engineering w must provide rea -world experiences and opportunities to students and faculty and establish a clear path from classroom and computer study to personal and career fulfillment faculty must show and students must learn how to translate ideas into useful products and services that support economic growth new jobs and expanding businesses to help solve both the educational and the economic problems caused by the shortage of real-life business opportunities around its campus and throughout z w's program is designed to provide training resources and experiences to its students and faculty along the full continuum of theoretical learning to practical business application the program includes a research and business incubator new and expanded fellowships and internships advanced computer and communications systems and a venture capital fund the research and business incubator will be owned and operated by w and will include state-of- the-art laboratories computer drafting and information systems office space administrative services such as accounting and employee_benefits and training in business and marketing skills the incubator facilities will be located on the main campus of w and in a nearby industrial park owned by w the incubator has three goals increase real-world engineering experiences that advance the scientific education of w's students perfect the scientific acumen of its faculty and attract develop and retain high- technology industries in z so that students faculty staff and others have opportunities to continue and to apply their learning and skills in the state w hopes to attract entrepreneurs and businesses from across the spectrum of the high-technology sector while not focusing on a particular industry or a specific kind of technology w expects that like other technology-based incubators software ventures will constitute a large proportion of the projects housed at the incubator an insufficient number of the key companies in this industry have established substantial operations in z thus limiting the number and depth of learning research and career opportunities in the state w also expects the program to result in the creation of a number of fellowship opportunities that are not available in a traditional classroom setting to further the product and process development initiatives conceived at the incubator w may invite post-doctoral fellows specialized technicians practicing professionals or faculty members from w or other universities to direct or join interdisciplinary teams that address specific problems or projects these fellows will learn entrepreneurship and business planning skills from the entrepreneurs and start-up businesses located at the incubator while at the same time providing w's graduate students who work on the teams with unique opportunities to study sharpen their engineering skills and develop graduate thesis projects the program also will expand w's practicum offerings for undergraduate students the college's students as in the past will continue to enjoy internship opportunities with small technology-based bl companies at a variety of locations across z and the nation but the businesses located at the incubator will provide additional and more convenient internship experiences for these students the interns will be challenged to apply their engineering mathematical and scientific knowledge to actual business problems on of near campus in addition part of the program funds will be used to develop an international internship project at w international student interns will travel to and live in various regions of the world and engage in work study programs there with colleges universities and research and business incubators similar to w's upon their return to campus the international interns’ experiences with these global partners will be shared with students faculty staff and other participants at w's incubator another key component of the program is the development of advanced computer and communications systems to connect the college community the incubator and the individuals and businesses that participate in program activities w envisions that the systems will encourage significant collaboration among its faculty and students incubator staff and businesses fellows and interns the computer system will include super-computing capabilities adapted to high-technology research and production the communications system will connect the incubator sites and the main campus at w with telephone video-conferencing distance learning and other communication facilities the entire w campus will have access to and will benefit from these enhanced resources the final component of the program is a venture capita fund that will provide loans to or equity investments in early-stage product development marketing and business planning efforts of enterprises associated with the incubator or other w projects w proposes to dedicate approximately one-third of v's grant to the venture capital fund with the fund the college will invest seed venture capital in qualifying businesses especially in the early stages of proving technical feasibility assessing the potential of inventions and underwriting the cost of new product development marketing and business planning by furnishing seed capital w hopes fo attract and retain successful entrepreneurs to the incubator on the conviction that such individuals and businesses will settie where the prerequisites for research education and business development prevail in this last phase of the program w may incur greater than average risk to foster worthwhile start-ups developed in earlier stages of the program and to offer research educational and career opportunities to w's students faculty and graduates compared to w's existing endowment the proposed venture capital fund will represent less than percent of the college's total investment portfolio v seeks rulings that disbursement of the portion of its grant proceeds targeted for w's venture capital fund will not be treated as a taxable_expenditure under sec_4945 or of the code and will constitute a qualifying_distribution that satisfies the requirements of sec_4942 law sec_4945 of the code defines the term taxable_expenditure to include amounts paid_by a private_foundation -- as a grant to an organization unless- a such organization is described in paragraph or of sec_509 or is an exempt_operating_foundation as defined in sec_4940 or b the private_foundation exercises expenditure_responsibility with respect to such grant in accordance with subsection h sec_53_4945-5 of the foundation and similar excise_taxes regulations explains that a grant by a private_foundation to a grantee organization which the grantee uses to make payments to another organization the secondary grantee shall not be regarded as a grant by the private_foundation to the secondary grantee if the b12 foundation does not earmark the use of the grant for any named secondary grantee and there does not exist an agreement oral or written whereby such grantor foundation may cause the selection of the secondary grantee by the organization to which the foundation makes the grant to avoid earmarking to the secondary grantee the original grantee organization must exercise control in fact over the selection process and actually make the selection completely independently of the private_foundation sec_4945 of the code states that a taxable_expenditure is any amount_paid by a private_foundation for any purpose other than one specified in sec_170 among the purposes recognized as exempt and described in sec_170 are exclusively purposes religious charitable scientific literary or educational sec_4942 of the code defines the term qualifying_distribution as any amount_paid to accomplish one or more purposes described in sec_170 other than any contribution to i an organization controlled directly or indirectly by the foundation or one or more disqualified persons or ii a private_foundation which is not an operating_foundation sec_53_4945-6 of the regulations states that an expenditure that constitutes a qualifying_distribution under sec_4942 of the code ordinarily will not be treated as a taxable_expenditure sec_1_501_c_3_-1 of the income_tax regulations defines the term charitable in its generally accepted legal sense to include the advancement of education or science sec_1_501_c_3_-1 of the regulations defines the term educational to include a t he instruction or training of the individual for the purpose of improving or developing his capabilities or b the instruction of the public on subjects useful to the individual and beneficial to the community sec_1_501_c_3_-1 of the regulations provides that a scientific_organization may meet the requirements of sec_501 only if it serves a public rather than a private interest and is organized and operated in the public interest the term ‘scientific’ as used in sec_501 includes the carrying on of scientific research in the public interest sec_1 c -1 d ii of the regulations specifies that scientific research does not include activities of a type ordinarily carried on as an incident to commercial or industrial operations or the designing or construction of equipment etc sec_1_501_c_3_-1 iii provides that scientific research will be regarded as carried on in the public interest a if the results of such research including patents copyrights processes or formulae resulting therefrom are made available to the public on a nondiscriminatory basis b if such research is performed for the united_states or any of its agencies or instrumentalities or for a state or political_subdivision thereof or c if such research is directed toward benefiting the public sec_1_501_c_3_-1 d iv of the regulations provides that an organization will not be regarded as organized and operated for the purpose of carrying on scientific research in the public interest and consequentiy will not qualify under sec_501 as a scientific’ organization if a such organization will perform research only for persons which are directly or indirectly its creators and which are not described in sec_501 or b such organization retains directly or indirectly the ownership or control of more than an insubstantial portion of the patents copyrights processes or formulae resulting from its research and does not make such patents copyrights processes or formulae available to the public for purposes of this subdivision a patent copyright process or formula shall be considered as made available to the public if such patent copyright process or formula is made available to the public on a nondiscriminatory basis in addition although one person is granted the bly exclusive right to the use of a patent copyright process or formula such patent copyright process or formula shall be considered as made available to the public if the granting of such exclusive right is the only practicable manner in which the patent copyright process or formula can be utilized to benefit the public in such a case however research from which the patent copyright process or formula resulted will be regarded as carried on in the public interest within the meaning of subdivision iii of this subparagraph only if it is scientific research described in subdivision ii c of this subparagraph it is carried on for a person described in subdivision iti b of this subparagraph or if revrul_74_587 1974_2_cb_162 held that an organization formed to relieve poverty eliminate prejudice reduce neighborhood tensions and combat community deterioration through a program of financial assistance in the form of low-cost or long-term loans to or the purchase of equity interests in various business enterprises in economically depressed areas was exempt under sec_501 of the code the loans and purchases of equity interests were not undertaken for purpose of profit or gain but for the purpose of advancing the charitable goals of the organization and are not investments for profit in the traditional business sense the ruling also noted that the activities were no less charitable because some of the benefiting businesses would not have otherwise qualified for charitable assistance the businesses were merely the instruments through which the charitable purposes were accomplished revrul_79_323 1979_2_cb_106 held that amounts paid to an industrial commission established by a state legislature the purpose of which was to maintain existing industries and to invite and attract additional industries to an area to diversify the area's industrial base were used for exclusively public purposes and were therefore deductible as charitable_contributions the commission by promoting the general economic health of the region and by maintaining and attracting industry benefited the residents of the region in addition there was no indication that gifts to the commission will inure to the benefit of private interests except indirectly in the course of advancing the public purposes of promoting the economic health and stability of the area revrul_85_109 1985_2_cb_165 considered the united_states district_court decision in st luke's hospital of kansas city v united 494_fsupp_85 w d mo the court held that a tax-exempt hospital's performance of diagnostic laboratory testing upon patient specimens from staff physicians did not constitute an unrelated business under sec_513 of the code the ruling declined to accept the court's reasoning that the testing was for the convenience of members under sec_513 but did adopt the court's alternative position that the testing furthered the hospital's exempt educational purpose the ruling accepted the holding that a teaching hospital which conducted non- patient laboratory testing on specimens needed for the conduct of its teaching activities was not engaged in an unrelated_trade_or_business where the outside testing services contributed importantly and substantially to the hospital's teaching program revrul_68_373 1968_2_cb_206 addressed whether a nonprofit entity that engaged in testing drugs for commercial pharmaceutical companies qualified for exemption as a scientific research organization under sec_501 of the code the founder and principal investigator of the testing organization was approved as a qualified investigator for the food and drug administration the ruling denied the exemption citing sec_1_501_c_3_-1 of the regulations and concluding clinical_testing is an activity ordinarily carried on as an incident to a pharmaceutical company's commercial operations d i of the regulations which does not constitute scientific research within the meaning of sec_1 c - revrul_69_632 1969_2_cb_120 denied sec_501 status to a nonprofit association composed of members of a particular industry that was created to develop new and improved uses for existing industry products the association's research projects may result in new products and processes that benefit the public but such benefit is secondary to that derived by the association's members the b s association's members select research projects in order to increase their sales by creating new uses and markets for their product therefore it is held that the primary purpose of the association's research is to serve the private interests of its creators rather than the public interest analysis wis a traditional educational_institution providing engineering science and mathematics training to undergraduate and graduate students it fulfills all of the criteria of sec_170 of the code and thus is an organization described in sec_509 w will use the venture capital fund to make loans to or equity investments in organizations that are not exempt themselves but which will be the means for w to further its educational scientific and other exempt purposes no part of the grant will be earmarked for particular secondary grantees or other recipients and w will make all investment and similar decisions completely independently therefore v's proposed grant to w for the venture capital fund will not be a taxable_expenditure under sec_4945 of the code even though v will not exercise expenditure_responsibility under sec_4945 and sec_4945 under sec_4945 of the code v would incur taxable_expenditure liability on amounts paid_or_incurred for any purpose other than one specified in sec_170 as an integral part of w's greater effort to continue offering a world-class engineering science and mathematics education to its students the program will provide w's students hands-on team-oriented research and educational work experiences with innovative individuals and businesses the program will allow w's faculty to continue their professional development while remaining on campus to fulfill their teaching research and administrative responsibilities w will extend its educational reach to businesses and other participants in the incubator or in other program activities furthermore the program will provide community benefit by contributing to the genera economic development of the depressed y area therefore the program generally advances scientific educational and charitable purposes described in sec_170 of the code in addition the venture capital fund specifically is intended and will be operated to further the scientific purposes of w the enterprises located in the research and business incubator will provide the apparatus for study and advanced knowledge in both the fundamental and applied sciences taught at the college w's faculty will transfer ideas from the classroom into laboratories computer simulations and production facilities w's students will apply the theories discussed in lectures to actual physical chemical electrical and engineering problems inventions discovered in the process of teaching and learning will be refined and developed for public dissemination and use these activities fit into the category of scientific research in the public interest described in the tegulations the research conducted by and for incubator companies that are supported by venture capital funds will immediately and directly aid in the scientific education of college or university students by creating an enhanced research environment on and around w's campus n addition faculty and student participation in venture capital businesses will allow them to observe and develop scientific information for publication in a treatise thesis or other form that is available to the interested public sec_1 c -1 d iii c their participation also may result in the development of processes or formulae made available to the public on a nondiscriminatory basis regulations sec_4 c -1 d iii a the venture capital fund additionally furthers w's scientific research goals by aiding a community or geographical area by attracting new industry to the community or area and development of or retention of an industry in the community or area regulations sec_1 c - d ili c this result supports venture capital fund investments even with respect to high-technology businesses in z that may not have a physical presence at the incubator by encouraging the blo scientific research does not include activities ordinarily carried on as an incident to commercial or industrial operations such as ordinary product testing and designing or constructing equipment or buildings unlike the private drug-testing company in revrul_68_373 or the trade_association in revrul_69_632 however w is an accredited college of engineering science and mathematics that supports and conducts research to advance education and science w's venture capital activities are related to that research and thus will further scientific purposes described in sec_170 of the code additionally the venture capital fund will further broader educational_purposes the venture capital pool will be used both i to create a better environment in which to instruct students and to support faculty for the purpose of improving or developing their instruction on subjects useful to the individual and beneficial to the community sec_1 c -1 d w is a teaching institution the educational opportunities created directly through venture capital businesses located at the research and business incubator will contribute importantly and substantially to the college's teaching program see revrul_85_109 capabilities and ji to provide general_public w will invest primarily in companies and ideas that further its educational mission of exposing students and faculty to cutting-edge high-technology science and business endeavors any private benefit to the companies in which w invests will be indirect and incidental in the course of advancing the public purposes of the college and the community at large see revrul_79_323 the investments will be the last step along a continuum of activities from classroom study through practical commercial application necessary to fulfill w's educational mission thus the venture capital fund contributes importantly and directly to carrying out w's exempt purposes similarly w's investments will help provide economic opportunities to the depressed y areas and promote professional specialty occupations including high-technology careers in z the program will increase y's ability to attract new industry and provide useful products and services that support economic growth new jobs and expanding businesses which will foster the development of an innovation economy in z the program will contribute to the benefit of the citizens of z and to the community of y in particular furthermore like the organization in revrul_74_587 w's venture capital investments generally will not generate profits in the traditional business sense although w hopes to use the venture capital fund to invest in companies that will become successful and thus create a revolving fund to support the program or increase w's general assets a return on investment will be only a secondary goal of the fund for the reasons discussed above w's use of the venture capital fund furthers scientific educational and charitable purposes under sec_170 b of the code and thus satisfies the initial requirement of sec_4942 neither v nor any of its disqualified persons exercise control directly or indirectly over w and w is not a private_foundation therefore the second requirement of sec_4942 is met accordingly v's support of w's venture capital project constitutes a qualifying_distribution by v based on the information you have submitted and as the distributee organization is recognized as exempt under sec_501 of the code under the facts described above we rule the disbursement of the portion of its grant proceeds targeted for w's venture capital fund will not be treated as a taxable_expenditure under sec_4945 or of the code and ‘the disbursement of the portion of its grant proceeds targeted for w's venture capital fund will constitute a qualifying_distribution that satisfies the requirements of sec_4942 we are informing your key district_director of this ruling because this ruling could help resolve future questions about your federal_income_tax status you should keep it in your permanent records bll s this ruling is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as precedent if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely dervata v back gerald v sack manager exempt_organizations group


internal_revenue_service number release date index number --------------------- ------------------------------------- ----------------------------- ------------------------------------------------------------ --------- ------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------------- id no ---------------- ----------------- telephone number ---------------------- refer reply to cc corp b02 plr-116636-16 date date ------------------- distributing distributing distributing distributing distributing distributing distributing legend -------------------- ------------------------------- ------------------------ -------------------------------- -------------------------------- ------------------------ --------------------------------- -------------------------------- ------------------------ ------------------------ ---------------------------------------------------------------------- -- ------------------------ -------------------- ---------------------------------- ------------------------ ----------------------------------- ---------------------------------- -------------- --------------------------------- ---------------------------------- plr-116636-16 distributing public spinco controlled controlled controlled controlled controlled sub sub sub -------------- ----------------------------- -------------------------------- ------------------------ -------------------------- -------------------------------- ------------------------ ------------------- -------------------------------- ------------------------ ----------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- --------------------- ------------- --------------------------- -------------------------------- ------------------------ --------------------- --------------------------------------- -------------- -------------------------- ----------------------------- -------------- -------------------------- -------------------------------- ------------------------ ------------------------- ----------------------------------- --------------------------- ---------------------------------- -------------------------------- ------------------------ plr-116636-16 sub sub sub sub sub sub sub sub sub sub sub -------------------------------- -------------------------------- ------------------------ ---------------------------------- ----------------------------------- ------------------------ --------------------------------------- -------------------------------- ------------------------ ----------------------------------- -------------------------------- ------------------------ ---------------------------------------- -------------------------------- -------------------------- ---------------------------------- -------------------------------- ------------------------ ------------------------------- --------------------------- ------------------------ ----------------------------------------------- -------------------------------- ------------------------ ------------------------------------- -------------------------------- ------------------------ ------------------------------- -------------------------------- ------------------------ ----------------------------- ----------------------------- ------------------------ plr-116636-16 sub sub sub sub sub sub sub sub sub sub sub ---------------------- -------------------------------- ------------------------ ---------------------------------------------------- -------------------------------- ------------------------ ------------------------------------ -------------------------------- ------------------------ ------------------ -------------------------------- ------------------------ -------------------------------- ------------------------------------------------- ------------------------ ---------------------------------------- -------------------------------- ------------------------ ---------------------------------------------------- -------------------------------- ------------------------ ---------------------------------- --------------------------- ------------------------ -------------------------------------- -------------------------------- ------------------------ ------------------------- -------------------------------- ------------------------ ---------------------------------- -------------------------------- ------------------------ plr-116636-16 sub sub fsub fsub fsub fsub fsub fsub fsub fsub fsub ---------------------------- ------------------------------------------------- ------------------------ ------------------------------ -------------------------------- ------------------------ -------------------------------- ------------------------ -------------- ------------------------ ---------------------------------- -------------- --------------------------------------- -------------------------------------- ------------------------ -------------------------------- -------------------------------------------------------- -------------- ----------------------- ------------------------------ -------------- ----------------------------------------- ----------------------------------------------------- -------------- ----------------------------------- ---------------------------------- -------------- -------------------------------------- ---------------------------------------------------- ------------------------ -------------------------- ------------------------------------------ ------------------------ plr-116636-16 fsub fsub fsub fsub fsub fsub fsub dre dre dre dre ------------------------------------------------------- ---------------------------- -------------- -------------------------- -------------------------------------- -------------- ------------------------------ -------------------------------- ------------------------ ---------------------- ----------------------------------------------- -------------- ----------------------- ---------------------- -------------- ----------------------------------- ---------------------------------------------- -------------- -------------------------------------------- -------------------------------- -------------- ---------------------------------------------------- ---------------------- ------------------------ ----------------- ------------------------------------------------- ------------------------ ------------------------ ----------------------------- -------------- ---------------- ------------------------------------------------- ------------------------ plr-116636-16 dre dre newco newco newco newco newco newco newco new sub new sub ------------------------------------------------ ---------------------- ------------------------ ---------------------------------------- ----------------------------- ------------------------ ---------------------------------- ------------------------------------------------- ------------------------ ---------------------- -------------------------------- ------------------------ ---------------------------------------------- ------------------------------------------------- ------------------------ ---------------------------------- ---------------------------------------------------- -------------- ------------------------------------- -------------------------------- ------------------------ --------------- ------------------------------ -------------- ---------------- ------------------------- -------------- ---------------------------------- -------------------------------- ------------------------ ------------------------------------ ---------------------------------------------------------------------- ---------------- ------------- plr-116636-16 new sub new sub new fsub business a business b dre business dre business fsub business controlled business state a state b state c state d state e state f state g state h ------------------------------- -------------------------------- ------------- -------------------------------- -------------------------------- ------------- ------------------------------ ---------------------------------------------- -------------- ---------------------------------------------------- ------------------------------- ---------------------------------------------------------------------- ----------- ---------------------------------------------------------------------- ------------------------------------------ ---------------------------------------------------------------------- -------------------------- ---------------------------------------------------------------------- ----------- ------------- ----------------- -------------- ------- -------------- --------- ----------- ----------------- plr-116636-16 country a country b country c country d country e country f country g country h country i country j country k country l province a b c d e f g h i ---------------------- ------------ ---------------------- ------------ --------- ------ ------------- ---------------------- ------------ -------- ------------ ------------- ----------------------- ------------ ------------ -------- ------ ---------- ------------ ------------ -- ---- plr-116636-16 j k l m n o p q r s t u v w x y z aa ---- -- ---- ---- -------- -------- ------------ ---------- ------------ ------------ ---------- -------- ------ -- ---- ---- ------------ ------------ dear --------------- this letter responds to your authorized representatives’ letter dated date requesting rulings on certain federal_income_tax consequences of a proposed plr-116636-16 transaction the proposed transaction the material information provided in that request and in subsequent correspondence is summarized below the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for rulings however it is subject_to verification on examination this letter is issued pursuant to section dollar_figure of revproc_2016_1 2016_1_irb_1 regarding one or more significant issues under sec_332 sec_351 sec_355 sec_368 or sec_1036 the rulings contained in this letter only address one or more discrete legal issues involved in the transaction this office expresses no opinion as to the overall tax consequences of the proposed transaction described in this letter or as to any issue not specifically addressed by the rulings below summary of facts distributing a state a corporation is a widely held public company that is the parent of a worldwide group of entities the distributing worldwide group and is also the common parent of an affiliated_group_of_corporations filing a consolidated federal_income_tax return the distributing group distributing has outstanding several tranches of publicly-held long-term debt the distributing debt and commercial paper distributing owns all of the issued and outstanding_stock of sub a state a corporation and sub a state h corporation distributing also indirectly owns all of the issued and outstanding_stock of fsub a country a corporation fsub owns all of the issued and outstanding equity interests of dre a country a entity disregarded as an entity separate from fsub dre is engaged in the dre business sub owns all of the issued and outstanding_stock of the following subsidiaries sub a state a corporation sub a state a corporation sub a state b corporation sub a state a corporation sub a state a corporation sub a state c_corporation sub a state a corporation sub a state d corporation and sub indirectly owns all of the stock of sub a state a corporation sub owns all of the issued and outstanding_stock of sub a state e corporation sub also directly owns a percent of the stock of sub a state a corporation b percent of the stock of sub a state a corporation and all of the issued and outstanding common_stock of sub a state f corporation and sub a state a corporation members of the distributing worldwide group own the remaining issued and outstanding equity interests in sub sub and sub sub owns all of the plr-116636-16 outstanding preferred_stock of sub sub also owns indirectly all of the stock of fsub a country b corporation which owns all of the equity interests in dre a country b entity disregarded as an entity separate from fsub dre is engaged in the dre business sub and sub own all of the issued and outstanding preferred_stock of sub a state a corporation members of the distributing worldwide group own the outstanding common_stock of sub sub owns directly all of the issued and outstanding ordinary stock of fsub a country c_corporation and owns indirectly all of the stock of fsub a country d corporation and fsub a country e corporation sub owns indirectly aa percent of the ordinary shares of fsub a country f corporation members of the distributing worldwide group own the remaining outstanding shares of fsub fsub owns indirectly all of the stock of distributing which owns all of the stock of distributing which owns all of the stock of distributing each of distributing distributing and distributing is a country g corporation distributing owns indirectly through entities disregarded as entities separate from distributing all of the stock of controlled a country b corporation fsub owns c percent of the stock of distributing a country h corporation sub owns indirectly through entities disregarded as entities separate from sub the remaining d percent of the stock of distributing distributing owns all of the stock of controlled a country h corporation and approximately e percent of the stock of fsub a country g corporation members of the distributing worldwide group own the remaining outstanding_stock of fsub controlled is engaged in the controlled business sub owns all of the equity interests in dre a state a limited_liability_company disregarded as an entity separate from sub dre a state a limited_liability_company disregarded as an entity separate from sub and fsub a country i corporation dre owns all of the stock of fsub a country i corporation which owns directly and indirectly u percent of the equity interests of fsub a country i limited_partnership that is treated as a corporation fsub indirectly owns v percent of the equity interests of fsub fsub owns f percent and sub owns g percent of the stock of fsub a country j corporation sub owns indirectly all of the equity interests in dre a country a entity disregarded as an entity separate from sub dre owns all of the issued and outstanding_stock of sub a state a corporation and z percent of the issued and outstanding ordinary shares of fsub a country a corporation sub fsub dre and distributing own h percent i percent j percent and k percent respectively of the stock of sub a state a corporation sub owns all of the issued and plr-116636-16 outstanding equity interests of dre a country i entity disregarded as an entity separate from sub sub owns l percent of the stock of fsub a country i corporation distributing owns the remaining m percent of the stock of fsub fsub is engaged in the fsub business fsub owns all of the issued and outstanding_stock of fsub a country k corporation sub owns all of the equity interests of sub a state a limited_liability_company that is treated as a corporation sub owns all of the stock of sub a state a corporation sub owns indirectly through wholly owned subsidiaries approximately n percent of the common_stock and o percent of the nonvoting preferred_stock of sub a state a corporation members of the distributing worldwide group own the remaining outstanding common and nonvoting preferred_stock and class of voting preferred_stock of sub sub is the common parent of an affiliated_group_of_corporations that join in filing a consolidated u s federal_income_tax return the sub consolidated_group sub owns all of the issued and outstanding_stock of sub sub sub and sub sub is a state d corporation sub and sub are state a corporations sub is a state e corporation sub owns p percent of the stock of distributing a state g corporation fsub owns the remaining q percent of the stock of distributing distributing owns among other subsidiaries and assets all of the stock of fsub a country a corporation and all of the common interests of sub a state a limited_liability_company treated as a corporation sub owns the preferred interests of sub the equity interests of sub are treated as stock for u s federal_income_tax purposes sub owns all of the issued and outstanding common_stock of distributing a state a corporation a member of the sub consolidated_group owns all of issued and outstanding class of voting preferred_stock of distributing sub owns all of the issued and outstanding class of common_stock of distributing a state a corporation sub dre and dre own r percent s percent and t percent respectively of the class of nonvoting preferred_stock of distributing sub owns all of the issued and outstanding class of voting preferred_stock of distributing such voting preferred_stock together with the nonvoting preferred_stock of distributing the distributing preferred_stock distributing owns u percent of the stock of fsub a country l corporation directly and the remaining v percent indirectly through entities disregarded as entities separate from distributing proposed transaction distributing proposes to undertake pursuant to one overall plan the following transaction steps which may occur in a different order than described below plr-116636-16 i ii iii iv v vi sub converts to a limited_liability_company sub llc and the sub liquidation sub through dre forms newco a state a limited_liability_company a fsub forms new ulc a country i unlimited liability company that will be treated as an entity disregarded as separate from fsub b fsub continues to province c new ulc amalgamates with fsub pursuant to country i law with new ulc surviving to form fsub m ulc the fsub liquidation fsub m ulc distributes the equity interests in a subsidiary to dre a sub liquidates the sub liquidation b sub contributes the business b assets of sub to newco the sub reincorporated assets a sub forms new sub a corporation and contributes the stock of sub to new sub b sub converts to a limited_liability_company sub llc c sub llc distributes its business a assets and cash to new sub vii viii a sub converts to a limited_liability_company the sub liquidation b sub distributes its business a assets and cash to sub c sub contributes its equity interests in sub to newco the sub reincorporated assets a sub forms new sub a state a corporation and contributes the stock of sub to new sub b sub converts to a limited_liability_company sub llc plr-116636-16 ix x xi xii xiii c sub distributes its business a assets and cash to new sub a sub and sub llc form new sub a state a corporation and contribute the stock of sub to new sub b sub converts to a limited_liability_company sub llc c sub distributes assets and cash to sub a sub converts to a limited_liability_company the sub liquidation b sub distributes certain assets and cash to sub c sub contributes its equity interests in sub to newco the sub reincorporated assets a sub sells its stock in fsub to distributing in exchange for cash b fsub sells its stock in fsub to an indirect subsidiary of newco in exchange for cash step xi the fsub sale a sub converts to a limited_liability_company the sub liquidation b sub distributes its stock in sub to sub c sub contributes the stock of sub to newco the sub reincorporated assets a sub elects to be treated as an entity disregarded as separate from sub the sub liquidation and together with the sub liquidation fsub liquidation sub liquidation the sub liquidation the sub liquidation and the sub liquidation the liquidations b sub distributes sub to sub c sub contributes sub to newco a newly formed state a corporation the sub reincorporated assets plr-116636-16 d sub distributes the stock of newco to sub in exchange for a portion of its stock in sub e sub contributes the stock of newco to newco xiv newco indirectly forms newco a country i entity disregarded as an entity separate from sub xv through a series of disregarded transactions fsub m ulc transfers its business b assets to newco the fsub reincorporated assets xvi newco elects to be classified as a corporation xvii newco elects to be classified as a corporation and sub distributes the stock of newco to distributing the assets of newco the sub reincorporated assets and together with the sub reincorporated assets the sub reincorporated assets the sub reincorporated assets the sub reincorporated assets the sub reincorporated assets and the fsub8 reincorporated assets the reincorporated assets xviii fsub m ulc elects to be classified as a corporation the fsub reincorporation xix sub llc elects to be classified as a corporation for u s federal tax purposes the sub reincorporation and together with the fsub reincorporation the reincorporations xx fsub contributes its stock in distributing to newco a newly formed state a limited_liability_company that will elect to be treated as a corporation the newco contribution xxi sub and newco contribute their stock in distributing to newco a newly formed state a corporation in exchange for stock of newco the newco contribution xxii distributing borrows from third-party and or related lenders and distributes the borrowing proceeds along with pre-existing cash to newco xxiii sub contributes its business b assets to a newly formed corporation and distributes the stock of the new corporation to distributing and dre in exchange for all or a portion of their stock in sub sub through dre retains its distributing preferred_stock plr-116636-16 xxiv fsub distributes percent of the stock of fsub and cash to sub in exchange for a portion of sub 12’s stock in fsub xxv a sub contributes its distributing preferred_stock and the stock of sub sub sub and sub to distributing in exchange for nonvoting preferred_stock of distributing b newco contributes the stock of distributing to distributing in exchange for nonvoting preferred_stock of distributing c sub contributes its distributing preferred_stock to distributing in exchange for shares of a new class of common_stock of distributing d dre contributes its distributing preferred_stock to distributing in exchange for shares of a new class of common_stock of distributing e sub through dre contributes its distributing preferred_stock to distributing in exchange for nonvoting preferred_stock of distributing f sub contributes its remaining interest in fsub to distributing in exchange for shares of a new class of common_stock of distributing g new sub contributes the equity interests of sub llc to distributing in exchange for shares of a new class of common_stock of distributing h new sub contributes the equity interests of sub llc to distributing in exchange for shares of a new class of common_stock of distributing i new sub contributes the equity interests of sub llc to distributing in exchange for shares of a new class of common_stock of distributing j sub contributes the preferred interests of sub to distributing in exchange for nonvoting preferred_stock of distributing step xxv the distributing contribution and together with the newco contribution and the newco contribution the contributions the nonvoting preferred_stock and new class of common_stock sub newco sub sub sub sub new sub new sub new sub and sub receive in the distributing contribution will constitute control of distributing within the meaning of sec_368 xxvi distributing contributes the stock of fsub and other assets to controlled a newly formed state a corporation and distributes all of the stock of controlled to distributing the controlled distribution plr-116636-16 xxvii sub llc converts to a corporation sub xxviii sub llc converts to a corporation sub xxix sub llc converts to a corporation sub xxx distributing directly and through entities disregarded as entities separate from distributing forms new fsub a country l corporation and contributes its direct and indirect interest in fsub to new fsub fsub elects to be treated as an entity disregarded as separate from new fsub xxxi new fsub forms newco a country a corporation new fsub borrows from a related_party and contributes the borrowing proceeds to newco newco acquires dre from fsub in exchange for cash xxxii distributing forms controlled and contributes its direct and indirect interest in new fsub to controlled xxxiii distributing distributes all of the stock of controlled and potentially cash to sub and distributing the controlled distribution xxxiv distributing contributes its stock in distributing sub sub sub sub fsub sub sub sub the distributing preferred_stock the preferred interests of sub and other business b assets it owns directly to controlled the controlled contribution xxxv controlled borrows from a related_party lender and distributes the borrowing proceeds to distributing xxxvi distributing forms new sub a state a corporation and contributes the stock of sub to new sub sub converts to a state a limited_liability_company sub llc xxxvii sub llc distributes its stock in distributing controlled cash and any other business a assets it owns to new sub xxxviii sub llc converts to a state h corporation sub xxxix distributing distributes all of the stock of controlled after having received the assets described in step xxxiv in the controlled contribution to new sub pro_rata on the class of common_stock sub holds the controlled distribution plr-116636-16 xl xli new sub contributes the stock of sub to controlled new sub distributes all of the stock of controlled to distributing xlii distributing contributes its stock in fsub to controlled and distributes the stock of controlled to fsub in exchange for a portion of its stock in distributing the controlled distribution xliii controlled purchases the equity interests in dre from fsub in exchange for cash xliv distributing distributes the stock of controlled to distributing the first controlled distribution xlv distributing distributes the stock of controlled to distributing the second controlled distribution xlvi distributing distributes the stock of controlled to fsub the third controlled distribution and together with the first controlled distribution and second controlled distribution the controlled distributions xlvii fsub contributes the stock of controlled to a controlled_corporation and the controlled_corporation is ultimately distributed to distributing through a series of internal distributions and contributions xlviii xlix a fsub contributes the majority of its assets to newco a newly formed country e corporation by way of a demerger under country e law b fsub sells all of the stock of newco to a subsidiary of public spinco in exchange for cash the newco sale and together with the fsub sale the sales a distributing contributes business b including the stock of controlled newco and controlled indirectly to public spinco in exchange for public spinco stock the assumption_of_liabilities if any debt of public spinco that will qualify as securities within the meaning of sec_361 the public spinco securities and cash the public spinco contribution b on or around the public spinco contribution date i one or more investment banks the investment banks acquires a portion of the distributing debt and commercial paper plr-116636-16 ii no less than w days after the investment banks acquire the distributing debt distributing enters into an exchange_agreement the exchange_agreement with the investment banks pursuant to which distributing will retire a portion of the distributing debt and commercial paper held by the investment banks in exchange for the public spinco securities iii no less than x days after the investment banks acquire the distributing debt distributing transfers the public spinco securities to the investment banks in exchange for a portion of the distributing debt the debt exchange and commercial paper c distributing uses any cash received in the public spinco contribution to repay debt and or make distributions to its shareholders within y months d distributing distributes the stock of public spinco to its shareholders the public spinco distribution ruling sec_1 the controlled contribution and controlled distribution will not disqualify the contributions from otherwise qualifying as sec_351 exchanges the relative fair_market_value of the gross assets of the fsub business compared to the fair_market_value of the gross assets of distributing will not preclude distributing from satisfying the active_trade_or_business_requirement of sec_355 with respect to the controlled distribution the relative fair_market_value of the gross assets of the dre business compared to the fair_market_value of the gross assets of controlled will not preclude controlled from satisfying the active_trade_or_business_requirement of sec_355 with respect to the controlled distribution the relative fair_market_value of the gross assets of the controlled business compared to the fair_market_value of the gross assets of controlled will not preclude controlled from satisfying the active_trade_or_business_requirement of sec_355 with respect to the controlled distribution the relative fair_market_value of the gross assets of the dre business compared to the fair_market_value of the gross assets of controlled will not preclude controlled from satisfying the active_trade_or_business_requirement of sec_355 with respect to any of the controlled distributions plr-116636-16 the transfers of the reincorporated assets to newco newco or newco and the reincorporations will not preclude the liquidations from otherwise qualifying as complete liquidations within the meaning of sec_332 any loss realized in the sales and not taken into account under sec_267 or sec_1_1502-13 will be taken into account under sec_267 and or sec_1_1502-13 upon the public spinco distribution taking into account the involvement of the investment banks in the debt exchange the investment banks and each participating historic holder of the distributing debt will be treated as a distributing creditor to which the public spinco securities are transferred in connection with the public spinco distribution for purposes of sec_361 and the public spinco securities will be treated as being distributed in pursuance of the public spinco distribution plan_of_reorganization for purposes of sec_361 caveats except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction of item discussed or referenced in this letter procedural statements 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 taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely isaac w zimbalist senior technician reviewer branch office of associate chief_counsel corporate


department of the treasury internal_revenue_service washington d c sep j tax_exempt_and_government_entities_division uniform issue list se tp cp ebt4 legend decedent a executor b individual c individual d irae financial_institution f state g amount year year date date date date date date dear this is in response to your request dated date as supplemented by correspondence dated date and date in which you request through your authorized representative a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested executor b the son and personal representative of decedent a and the sole executor of decedent a’s estate represents that decedent a atage a distribution in cash equal to amount from ira e which was maintained by financial_institution f individual b asserts that decedent a failed to accomplish a rollover within the 60-day period prescribed by sec_408 of the code because of an acute medical_condition that caused severe cognitive impairment __ received prior to his death decedent a owned ira e with financial_institution f beginning in year decedent a’s family observed signs of decedent a’s mental decline on date sec_4 and decedent a was diagnosed by three different physicians as suffering from significant cognitive impairment which had worsened over time and had occurred in a persistent pattern over a period of several years during this period on date of year decedent a withdrew amount from ira e on date executor b was appointed by a circuit_court in state g to serve as decedent a’s guardian on date decedent a passed away decedent a was survived by his three children executor b individual c and individual d after being appointed as the guardian of decedent a executor b discovered that decedent a failed to file a federal_income_tax return for year executor b promptly filed the return to report the distribution executor b represents that amount has not been used for any other purpose based on the above facts and representations you request a ruling that the service waive the 60-day rollover requirement under sec_408 of the code as to the distribution in cash of amount sec_408 of the code defines an individual_retirement_account to mean a_trust created or organized in the united_states and requires that the trustee be a bank or an approved non-bank trustee sec_408 of the code defines an individual_retirement_annuity to include an annuity_contract that is issued by an insurance_company and satisfies certain requirements sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 sec_408 of the code provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money or any other_property is paid into an ira for the benefit of such individual not later than the 60th day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary_of_the_treasury may waive the 60-day requirement under sec_408 and sec_408 where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement revproc_2003_16 r b provides that the service will issue a ruling waiving the 60-day rollover requirement in cases where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the taxpayer in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information and documentation submitted are consistent with executor b’s assertion that decedent a failed to accomplish a rollover within the 60-day period prescribed by d a of the code due to an acute medical_condition that caused severe cognitive impairment therefore pursuant to sec_408 of the code the service waives the day rollover requirement with respect to the distribution in cash equal to amount executor b has days from the issuance of this letter_ruling to contribute cash in an amount not exceeding amount into an ira established in the name of decedent a provided all other requirements of sec_408 of the code except the 60-day requirement will be met with respect to the contribution of amount such contribution will be considered a rollover_contribution within the meaning of sec_408 we note that the scope of executor b’s authority as executor of decedent a’s estate is a matter of state law this ruling assumes that executor b’s actions relevant to the ruling_request contained herein are in accordance with the laws of state g and taken pursuant to executor b’s authority this ruling does not authorize the rollover of amounts that are required to be distributed by sec_408 of the code and it does not address any other issues relating to sec_408 and sec_401 no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_61 k of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter_ruling is being sent to your authorized representative if you wish to inquire about this ruling please contact please address all correspondence to se t ep ra t1 sincerely yours y ehor carlton a watkins manager employee_plans technical group enclosures notice of intention to disclose deleted copy of this letter cc


internal_revenue_service number release date index number ---------------------------- ------------- ----------------------------------------------- ---------------------------------------- ----------------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------- id no ------------- telephone number --------------------- refer reply to cc corp b04 plr-134029-06 date date ---------------------------------------------------------- ---------------------------------------------------------------- - legend legend taxpayer -------------------------------------------------------------------------------- ------------------------------------------------------------- subsidiary1 ------------------------------------------------------------------------------- ----------------------------------------------------------------- ------------------------------------------------------------- subsidiary2 -------------------------------------------------------------------------------- ------------------------------------------------------------- newco --------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- shareholder a -------------------------------------------------------------------------------- ------------------------------------------------------------- shareholder b ---------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------- ---------------------------------- plr-134029-06 ------------------------------------------------------------- shareholder c -------------------------------------------------------------------------------- ------------------------------------------------------------------------------------ ------------ ---------------------- -------------------------- ---------------------------------------------------- ------------------------------------------------------------------- ------------------------------------------------------------- state a state b date dear mr ---------------------- federal_income_tax consequences of a proposed transaction the information provided in that letter and in later correspondence is summarized below submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process this letter responds to your date letter requesting rulings on certain the rulings contained in this letter are based on facts and representations summary of facts taxpayer is the common parent an affiliated_group that files consolidated income_tax returns taxpayer is a holding_company that owns all of the membership interests in subsidiary1 and owns all of the stock of subsidiary subsidiary1 is a state a nonprofit nonstock corporation that is taxed as a subchapter_c_corporation for federal income taxes subsidiary1 and subsidiary2 are members of taxpayer’s consolidated_group subsidiary1 leases property to subsidiary2 subsidiary2 sub-leases the property to the shareholders of taxpayer and to other tenants taxpayer has one class of common_stock outstanding the common_stock is equally owned by shareholder a shareholder b and shareholder c taxpayer intends to complete a series of transactions to restructure its businesses including the conversion of subsidiary1 to a state b for-profit company state a law prohibits the merger or conversion of a state a nonprofit corporation into a state a or foreign state plr-134029-06 for-profit corporation state a treats certain foreign non-stock membership corporations like state a nonprofit_corporations following transaction the proposed transaction for what is represented to be a valid business_purpose taxpayer proposes the i taxpayer will form newco as a state b non-stock membership corporation and will contribute to newco a nominal amount of assets in exchange for all of the newco membership interests ii iii iv v in a statutory merger under the laws of state a and of state b subsidiary1 will merge with and into newco with newco surviving in a recapitalization transaction newco will convert from a state b non- stock corporation to a state b stock corporation by amending its certificate of incorporation to provide for the issuance of stock taxpayer will own all of the stock of newco subsidiary2 will merge into newco with newco surviving in a reorganization that is intended to qualify under sec_368 of the code subject_to the approval of its board_of directors taxpayer’s management anticipates that taxpayer will elect under sec_856 of the internal_revenue_code the code to be treated as a real_estate_investment_trust reit effective date in connection with taxpayer’s planned election newco will be treated as a qualified_reit_subsidiary under sec_856 of the code representations for purposes of the proposed transaction subsidiary1 subsidiary2 and newco are collectively referred to as the transferors taxpayer and newco are collectively referred to as the transferees equity interests means stock and or membership interests of the respective owner taxpayer has made the following additional representations with respect to the proposed transaction a in each instance described above the fair_market_value of the newco equity interests received by taxpayer will be approximately equal to the fair_market_value of the subsidiary1 and newco equity interests surrendered in the exchanges plr-134029-06 b there is no plan or intention by taxpayer to sell or otherwise dispose_of its newco equity interests received in the transaction except for dispositions in connection with taxpayer’s election to be treated as a reit c immediately following the reincorporation of subsidiary1 and the recapitalization of newco taxpayer will own all of the outstanding newco stock and will own such stock solely by reason of its ownership of subsidiary1 prior to the recapitalization of newco d newco has no plan or intention to issue additional shares of its stock following the transaction e immediately following consummation of the transaction newco will possess the same assets and liabilities except for assets used to pay expenses_incurred in connection with the transaction as those possessed by subsidiary1 immediately prior to the transaction f at the time of the transaction subsidiary1 will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire an equity_interest in subsidiary1 or in newco g newco has no plan or intention to reacquire any of its stock issued in the transaction h newco has no plan or intention to sell or otherwise dispose_of any of the assets of the transferors acquired in the transaction except for dispositions made in the ordinary course of business and for dispositions in connection with taxpayer’s election to be treated as a reit i following the transaction newco will continue the historic_business of subsidiary2 or use a significant portion of subsidiary2’s historic_business_assets in a business j the shareholders members transferors and transferees will each pay their respective expenses if any incurred in connection with the transaction k the transferors and transferees are not under the jurisdiction of a court in a title_11_or_similar_case within the meaning of sec_368 of the code l the fair_market_value of the assets transferred to the transferees by the transferors each equals or exceeds the sum of the liabilities assumed by the transferees in each instance described above plr-134029-06 m the liabilities to be assumed as deterermined under sec_357 in the transaction and the liabilities to which the transferred assets are subject were incurred in the ordinary course of business and are associated with the assets being transferred above we rule as follows rulings based solely on the information submitted and the representations set forth no gain_or_loss will be recognized by the transferors on the transfer of property to the transferees in exchange for the transferees’ equity interests and assumption_of_liabilities in each instance described above no gain_or_loss will be recognized by the transferees on the receipt of property in exchange for their equity interests in each instance described above the basis of each asset received by the transferees in exchange for their equity interests will equal the basis of each asset in the hands of the respective transferor immediately before the transfer in each instance described above the holding_period of each asset received by each transferee will include the period during which the respective transferor held the asset caveats no opinion is expressed about the tax treatment of the proposed transaction under other provisions of the code or regulations or the tax treatment of any conditions existing at the time of or effects resulting from the proposed transaction that are not specifically covered by the above rulings in particular no opinion is expressed regarding i whether taxpayer’s reit election will be a valid election ii whether newco will be a qualified_reit_subsidiary and iii the federal_income_tax effects of the transaction under treasury regulations at sec_1_1502-13 with regard to intercompany obligations sec_1_1502-19 with regard to excess loss accounts or sec_1_1502-75 with regard to termination the consolidated_group procedural statements this ruling letter is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent a copy of this ruling letter should be attached to the federal_income_tax return of plr-134029-06 each taxpayer involved for the taxable_year in which the transaction covered by this ruling letter is consummated alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the ruling letter letter is being sent to your authorized representative in accordance with the power_of_attorney on file with this office a copy of this sincerely _______________________________ lewis k brickates chief branch associate chief_counsel corporate