department of the treasury employer_identification_number contact person - id number contact telephone number uil internal_revenue_service p o box cincinnati oh release number release date date date legend b program c location z dollar amount dear we have considered your request for advance approval of your grant-making program under sec_4945 g of the internal_revenue_code dated date our records indicate that you are recognized as exempt from federal_income_tax under sec_501 of the code and that you are classified as a private_foundation as defined in sec_509 your letter indicates that you will operate a scholarship program for students to attend b the scholarship program is open to all students at c which are approximately individuals one to two scholarships will be awarded annually in the amount of dollar_figurez scholarships are not renewable and are awarded on a one-time basis scholarship recipients will be recruited by a representative hired to coordinate the program the coordinator who does not serve as an officer director or trustee will select the top candidates nominees must be in good academic standing at c and able to withstand the physical challenges of b preference will be given to low-to-moderate income students and students of single parents applicants will be reviewed by the coordinator and your trustees appointed annually by your board to the selection committee together you will make a final selection the names of applicants are not disclosed during the review process you especially seek students who possess untapped leadership potential and an interest in giving back to the community upon selection you will contact recipients and their parents to ensure the rigors of b are understood and the recipient is capable of participation the recipient will select a three week b course located anywhere in the continental_united_states you will cover program and travel costs with payment directly to b students will not receive any direct funding from you you will monitor the program to ensure the recipients’ successful completion of b recipients will be asked to tell you what they got from the program and to help recruit applicants for the following year h t you will investigate any diversions of funds from their intended purposes take all reasonable and appropriate steps to recover diverted funds and ensure funds held by a grantee are used for their intended purposes if funds are diverted from their intended purposes you will withhold further payments to grantees until you obtain grantees’ assurances that future diversions will not occur and that grantees will take extraordinary precautions to prevent future diversions from occurring you agree to maintain records that include the following i information used to evaluate the qualification of potential grantees identification of the grantees including any relationship of any grantee to the private_foundation the amount and purpose of each grant and iv all grantee reports and other follow-up data obtained in administering the private foundation’s grant program sec_4945 and b of the code impose certain excise_taxes on taxable_expenditures made by a private_foundation sec_4945 of the code provides that the term taxable_expenditure means any amount_paid or incurred by a private_foundation as a grant to an individual for travel study or other similar purposes by such individual unless such grant satisfies the requirements of subsection g sec_4945 of the code provides that sec_4945 shall not apply to individual grants awarded on an objective and nondiscriminatory basis pursuant to a procedure approved in advance if it is demonstrated that the grant constitutes a scholarship or fellowship_grant which is subject_to the provisions of sec_117 and is to be used for study at an educational_organization described in sec_170 the grant constitutes a prize or award which is subject_to the provisions of sec_74 if the recipient of such prize or award is selected from the general_public or the purpose of the grant is to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar capacity skill or talent of the grantee sec_53_4945-4 of the regulations provides that to secure approval a private_foundation must demonstrate that its grant procedure includes an objective and nondiscriminatory selection process t a such procedure is reasonably calculated to result in performance by grantees of the activities that the grants are intended to finance and the foundation plans to obtain reports to determine whether the grantees performed activities that the grants are intended to finance based on the information submitted and assuming your award programs will be conducted as proposed with a view to provide objectivity and nondiscrimination in making the awards we have determined that your procedures for granting the awards comply with the requirements contained in sec_4945 of the code and that awards granted in accordance with such procedures will not constitute taxable_expenditures within the meaning of sec_4945 in addition we have determined that awards made under your procedures are excludable from the gross_income of the recipients subject_to the limitations provided by sec_117 of the code this determination is conditioned on the understanding that there will be no material_change in the facts upon which it is based it is further conditioned on the premise that no grants will be awarded to foundation managers or members of the selection committee or for a purpose that is inconsistent with the purpose described in sec_170 of the code the approval of your award program procedures herein constitutes a one-time approval of your system standards and procedures designed to result in awards which meet the requirements of sec_4945 of the code this determination only covers the grant programs described above thus approval shall apply to subsequent award programs only as long as the standards and procedures under which they are conducted do not differ materially from those described in your request any funds you distribute to individuals must be made on a true charitable basis in furtherance of the purposes for which you are organized therefore you should maintain adequate_records and case histories so that any or all award distributions can be substantiated upon request by the internal_revenue_service this determination is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as a precedent you must report any future changes in your grant making procedures please keep a copy of this letter in your permanent records if you have any questions please contact the person whose name and telephone number are shown above sincerely yours lois g lerner director exempt_organizations enclosures notice redacted copy of letter


t c summary opinion united_states tax_court s scott lain and teresita garcia-lain petitioners v commissioner of internal revenue respondent docket no 13671-13s filed date s scott lain and teresita garcia-lain pro sese derek p richman for respondent summary opinion jacobs judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case unless otherwise indicated subsequent section references are to the internal_revenue_code code in effect for all rule references are to the tax_court rules_of_practice and procedure and all dollar amounts are rounded to the nearest dollar respondent irs determined a dollar_figure deficiency in petitioners’ federal_income_tax and a sec_6662 accuracy-related_penalty of dollar_figure the issues for decision are whether petitioners are entitled to claimed deductions on schedule a itemized_deductions for medical and dental expenses charitable_contributions unreimbursed employee_expenses and tax preparation fees in excess of those the irs allowed and whether petitioners are liable for a sec_6662 accuracy-related_penalty background some of the facts have been stipulated and they are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference at the time of filing their petition petitioners resided in florida when the case was called for trial petitioner wife teresita garcia-lain did not appear nor was there any appearance on her behalf petitioner husband s scott lain did appear at trial respondent’s counsel made an oral motion to dismiss ms garcia-lain for lack of prosecution respondent’s motion was granted by order dated date a decision will be entered against ms garcia-lain for a deficiency and penalty in the same amounts as those determined against mr lain i introduction s scott lain graduated from indiana university in with a degree in telecommunications after graduating from indiana university he moved to miami florida where he worked as an assistant manager and later as manager of several large retail department stores mr lain changed professions eventually becoming a stockbroker during the beginning of the year at issue mr lain worked as a stockbroker for chase investment bank chase during the latter part of he worked as an insurance salesman for new england life_insurance co a metlife company metlife mr lain’s work at both chase and metlife required him to drive his vehicle from his offices to the offices and homes of prospective and current clients to discuss investments retirement income plans and other services chase and metlife offered mr lain and ms garcia-lain have one child jl when jl was three years old he was diagnosed with autism spectrum disorder jl is considered an autistic savant an autistic savant is a person with autism who exhibits extraordinary ability in a highly specialized area such as arithmetic or memorization the court refers to minors by their initials see rule a ii petitioners’ federal_income_tax return petitioners filed a joint federal_income_tax return the irs disallowed various deductions that petitioners claimed on their schedule a namely dollar_figure for medical and dental expenses dollar_figure for charitable_contributions and dollar_figure for unreimbursed employee_expenses and tax preparation fees the relevant facts relating to the these deductions follow a petitioners’ medical_expenses on schedule a of their income_tax return petitioners reported medical and dental expenses of dollar_figure which was reduced to a claimed deduction of dollar_figure to give effect to the of adjusted_gross_income reduction pursuant to sec_213 petitioners contend that most of the medical and dental expenses were incurred for treating jl’s autism spectrum disorder at trial mr lain submitted canceled checks and invoices totaling dollar_figure pertaining to jl’s school therapy sessions and medical doctors b charitable_contributions on schedule a of their income_tax return petitioners claimed a deduction of dollar_figure for charitable_contributions dollar_figure by cash or check and dollar_figure by gifts other than cash or check with respect to the dollar_figure of charitable_contributions by gifts other than cash or check petitioners reported on form_8283 noncash charitable_contributions that they had donated clothing with a thrift shop value of dollar_figure to goodwill industries of south florida at trial mr lain submitted a canceled check for dollar_figure made payable to st timothy catholic church moreover mr lain testified that petitioners weekly donated dollar_figure in cash to st timothy catholic church c miscellaneous_itemized_deductions on schedule a of their income_tax return petitioners claimed a deduction of dollar_figure for miscellaneous_itemized_deductions which consisted of dollar_figure of unreimbursed employee_expenses and dollar_figure of tax preparation fees reduced by the sec_67 floor petitioners’ reported unreimbursed employee_expenses summarized on form 2106-ez unreimbursed employee_expenses consisted of the following expenses amount vehicle expenses standard mileage rate of cents parking fees tolls and transportation travel_expenses incurred while away from home other business_expenses meals and entertainment_expenses after sec_274 limitation total expenses dollar_figure big_number big_number big_number to determine their vehicle expenses petitioners used an optional standard mileage rate permitted under revproc_2009_54 2009_51_irb_930 of cents per mile mr lain submitted a travel log which shows the dates origins destinations and business purposes of the various round trips he drove using his vehicle from his chase or metlife offices to visit prospective or current clients this log shows that he drove big_number miles for business purposes in from june through date mr lain was required to pay metlife dollar_figure for parking fees he submitted monthly producer expense statements to metlife showing that he incurred and paid these fees mr lain also paid metlife fees for use of its copy machine for professional liability insurance and for marketing materials he submitted an agent earnings and deductions statement which showed he paid metlife dollar_figure for these fees in in metlife offered a certification class called metlife center for special needs planning to certain of its employees mr lain attended the class to maintain and improve his current job skills and he traveled to california where the class was offered to attend with respect to the trip to california he submitted an american airlines invoice for dollar_figure and a hyatt regency hotel invoice for dollar_figure mr lain was not entitled to reimbursement from metlife for the vehicle and parking expenses paid the copy machine professional liability insurance or marketing materials expenses or the trip to california for the certification class petitioners self-prepared their return using tax preparation software that they purchased for dollar_figure i general principles governing substantiation discussion it is well established that deductions are a matter of legislative grace and taxpayers bear the burden of proving they are entitled to all deductions claimed rule a 503_us_79 292_us_435 moreover taxpayers must substantiate the amount and purpose of the item deducted 65_tc_87 aff’d per curiam 540_f2d_821 5th cir taxpayers are required to maintain records that are sufficient to enable the commissioner to determine their correct_tax liability see sec_6001 43_tc_824 sec_1_6001-1 income_tax regs under certain circumstances if a taxpayer establishes entitlement to a deduction but not the amount the court may estimate the amount allowable 39_f2d_540 2d cir we generally will not estimate a deductible expense unless the taxpayer presents sufficient evidence petitioners have not argued nor shown that the burden_of_proof should shift to respondent under sec_7491 to provide some basis upon which an estimate may be made 85_tc_731 without such a basis any allowance would amount to unguided largesse see 245_f2d_559 5th cir sec_274 requires more stringent substantiation requirements to be met before a taxpayer may deduct certain categories of expenses including passenger_vehicle and travel_expenses see 50_tc_823 aff’d per curiam 412_f2d_201 2d cir to satisfy the requirements of sec_274 in general a taxpayer must maintain adequate_records or produce evidence corroborating his or her own statement establishing the amount date and business_purpose for a travel expenditure or use of the vehicle sec_1_274-5t c temporary income_tax regs fed reg date sec_1_274-5t temporary income_tax regs fed reg date provides in relevant part that adequate_records generally consist of an account book a diary a log a statement of expense trip sheets or a similar record made at or near the time of the expenditure or use along with supporting documentary_evidence the strict substantiation requirements of sec_274 for vehicle expenses must be met even where the optional standard mileage rate is used sec_1_274-5 income_tax regs ii loss of records petitioners contend that they are unable to substantiate many of the expenses underlying their claimed deductions because their tax records were destroyed by water from a nearby pipe that had burst when a taxpayer’s records have been destroyed or lost due to circumstances beyond the taxpayer’s control the taxpayer may substantiate his or her claimed expenses including sec_274 expenses through reasonable reconstruction see 71_tc_1120 see also 122_tc_305 sec_1_274-5t temporary income_tax regs fed reg date a taxpayer is required to reconstruct the records if possible see eg chong v commissioner tcmemo_2007_12 if a taxpayer establishes that the records were lost or destroyed because of circumstances beyond the taxpayer’s control he or she must nevertheless substantiate the claimed expenditures through secondary evidence see boyd v commissioner t c pincite the burden is on the taxpayer to show that the documentation was actually lost or destroyed because of circumstances beyond his or her control see adler v commissioner tcmemo_2010_47 aff’d 443_fedappx_736 3d cir on the basis of mr lain’s testimony which we found credible we are satisfied that petitioners’ tax records were destroyed because of circumstances beyond their control nonetheless mr lain’s testimony and minimal supporting records taken together fail to provide a basis for our estimating many of the deductions claimed iii medical and dental expenses petitioners contend that they are entitled to a schedule a medical and dental expense deduction of dollar_figure generally sec_213 allows a deduction for expenses paid during the taxable_year for medical_care that are not_compensated_for_by_insurance_or_otherwise to the extent such expenses exceed of the taxpayer’s adjusted_gross_income courts have recognized that the cost of educational_services rendered to those with mental disabilities can qualify as a medical expense if the expenses were incurred for the mitigation alleviation or treatment of the mental_disability see 76_tc_408 at trial mr lain submitted canceled checks and invoices pertaining to educational and medical_expenses petitioners had to pay with respect to jl’s autism spectrum disorder contrary to respondent’s contention we find that the educational expenses were paid for the mitigation and alleviation of jl’s autisim spectrum disorder accordingly we hold that petitioners are entitled to deduct dollar_figure before the of adjusted_gross_income reduction under sec_213 iv charitable_contributions petitioners contend that they are entitled to a schedule a charitable_contribution_deduction of dollar_figure in general sec_170 allows a deduction for any charitable_contribution by the taxpayer made within the taxable_year charitable_contribution deductions are subject_to the recordkeeping requirements of sec_1_170a-13 income_tax regs for contributions of money and sec_1_170a-13 income_tax regs for contributions of property other than money where the contribution is dollar_figure or more sec_170 requires the taxpayer to substantiate the claimed contribution with a written contemporaneous acknowledgment from the donee organization if a taxpayer makes a charitable_contribution of property other than money in excess of dollar_figure the taxpayer must maintain written records showing the manner of acquisition of the property and the approximate date_of_acquisition see sec_1_170a-13 income_tax regs separate contributions of less than dollar_figure are not subject_to the requirements of sec_170 even if the sum of the contributions made by a taxpayer to a donee organization during a taxable_year totals dollar_figure or more see sec_1 170a- f income_tax regs at trial mr lain submitted a canceled check for dollar_figure payable to st timothy catholic church in addition he credibly testified that he placed dollar_figure in cash into the plate when attending weekly church services mr lain also credibly testified that petitioners made some donations of property to qualified charitable organizations on the basis of petitioners’ documentary_evidence and mr lain’s credible testimony we find that petitioners contributed at least dollar_figure in money check and cash to st timothy catholic church and at least dollar_figure in property other than money to qualified charitable organizations consequently we hold that petitioners are entitled to deduct dollar_figure for charitable_contributions for v miscellaneous_itemized_deductions petitioners contend that they are entitled to schedule a miscellaneous_itemized_deductions of dollar_figure after giving effect to the sec_67 floor reduction these miscellaneous_itemized_deductions consist of unreimbursed employee_expenses and tax preparation fees a unreimbursed employee_expenses petitioners reported dollar_figure of unreimbursed employee_expenses on schedule a and form 2106-ez these expenses consist of dollar_figure of vehicle expenses dollar_figure of parking expenses dollar_figure of travel_expenses dollar_figure of business_expenses and dollar_figure of meals and entertainment_expenses after reduction for the sec_274 limitation vehicle expenses sec_162 generally allows a deduction for ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying_on_a_trade_or_business the term trade_or_business as used in sec_162 includes the trade_or_business of being an employee 54_tc_374 expenses for transportation between a taxpayer’s residence and his or her place of business or employment are generally considered personal expenses the deduction of which is prohibited under sec_262 see 413_us_838 326_us_465 sec_1_162-2 sec_1_262-1 income_tax regs the costs of going from one business location to another however are generally deductible under sec_162 revrul_55_109 1955_1_cb_261 a taxpayer who uses his or her own vehicle for business may deduct either the actual cost incurred while using the vehicle for business purposes or an optional standard mileage rate for business use provided the taxpayer substantiates the amount of business mileage and the time and purpose of each use see sec_1_274-5 income_tax regs revproc_2009_54 2009_51_irb_930 as discussed supra petitioners elected the optional standard mileage rate petitioners are therefore entitled to a deduction under the standard mileage rate provided they are able to show the actual miles the time and place and the business_purpose of the travel see nicely v commissioner tcmemo_2006_ sec_1_274-5 income_tax regs petitioners submitted a contemporaneous log that shows mr lain drove big_number miles for business purposes as a result of his travel between his chase and metlife offices and the offices and homes of prospective and current clients contrary to respondent’s contention we find the log credible despite a few errors mr lain made in its construction because mr lain’s log meets the strict substantiation requirements of sec_274 we hold that petitioners are entitled to a dollar_figure deduction for vehicle expenses see revproc_2009_51 supra noting that taxpayers are entitled to deduct cents per business mile for parking expenses mr lain submitted a producer expense statements from metlife showing he paid dollar_figure in parking expenses as unreimbursed employee business_expenses we find and thus hold that petitioners are entitled to deduct dollar_figure for parking expenses travel_expenses sec_162 permits taxpayers to deduct traveling expenses including amounts expended for lodging and meals if such expenses are ordinary and necessary incurred while away from home and incurred in the pursuit of a trade_or_business see commissioner v flowers u s pincite mr lain traveled to california to attend a certification program for metlife in he attended the program in order to maintain and improve his job skills at metlife mr lain submitted an american airlines invoice for dollar_figure and a hyatt regency hotel invoice for dollar_figure pertaining to this travel we find and thus hold that petitioners are entitled to a dollar_figure deduction for travel_expenses business_expenses mr lain submitted an agent earnings and deductions statement from metlife which shows he incurred dollar_figure in expenses for use of a copy machine maintenance of professional liability insurance and purchase of marketing materials accordingly we hold that petitioners are entitled to a dollar_figure deduction for unreimbursed business_expenses b tax preparation fees petitioners claimed a deduction of dollar_figure for tax preparation fees a taxpayer may deduct ordinary and necessary expenses_incurred in connection with the determination collection and refund of taxes see sec_212 such deductible expenses include expenses_incurred in connection with the preparation of tax returns see sec_1_212-1 income_tax regs at trial mr lain credibly testified that petitioners paid dollar_figure for tax preparation software which enabled them to prepare their return we find and thus hold that petitioners are entitled to a deduction of dollar_figure for tax preparation fees in sum we hold that petitioners are entitled to dollar_figure in miscellaneous_itemized_deductions before giving effect to the sec_67 floor reduction vi sec_6662 accuracy-related_penalty respondent contends that petitioners are liable for a sec_6662 accuracy-related_penalty sec_6662 and b imposes a penalty of of the portion of an underpayment_of_tax attributable to among other things the taxpayer’s negligence or disregard of rules or regulations negligence includes any failure to make a reasonable attempt to comply with the provisions of the code including any failure to keep adequate books_and_records or to substantiate items properly see sec_6662 sec_1_6662-3 income_tax regs respondent bears the burden of production with respect to the imposition of the sec_6662 accuracy-related_penalty see sec_7491 116_tc_438 petitioners have been able to substantiate only portions of the expenses they reported on schedule a for accordingly respondent has met his burden of production with respect to the negligence_penalty relating to the portion of the underpayment that is due to disallowance of deductions for these expenses sec_6664 provides an exception to the imposition of the accuracy- related penalty if the taxpayer establishes that there was reasonable_cause for and the taxpayer acted in good_faith with respect to the underpayment sec_1 a income_tax regs the determination of whether the taxpayer acted with reasonable_cause and in good_faith is made on a case-by-case basis taking into account the pertinent facts and circumstances id para b the taxpayer bears the burden of establishing that he or she acted in good_faith and that there was reasonable_cause for the underpayment see higbee v commissioner t c pincite as found supra petitioners’ tax records were destroyed on account of damage from a burst water pipe additionally petitioners prevailed with respect to some of the claimed deductions were it not for the loss of petitioners’ tax records we believe that they might have been able to substantiate many of their claimed deductions consequently we decline to sustain respondent’s determination to impose an accuracy-related_penalty to reflect the foregoing decision will be entered under rule


of under ten nar emp lovee aad emp coy m ges ob fo an ers of y l i w o o o h a h y i s s t i i o o o a l i o w n o v b a n c e a a c g o o e a n o n o o o t w v f i c sec_2 g d b e m h v o a y e - w v b e i f w n u n s e e e a s o o s o t h p y o t a n o c a o o w w e w v s s m o o a a b m o m m e e f o s t b i e t a ‘ o n o e o t s i o m f e c w o e e h e b e m o s o f o g v e d g s w o a p e e d i m s o o w m o o i w o o w o w y g d o o d s t e d t o s o g m c o s o o o m y v e d q w o s e o g g g i r t i s o o n a a o8 mances exvice v o u e u d o t o p o o o h o o o x g e o m e s i o c e d q o o t w d e g g d f o d o f t s o e r e y r t s i y s a o o o d e o e t p s v p v t t s o o s e g o - u y wand oo butions o em ployee lo y i rm y a issi iene ar gt ea ak serv v v w v g o m b a s k y - n w e e e w g e a s o f p r a b a o o o a s m m o f n s o n i v o o s_r l o r d o o - r g v e h i w s c t i o d overnmen b7e i o a s h o o o w v o y e s o o b a o b o y y e d a e c c k x d f i o o c s g a a o r w o a n p o e b e w w o t h i e f w v n a w e m e r m g o o o o f o o a o a n s w o m o e t b r n p s b r e s i e t m m s o y o s_r t c f m o m o m o o s e e d a o d o u b a d o b t x x dollar_figure o o c b i w o r t o t s o e g a o r a e w u y g e o e b t u o o o a s g i a o s a n i m o d o dollar_figure - u b e q o a s a dollar_figure a o b o d a g e r y b o m a o o w a s o r u i o r s n s o w c a o s t b e c a o a q o c o a o d v v t i r a o o w e w e o d o h f d d e_p o r k o e e y g a a p f o s g y s p o m a g o t e a p o m a d e t p o e t e w o s s e o a b t e m m u s a m y w w d t d a v e t t ‘ h e c oe ae zo0c25c6 la sec_2 terming ned emp oymen with board a set anc are not inc uded li a a orea ted as employ n w ince picked-up oo ze von nor ou tions wages as o o h e d o f s - -d amou d o o s o s o t y picked- a b a t w s t v o u f re gener a lay dollar_figures ubtec ot te sectio th iboti sy benefit o e an and the srs rot tap o ob guuezsos a to such purposes ss described in defined contribution is subject_to the ual additions described a as such sbutions that are pi sec_414 are tre and defined_contribution_plan ux accordingly the picked-up contri ruling_request will not be tr for purposes of sec_41 are not annu d other at on contributions sec_425 c up by employer m pursuant to as employer contributions additions to employee a separate od poses cf sec_415 c dutions referred zo é i section st y defines n nonqualified rvice as an employee of litical subdivision or agency_or_instrumentality thereof service as an employee of certain roucat zona organizations under section to0 b a la iitary service or service as an an association employee of because the service for which permissive_service_credit will be purchased is the type of service described in sec_415 n c it does not constitute nonqualified service within the meaning of this section we conclude that for purposes of the application of sec_414 h it the code contributions through a reduction in salary an offset against future salary increases or a combination of both is immaterial whether an em toloyer picks up of in accordance with revenue resend this ruling does not apply to any contribution before the later of th effective date of the ordinances or the effective date of the payroll reduction authorization this ruling is based on the assumption that plans a b and c will be qualified under section a of the code at the time of the proposed contributions to whether the amounts in sed as ax under the federal insurance inion is expressed as re paid pursuant to a salary m the meaning of section to whether this ruling is directed only to the taxpayer who requested it it may not be used or cited by others as precedent sec_6110 k of the code provides that sincerely yours enclosures deleted copy notice of intention to disclose


internal_revenue_service number release date index number ---------------------- ------------------------- ------------------------ ------------------------------------ --------------------------- department of the treasury washington dc person to contact ------------------------------- --------- ------------ --------- telephone number --------------------- refer reply to cc psi - plr-137024-05 date date -------- ------------------ legend x ------------------------ --------------------------------------------------- state date dear ----------------- correspondence submitted on behalf of x requesting a ruling under sec_301_9100-3 of the procedure and administration regulations that x be granted an extension of time to elect under sec_301_7701-3 to be classified as an association_taxable_as_a_corporation for federal tax purposes formed on date x intended to be classified as an association_taxable_as_a_corporation for federal tax purposes effective date however no form_8832 entity classification election was timely filed on behalf of x federal tax purposes that is not properly classified as a_trust under sec_301_7701-4 or otherwise subject_to special treatment under the internal_revenue_code sec_301_7701-2 provides that a business_entity is any entity recognized for the information submitted states that x a state limited_liability_company was this letter responds to a letter dated date and subsequent sec_301_7701-3 provides that an eligible_entity may elect to be sec_301_7701-3 provides that unless the entity elects otherwise a sec_301_7701-3 provides that an election made under sec_301 sec_301_7701-3 provides that a business_entity that is not classified as a plr-137024-05 corporation under sec_301 b or an eligible_entity can elect its classification for federal tax purposes domestic eligible_entity is a partnership if it has two or more members classified other than as provided under sec_301_7701-3 by filing form_8832 with the service_center designated on the form c i will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on the form_8832 cannot be more than days prior to the date on which the election is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or an announcement published in the internal_revenue_bulletin commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic_extension 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 that x has satisfied the requirements of sec_301_9100-3 as a result x is granted an extension of time of sixty days from the date of this letter to file a form_8832 with the appropriate service_center electing to be treated as an association effective date that purpose based solely on the facts submitted and the representations made we conclude a copy of this letter should be attached to the election a copy is enclosed for sec_301_9100-1 defines the term regulatory election as an election sec_301_9100-1 through provide the standards the except as specifically set forth above no opinion is expressed or implied this ruling is directed only to the taxpayer who requested it sec_6110 pursuant to the power_of_attorney on file with this office a copy of this letter is plr-137024-05 concerning the federal tax consequences of the facts described above under any other provision of the code of the internal_revenue_code provides that it may not be used or cited as precedent being sent to x’s authorized representative enclosures copy of this letter copy for sec_6110 purposes heather c maloy associate chief_counsel passthroughs and special industries sincerely


department of the treasury i n t e r n a l r e v e n u e s e r v i c e washington d c date cc intl br1 genin-158556-05 office_of_chief_counsel number info release date uil ----------------------- ---------------------------------- --------------------------------- ------------------------------ dear ------------- this letter responds to your request for information dated date in your letter you requested information on paragraphs b and c of sec_2501 of the internal_revenue_code paragraph b of sec_2501 states that a donor who is a citizen_of_the_united_states and a resident of a possession thereof shall for purposes of the tax imposed by this chapter be considered a citizen_of_the_united_states within the meaning of that term wherever used in this title unless he acquired his united_states citizenship solely by reason of his being a citizen of such possession_of_the_united_states or his birth or residence within such possession_of_the_united_states paragraph c of sec_2501 states that a donor who is a citizen_of_the_united_states and a resident of a possession thereof shall for purposes of the tax imposed by this chapter be considered a nonresident_not_a_citizen_of_the_united_states within the meaning of that term wherever used in this title but only if such donor acquired his united_states citizenship solely by reason of his being a citizen of such possession_of_the_united_states or his birth or residence within such possession_of_the_united_states in addition you may find it useful to view sec_25_2501-1 and d which contain examples of the application of sec_2501 and sec_2501 this information_letter is advisory only and has no binding effect on the internal_revenue_service it is intended for informational purposes only and does not constitute a ruling if you would like a definitive determination concerning a particular set of facts you must comply with the requirements for obtaining a private_letter_ruling that are set forth in revproc_2005_1 sec_2 2005_1_irb_7 date genin-158556-05 if you have any additional questions please contact -------------------at -------------------- sincerely _______________________________ elizabeth u karzon chief branch office_of_chief_counsel international


internal_revenue_service index no number release date cc dom p si 7-plr-102171-99 date legend a b d f g1 g2 g3 h1 h2 i j k l1 l2 r x z dear in a letter dated you requested rulings regarding your purchase of gas properties effective the transaction was later modified effective you represented that a entered into agreements to purchase certain gas interests in i from b production from the subject interests includes gas produced from devonian_shale which is a qualified_fuel under sec_29 of the internal_revenue_code_of_1986 as amended as consideration for the subject interests a will pay b cash equal to d a will also be obligated to pay a credit payment note a fixed payment note and a volumetric production_payment retained by b the fixed payment note is in the - - cid principal_amount of r and bears interest at the rate of z payments of principal and interest are made in accordance with a schedule the entire balance of the fixed payment note including unpaid interest is due and payable in full on x prior to maturity and notwithstanding the payment schedule payments are to be made out of actual net_proceeds received from sale of minerals produced from the properties any amounts due but unpaid will be paid in succeeding months the production_payment is payable solely out of the gross_proceeds from the sale of hydrocarbons from the subject interests gross_income_from_the_property within the meaning of sec_613 of the code the payments required under the production_payment are the lesser_of a the measurement amount for the current payment period and b the gross_proceeds from the sale of hydrocarbons from the subject interests during the payment period the measurement amount is determined by reference to an amount in the net profits account npa the npa amount equals the sum of i any unpaid measurement amount carried forward from a prior payment period and ii the balance in the npa for the current payment period any measurement amount in excess of gross_proceeds is carried forward to the succeeding payment period the npa amount will be calculated for each payment period by deducting the total debits from the total credits made to the npa during such payment period the npa is credited with the gross_proceeds and any other consideration received during the payment period with respect to the subject interests all expenses paid during the payment period with respect to the ownership and operation of the subject interests are debited to the npa including all amounts of principal and interest under the recourse note the volumetric production_payment will terminate when the production from the subject interests equals f percent of the current at the time of creation of the production_payment estimate of the economically recoverable reserves in the subject interests it is anticipated that the fixed payment note will terminate before the volumetric production_payment when the production_payment was created the estimated present_value of the production from the subject interests after the production_payment and the fixed payment note terminate was greater than of the present_value of the entire production stream from all the subject interests following termination of the production_payment a will be - - cid entitled to of the income from production attributable to the subject interests as part of the assignment b reserved an interest the contingent_interest in any reserves that might exist after production of of the reserves currently estimated to exist under the credit payment note a will pay the credit payment amount to b after the total amount of credit payment amount exceeds the prepaid credit_amount the credit payment amount is payable each calendar_quarter beginning j and ending k the credit payment amount is defined as g1 multiplied by the dollar amount of the estimated sec_29 credits attributable to sales of qualified_fuels from the subject interests until the payments equal dollar_figurel1 thereafter the credit payment amount is g2 until amounts paid equal dollar_figurel2 thereafter the credit payment amount is g3 of the sec_29 credits attributable to sales of qualified_fuels b was granted an option to re-acquire the subject interests for fair_market_value the repurchase option is exercisable between h1 and h2 or upon the occurrence of certain stated events a has also entered into a management agreement with b the management agreement is typical of those within the industry the rulings requested are a has acquired the entire economic_interest of b in the transferred properties the volumetric production_payment is properly characterized as a purchase_money_mortgage loan under sec_636 of the code the credit payment note is not an economic_interest in the properties the fixed payment note is not an economic_interest in the properties any sec_29 credit attributable to production from the properties after their sale to a is attributable to a sec_1_611-1 of the income_tax regulations provides - - cid that an economic_interest is possessed in every case in which the taxpayer has acquired by investment any interest in mineral in place and secures by any form of legal relationship income derived from the extraction of the mineral to which the taxpayer must look for a return of the taxpayer’s capital sec_1_614-1 provides that the term_interest means an economic_interest in a mineral deposit within the meaning of sec_1_611-1 the term includes working or operating interests royalties overriding royalties net profits interests and to the extent not treated as loans under sec_636 production payments in 310_us_404 the taxpayer received payments which could be satisfied out of any sale of the fee simple title of the land as well as production of the oil because the taxpayer was not looking solely to the oil production for a return on his investment the court found he did not have an economic_interest sec_636 and sec_1_636-1 provide that a production_payment created and retained upon the transfer of the mineral_property burdened by the production_payment is treated as a purchase_money_mortgage loan on the burdened mineral_property sec_1_636-3 defines the term production_payment to mean a right to a specified share of the production from mineral in place if as and when produced or the proceeds from the production the right must be an economic_interest in the mineral in place it may burden more than one mineral_property and the burdened mineral_property need not be an operating_mineral_interest the right must have an expected economic life at the time of its creation of shorter duration than the economic life of one or more of the burdened mineral properties a right to mineral in place that can be required to be satisfied by other than the production of mineral from the burdened mineral_property is not an economic_interest in mineral in place a production_payment must be limited by a dollar amount a quantum of mineral or a period of time a right to mineral in place has an economic life of shorter duration than the economic life of a mineral_property burdened thereby if the right may not reasonably be expected to extend in substantial amounts over the entire productive life of the mineral_property sec_1_636-1 of the regulations states that the payor and payee shall determine their allowable deductions as if the production_payment were a loan and refers to sec_483 of - - cid the code sec_483 in turn refers to sec_1272 through for the treatment of original_issue_discount instruments sec_29 provides a credit for qualified_fuel as defined in sec_29 sold by the taxpayer to an unrelated_person during the taxable_year the production of which is attributable to the taxpayer a transaction will be classified as a sale_or_exchange of a mineral_interest in cases in which the owner of a continuing property interest assigns that interest and retains a non- continuing interest in production economic_interest that is an interest that is not coterminous with the productive life of the transferred property in this case b will retain a production_payment that is limited to a specified number of units of mineral based on a stated percentage of the reserves currently known to exist at the time the transaction is consummated if additional reserves are found to exist after all reserves currently known to exist have been produced b will acquire a contingent_interest which is a specified percentage of any such additional reserves the production_payment is payable solely from production from the burdened properties and has an economic life of shorter duration than the economic life of the burdened properties because the interest b retained in any additional reserves does not come into being unless and until the additional reserves not at present believed to exist are determined to exist it is not a continuing interest accordingly based on the information submitted and the representations made the volumetric production_payment meets the requirements of sec_1_636-3 and is treated as a purchase_money_mortgage loan the credit payment note is to be paid from sources other than the subject properties having an alternate source_of_income the note cannot be an economic_interest following anderson likewise the fixed payment note cannot be an economic_interest since it must be extinguished on x from sources other than the subject properties based solely on the representations made and the information submitted we conclude that a has acquired the entire economic_interest of b in the - - cid transferred properties until and unless b repurchases the property or the contingent_interest arises the volumetric production_payment is properly characterized as a purchase_money_mortgage loan under sec_636 of the code the credit payment note is not an economic_interest in the properties the fixed payment note is not an economic_interest in the properties any sec_29 credit attributable to production from the properties after their sale to a is attributable to a until and unless b repurchases the property or the contingent_interest arises no opinion is expressed or implied regarding the determination of the buyer’s basis in the subject interests no opinion is expressed or implied regarding the determination of amounts attributable to interest or principal pursuant to the production_payment except as ruled above we express or imply no opinion as to the federal tax consequences of this transaction under any other provision of the code specifically we express or imply no opinion whether any fuel produced from the properties is qualified_fuel within the meaning of sec_29 this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this ruling should be attached to your tax_return filed for the year in which the transaction covered by this ruling was consummated a copy is enclosed for this purpose sincerely yours assistant chief_counsel passthroughs and special industries by joseph h makurath senior technician reviewer branch


------ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division jun uniform issue list legend taxpayer a taxpayer b irac irad financial_institution e financial_institution f receiver g amount amount dear this letter is in response to a request for a letter_ruling dated date in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a and taxpayer a's spouse taxpayer b represent that they received distributions from ira c and ira d totaling amount and amount respectively taxpayer a and taxpayer b assert that their failure to accomplish rollovers within the 60-day period prescribed by sec_408 of the code was due to the failure of receiver g of financial_institution f to identify these amounts as ira_distributions taxpayer a maintained ira c and taxpayer b maintained ira d individual_retirement_accounts iras with financial_institution e under sec_408 of the code taxpayer a and taxpayer b made both ira and non-ira investments in financial_institution f in the securities_and_exchange_commission determined that financial_institution f was a ponzi scheme and froze all assets of financial_institution f receiver g was appointed receiver over financial_institution f in receiver g of financial_institution f made several distributions to taxpayer a and taxpayer b the distributions included refunds of ira money and refunds of non ira money receiver g failed to identify the distributions as refunds of ira assets after the 60-day rollover period taxpayer a and taxpayer b received forms 1099-r indicating that amount for taxpayer a and amount for taxpayer b were ira_distributions based on the above facts and representations you request that the service waive the 60-day rollover requirement contained in sec_408 of the code with respect to the distributions of amount and amount sec_408 of the code provides that except as otherwise provided in sec_408 of the code any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code provides the rules applicable to ira_rollovers sec_408 d a of the code provides that sec_408 d of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if- i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the 60th day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 of the code sec_408 of the code provides that sec_408 of the code does not apply to any amount described in sec_408 of the code received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 of the code from an ira which was not includible in gross_income because of the application of sec_408 of the code sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary may waive the 60-day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 i r s date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inabi1ity 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 presented and the documentation submitted by taxpayer a and taxpayer is consistent with their assertion that their failure to accomplish a timely rollover of amount and amount was due to the failure of receiver g of financial_institution f to identify the amounts as relating to taxpayer a's and taxpayer b's iras therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount from ira c and amount from ira d taxpayer a and taxpayer are granted a period of days from the issuance of this letter_ruling to contribute amount and amount into rollover iras provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contributions the contributions will be considered rollover_contributions within the meaning of sec_408 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 a of the code this letter is directed only to the taxpayer who requested it sec_611 o k of the code provides that it may not be used or cited as precedent if you wish to inquire about this ruling please contact i d se t ep ra t1 pincite37033 sincerely yours carlton a watkins manager employee_plans technical group enclosures deleted copy of this letter notice of intention to disclose notice


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi plr-115984-03 date date company shareholders properties state city a plr-115984-03 b c d e f g h dear this letter responds to a letter from your authorized representative dated date as well as subsequent correspondence submitted on behalf of company requesting a ruling that the rental income received by company from the properties is not passive_investment_income within the meaning of sec_1362 of the internal_revenue_code facts company a state corporation elected under sec_1362 to be an s_corporation effective a it has accumulated_earnings_and_profits company owns operates leases and manages commercial real_estate the properties in city through its president and b full-time employees a property manager tenant liaison and a maintenance man as well as independent contractors company provides various services to the properties in its real_estate leasing and management business these services include common area cleaning and maintenance inspection and maintenance of building exteriors and interiors including foundations roofs electrical systems and exterior plumbing interior and exterior painting repair and maintenance of parking lots and exterior lighting landscaping and lawn care snow removal and ice control trash removal supervision and compensation of outside vendors and service providers emergency response and property access for public safety purposes and the handling of tenant problems suggestions and complaints in addition to the services provided to tenants company handles the usual leasing and administrative functions involved in managing real_estate company received or accrued approximately c in rents and paid_or_incurred plr-115984-03 approximately d in relevant expenses for e on the properties the rental income and expense figures for f are g and h respectively law and analysis except as provided in sec_1362 sec_1362 provides that a small_business_corporation may elect in accordance with the provisions of sec_1362 to be an s_corporation sec_1362 provides that an election under sec_1362 terminates whenever the corporation i has accumulated_earnings_and_profits at the close of each of three consecutive tax years and ii has gross_receipts for each of such tax years more than percent of which are passive_investment_income except as otherwise provided in sec_1362 sec_1362 provides that the term passive_investment_income means gross_receipts derived from royalties rents dividends interest annuities and sales or exchanges of stock_or_securities sec_1_1362-2 of the income_tax regulations provides that rents means amounts received for_the_use_of or the right to use property whether real or personal of the corporation sec_1_1362-2 provides that rents does not include rents derived in the active trade_or_business of renting property rents received by a corporation are derived in an active trade_or_business of renting property only if based on all the facts and circumstances the corporation provides significant services or incurs substantial costs in the rental business generally significant services are not rendered and substantial costs are not incurred in connection with net leases whether significant services are performed or substantial costs are incurred in the rental business is determined based upon all the facts and circumstances including the number of persons employed to provide the services and the types and amounts of costs and expenses_incurred other than depreciation conclusion based solely on the facts and representations submitted we conclude that the rents company receives from the properties are not passive_investment_income under sec_1362 except for the specific ruling above we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the code specifically we express or imply no opinion regarding company's eligibility to be an s_corporation further the passive_investment_income rules of sec_1362 are completely independent of the passive_activity rules of sec_469 unless an exception plr-115984-03 under sec_469 applies the rental_activity remains passive for purposes of sec_469 under a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative this ruling is directed only to the taxpayer who requested it according to sec_6110 this ruling may not be used or cited as precedent sincerely yours mary beth collins senior technician reviewer branch office of associate chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes cc


department of the treasury internal_revenue_service washington d c may 2001-dollar_figure number info release date the honorable frank r wolf member u s house of representatives park center road suite herndon va attention sharon snyder dear congressman wolf this letter is in response to your inquiry dated date to mr floyd williams national director for legislative affairs internal_revenue_service irs on behalf of sought your help in computing the your constituent value of an annuity for estate_tax purposes we cannot provide exact value for his annuities however we can provide the following general information that will help him calculate the value of an annuity that is included in a decedent’s gross_estate with an determining whether the value of an annuity is included in a decedent’s gross_estate sec_2001 of the internal_revenue_code the code imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states however under sec_2010 every decedent’s estate is allowed a credit against the estate_tax the credit allowed for people dying during the year is dollar_figure based on an applicable_exclusion_amount of dollar_figure this credit increases each year until it reaches a maximum of dollar_figure in the year or later when the applicable_exclusion_amount equals dollar_figure as a result of this credit an estate generally is not liable for estate_tax unless the fair_market_value of the estate plus the value of all gifts made by the decedent during his lifetime exceeds the applicable_exclusion_amount in the year in which the decedent dies in calculating the value of an estate sec_2039 and b generally provide that the gross_estate includes the value of an annuity_or_other_payment receivable by any beneficiary by reason of surviving the decedent under certain agreements or plans the instructions for form_706 schedule i annuities explain the general requirements for determining whether an annuity is included in a decedent’s gross_estate and provide examples to assist with this determination for your convenience i have enclosed a copy of the form_706 instructions determining the amount of an annuity included in a decedent’s gross_estate if an annuity should be included in a decedent’s gross_estate the estate must calculate the amount to be included this calculation depends upon the value of the annuity and the amount of contributions towards the annuity’s purchase_price attributable to the decedent or the decedent’s employer the following formula illustrates this calculation amount of annuity included contributions to the purchase of the annuity x value of the in the decedent’s gross_estate attributable to the decedent annuity purchase_price of the annuity to use this formula the estate must value the annuity if the company that issued the annuity regularly engages in the selling of annuities the value of the annuity is established by determining the price of comparable annuities sold by that company usually the value of the annuity would equal the cost of acquiring an annuity policy with benefits similar to the annuity in question at the date of decedent’s death welliver v commissioner 8_tc_165 if however annuity payments received by survivor beneficiaries are not paid_by a company that regularly engages in such business the annuity is valued using the appropriate interest rate and valuation tables valuing an annuity using the appropriate interest rate and valuation tables the valuation tables assign a value to the annuity using the following formula value annuity_payment x table annuity factor based on x table adjustment factor for amount age of surviving annuitant timing number of payments table s or r if applicable table j or k to use the valuation tables the estate first must determine the appropriate interest rate and the ages of the surviving annuity recipient or recipients as of the decedent’s date of death the appropriate interest rate known as the sec_7520 rate is calculated by multiplying the applicable federal_mid-term_rate compounded annually for the month in which the decedent dies by percent and rounding the product to the nearest two-tenths of one percent each month the irs publishes the sec_7520 rate in the internal_revenue_bulletin you can obtain this rate from the irs website at www irs ustreas gov by selecting the tax info for you category and then selecting applicable federal rates using the appropriate interest rate and the ages of the surviving annuity recipient or recipients the estate next determines which tables to use for the calculation table s or r and table j or k if applicable table s is used when the annuity_payment is made at the end of each year for a term of years or the life of one individual if the payment is to be made for the lives of two individuals table r is used if the annuity payments are more frequent than annually and or are made at the beginning of a period an adjustment factor from either table j or k must be included in the calculation an adjustment factor from table j must be used when the payments are made at the beginning of a period regardless of whether the annuity payments are more frequent than annually an adjustment factor from table k must be used when the payments are made at the end of specified periods when such payments are more frequent than annually tables s_r and k used for valuation dates after date can be found in the irs publication actuarial values book aleph table j used for valuation dates after date can be found in sec_20_2031-7 of the estate_tax regulations for purposes of the examples below i have enclosed copies of specific pages from the book aleph as well as table j however a copy of the book aleph can be purchased from the superintendent of documents united_states government printing office washington dc it can also be purchased by phone by calling the superintendent of documents at not a toll-free number and requesting irs publication book aleph document number furthermore if a special factor is required for an actual decedent the executor may request a ruling from the irs examples for calculating the amount of an annuity which will be included in a decedent’s gross_estate the following examples derived from sec_20_2031-7t d example of the estate_tax regulations illustrate the calculations involved in determining the amount of an annuity included in a decedent’s gross_estate assume that a purchased an annuity for the benefit of both a and b under the terms of the annuity_contract at a’s death a survivor annuity of dollar_figure a year payable in equal semiannual installments made at the end of each interval is payable to b for life at a’s death b wa sec_45 years months old also at a’s death the sec_7520 rate was percent under table s the annuity factor pincite percent for determining the present_value of an annuity payable until the death of a person age the number of years nearest b’s actual age is the adjustment factor from table k at an interest rate of percent for semiannual annuity payments made at the end of the period i sec_1 the present_value of the annuity at the date of a’s death is therefore dollar_figure dollar_figure x x if however the semiannual installments were to be made at the beginning of each interval the adjustment factor would be determined under table j if the annuity_contract was payable in equal semiannual installments made at the end of each interval to b for life and then to c for life tables r and k would be applicable if we assume that the interest rate is percent and b and c are age sec_46 and sec_25 respectively the value of the annuity is calculated as follows determining the remainder factor under table r based on an interest rate of percent the factor for a remainder_interest payable on the death of the last to die of two persons age and is calculating the annuity factor the annuity factor is determined as follows - remainder factor interest rate calculating the value of the annuity the present_value of the annuity is dollar_figure determined as follows dollar_figure annual annuity_payment x annuity factor x table k adjustment factor at an interest rate of percent for semiannual annuity payments made at the end of the period dollar_figure value of the annuity i hope this information is helpful to you and your constituent if you need further assistance please call caroline watson identification_number at sincerely paul f kugler assistant chief_counsel passthroughs and special industries enclosures


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 tege eoeg teb presp-150085-06 date date dear ----------------- this letter is in response to your application_for an allocation of authority to issue dollar_figure------- --------------- in clean renewable energy bonds crebs under sec_54 of the internal_revenue_code the code sec_54 of the code imposes a limitation of dollar_figure on the amount of crebs which may be issued to finance qualified projects the limitation sec_54 provides that the limitation is to be allocated by the secretary of treasury in such manner as the secretary deems appropriate except that no more than dollar_figure of the limitation may be allocated to finance qualified projects of qualified borrowers which are governmental bodies section of notice_2005_98 2005_52_irb_1211 provides that the limitation will be allocated among qualified projects for which a share of such limitation has been requested beginning with the project s requesting the smallest share in dollar amount and continuing with the project s requesting the next-smallest share until the total limitation has been exhausted however in the event that dollar_figure has been allocated to qualified projects of qualified borrowers that are governmental bodies the remaining shares of the limitation will be allocated under the methodology described in the previous sentence only to qualified projects of qualified borrowers that are not governmental bodies for purposes of allocating the limitation among projects all qualified projects located at the same site and owned by the same qualified_borrower are treated as a single project and each project is treated as requesting a single allocation presp-150085-06 an allocation of shares of the limitation cannot be made with respect to the project owned by the borrower listed in appendix a because such borrower is a governmental body and dollar_figure has already been allocated to applications requesting a smaller share of the limitation to finance qualified projects owned by qualified borrowers that are governmental bodies we appreciate your submission of the application_for our consideration and encourage you to continue to pursue your plans for constructing a clean renewable energy project sincerely assistant chief_counsel exempt_organizations employment_tax government entities tax exempt government entities by timothy l jones senior counsel tax-exempt_bonds branch presp-150085-06 borrower name appendix a project type project location --------------------------------- --------------------------------- -------------- trash combustion facility -------------------------------- ---------------------------- amount allocated dollar_figure----------------- ------------ ---------------------------------- ------------------------------------------------ ------------------------------------------------- -------------------------- -------------------------------------------- ---------------------------


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 tege eb hw plr-146336-08 date date legend taxpayer ---------------------------------------------- ------------------------------------------------------- state board trust plan -------------- -------------------------------------------------------------------------- ----------------------------------------------- --------------------------------------- dear --------------- this is in reply to your letter dated date and subsequent correspondence in which you request various rulings on behalf of taxpayer with respect to plan and trust facts taxpayer is a body politic and corporate existing under the laws of state as a body politic and corporate of state taxpayer is a political_subdivision of state taxpayer is governed by board taxpayer adopted plan as a means of providing health benefits to its eligible retirees taxpayer is authorized to amend_or_terminate plan plr-146336-08 under plan taxpayer pays all or a portion of the premium for health_insurance_coverage for eligible retirees only eligible retirees receive benefits spouses dependents or other beneficiaries are not eligible to receive plan benefits taxpayer represents that there are no pre-tax salary reduction elections under plan in addition taxpayer represents that plan does not permit a cash-out of unused amounts or a conversion of sick or vacation days to retiree health benefits participants may not salary-reduce to pay for any benefit plan is funded solely with taxpayer contributions taxpayer created trust to provide a vehicle for funding retiree benefits under plan the income of trust consists solely of contributions from taxpayer and investment_income trust assets will be used to pay for plan benefits and for the administration of trust private interests do not participate in trust no part of trust may be diverted to purposes other than the exclusive benefit of the participants and their beneficiaries no part of the trust’s net_earnings may inure to the benefit of any private person taxpayer may terminate trust at any time for any reason upon termination of trust the remaining assets of trust will be used solely to provide health benefits to the participants of plan and to satisfy other debts or liabilities of trust any assets remaining in trust after meeting the obligations of plan and satisfying other liabilities of trust would be transferred to taxpayer law and analysis sec_115 of the internal_revenue_code code provides that gross_income does not include income derived from any public_utility or the exercise of any essential government function and accruing to a state or any political_subdivision thereof in revrul_77_261 1977_2_cb_45 income from an investment fund established under a written declaration of trust by a state for the temporary investment of cash balances of the state and its participating political subdivisions was excludable from gross_income for federal_income_tax purposes under sec_115 the ruling indicated that the statutory exclusion was intended to extend not to the income of a state or municipality resulting from its own participation in activities but rather to the income of a corporation or other entity engaged in the operation of public_utilities or the performance of some governmental function that accrued to either a state or municipality the ruling points out that it may be assumed that congress did not desire in any way to restrict a state’s participation in enterprises that might be useful in carrying out projects that are desirable from the standpoint of a state government and which are within the ambit of a sovereign to properly conduct in revrul_90_74 1990_2_cb_34 the service determined that the income of an organization formed funded and operated by political subdivisions to pool various risks casualty public liability workers’ compensation and employees’ health is excludable plr-146336-08 from gross_income under sec_115 of the code in revrul_90_74 private interests neither materially participate in the organization nor benefit more than incidentally from the organization trust provides health benefits to retired employees of taxpayer a political_subdivision of state providing health benefits to current and former employees constitutes the performance of an essential government function based upon revrul_90_74 and revrul_77_261 trust performs an essential_governmental_function within the meaning of sec_115 of the code the income of trust accrues to the taxpayer no private interests participate in or benefit from the operation of trust any distribution of remaining funds in trust to participating retirees upon the dissolution of the trust satisfies an obligation the taxpayer has assumed with respect to providing benefits to its employees the benefit to the participating employees is incidental to the public benefit see revrul_90_74 sec_61 of the code and sec_1_61-21 of the income_tax regulations provide that except as otherwise provided in subtitle a of the code gross_income includes compensation_for services including fees commissions fringe_benefits and similar items sec_106 of the code provides that gross_income of an employee does not include employer-provided coverage under an accident_or_health_plan sec_1_106-1 of the regulations provides that the gross_income of an employee does not include contributions which his employer makes to an accident_or_health_plan for compensation through insurance or otherwise to the employee for personal injuries or sickness incurred by him his spouse or his dependents as defined in sec_152 the employer may contribute to an accident_or_health_plan either by paying the premium or a portion of the premium on a policy of accident_or_health_insurance covering one or more of his employees or by contributing to a separate trust or fund including a fund referred to in sec_105 which provides accident and health benefits directly or through insurance to one or more of his employees however if the insurance_policy trust or fund provides other_benefits in addition to accident or health sec_106 applies only to the portion of the contributions allocable to accident or health benefits coverage provided under an accident_and_health_plan to former employees is excludable from gross_income under sec_106 see revrul_62_199 1962_2_cb_32 revrul_82_196 1982_2_cb_53 based on the information submitted and representations made we conclude as follows the income of trust is derived from the exercise of an essential_governmental_function and will accrue to a state or a political_subdivision thereof for purposes plr-146336-08 of sec_115 accordingly trust’s income is excludable from gross_income under sec_115 of the code payments made from trust which are used exclusively to pay for the accident or health coverage of retired employees are excludable from the gross_income of retired employees under sec_106 of the code no opinion is expressed concerning the federal tax consequences of plan or trust under any other provision of the code other than those specifically stated herein 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 representative sincerely harry beker chief health and welfare branch associate counsel division counsel tax exempt government entities


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 tege eoeg teb presp-144796-06 date date dear ------------ pursuant to sec_54 of the internal_revenue_code the code and notice_2005_98 2005_52_irb_1211 and after review of your application submitted on date including supplements thereto we have determined that the project described in appendix a attached hereto is qualified for purposes of sec_54 and will be owned by one or more qualified borrowers we allocate authority to ----------------------------------- -------------------- the issuer a qualified issuer under sec_54 to issue up to dollar_figure----------- ----------------of clean renewable energy bonds crebs bonds issued pursuant to this allocation must be designated by the issuer as bonds for purposes of sec_54 for the project described in appendix a up to the amount allocated for each project described in appendix a bonds so designated must be issued on or before date please be aware that in order for bonds to be crebs the applicable_requirements of the code including without limitation sec_54 notice_2005_98 and notice_2006_7 2006_10_irb_559 must be met please note that creb proceeds may be used to reimburse capital expenditures paid_by qualified borrowers for qualified projects only if the provisions of sec_54 are met if you have any questions with respect to this allocation please contact --------------------- ----------------------------------------of the office of division counsel associate chief_counsel tax-exempt and government entities on -------------------- not a toll-free call except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter for purposes of the renewable_electricity_production_credit under sec_45 of the code no inference may be drawn from this allocation that any project listed in appendix presp-144796-06 a is a qualified_facility or that electricity to be produced at such project s is electricity from a qualified_energy resource at a qualified_facility within the meaning of sec_45 this determination is directed only to the applicant named above 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 form 8038-g information_return for tax- exempt governmental obligations filed for bonds issued pursuant to this allocation the allocation contained in this letter is based upon information and representations submitted by the applicant for the creb allocation 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 application_for an allocation it is subject_to verification on examination sincerely assistant chief_counsel exempt_organizations employment_tax government entities tax exempt government entities by timothy l jones senior counsel tax-exempt_bonds branch presp-144796-06 borrower name appendix a project type project location -------------------------------- wind facility -------------------- -------------------------------- -------------- amount allocated dollar_figure-------------


tcmemo_2012_217 united_states tax_court booker t morris iii and jarmese l roberts morris petitioners v commissioner of internal revenue respondent docket no 19139-10l filed date booker t morris iii and jarmese l roberts morris pro sese susan k greene for respondent memorandum findings_of_fact and opinion cohen judge this case was commenced under sec_6330 in response to a notice_of_determination concerning collection actions with respect to petitioners’ unpaid income_tax liabilities for and and booker t morris’ liability for sec_6672 trust fund penalties for the last quarterly tax period of four quarterly tax periods in quarterly periods ended march september and date and all four quarterly periods in all section references are to the internal_revenue_code the primary issue for decision is whether refunds claimed by petitioners on their income_tax returns were erroneously and inadequately applied to the various unpaid liabilities findings_of_fact some of the facts have been stipulated and the stipulated facts are incorporated in our findings by this reference petitioners resided in texas at the time the petition was filed until booker t morris iii petitioner was a practicing attorney jarmese l roberts morris ms morris was an administrator during and petitioner maintained his law practice through booker t morris iii associates p c pc and reported the results of that practice on corporate_income_tax returns of the pc on date the internal_revenue_service irs sent to petitioner by certified mail a letter trust funds recovery penalty letter informing petitioner that the irs proposed to assess against him trust fund penalties for some but not all of the quarterly periods identified above and advising him of his right to appeal or protest the proposed action the letter was sent to petitioners’ correct address but was returned unclaimed after two notices of attempted delivery by the post office the trust fund penalties were duly assessed after the time for protest or appeal had passed the assessed amounts were determined in accordance with regular irs procedures used to calculate trust fund penalties for failure to pay over employment_taxes shown due on employer’s quarterly payroll tax returns petitioners filed joint federal_income_tax returns for through inclusive the returns for and showed balances due which were duly assessed by the irs petitioners’ returns for and through inclusive reported overpayments and requested that the overpayments be refunded to them at the time the joint returns requesting refunds were filed petitioners owed various liabilities for earlier years rather than paying the requested refunds the irs applied the claimed overpayments to the outstanding liabilities although the application of overpayments was neither chronological nor otherwise systematic each credit for a claimed overpayment was reflected in irs records of assessments of civil penalties and income_tax owed by petitioners so far as the record reflects petitioners did not dispute the application of the overpayments or direct that they be applied to specific liabilities until date when the collection action that resulted in the notice_of_determination was being reviewed in the irs office of appeals on date the irs filed a notice_of_federal_tax_lien for ms morris’ income_tax_liability for and a duly assessed civil penalty liability for the tax period ended date liability ms morris submitted four offers-in-compromise from date to date each of which was ultimately denied by the irs the pendency of the offers-in-compromise however extended the period of limitations on collection of the liability to date the lien was released in date pursuant to a program by which a lien is automatically released years after it is filed on date the irs applied an overpayment credit claimed on petitioners’ income_tax return to the liability on date the irs ceased attempts to collect any part of the dollar_figure then remaining on the liability on date a letter final notice_of_intent_to_levy and notice of your right to a hearing was sent to petitioner with respect to his trust fund liabilities for the quarter ended date and the quarters in and that are the subject of the determination under review here also on that date a letter was sent to petitioners with respect to their income_tax liabilities for and petitioners requested a hearing on each notice claiming offsets generating refunds to be applied to the unpaid balances the requests for hearing were referred to an appeals settlement officer who reviewed transcripts of account and administrative files and verified that all legal and procedural requirements had been met before the final notices of intent to levy had been issued during a series of exchanges by letter fax and telephone the settlement officer explained to petitioner how overpayment credits had been applied to the unpaid liabilities and that offsets are routinely applied to the oldest balances to minimize accrual of penalties and interest the settlement officer advised petitioner of the availability of and requirements for an offer-in-compromise as well as requests for abatement of interest and requests for sec_6015 relief by ms morris petitioner declined to pursue a collection alternative instead petitioner sent letters dated june and requesting that overpayments claimed on income_tax returns be applied in ways specified by petitioner rather than in the manner previously applied by the irs notices of determination sustaining the proposed levies were sent on date opinion petitioners contend that the overpayments claimed on their income_tax returns for and through inclusive should be applied to the unpaid balances of their outstanding liabilities in accordance with their designation by letters sent in date rather than as applied by the irs for many years before the collection action under review here commenced they also claim that collection of the liability was barred by the statute_of_limitations at the time the last credit was applied and that the trust fund penalties are incorrect because they are inconsistent with the corporate_income_tax returns filed by petitioner’s pc for the years in which the penalties accrued they have neither produced credible_evidence nor cited authorities in support of their positions overpayments by a taxpayer may be applied to other tax_liabilities of the taxpayer at the discretion of the irs see sec_6402 weber v commissioner t c ___ ___ slip op pincite date sec_301_6402-3 proced admin regs although in some circumstances the taxpayer may elect on a return to have an overpayment applied to a preexisting or future liability petitioners requested refunds on each overpayment return because of the outstanding liabilities they were not entitled to those refunds they are not entitled to compel retroactively the application of overpayments to long-outstanding liabilities in the manner that they belatedly suggest using transcripts of petitioners’ accounts the settlement officer explained to petitioner the manner in which the overpayments were applied there was testimony at trial explaining the transcripts and the policies and practices by which various transactions and entries occurred the application of specific credits to specific liabilities was detailed in respondent’s answering brief petitioners did not file a reply brief ordered by the court and at no time have they pointed to an erroneous transaction in the irs records or to an overpayment credit that was not applied to one of their many outstanding liabilities petitioner belatedly attempts to dispute the amounts of the trust fund liability penalties that were assessed against him in relation to his pc respondent contends that petitioner is precluded from doing so because he had a prior opportunity in response to the letter sent to him in date even though respondent acknowledges that the letter was not actually received by petitioner see sec_6330 132_tc_301 because the letter was sent to the correct address and unclaimed after two notices of attempted delivery respondent contends that we should assume that petitioner refused delivery see 114_tc_604 we are not persuaded that we can conclude on this record that petitioner deliberately refused delivery moreover the letter did not address all of the periods involved in this case even if petitioner is entitled to dispute the underlying liabilities however he has offered only vague arguments that the assessed trust fund penalties are inconsistent with his corporate_income_tax returns and that therefore the irs did not correctly determine the amounts as explained at trial and in the exhibits the assessed penalties are based on employer’s quarterly payroll tax returns not on income_tax returns the quarterly returns are not in the record and there is no reason to believe that the procedures and records of the irs in assessing the penalties are incorrect finally petitioners argue that collection of the tax_liability was barred when their overpayment was applied to that liability in date their argument is based on the release of the federal_tax_lien in the lien however is independent of the liability which could be collected until the period of limitations extended by ms morris’ successive offers-in-compromise expired in see 136_tc_463 at that time collection efforts ceased with respect to the balance of the liability we have considered the other arguments of the parties they are irrelevant unnecessary to the result or otherwise lack merit decision will be entered for respondent