t c summary opinion united_states tax_court wendell wilson and angelica m wilson petitioners v commissioner of internal revenue respondent docket no 16610-13s filed date wendell wilson and angelica m wilson pro sese heather k mccluskey for respondent summary opinion gerber judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed unless otherwise indicated all section references are to the internal_revenue_code in effect for the years under consideration and all rule references continued 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 respondent determined dollar_figure and dollar_figure income_tax deficiencies for petitioners’ and taxable years respectively respondent also determined dollar_figure and dollar_figure sec_6662 accuracy-related_penalties for and respectively the issues for our consideration are whether petitioners are entitled to foreign_earned_income exclusions under sec_911 for and and whether petitioners are liable for sec_6662 accuracy-related_penalties for and background petitioners resided in querétaro mexico at the time their petition was filed and during the years and wendell wilson petitioner is a citizen_of_the_united_states and angelica wilson is a citizen_of_the_united_states and mexico angelica wilson did not earn income during and petitioner is a ship’s engineer in the merchant marine and his only employment during and was as an engineer on board oceangoing container ships as an engineer he was in charge of the ship’s engine room continued are to the tax_court rules_of_practice and procedure including its electrical mechanical and electronic systems petitioner was a licensed merchant marine for approximately years and his license was issued by the united_states coast guard the marine engineers benefits association meba posts jobs and merchant marines are able to bid on them petitioner would bid on jobs through meba and ultimately would sign a contract with a ship’s captain for a specific voyage petitioner worked on five voyages during and five during each of the contracts petitioner entered into specified an itinerary that included time in foreign ports all of the voyages began and ended in california he did not work or earn income in mexico during and but would generally leave his home in mexico and travel to california where he would board a ship for a voyage to foreign ports during petitioner was on voyages from march through april april through may may through june july through august and august through september for a total of days and earned dollar_figure during petitioner was on voyages from january through march march through april april through may11 november through december and december through december 31for a total of days and earned dollar_figure most of the time the various ships were in international waters during petitioner spent days working in a foreign port or within the territorial waters of a foreign_country during petitioner spent days working in a foreign port or within territorial waters of a foreign_country petitioner employed michael contract an accountant to prepare petitioner’s income_tax returns mr contract had prepared petitioners’ income_tax returns for approximately years before the years before the court petitioner moved to mexico during and mr contract on the basis of petitioner’s place of residence and the fact that he was on ships involved in foreign_travel for his work prepared petitioners’ returns for the taxable years through so as to report that petitioner’s income was exempt from u s taxation after petitioner reported that his income was exempt from u s taxation his returns were audited for and no deficiency was determined by respondent with regard to the tax-exempt status of his income petitioners relied on mr contract with respect to their and income_tax returns discussion during and petitioner was a merchant marine who served on cargo ships that were for most of the time outside u s territorial waters he excluded from gross_income all of the income he earned as foreign_earned_income under sec_911 under sec_911 to be entitled to exclude income a taxpayer must be a qualified_individual and the income must be foreign_earned_income respondent agrees that petitioner is a qualified_individual but contends that his income was not foreign earned foreign_earned_income is income received by a taxpayer from sources within a foreign_country or countries which constitute earned_income attributable to services performed during the time the taxpayer meets the qualified_individual test sec_911 the term foreign_country is defined in sec_1 h income_tax regs as follows any territory under the sovereignty of a government other than that of the united_states it includes the territorial waters of the foreign_country determined in accordance with the laws of the united_states the air space over the foreign_country and the seabed and subsoil of those submarine areas which are adjacent to the territorial waters of the foreign_country and over which the foreign_country has exclusive rights in accordance with international law with respect to the exploration and exploitation of natural_resources international waters are not subject_to the dominion of any single nation 394_us_11 this court has held that income earned in international waters is not excludible under sec_911 petitioner had a permanent home or domiciliary in mexico where he was a bona_fide_resident see sec_911 clark v commissioner tcmemo_2008_71 accordingly during the days petitioner earned_income in the territorial waters of a foreign_country essentially in a port of a foreign_country his earned_income would be exempt under sec_911 on the record before the court and in accord with the statutes and caselaw petitioner was in the territorial waters of a foreign_country for days during and days during during petitioner worked a total of days so that divided by of his income is exempt from u s taxation during petitioner worked a total of days so that divided by of his income is exempt from u s taxation the resulting percentages found by the court for and are to be applied by the parties to petitioner’s maritime income earned for each year in a rule computation we also consider whether petitioners are liable for accuracy-related_penalties under sec_6662 on the resulting underpayments for and respondent determined that petitioners are liable for accuracy-related_penalty for each year for an underpayment attributable to negligence or disregard the percentage for each year has been rounded to the nearest whole number of rules or regulations and or a substantial_understatement_of_income_tax and or a substantial_valuation_misstatement overstatement sec_6662 is applicable where there is an underpayment attributable to negligence disregard of rules or regulations or a substantial_understatement_of_income_tax sec_6662 and see 85_tc_934 sec_6664 provides that the penalty will not apply to any portion of an underpayment if it is shown that there was reasonable_cause for that portion and that the taxpayer acted in good_faith reliance on the advice of a tax professional may be sufficient to establish reasonable_cause and good_faith for the purpose of avoiding the penalty 469_us_241 in order for the reliance to effectively enable the taxpayer to avoid the penalty the adviser must be a competent professional who had sufficient expertise to justify reliance the taxpayer provided necessary and accurate information to the adviser and the taxpayer actually relied in good_faith on the adviser’s judgment see 115_tc_43 aff’d 299_f3d_221 3d cir respondent apparently used pro forma blanket language in the determination the court is not aware of a valuation issue between the parties petitioner had employed his preparer for years and relied upon his expertise to report that petitioner’s income was exempt under sec_911 the preparer was informed about petitioner’s residence and the facts surrounding his income earned during international voyages on cargo ships the reporting position had been approved for earlier years and it was reasonable for petitioners to rely on the preparer under these circumstances accordingly we hold that petitioners are not liable for accuracy-related_penalties with respect to any underpayments that may result from our holding on the sec_911 issue to reflect the foregoing decision will be entered under rule


t c summary opinion united_states tax_court donald r hill petitioner v commissioner of internal revenue respondent docket no 26487-08s filed date donald r hill pro_se michael j gabor for respondent armen special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any unless otherwise indicated all subsequent section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure other court and this opinion shall not be treated as precedent for any other case respondent determined a deficiency in petitioner’s federal_income_tax of dollar_figure and an accuracy-related_penalty under sec_6662 of dollar_figure after concessions by petitioner the issues for decision are whether social_security_benefits received by petitioner in are includable in his income for that year and whether petitioner is liable for the accuracy-related_penalty we hold that the social_security_benefits are includable in petitioner’s income for and that petitioner is not liable for the accuracy-related_penalty background some of the facts have been stipulated and they are so found we incorporate by reference the parties’ stipulation of facts and accompanying exhibits petitioner resided in the state of florida when the petition was filed during petitioner received social_security_benefits of dollar_figure although petitioner was married at the close of and did not live apart from his spouse during that year he and his spouse filed separate tax returns using the married filing a separate_return filing_status because he believed the social_security_benefits had already been taxed when deducted from his paychecks during his years of employment petitioner did not include any of the social_security_benefits on his federal_income_tax return in a notice_of_deficiency respondent determined inter alia that percent of the social_security_benefits dollar_figure received by petitioner during is includable in petitioner’s income for that year respondent also determined that petitioner is liable for the accuracy-related_penalty based on negligence or disregard of rules or regulations discussion a social_security_benefits sec_61 provides that except as otherwise provided by law gross_income includes all income from whatever source derived relevant for our purposes sec_86 provides that if a taxpayer’s modified adjusted gross income2 plus one-half of the social_security_benefits received by the taxpayer exceeds the adjusted_base_amount then gross_income includes the lesser_of the sum of a percent of such excess plus b the lesser_of i one-half of the social_security_benefits received during the year or ii one-half of the difference between the adjusted_base_amount and the base_amount of the taxpayer or percent of the social_security_benefits received during the taxable_year see sec_86 b with respect to a married in this case ignoring adjustments not relevant here petitioner’s modified_adjusted_gross_income equals his adjusted_gross_income see sec_86 taxpayer who does not file a joint_return and who does not live apart from his spouse at all times during the taxable_year both the base_amount and the adjusted_base_amount are zero sec_86 and c petitioner filed his federal_income_tax return using the married filing a separate_return filing_status in addition petitioner does not claim that he lived apart from his wife during and nothing in the record suggests that he did therefore petitioner’s base_amount and adjusted_base_amount for purposes of the sec_86 calculation are zero see sec_86 and c taking into account petitioner’s filing_status his modified_adjusted_gross_income and the social_security_benefits he received percent of those benefits are includable in his income see sec_86 b and c accordingly respondent’s determination in this regard is sustained b sec_6662 penalty sec_6662 and b imposes a penalty equal to percent of the amount of any underpayment attributable to negligence or disregard of rules or regulations the term negligence includes any failure to make a reasonable attempt to comply with tax laws and disregard includes any careless for a taxpayer who files a joint_return the base_amount and adjusted_base_amount are dollar_figure and dollar_figure respectively see sec_86 b reckless or intentional disregard of rules or regulations sec_6662 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_6664 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 sec_1_6664-4 income_tax regs circumstances that may indicate reasonable_cause and good_faith include the extent of the taxpayer’s effort to properly assess the tax_liability and an honest misunderstanding of fact or law that is reasonable in light of the taxpayers’s experience knowledge and education id the taxpayer bears the burden of proving that he or she did not act negligently or disregard rules or regulations rule a 290_us_111 116_tc_438 see sec_7491 regarding the commissioner’s burden of production respondent bases his determination of the sec_6662 accuracy-related_penalty in large part on petitioner’s failure to include the social_security_benefits in his income we are satisfied that petitioner made a good_faith effort to properly determine his federal_income_tax liability and his failure to properly account for his social_security_benefits results from an honest misunderstanding of fact or law that is reasonable in light of his age experience knowledge and education accordingly we hold that petitioner is not liable for the sec_6662 accuracy-related_penalty for conclusion we have considered all of the arguments made by the parties and to the extent that we have not specifically addressed them we conclude that they are unpersuasive to reflect the foregoing decision will be entered for respondent as to the deficiency in tax and for petitioner as to the accuracy-related_penalty


t c memo united_states tax_court gary james taylor petitioner v commissioner of internal revenue respondent docket no filed date gary james taylor pro_se julie l payne for respondent memorandum opinion wolfe special_trial_judge this case was heard pursuant to the provisions of sec_7443a and rule sec_180 sec_181 and sec_182 all section references are to the internal_revenue_code in effect for the tax_year in issue unless otherwise indicated all rule references are to the tax_court rules_of_practice and procedure the sole issue for determination is whether petitioner is entitled to the earned_income_credit for the tax_year this case was submitted fully stipulated the stipulation of facts and the attached exhibits are incorporated herein by this reference petitioner resided in monroe washington when the petition in this case was filed during petitioner was incarcerated at the washington state reformatory a penal institution during his incarceration petitioner was employed by washington marketing group inc wmg as a telemarketer for his services petitioner received wages from wmg in the amount of dollar_figure petitioner included this amount in his federal_income_tax return and claimed an earned_income_credit in the amount of dollar_figure petitioner is not entitled to the earned_income_tax_credit he claimed on his tax_return an eligible_individual is allowed an earned_income_credit for the taxable_year in an amount equal to the credit percentage of so much of the taxpayer's earned_income as does not exceed the earned_income amount sec_32 earned_income includes wages salaries tips and other employee compensation sec_32 however earned_income does not include any amount received for services provided by an individual while the individual is an inmate at a penal institution sec_32 the wages reported by petitioner on his income_tax return were compensation_for services provided by petitioner while he was incarcerated therefore this income is not earned_income for purposes of the credit with respect to the earned_income_credit petitioner had no earned_income and is therefore not entitled to the credit decision will be entered for respondent


internal_revenue_service national_office technical_advice_memorandum date number release date index uil no case mis no tam-119114-01 tege eoeg et1 area director appeals sb_se - area taxpayer’s name taxpayer’s address taxpayer’s identification no years involved date of conference legend taxpayer x taxpayer y boat boat year year issues whether in year taxpayer x’s services as a crew member of boat constituted service described in sec_3121 of the internal_revenue_code code whether in year taxpayer x’s services as a crew member of either boat or boat constituted service described in sec_3121 of the code facts taxpayer x and taxpayer y are spouses taxpayer x works as a commercial tam-119114-01 fisherman in year he worked as a crew member aboard boat and frequently was the captain of the vessel taxpayer x worked on trips during year there were never more than four crew members on boat on any trip under an arrangement with the owner of boat taxpayer x received a share of the proceeds from the sale of the fish caught from each trip the owner deducted trip expenses from the gross_proceeds the balance was then split with a certain percentage of the proceeds kept by the owner and the remaining portion of the proceeds paid to the crew members for each trip the amount of the catch and expenses are listed on the settlement sheets in addition to net_proceeds from the sale of the fish caught from each trip the owner paid additional_amounts to taxpayer x in year to fund health insurance premiums for approximately the first six weeks of year taxpayer x continued to work on boat taxpayer x continued to be paid in the same manner except that boat 1’s owner did not pay any additional_amounts towards health insurance premiums at some point in february of year taxpayer x began to work on another fishing vessel boat there were never more than four crew members per trip on boat as a crew member taxpayer x received for each trip a percentage of the net_proceeds from the sale of the catch the owner of boat did not pay any other additional_amounts to taxpayer x in year the owners of both boat and boat issued forms reporting the net_proceeds received by taxpayer x taxpayers x and y reported these amounts on schedule c of their form sec_1040 taxpayers x and y did not report any self-employment_income or pay any self-employment contributions act seca_tax on their year and year returns law and analysis under sec_3121 of the internal_revenue_code code services performed by an individual on a fishing boat are not included as employment for purposes of the federal_insurance_contributions_act fica tax if performed under an arrangement with the owner or operator of the boat under which the individual receives only a share of the boat’s catch or the proceeds from such catch the amount of the individual’s share depends on the amount of the boat’s catch and the individual receives no other cash_remuneration beyond remuneration that does not exceed dollar_figure per trip is contingent on a minimum catch and is paid solely for additional duties for which additional cash_remuneration is traditional in the industry in addition the operating crew of the boat must normally be made up of fewer than individuals which means that the average size of the operating crew on trips made during the preceding four calendar quarters consisted of fewer than individuals revrul_77_102 1977_1_cb_300 addresses two situations as to whether the services performed by certain individuals are excepted from employment under sec_3121 in situation the owner of a fishing boat employs a captain and tam-119114-01 eight other crew members to perform services on the boat which is engaged in catching fish the crew members receive payments of the net_proceeds of the boat’s catch computed as follows out of the gross_proceeds from the sale of the catch deductions are made for certain specified expenses such as ice fuel and a payment of dollar_figure each to the mate engineer and cook percent of the remaining proceeds net stock is divided equally among the captain and other crew members and the remaining percent is divided between the captain and the owner before each trip the crew members are responsible for loading supplies and doing other necessary work in port in preparation for the trip at the completion of the trip the crew must remove and transport the catch to the point of sale and perform other incidental duties necessary to leave the boat in the same condition as it was before the trip these duties which may include repairing nets constructing new nets and splicing cable are performed without additional remuneration the ruling holds that because the dollar_figure payments do not depend upon the amount of the boat’s catch the arrangement with the mate engineer and cook fails to meet the requirements of sec_3121 the ruling further holds that the services performed by the other six crew members are excepted from employment because they do not receive any cash_remuneration other than a share of the proceeds from the sale of the catch their share depends on the amount of the catch in situation the facts are the same except the arrangement also provides that for each trip the captain and other crew members in addition to receiving a share of the catch are entitled to receive x dollars per hour for repairing nets constructing new nets splicing cable and doing other incidental work while in port in situation all of the crew members are entitled to receive cash_remuneration other than a share of the catch the ruling holds that none of their services are excepted from employment under sec_3121 sec_31_3121_b_20_-1 which was promulgated in provides that an individual’s service on a boat engaged in catching fish is excepted from employment only if the amount of the individual’s share depends solely on the amount of the boat’s catch of fish sec_31_3121_b_20_-1 explains that this requirement is not satisfied if there exists an agreement with the boat’s owner or operator by which the individual’s remuneration is determined partially or fully by a factor not dependent on the size of the catch for example if a boat is operated under a remuneration agreement eg a collective agreement which specifies that crew members in addition to receiving a share of the catch are entitled to an hourly wage for repairing nets regardless of whether this wage is actually paid then all the crew members covered by tam-119114-01 the arrangement are entitled to receive cash_remuneration other than a share of the catch and their services are not excepted from employment by sec_3121 taxpayers argue however that the language of sec_31_3121_b_20_-1 conflicts with the holding in revrul_77_102 sec_31_3121_b_20_-1 provides that in order to qualify for the exception under sec_3121 the remuneration of the crew member must be determined solely based on the catch the taxpayers believe that a payment of a percentage of the catch after deduction for expenses is not based solely on the catch because the expenses deducted may not relate to the size of the catch the example provided in the regulation however clarifies that the requirement that the payment be based solely on the catch requires that the compensation be calculated by reference to the catch in contrast to a set fee or hourly wage arrangement taxpayers argue that revrul_77_102 is an incorrect application of sec_3121 and is inconsistent with the relevant regulations the same argument concerning the validity of revrul_77_102 was raised by the taxpayers in 32_fedclaims_377 the court held that the interpretation of the statute in revrul_77_102 represented a reasonable position and therefore was valid the court also upheld the validity of sec_31 b and found no inconsistency between the regulations and revrul_77_102 therefore the principles set forth in the regulations and revrul_77_102 continue to be the applicable principles for determining whether a fisherman’s services on a commercial fishing boat constitute service described in sec_3121 of the code the additional_amounts that the owner of boat paid to taxpayer x in year to fund health insurance premiums constitute compensation_for services rendered on the boat that is not a share of the boat’s catch does not depend on the amount of the boat’s catch and is not paid solely for additional duties for which additional cash_remuneration is traditional in the industry therefore taxpayer x’s services did not qualify for the sec_3121 exception from employment in year because taxpayer x did not receive any additional payments for year either from the owner of boat or the owner of boat taxpayer x’s services did qualify for the sec_3121 exception from employment in year conclusions in year taxpayer x’s services as a crew member of boat did not constitute service described in sec_3121 of the code in year taxpayer x’s services as a crew member of both boat and boat constituted service described in sec_3121 of the code caveats tam-119114-01 a copy of this technical_advice_memorandum is to be given to the taxpayers in accordance with sec_6110 of the code this memorandum should not be cited as precedent


internal_revenue_service department of the treasury number release date index number u i l no washington dc person to contact telephone number refer reply to cc psi plr-142178-02 date date legend company state shareholders a dear this letter responds to a letter dated date and subsequent correspondence requesting a ruling on behalf of company under sec_1362 of the internal_revenue_code the information submitted discloses that company was formed on a under the laws of state company has two shareholders shareholders it is represented that company has intended to be an s_corporation since a however company discovered that its s election had not been timely filed company requests a ruling under sec_1362 that its sec_1362 election will be treated as timely made for its taxable_year that began on a sec_1362 provides that a small_business_corporation may elect to be an s_corporation plr-142178-02 sec_1362 provides when an s election will be effective generally if an s election is made within the first two and one half months of a corporation's taxable_year then that corporation will be treated as an s_corporation for the year in which the election is made sec_1362 provides that if an s election is made after the first two and one half months of a corporation's taxable_year then that corporation will not be treated as an s_corporation until the taxable_year following the year in which the s election is made sec_1362 provides that if no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year and sec_1362 shall not apply based on the facts submitted and representations made we conclude that company has established reasonable_cause for failing to make a timely s election for its taxable_year that began on a and is eligible for relief under sec_1362 accordingly we conclude that company's sec_1362 election will be treated as timely made for its taxable_year that began on a however this ruling is contingent on company filing form_2553 election by a small_business_corporation with an effective date of a with the appropriate service_center within days from the date of this ruling a copy of this letter should be attached to the form_2553 except as specifically set forth above we express or imply no opinion concerning the federal tax consequences of the foregoing facts specifically we express or imply no opinion on whether company otherwise qualifies as an s_corporation pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to company’s authorized representative this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours s christine ellison chief branch office of the associate chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes cc


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc ebeo br5-plr-101688-99 date date legend trust esop x y z company dear this responds to a letter sent on your behalf requesting a ruling regarding your substantial compliance with the requirements of sec_1042 of the internal_revenue_code_of_1986 the code and the applicable regulations in connection with the sale of stock of the company to the employee_stock_ownership_plan esop maintained by the company the company is a domestic_corporation with only one class of common_stock issued and outstanding at the time of sale of stock to esop the company has never had stock outstanding that was readily_tradable on an established_securities_market company adopted esop effective as of date esop has been represented as being qualified under sec_401 of the code and as satisfying the requirements of sec_4975 plr-101688-99 you are co-trustees of the trust the trust which is a_trust established to hold assets for investment purposes on date seven shareholders including the trust sold x shares of common_stock of the company to the esop the esop transaction the trust sold y shares of its stock the stock to the esop as a result of the esop transaction the trust realized a gain of z dollars as of the date of the sale the trust had held the stock for more than three years and it had not received the stock in a distribution from a plan described in sec_401 of the code or in a transfer pursuant to an option or other right to acquire the stock to which sec_83 sec_422 or sec_423 of the code applied immediately after the esop transaction the esop owned more than of the common_stock of the company the trust immediately deposited the proceeds it received from the esop transaction from the sale of the stock with a nationally known brokerage firm the brokerage firm which placed the proceeds in a special account the account the account was segregated from trust’s other investments you intended to defer the gain from the esop transaction on behalf of the trust you made an election to defer gain pursuant to sec_1_1042-1tof the temporary income_tax regulations and attached the election to the trust’s tax_return then from date through date the brokerage firm used funds from the account to enter into a series of twenty-nine transactions on behalf of the trust in which securities were purchased from domestic operating companies the trust intended that these securities would constitute qualified_replacement_property qrp as defined under sec_1042 of the code you were unaware that a notarized statement of purchase for each individual transaction is required within days of each purchase under sec_1_1042-1t q a-3 of the temporary income_tax regulations in november of you became aware of the misunderstanding regarding the proper completion of the statement of purchase and you completed one notarized statement of purchase for the trust on date for all the intended qrp the tax_return for the trust was filed in a timely manner attached to the return were all of the statements required for a valid sec_1042 election ie a statement of election and a verified written_statement of the company consenting to the application of sec_4978 and sec_4979a of the code you intend to file the notarized statements of purchase with the trust’s timely filed tax_return as required under sec_1_1042-1t you have requested a ruling that by completing the notarization of the statement of purchase as discussed above and assuming all remaining requirements of sec_1042 of the code and regulations thereunder are met the trust has substantially complied with the requirements for making an election under sec_1042 of the code and sec_1_1042-1t q a-3 of the temporary income_tax regulations in order for the trust to defer the recognition of gain realized on the sale of stock to the plr-101688-99 company sec_1042 of the code provides that a taxpayer or executor may elect in certain cases not to recognize long-term_capital_gain on the sale of qualified_securities to an esop as defined in sec_4975 or eligible worker owned cooperative if the taxpayer purchases qualified_replacement_property as defined in sec_1042 within the replacement_period of sec_1042 and the requirements of sec_1042 and sec_1_1042-1t of the temporary income_tax regulations are satisfied a sale of qualified_securities meets the requirements of sec_1042 if the qualified_securities are sold to an esop as defined in sec_4975 or an eligible worker owned cooperative the plan or cooperative owns after application of a immediately after the sale at least percent of - a each class of outstanding_stock of the corporation other than stock described in sec_1504 which issued the securities or b the total value of all outstanding_stock of the corporation other than stock described in sec_1504 the taxpayer files with the secretary a verified written_statement of the employer whose employees are covered by the esop or an authorized officer of the cooperative consenting to the application of sec_4978 and sec_4979a with respect to such employer or cooperative and the taxpayer’s holding_period with respect to the qualified_securities is at least years determined as of the time of the sale for taxable years beginning before date sec_1042 provides that the term qualified_securities means employer_securities as defined in sec_409 which are issued by a domestic_corporation that has no stock outstanding that is readily_tradable on an established_securities_market and were not received by the taxpayer in a distribution from a plan described in sec_401 or in a transfer pursuant to an option or other right to acquire stock to which sec_83 sec_422 or sec_423 applied the taxpayer must purchase qualified_replacement_property within the replacement_period which is defined in sec_1042 as the period which begin sec_3 months before the date on which the sale of qualified_securities occurs and end sec_12 months after the date of such sale sec_1042 defines qualified_replacement_property qrp as any security issued by a domestic operating_corporation which did not for the taxable_year preceding the taxable_year in which such security was purchased have passive_investment_income as defined in sec_1362 in excess of percent of the gross_receipts of such corporation for such preceding_taxable_year and is not the corporation which issued the qualified_securities which such security is replacing or a member of the same controlled_group_of_corporations within the meaning of sec_1563 as such corporation plr-101688-99 sec_1_1042-1t q a-3 of the temporary income_tax regulations states that the election shall be made in a statement of election attached to the taxpayer’s income_tax return filed on or before the due_date including extensions of time for the taxable_year in which the sale occurs sec_1_1042-1t q a-3 of the temporary income_tax regulations states that the statement of election shall provide that the taxpayer elects to treat the sale of securities as a sale of qualified_securities under sec_1042 and shall contain the following information a description of the qualified_securities sold including the type and number of shares the date of the sale of the qualified_securities the adjusted_basis of the qualified_securities the amount_realized upon the sale of the qualified_securities the identity of the esop or worker-owned cooperative to which the qualified_securities were sold if the sale was part of a single interrelated transaction under a prearranged agreement between taxpayers involving other sales of qualified_securities the names and taxpayer identification numbers of the other taxpayers under the agreement and the number of shares sold by the other taxpayers sec_1_1042-1t q a-3 of the temporary income_tax regulations further provides that if the taxpayer has purchased qualified_replacement_property at the time of the election the taxpayer must attach as part of the statement of election a statement of purchase describing the qualified_replacement_property the date of the purchase and the cost of the property and declaring such property to be qualified_replacement_property with respect to the sale of qualified_securities the statement of purchase must be notarized no later than days after the purchase literal compliance with procedural directions in treasury regulations on making elections is not always required see 67_tc_736 acq in result 1979_1_cb_1 regulatory requirements that relate to the substance or the essence of the statute on the other hand must be complied with strictly immediately upon discovering that the individual notarized statements of purchase were not executed in a timely manner you attempted to correct the situation plr-101688-99 prior to the timely filing of such notarized statements of purchase with the trust’s u s income_tax return for the taxable_year you became aware of the misunderstanding regarding the proper completion of the statement of purchase and you completed one notarized statement of purchase for all the intended qrp you intend to attach this statement of purchase to the trust’s timely filed u s income_tax return for these transactions were made in reliance on tax professionals and a nationally known brokerage firm as to requirements to complete the sec_1042 election in a timely and correct manner therefore based on the specific facts of this case and representations made by your representatives we conclude that the trust has substantially complied with the requirements for an election under sec_1042 of the code and that the elections will be treated as satisfying the requirements of sec_1_1042-1t of the temporary income_tax regulations at q a-3 concerning the notarized statements of purchase with respect to qualified_replacement_property purchased by the taxpayer 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 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 representative plr-101688-99 the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely james l brokaw chief branch office of associate chief_counsel employee_benefits and exempt_organizations


department of the treasury int ernal revenue service washington d c o f f i c e o f c h i e f c o u n s e l date number release date cc intl br1 wta-n-115962-00 uilc internal_revenue_service national_office request for technical assistance memorandum for lowell g hancock technical advisor office of pre-filing services from elizabeth u karzon chief branch no associate chief_counsel intl subject east timor and the united states-indonesia income_tax treaty this technical assistance responds to your request for assistance by e-mail that we received on date technical assistance is not binding on examination or appeals and is not a final case determination this document is not to be used as precedent issue whether residents of east timor qualify for benefits under the convention between the government of the united_states and the government of the republic of indonesia for the avoidance of double_taxation and the prevention of fiscal evasion with respect to taxes on income united states-indonesia income_tax treaty conclusion residents of east timor do not qualify for benefits under the united states-indonesia income_tax treaty because the united_states has never recognized that east timor is part of the republic of indonesia facts timor is an island in the lesser sunda group at the southern end of the malay archipelago the island for many years was divided between the dutch and the portuguese sections tias signed date effective date wta-n-115962-00 portuguese timor came under macao’s jurisdiction in and became a separate colony in east timor became an overseas province of portugal in in date fighting broke out in portuguese timor between the revolutionary front for an independent east timor fretilin and two rival pro-indonesian groups the timorese democratic union and the peoples democratic association of timor the fretilin movement proclaimed a people’s republic of east timor independent of portugal on date nine days later the new country was invaded by indonesian forces and it was incorporated into the republic of indonesia as the country’s twenty-seventh province in the legality of indonesia’s administration of east timor however is disputed by the united nations general assembly resolution xxx general assembly resolution general assembly resolution general assembly resolution general assembly resolution general assembly resolution general assembly resolution general assembly resolution security council resolution and security council resolution in date the indonesian government agreed to a united nations sponsored vote which allowed the people of east timor to choose between continued control by indonesia or independence on date the east timor people voted overwhelmingly for independence the people’s consultative assembly of indonesia accepted the results of the date referendum after the vote the united nations established a multinational force called the international force east timor interfet pursuant to united nations security counsel resolution interfet was given a mandate to restore peace and security in east timor protect and support the united nations mission there and facilitate humanitarian assistance operations the interfet was formally replaced in east timor on date by the united nations transitional administration in east timor untaet the untaet which was established by security council resolution has a mandate that includes providing security and maintaining law and order throughout east timor establishing an effective administration ensuring the coordination and delivery of humanitarian assistance and supporting the development of self-government under a self-imposed deadline untaet must hold elections and transfer authority to the new government by the end of on date east timor adopted its own income_tax system the united_states has never acknowledged the incorporation of east timor into indonesia the united_states voted in favor of the security council resolutions on east timor that called upon the government of indonesia to withdraw without delay from east timor no competent_authority claims have been filed with the tax_treaty division by east timor residents seeking the benefits of the united states-indonesia income_tax treaty we have not been able to determine the extent to which indonesian taxes were wta-n-115962-00 imposed on east timor during the period from and including whether residents of east timor were subject_to indonesian income taxes analysis article personal scope of the united states-indonesia income_tax treaty provides that t his convention is applicable to persons who are residents of one or both of the contracting states article fiscal residence provides in part in paragraph that i n this convention the term resident of a contracting state means any person who under the laws of that state is liable to tax therein by reason of his domicile residence place of incorporation place of management or any other criterion of a similar nature article general definitions defines the term indonesia in paragraph a as the territory of the republic of indonesia and the adjacent seas over which the republic of indonesia has sovereignty sovereign rights or jurisdictions in accordance with the provisions of the united nations convention on the law of the sea thus the question is whether an east timor resident is a resident of a contracting state neither the treasury department’s technical explanation nor the report of the senate foreign relations committee addresses the issue of whether east timor residents are covered by the treaty the united_states income_tax treaty with indonesia was negotiated from to however most issues had been resolved in three years prior to indonesia’s invasion and annexation of east timor with respect to the term indonesia a draft of the treaty dated date contains a definition essentially the same as the definition in the treaty signed in there is no evidence that the definition of indonesia was revisited after indonesia occupied east timor in in our view this supports the position that the negotiators did not intend indonesia to include east timor for purposes of the tax_convention the united_states has never acknowledged the incorporation of east timor into indonesia thus a resident of east timor is not in our view a resident of indonesia for purposes of the income_tax treaty


t c memo united_states tax_court paul everman petitioner v commissioner of internal revenue respondent docket no 13268-02l filed date jerry arthur jewett for petitioner michelle m lippert and julie a pals for respondent memorandum opinion armen special_trial_judge this matter is before the court on respondent’s motion to dismiss for lack of jurisdiction as supplemented respondent contends that the court lacks jurisdiction over the petition on the grounds that the petition was not filed within the 90-day period prescribed in sec_6213 and sec_7502 and respondent did not issue to petitioner a notice_of_determination concerning collection actions that would allow petitioner to invoke the court’s jurisdiction under sec_6320 and or as discussed in detail below we shall grant respondent’s motion to dismiss as supplemented background the record establishes and or the parties do not dispute the following a notice_of_deficiency on date respondent mailed to petitioner a notice_of_deficiency in the notice_of_deficiency respondent determined deficiencies in petitioner’s federal income taxes for and in the amounts of dollar_figure dollar_figure and dollar_figure respectively respondent also determined that petitioner was liable for accuracy-related_penalties under sec_6662 for and in the amounts of dollar_figure and dollar_figure respectively the notice_of_deficiency was issued by the internal_revenue_service irs district_director in cincinnati ohio the notice_of_deficiency was signed c ashley bullard by bl at the time that the notice_of_deficiency was issued c ashley bullard wa sec_1 unless otherwise indicated all section references are to the internal_revenue_code as amended and all rule references are to the tax_court rules_of_practice and procedure the irs district_director in cincinnati ohio petitioner did not file a petition for redetermination with the court within the 90-day period prescribed in sec_6213 consequently on date respondent assessed the determined deficiency and accuracy-related_penalty for as well as statutory interest on date respondent assessed the determined deficiency and accuracy-related_penalty for as well as statutory interest presumably respondent also assessed the determined deficiency and accuracy-related_penalty for but that year is not part of the present case b_notice of federal_tax_lien on date respondent sent to petitioner by certified mail a notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 the notice required by sec_6320 the notice required by sec_6320 listed petitioner’s unpaid tax_liabilities for and three days later on date respondent filed a notice_of_federal_tax_lien with the recorder of mercer county in celina ohio with regard to petitioner’s unpaid tax_liabilities for and brenda mccullough acting technical support group manager responsible for collection matters authorized the issuance of the notice required by sec_6320 and the filing of the notice of federal the record does not definitively reveal bl’s identity tax_lien at that time ms mccullough was classified as a gs- employee petitioner received the notice required by sec_6320 c final notice_of_levy on date respondent mailed to petitioner by certified mail a final notice-notice of intent to levy and notice of your right to a hearing final notice_of_intent_to_levy under sec_6330 in respect of petitioner’s unpaid tax_liabilities for and the final notice_of_intent_to_levy which was not signed was issued by revenue_officer john stetsko the final notice identified mr stetsko as the person to contact and provided his contact telephone number and employee identification_number at that time mr stetsko was classified as a gs-12 employee and a gs-1169 series revenue_officer petitioner received the final notice_of_intent_to_levy on date d petitioner’s request for a hearing on date petitioner filed with respondent a request for a collection_due_process_hearing in respect of his unpaid tax_liabilities for and petitioner’s request for a due in authorizing the issuance of the notice required by sec_6320 and the filing of the notice_of_federal_tax_lien ms mccullough acted at the request of group manager robert winship as a group manager mr winship was the supervisor of john stetsko a revenue_officer who was assigned petitioner’s account for collection see infra c process hearing expressly referenced the final notice_of_intent_to_levy e the appeals_office hearing on date petitioner attended an administrative hearing conducted by an appeals officer at the irs appeals_office in toledo ohio at the start of the hearing the appeals officer stated that because petitioner’s request for an administrative hearing was received more than days after the issuance of the final notice_of_intent_to_levy and a fortiori more than days after the issuance of the notice required by sec_6320 the hearing would be conducted as an equivalent_hearing during the hearing petitioner requested that the appeals officer verify that the persons who issued the final notice_of_intent_to_levy and the notice required by sec_6320 and who filed the notice_of_federal_tax_lien were all authorized to do so petitioner also questioned the validity of the final notice_of_intent_to_levy because it was not signed f respondent’s decision letter on date the appeals_office issued to petitioner a decision letter concerning equivalent_hearing under sec_6320 and or the decision letter with regard to petitioner’s unpaid tax_liabilities for and in the decision letter the appeals_office concluded the collection actions filing the notice_of_federal_tax_lien and proposed enforcement actions including levies are upheld g the petition on date petitioner filed with the court a petition challenging respondent’s deficiency determinations for the taxable years and as set forth in the notice_of_deficiency dated date and the decision letter dated date the petition includes a number of attachments including a copy of the notice_of_deficiency which is stamped refused for fraud f_r c p b the petition also includes statements indicating that petitioner is challenging the validity of the notice_of_deficiency with regard to the decision letter dated date the petition states in pertinent part because the final notice_of_intent_to_levy sent to petitioner was not sent by the secretary or his authorized delegate even though petitioner’s appeal was filed after the day time period it is still timely and the appeals_office determination to only grant petitioner an equivalency hearing was in error at the time that the petition was filed petitioner resided in celina ohio the petition states in pertinent part exhibit a note that deficiency_notice is not signed by secretary and no notice_of_deficiency was sent by the secretary or his authorized delegate h respondent’s motion to dismiss as stated respondent filed a motion to dismiss for lack of jurisdiction respondent contends that the court lacks jurisdiction on the grounds that the petition was not timely filed with regard to the notice_of_deficiency dated date and respondent did not issue to petitioner a notice_of_determination concerning collection actions under sec_6320 or sec_6330 petitioner filed a notice of objection to respondent’s motion pursuant to notice this matter was called for hearing at the court’s motions session in washington d c counsel for respondent appeared at the hearing and offered argument in support of respondent’s motion to dismiss although there was no appearance by or on behalf of petitioner at the hearing petitioner filed with the court a written_statement pursuant to rule c after the hearing the court issued orders directing respondent to file supplements to his motion to dismiss respondent complied with the court’s orders discussion the tax_court is a court of limited jurisdiction we may exercise jurisdiction only to the extent expressly authorized by statute 66_tc_61 the court’s jurisdiction to redetermine a deficiency the court's jurisdiction to redetermine a deficiency depends on the issuance of a valid notice_of_deficiency and a timely filed petition rule a c 93_tc_22 90_tc_142 sec_6212 expressly authorizes the commissioner after determining a deficiency to send a notice_of_deficiency to the taxpayer by certified or registered mail the taxpayer in turn ha sec_90 days or days if the notice is addressed to a person outside of the united_states from the date the notice_of_deficiency is mailed to file a petition in this court for a redetermination of the deficiency sec_6213 pursuant to sec_7502 a timely mailed petition will be treated as though it were timely filed the record shows that respondent mailed the notice_of_deficiency in question to petitioner on date however the petition in this case was not filed until date--over a year and a half after the mailing of the notice_of_deficiency it follows that the petition was not filed within the 90-day statutory period under sec_6213 petitioner’s only contention is that the notice_of_deficiency is invalid because it was not signed by the secretary or an authorized delegate petitioner’s argument is meritless the notice_of_deficiency in question was issued by the irs district_director in cincinnati ohio and was signed c ashley bullard the irs district_director in cincinnati ohio by bl it is well settled that the secretary or_his_delegate may issue notices of deficiency sec_6212 sec_7701 and a i the secretary’s authority to issue notices of deficiency has been delegated to district directors and to directors of irs service centers see 118_tc_162 and cases cited therein moreover there is no requirement that a notice_of_deficiency be signed sec_6212 50_tc_509 elmore v commissioner tcmemo_2003_123 fox v commissioner tcmemo_1993_277 n affd without published opinion 69_f3d_543 9th cir consistent with the foregoing we reject petitioner’s contention that the notice_of_deficiency dated date is invalid we shall grant that part of respondent’s motion that moves to dismiss for lack of jurisdiction as to the notice_of_deficiency the court’s jurisdiction to review collection actions sec_6320 and sec_6330 generally provide that the commissioner must give a taxpayer notice that a federal_tax_lien has been filed and notice that the commissioner intends to levy on the taxpayer’s property and offer the taxpayer an opportunity for an administrative review of those matters in the form of an appeals_office hearing if the taxpayer is dissatisfied with an appeals_office determination regarding a collection action the taxpayer may seek judicial review of the administrative determination in the tax_court or federal district_court as appropriate see 115_tc_35 114_tc_176 sec_6320 and sec_6330 provide in pertinent part that the secretary shall notify a person in writing of his or her right to an appeals_office hearing regarding a notice required by sec_6320 or a final notice_of_intent_to_levy by among other methods mailing such notice by certified or registered mail to the person’s last_known_address further sec_6320 and sec_6330 provide that the prescribed notification shall explain that the person has the right to request an appeals_office hearing during a specified day period where the appeals_office issues a determination_letter to a taxpayer following an administrative hearing regarding a notice required by sec_6320 and or a final notice_of_intent_to_levy sec_6320 and sec_6330 provide that the taxpayer shall have days following the issuance of such determination_letter to file a petition for review with the tax_court or federal district_court as appropriate see 114_tc_492 we have held that this court’s jurisdiction under sec_6320 and sec_6330 depends on the issuance of a valid notice_of_determination and the filing of a timely petition for review see 117_tc_122 offiler v commissioner supra pincite the record shows that respondent sent petitioner a notice required by sec_6320 on date and a final notice_of_intent_to_levy on date however petitioner did not file his request for an administrative hearing with respondent until date after concluding that petitioner had failed to file his request for an administrative hearing within the 30-day period prescribed in sec_6330 and a b the appeals officer informed petitioner that petitioner would be offered an equivalent_hearing as opposed to the administrative hearing contemplated by sec_6330 see 119_tc_252 describing the genesis for equivalent hearings following the hearing the appeals_office issued to petitioner a decision letter stating that the proposed collection actions were appropriate respondent cites 116_tc_255 in support of his motion to dismiss that part of the petition challenging the decision letter dated date in kennedy v commissioner supra we held under similar circumstances that a decision letter issued by an appeals_office following an equivalent_hearing did not constitute a notice_of_determination under sec_6330 and therefore the decision letter did not provide a basis for the taxpayer to invoke this court’s jurisdiction see 116_tc_263 petitioner concedes in his petition that his request for an administrative hearing was not filed with respondent within the 30-day period prescribed in sec_6330 petitioner nevertheless contends that the appeals_office erred in conducting an equivalent_hearing as opposed to an administrative hearing under sec_6330 on the ground the final notice_of_intent_to_levy was invalid because it was not signed by the secretary or an authorized delegate we disagree it is well settled that the secretary or_his_delegate including the commissioner may issue a notice required by sec_6320 or a final notice_of_intent_to_levy sec_6320 sec_6330 sec_7701 and a i a see 119_tc_252 wilson v commissioner tcmemo_2002_242 sec_301_6320-1 sec_301_6330-1 sec_301_7701-9 proced admin regs the commissioner’s authority to file a notice_of_federal_tax_lien and or issue a final notice_of_intent_to_levy has been delegated to a host of internal_revenue_service personnel including in the case of federal tax_liens various managers responsible for collection matters and gs-9 and above revenue officers and in the case of levies on property in the hands of third parties gs-9 and above revenue officers see delegation_order no rev date rev date pertaining to levies delegation_order no rev date pertaining to liens consistent with these delegations of authority the notice_of_federal_tax_lien and the notice required by sec_6320 which were initiated by revenue_officer john stetsko and authorized by acting technical support group manager brenda mccullough and the final notice_of_intent_to_levy which was issued by revenue_officer stetsko are valid finally in connection with the foregoing we observe that there is no statutory requirement that a final notice_of_intent_to_levy be signed cf 50_tc_509 a notice_of_deficiency need not be signed in order to be valid fox v commissioner tcmemo_1993_277 n same affd without published opinion 69_f3d_543 9th cir elmore v commissioner tcmemo_2003_123 same for notice_of_determination to proceed with levy consistent with the preceding discussion we conclude that we lack jurisdiction in this case for the reasons set forth in respondent’s motion to dismiss as supplemented in order to give effect to the foregoing an order granting respondent's motion to dismiss for lack of jurisdiction as supplemented will be entered