internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi 7-plr-135031-02 date date legend taxpayer x y dear we received letters dated date date and date from taxpayer’s authorized representative requesting permission for taxpayer to revoke its election under sec_41 of the internal_revenue_code this letter responds to that request the facts and representations submitted are as follows taxpayer is an accrual basis taxpayer and the common parent of an affiliated_group of companies that join in filing a consolidated federal_income_tax return the consolidated federal_income_tax return is filed on the basis of a calender year for the taxable_year ending on x taxpayer elected to determine its credit_for_increasing_research_activities under the alternative incremental research rules of sec_41 taxpayer determined its research_credit for that year using the alternative incremental research rules of sec_41 before the due_date of its return including extensions for the taxable_year ending on y taxpayer submitted a request to revoke its election to determine its research_credit under the alternative_incremental_research_credit rules of sec_41 for qualified_research_expenses paid_or_incurred on or after the taxable_year ending on y and all subsequent taxable years for taxable years beginning after june taxpayers may elect to determine their research_credit under the alternative_incremental_research_credit rules of sec_41 sec_41 provides that an election under sec_41 shall apply for the taxable_year in which made and all succeeding taxable years unless revoked with the consent of the secretary plr-135031-02 based solely on the facts submitted and representations made we grant permission for taxpayer to revoke its election to determine its credit_for_increasing_research_activities under the alternative_incremental_research_credit rules of sec_41 for qualified_research_expenses paid_or_incurred during the taxable_year ending on y taxpayer should compute its credit_for_increasing_research_activities for the taxable_year ending on y and all succeeding taxable years using the general_rule of sec_41 provided that taxpayer does not make a new election to determine its credit_for_increasing_research_activities under the alternative_incremental_research_credit rules of sec_41 except as expressly provided herein we express or imply no opinion concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter further we express or imply no opinion concerning expenditures taxpayer treated as qualified expenses this ruling is directed only to the taxpayer requesting it sec_6111 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 a copy of this letter must be attached to any income_tax return to which it is relevant 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 brenda stewart assistant to the chief branch office of associate chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes


department of the treasury internal_revenue_service washington d c large_business_and_international_division date release number release date uil code legend taxpayer parent sub i sub2 accounting firm date date date date tt dear’ this letter responds to a letter dated date submitted on behalf of taxpayer requesting the commissioner make a determination regarding the failure of one of its wholly owned subsidiaries sub to join in the filing of a consolidated u s income_tax return as required by sec_1 a l of the regulations for the tax_year ended date representations on date parent purchased of the outstanding_stock of sub on date parent organized a wholly owned subsidiary sub as a limited_liability_company and timely filed form_8832 in which sub elected to be taxed as a corporation for u s federal_income_tax purposes effective as of its formation for the tax_year ended date parent and sub filed separate returns for the tax_year ended date parent and one of its subsidiaries sub elected to file a consolidated_return for the tax_year ended date sub filed a separate form_1120 on which it reported no income and no deductions the date consolidated_return for taxpayer included form_1122 authorization and consent of subsidiary_corporation to be included in a consolidated_income_tax_return for sub the date consolidated_return for taxpayer included form_851 affiliations schedule on which sub was the only reported affiliated_group member ‘ e e e e law sec_1501 provides that an affiliated_group_of_corporations shall have the privilege of making a consolidated_return with respect to the income_tax imposed by chapter for the taxable_year in lieu of separate returns the making of a consolidated_return shall be upon the condition that all corporations which at any time during the taxable_year have been members of the affiliated_group consent to all the consolidated_return_regulations prescribed under sec_1502 prior to the last day prescribed by law for the filing of such return the making of a consolidated_return shall be considered as such consent sec_1504 and define the term affiliated_group as or more chains of includible corporations connected through stock ownership with a common parent_corporation which is an includible_corporation but only if- i the common parent directly owns stock with at least of the total voting power ii and of the total value of at least other includible corporations and stock with at least of the total voting power and of the total value of each of the includible corporations is directly owned by or more of the other includible corporations sec_1_1502-75 provides that a group which did not file a consolidated_return for the immediately preceding_taxable_year may file a consolidated_return in lieu of separate returns for the taxable_year provided that each corporation that has been a member during any part of the taxable_year for which the consolidated_return is to be filed consents in the manner provided in paragraph b of this section to the regulations under sec_1502 sec_1 b provides that the consent of a corporation shall be made by the corporation joining in the making of the consolidated_return for such year a corporation shall be deemed to have joined in the making of a consolidated_return if it files a form_1122 in the manner specified in paragraph h of this section sec_1_1502-75 provides that if a member of the group fails to file form_1122 the commissioner may under the facts and circumstances determine that such member has joined in the making of a consolidated_return by such group the following circumstances among others will be taken into account in making this determination i whether or not the income and deductions of the member were included in the consolidated_return ii whether or not a separate_return was filed by the member for that taxable_year and iii whether or not the member was included in the affiliations schedule form_851 if the commissioner determines that the member has joined in the making of the consolidated_return such member shall be treated as if it had filed a form_1122 for such year for purposes of paragraph h of this section sec_1_1502-75 provides that if any member has failed to join in the making of a consolidated_return under either subparagraph or of this paragraph then the tax_liability of each member of the group shall be determined on the basis of separate returns unless the common parent_corporation establishes to the satisfaction of the commissioner that the failure of such member to join in the making of the consolidated_return was due to a mistake of law or fact or to inadvertence in such case such member shall be treated as if it had filed a form_1122 for such year for purposes of paragraph h of this section and thus joined in the making of the consolidated_return for such year sec_1_1502-75 provides that if a group wishes to file a consolidated_return for a taxable_year then a form_1122 authorization and consent of subsidiary_corporation to be included in a consolidated_income_tax_return must be executed by each subsidiary for taxable years beginning after date the group must attach either executed forms or unsigned copies of the completed forms to the consolidated_return is not required for a taxable_year if a consolidated_return was filed or was required to be filed by the group for the immediately preceding_taxable_year form_1122 rev_proc allows an affiliated_group that satisfies certain requirements to obtain an automatic determination to treat a subsidiary member of the affiliated_group as if it filed a form_1122 even though it failed to do so in this case the parent affiliated_group does not satisfy the requirements of revproc_2014_24 necessary to obtain automatic relief to treat sub as if it filed form_1122 for the tax_year ended date however the irs may act on behalf of the commissioner to treat sub as if it had filed a form_1122 and joined in the filing of the parent consolidated_return under the provisions of treas reg sec_1_1502-75 or sec_1_1502-75 does not apply in this case because the income and deductions of sub were not included in the parent consolidated_return sub filed a separate_return for date and sub was not included in the parent form_851 affiliations schedule in order to obtain relief under sec_1 b sub 1’s failure to join in the making of the consolidated_return must have been due to a mistake of law or fact or to inadvertence determination it is our position that sec_1_1502-75 applies in this case and an amended_return to include sub as a member of the parent consolidated_return should be allowed the fact that the date consolidated_return for taxpayer included form_1122 authorization and consent of subsidiary_corporation to be included in a consolidated_income_tax_return for sub and the fact that the date consolidated_return for taxpayer included parent and sub in the form_851 affiliations schedule indicate that the parent affiliated_group intended to file a consolidated_return for the year ended date sec_1 a allows the parent affiliated_group to file a consolidated_return in lieu of separate returns for the date tax_year provided that each corporation which was a member of the parent affiliated_group at any time during date tax_year joins that at the time of the preparation of the relevant date u s federal_income_tax returns accounting firm the return preparer mistakenly believed that the inclusion of sub in the consolidated_return was voluntary not mandatory in the filing of the parent consolidated_return the taxpayer states it is our opinion that the common parent_corporation has satisfactorily established that the failure of sub to join in the making of the consolidated_return was due to a mistake of law if parent intended to exercise its privilege of filing a consolidated_return and parent directly owned at least of the total voting power and of the total value of sub then sub was required to join in the filing of the consolidated_return in order to obtain the benefits of consolidation and should be treated as if it filed form_1122 for the date taxable_year per sec_1 b based solely on the information submitted and the representations set forth above we conclude that pursuant to sec_1_1502-75 the taxpayer may be allowed to amend their consolidated_return for the tax_year ended date in order to include sub as a member of the consolidated_return as if sub had timely filed form_1122 and therefore joined in the making of a consolidated_return caveats except as expressly provided herein no opinion is expressed or implied concerning the federal_income_tax consequences of any aspect of any transaction or item discussed or referenced in this letter or about the tax treatment of any condition existing at the time of or effects resulting from any transaction or item that is not specifically covered by the above determination the determination contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party procedural matters this determination is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent this office will associate a copy of this determination_letter with the taxpayer's federal_income_tax return for the initial year a copy of this determination_letter should be kept in the taxpayer’s permanent records sincerely s c ott b a j n digitally signed by scott balint dn cn scott bailint o eastern compllance practice area dfo great ee emall scott ballint lrs gov date dollar_figure -04'00' scott ballint acting director field o large business international eastern compliance practice area erations-g i ec


internal_revenue_service number release date index number -------------------------------- ------------------------------ --------------------------- re --------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------------- id no -------------- ----------------- telephone number ---------------------- refer reply to cc psi b04 plr-113835-16 date date legend decedent spouse date date -------------------------------------------------- ----------------------- ------------------- ----------------------- dear ---------------- this letter responds to your personal representative’s letter of date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election under sec_2010 of the internal_revenue_code portability election to allow a decedent’s surviving_spouse to take into account that decedent’s deceased spousal unused exclusion dsue amount the facts and representations are as follows decedent died on date survived by spouse date is a date after the effective date of the amendment to sec_2010 which provides for portability of a dsue amount to a surviving_spouse to obtain the benefit of portability of decedent’s dsue amount to spouse decedent’s estate was required to file form_706 united_states estate and generation-skipping_transfer_tax return on or before the date that is nine months after decedent’s date of death or the last day of the period covered by an extension decedent’s form_706 was due on date but the estate did not file a form_706 to make the portability election the estate discovered its failure to elect portability after the due_date for making the election it is represented that the value of decedent’s gross_estate is less than the basic exclusion amount in the year of decedent’s death including any taxable_gifts made during her lifetime plr-113835-16 you request an extension of time pursuant to sec_301_9100-3 to elect portability of decedent’s dsue amount pursuant to sec_2010 law and analysis sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2010 provides that a credit of the applicable credit_amount shall be allowed to the estate of every decedent against the tax imposed by sec_2001 sec_2010 provides that the applicable credit_amount is the amount of the tentative_tax that would be determined under sec_2001 if the amount with respect to which such tentative_tax is to be computed were equal to the applicable_exclusion_amount on date congress amended sec_2010 effective for estates of decedents dying and gifts made after date to allow portability of a decedent’s unused applicable_exclusion_amount between spouses tax relief unemployment insurance reauthorization and job creation act of pub_l_no sec_303 124_stat_3296 sec_2010 provides that the applicable_exclusion_amount is the sum of the basic exclusion amount and in the case of a surviving_spouse the dsue amount sec_2010 generally provides that the basic exclusion amount is dollar_figure to be adjusted for inflation annually after calendar_year sec_2010 defines the dsue amount to mean the lesser_of a the basic exclusion amount or b the excess of -- i the applicable_exclusion_amount of the last deceased spouse of the surviving_spouse over ii the amount with respect to which the tentative_tax is determined under sec_2001 on the estate of such deceased spouse sec_2010 provides that a dsue amount may not be taken into account by a surviving_spouse under sec_2010 unless the executor of the estate of the deceased spouse files an estate_tax_return on which such amount is computed and makes an election on such return that such amount may be so taken into account the election once made shall be irrevocable no election may be made if such return is filed after the time prescribed by law including extensions for filing such return sec_2010 provides that the secretary shall prescribe regulations as may be necessary or appropriate to implement sec_2010 plr-113835-16 sec_20_2010-2t a of the estate_tax regulations as in effect on date provides that to allow a decedent’s surviving_spouse to take into account that decedent’s dsue amount the executor of the decedent’s estate must elect portability of the dsue amount on a timely-filed form_706 under sec_20_2010-2t a the due_date of an estate_tax_return required to elect portability is nine months after the decedent’s date of death or the last day of the period covered by an extension if an extension of time for filing has been granted under sec_20_2010-2t a the portability election is made by timely filing a complete and properly prepared estate_tax_return unless the executor satisfies the requirements for the election not to apply in sec_20_2010-2t a i sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term statutory election means an election whose due_date is prescribed by statute the term regulatory election means an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute a request for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election the due_date for the portability election is prescribed by statute in the case of an estate required to file an estate_tax_return under sec_6018 see sec_2010 sec_6075 and sec_6018 in the case of an estate that is not required to file an estate_tax_return under sec_6018 the due_date is prescribed by regulation see sec_20_2010-2t a see also sec_20_2010-2 and revproc_2014_18 2014_7_irb_513 sec_2 accordingly in the latter case a taxpayer may seek an extension of time to elect portability under the provisions of sec_301_9100-3 plr-113835-16 sec_6018 requires the filing of an estate_tax_return in all cases where the gross_estate exceeds the basic exclusion amount in effect under sec_2010 for the calendar_year which includes the date of death for purposes of this determination under sec_6018 the basic exclusion amount is reduced but not below zero by the sum of -- a the amount of the adjusted_taxable_gifts within the meaning of sec_2001 made by the decedent after date plus b the aggregate amount allowed as a specific exemption under sec_2521 as in effect before its repeal by the tax reform act of with respect to gifts made by the decedent after date it is represented that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is not required to file an estate_tax_return under sec_6018 under these facts the commissioner has discretionary authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly we grant an extension of time of days from the date of this letter in which to elect portability under sec_2010 the election should be made by filing a complete and properly-prepared form_706 and a copy of this letter within days from the date of this letter to the cincinnati service_center at the following address internal_revenue_service cincinnati service_center stop cincinnati oh for purposes of electing portability a form_706 filed by decedent’s estate within days from the date of this letter will be considered to be timely filed 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 if it is later determined that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is required to file an estate_tax_return pursuant to sec_6018 the commissioner is without authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability and the grant of the extension referred to in this letter is deemed null and void this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-113835-16 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 associate chief_counsel passthroughs special industries by lorraine e gardner lorraine e gardner senior counsel branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


department of the treasury internal_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 pa apjp b02 sca-145620-01 uilc internal_revenue_service national_office service_center advice memorandum for jimmy l smith director submission processing w cas sp imf r from curtis g wilson assistant chief_counsel administrative provisions and judicial practice cc pa apjp subject signature requirements for extensions of time to file this chief_counsel_advice responds to your memorandum dated date in accordance with sec_6110 this chief_counsel_advice should not be cited as precedent issue what is the legal authority for the signature requirements for the various extension forms conclusion under the sec_6081 regulations forms and do not require a signature for service approval forms and do require a signature law and analysis sec_6061 provides the general_rule for the signing of returns and other documents required to be made under any provision of the internal revenue laws or regulations under sec_6061 any such document must be signed in accordance with forms or regulations when the regulations require a signature then the form must also require a signature when the regulations are silent on the signature requirement a signature is required if the form sets forth a signature requirement in such instance if the service believes that there is no longer a need for a signature the particular form can be revised to remove the signature block sca-145620-01 the following forms do not require a signature for service approval form_4868 application_for automatic_extension of time to file u s individual tax_return is governed by sec_1_6081-4 generally an application_for extension of any return of tax imposed by subtitle a or subtitle f requires a signature when the regulations for automatic extensions of individual income_tax returns were amended in the signature requirement was removed see preamble fr pincite8 t d form_8736 application_for automatic_extension of time to file u s return for a partnership remic or for certain trusts is governed by sec_1_6081-2 sec_1_6081-6 and sec_1_6081-7 the final regulations removed the regulatory requirement that forms be signed see preamble fr pincite9 t d the following forms require a signature for approval form_2350 application_for extension of time to file u s income_tax return is governed by sec_1_911-7 and sec_1_6081-1 the latter regulations provide that the request for this extension must be signed by the taxpayer or the taxpayer’s duly authorized agent form_2688 application_for additional extension of time to file u s individual tax_return is governed by the general requirements for requesting an extension in sec_1_6081-1 under this regulation the request for extension must be signed by the taxpayer or the taxpayer’s duly authorized agent form_2758 application_for extension of time to file certain excise income information and other returns is governed by sec_1_6081-1 sec_55_6081-1 and sec_156_6081-1 form_2758 covers extension requests for multiple forms the forms required under subtitle a or subtitle f are governed by sec_1_6081-1 which requires the taxpayer’s signature for extension requests the other forms which are not under subtitle a or subtitle f are governed by the general signature provisions under sec_6061 sec_6061 provides that if a form or regulation requires a signature it must be signed form_2758 currently requires a signature further unlike the applications for automatic extensions form_2758 requires a full recital of the reason for the extension forms which require such a recital of facts must be signed by the taxpayer under penalties of perjury sca-145620-01 form_4768 application_for extension of time to file a return and or pay u s estate and generation-skipping_transfer taxes is governed by sec_20_6081-1 this regulation provides for both an automatic 6-month extension of time to file and an additional extension treas reg does not address a signature requirement under sec_6061 when the regulations are silent on the signature requirement a signature is required if the form sets forth a signature requirement form_4768 currently requires a signature form_5558 application_for extension of time to file certain employee plan returns is governed by the general requirements for requesting an extension found in sec_1_6081-1 under this regulation the request for extension must be signed by the taxpayer or the taxpayer’s duly authorized agent form_7004 application_for automatic_extension of time to file corporation income_tax returns is governed by sec_1_6081-3 sec_1_6081-3 requires that the form_7004 must be signed by a person authorized by the corporation to request the extension form_8800 application_for additional extension of time to file u s return for a partnership remic or for certain trusts is governed by the general requirements for requesting an extension found in sec_1 b under this regulation the request for extension must be signed by the taxpayer or the taxpayer’s duly authorized agent form_8868 application_for extension of time to file an exempt_organization return including automatic 3-month extension is governed by sec_1_6081-1 in your incoming memorandum you had stated that form_8868 did not require a signature for the 3-month extension this is not correct form_8868 requires a signature for approval of both the automatic 3-month extension and the additional 3-month extension the automatic 3-month extension has not been addressed in the regulations and should be considered under sec_1_6081-1 which requires the taxpayer’s or the taxpayer’s duly authorized agent’s signature on a request for extension if you have any questions regarding this response please contact branch of the administrative provisions judicial practice division at by judith m wall chief branch


t c summary opinion united_states tax_court christopher olan garrin petitioner v commissioner of internal revenue respondent docket no 25592-07s filed date christopher olan garrin pro_se john r bampfield for respondent ruwe judge this case was heard pursuant to the provisions of section of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to unless otherwise indicated all section references are to the internal_revenue_code in effect for the years at issue and all rule references are to the tax_court rules_of_practice and procedure be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case respondent determined deficiencies additions to tax and accuracy-related_penalties as follows addition_to_tax accuracy-related_penalty year deficiency sec_6651 sec_6662 dollar_figure dollar_figure dollar_figure big_number dollar_figure dollar_figure after concessions the issues we must decide are whether petitioner had unreported income of dollar_figure for whether petitioner is entitled to cost_of_goods_sold and deductions claimed on schedule c profit or loss from business for and in amounts greater than those allowed by respondent whether petitioner is entitled to deduct net operating losses nol of dollar_figure for and dollar_figure for whether petitioner is entitled to deduct home mortgage interest claimed on schedule a itemized_deductions in an amount greater than that allowed by respondent for whether petitioner is liable for the additions to tax pursuant to sec_6651 for and and whether petitioner i sec_2 in the notice_of_deficiency respondent determined on the basis of bank_deposits analysis that petitioner had unreported income of dollar_figure after further examination of petitioner’s bank_deposits for respondent has concluded that petitioner’s unreported income should have been dollar_figure nevertheless respondent has agreed to limit his pursuit of unreported income to dollar_figure as originally stated in the notice_of_deficiency liable for the accuracy-related_penalties pursuant to sec_6662 for and background some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference at the time the petition was filed petitioner resided in georgia during and petitioner was a subcontractor doing business as garrin construction a commercial construction company that specialized in interior commercial drywall petitioner transacted much of his business with cash including purchasing materials and paying some of his employees payors reported paying to petitioner nonemployee compensation of dollar_figure and dollar_figure during and respectively petitioner operated his business from his residence petitioner however has not offered any documentary or testimonial evidence as to the portion of his residence that was used exclusively for business during petitioner acquired a big job that required him to assign eight of his workers to it petitioner testified that the big job caused him cashflow problems and he had to borrow money from his mother in order to continue paying his workers and to purchase the necessary materials to complete the job petitioner asserts that his mother lent him dollar_figure at various intervals during and that these funds were received in cash petitioner further asserts that he borrowed roughly about dollar_figure from his girlfriend in in order to fix his house and shop petitioner submitted two letters one allegedly written by his mother and the other allegedly written by his girlfriend as evidence of the funds he had borrowed from them the two handwritten letters however were both dated within week of trial petitioner had no other documentation of either loan in date petitioner’s residence was destroyed by fire the report prepared by the local fire department stated there was heavy fire throughout the house with most of the roof area and one vehicle destroyed by the fire the fire destroyed not only petitioner’s shop but also his business records petitioner did not claim a casualty_loss on either his or federal_income_tax return during petitioner paid dollar_figure in home mortgage interest the irs received petitioner’s federal_income_tax return on date petitioner did not report any wages salaries tips or gross_receipts from his business for but did report a dollar_figure state_income_tax refund petitioner also reported a business loss of dollar_figure an nol of dollar_figure and home mortgage interest of dollar_figure during petitioner allowed his niece to move into his trailer home since he did not stay there while out of town petitioner received a telephone call from his brother and his brother’s wife informing him that they were throwing all of his belongings out including his business records transferring the title out of his name and moving their daughter petitioner’s niece into the trailer petitioner called the police to put a stop to his family’s actions but asserts that his business records were nevertheless lost the irs received petitioner’s federal_income_tax return on date on his schedule c petitioner reported gross_receipts of dollar_figure cost_of_goods_sold of dollar_figure car and truck expenses of dollar_figure depreciation of dollar_figure an insurance other than health expense of dollar_figure and a utilities expense of dollar_figure resulting in a reported business loss of dollar_figure for petitioner did not report any wages salaries or tips on his return petitioner also reported a separate nol of dollar_figure and a state_income_tax refund of dollar_figure discussion the commissioner’s determinations in a notice_of_deficiency are presumed correct and the taxpayer bears the burden of proving error in the commissioner’s determinations rule a 290_us_111 the burden_of_proof may shift to the commissioner in certain circumstances if the taxpayer introduces credible_evidence and establishes that he or she substantiated items maintained required records and fully cooperated with the commissioner’s reasonable requests sec_7491 and a and b petitioner has neither asserted that the burden_of_proof has shifted to respondent nor provided sufficient credible_evidence to reconstruct his business records for or therefore the burden_of_proof remains with petitioner i unreported income for gross_income includes all income from whatever source derived unless excluded by a specific provision of the internal_revenue_code sec_61 where a taxpayer is unable to produce substantiating business records of his income the commissioner may use the bank_deposits method to reconstruct and compute the taxpayer’s income see 64_tc_651 affd 566_f2d_2 6th cir a bank deposit is prima facie evidence of income 87_tc_74 this method of reconstruction assumes that all money deposited into a taxpayer’s bank account is includable in gross_income unless the taxpayer establishes that the deposits are not taxable 96_tc_858 affd 959_f2d_16 2d cir the commissioner however must take into account any nontaxable items and deductible expenses of which he has knowledge id citing 335_f2d_671 5th cir petitioner does not dispute respondent’s use of the bank_deposits method for reconstruction of his income rather he contends that a portion of these deposits was loan proceeds from his mother and his girlfriend for support petitioner proffered two handwritten letters purportedly from his mother and his girlfriend however the handwritten letters were not contemporaneous manifestations of the parties’ purported agreements with petitioner and we do not find them to be persuasive or credible moreover petitioner has not identified any specific deposit into his bank account as representative of loan proceeds because petitioner failed to identify any of the deposits as nontaxable all the deposits in are includable in petitioner’s gross_income accordingly we find that petitioner failed to report dollar_figure in gross_receipts for ii schedule c cost_of_goods_sold and business_expenses sec_162 allows a taxpayer to deduct all the ordinary and necessary expenses paid_or_incurred in carrying_on_a_trade_or_business taxpayers bear the burden of proving that they have complied with the specific requirements for any deduction claimed 503_us_79 292_us_435 personal expenses in contrast generally are not deductible sec_262 a taxpayer must substantiate amounts claimed as deductions by maintaining the records necessary to establish that he or she is entitled to the deductions sec_6001 sec_1_6001-1 income_tax regs when a taxpayer presents convincing evidence that he incurred a deductible expense but lacks the records to substantiate the claimed amounts the court may estimate the allowable deduction 39_f2d_540 2d cir 85_tc_731 the court will estimate the expenses only when the record provides some basis for computation cohan v commissioner supra pincite vanicek v commissioner supra pincite in estimating the taxpayer’s allowable deductions the court bears heavily against the taxpayer because the inexactitude is of his own making cohan v commissioner supra pincite a utilities expense for petitioner claimed a utilities expense of dollar_figure of that amount respondent allowed dollar_figure and disallowed dollar_figure petitioner has not established that he paid_or_incurred a utilities expense in an amount greater than that respondent allowed accordingly we find that he is not entitled to a utilities expense deduction for in excess of the amount respondent already allowed for petitioner did not initially deduct a utilities expense on his late-filed federal_income_tax return at trial however petitioner submitted a copy of an electric utility bill with his name on it this electric utility bill indicates that petitioner paid dollar_figure for electricity during the electric utility bill does not however indicate the address or property to which it pertains nevertheless respondent has conceded on brief that it relates to petitioner’s residence sec_280a provides except as otherwise provided in this section in the case of a taxpayer who is an individual no deduction otherwise allowable under this chapter shall be allowed with respect to the use of a dwelling_unit which is used by the taxpayer during the taxable_year as a residence sec_280a provides an exception to this general_rule and permits a deduction for home_office expenses allocable to a portion of the dwelling_unit which is exclusively used on a regular basis as the principal_place_of_business for any trade_or_business of the taxpayer petitioner has neither established what portion of his residence was used solely for business purposes nor provided some basis for us to compute it thus we are unable to determine what portion of his utilities expense was allocable to the business accordingly we find that petitioner has failed to carry his burden_of_proof and therefore is not entitled to a utilities expense deduction for b car and truck expenses sec_274 imposes heightened substantiation requirements for listed_property listed_property includes passenger automobiles sec_280f the required substantiation must be sufficient to establish the amount and use of the expense the time of the business use and the business_purpose of the expense sec_1_274-5t temporary income_tax regs fed reg date taxpayers must substantiate their expenses by either adequate_records or sufficient evidence corroborating the taxpayer’s own statement sec_274 sec_1_274-5t temporary income_tax regs fed reg date to meet the ‘adequate records’ requirements of sec_274 a taxpayer shall maintain an account book diary log statement of expense trip sheets or similar record and documentary_evidence sec_1 5t c i temporary income_tax regs fed reg date when a taxpayer loses the substantiating documentation due to circumstances beyond his control he may reasonably reconstruct such expenses sec_1_274-5t temporary income_tax regs fed reg date petitioner did not deduct any car and truck expenses on his schedule c at trial petitioner provided a dollar_figure receipt from craig’s xpress lube dated date petitioner however has offered nothing more to reasonably reconstruct his car and truck expenses in and has failed to establish the business_purpose of the dollar_figure expense accordingly we sustain respondent’s determination and find that petitioner has not met the heightened substantiation requirements to deduct any car and truck expenses in on petitioner’s schedule c for he deducted dollar_figure of car and truck expenses respondent disallowed dollar_figure of the claimed deduction at trial petitioner proffered many receipts purportedly relating to car and truck expenses of his business petitioner has not corroborated these receipts with credible testimony or other evidence to establish the business_purpose of the expenses see sec_1_274-5t temporary income_tax regs supra in fact when asked about a log for petitioner testified i think there is a log somewhere but it probably isn’t up to date because it was pretty much havoc at that time i got a little sidetracked i’m sure it won’t be accurate while petitioner may have incurred some car and truck expenses while operating his business the consequence of his failure to keep an accurate log or at a minimum establish the business_purpose for the expenses reflected on the receipts provided by him is that respondent’s determination will be sustained accordingly we find that petitioner is not entitled to a car and truck expense deduction for in excess of the amount respondent already allowed c cost_of_goods_sold and other schedule c expenses on his schedule c petitioner did not report any amount as cost_of_goods_sold cogs or claim a deduction for any business_expense other than a dollar_figure depreciation expense under sec_179 in the notice_of_deficiency respondent determined that petitioner incurred dollar_figure for cogs dollar_figure for insurance and dollar_figure for repairs and maintenance in petitioner submitted evidence showing that he had additional schedule c expenses in that were neither claimed on his return nor allowed by respondent in the notice_of_deficiency on brief respondent has conceded that petitioner is entitled to an additional dollar_figure in schedule c expense deductions with respect to all other receipts petitioner proffered he has not established how these expenditures related to his business accordingly we sustain respondent’s determination and hold that petitioner is not entitled to an increase in cogs or to any other business_expense deduction in an amount greater than that respondent allowed for on his schedule c petitioner reported cogs of dollar_figure in the notice_of_deficiency respondent determined that petitioner had overstated his cogs by dollar_figure after reviewing the multitude of receipts provided by petitioner at trial on brief respondent has conceded that petitioner’s cogs should be increased by an additional dollar_figure most of the receipts petitioner provided are insufficient on their own to substantiate their business_purpose moreover petitioner has not credibly testified with respect to these receipts we therefore sustain respondent’s determination and hold that petitioner is only entitled to subtract dollar_figure from his gross_receipts as cogs in iii net_operating_loss deductions sec_172 and b allows a deduction for an nol which may be carried back to each of the years preceding the taxable_year of the loss and carried over to each of the taxable years following the year of the loss in general the taxpayer bears the burden of establishing both the actual existence of nols and the amounts of such losses that may be carried to the years at issue rule a 115_tc_605 on his federal_income_tax return petitioner reported a dollar_figure nol and on his return he reported a dollar_figure nol in the notice_of_deficiency respondent disallowed these deductions because petitioner did not establish that any loss existed or was adequately substantiated petitioner has not provided any evidence of the existence of an nol that could have been deducted in or accordingly we find that petitioner is not entitled to an nol deduction for either or iv home mortgage interest_deduction for petitioner claimed a home mortgage interest_deduction of dollar_figure respondent determined that petitioner was entitled to a home mortgage interest_deduction of dollar_figure home mortgage interest is generally deductible under sec_163 subject_to the requirements of subsection h petitioner has not offered any documentary or testimonial evidence to allow us to determine whether he is entitled to a home mortgage interest_deduction in excess of the amount respondent already allowed accordingly we sustain respondent’s determination v sec_6651 addition_to_tax sec_6651 imposes an addition_to_tax for the failure_to_file a return sec_7491 generally provides that the commissioner bears the burden of production with respect to the liability of an individual for any penalty or addition_to_tax the commissioner may meet his burden of production by coming forward with sufficient evidence indicating that it is appropriate to impose the relevant penalty 116_tc_438 because the parties stipulated that petitioner filed his and federal_income_tax returns late respondent has met his burden of production additionally petitioner has not offered any documentary or testimonial evidence to establish that his late filing was due to reasonable_cause and not due to willful neglect see sec_6651 accordingly we sustain the sec_6651 addition_to_tax but note that because the parties have made several concessions respondent’s original sec_6651 addition_to_tax computations must be adjusted to reflect those changes vi sec_6662 accuracy-related_penalty pursuant to sec_6662 and b and a taxpayer may be liable for a penalty of percent on the portion of an underpayment_of_tax due to negligence or disregard of the rules or regulations or attributable to a substantial_understatement_of_income_tax sec_6662 defines negligence as any failure to make a reasonable attempt to comply with the provisions of the internal_revenue_code see also sec_1_6662-3 income_tax regs a substantial_understatement of tax is defined as an understatement_of_tax that exceeds the greater of percent of the tax required to be shown on the tax_return or dollar_figure sec_6662 the commissioner bears the burden of production with respect to the accuracy-related_penalty see sec_7491 higbee v commissioner supra pincite on the basis of our findings herein respondent has met his burden of production see sec_6662 sec_1_6662-3 income_tax regs although petitioner asserts that his business records were either destroyed by fire or lost due to the actions of his family members we do not find his limited testimony sufficient to establish that the alleged missing records complied with the recordkeeping requirements of the law see sec_6001 sec_1_6001-1 income_tax regs petitioner therefore failed to make a reasonable attempt to comply with the law or maintain adequate_records an exception to the sec_6662 penalty applies when the taxpayer demonstrates there was reasonable_cause for the underpayment and the taxpayer acted in good_faith with respect to the underpayment sec_6664 higbee v commissioner supra pincite whether a taxpayer acted with reasonable_cause and in good_faith is made on a case-by-case basis taking into account all the pertinent facts and circumstances higbee v commissioner supra pincite sec_1_6664-4 income_tax regs petitioner testified that he had receipts for many of his expenses but the receipts were either destroyed by fire in or thrown away by his brother and his brother’s wife in the loss of his business records does not explain why petitioner chose not to report any gross_receipts from his business in additionally petitioner admittedly did not keep a contemporaneous log of his expenses in and testified further that if he could find the log that he kept he was sure that it would not be accurate moreover petitioner has made little if any attempt to reconstruct the missing records such circumstances do not constitute reasonable_cause accordingly we conclude that petitioner has failed to demonstrate reasonable_cause and good_faith respondent’s determination on this issue is sustained to reflect the foregoing decision will be entered under rule


t c memo united_states tax_court john s black petitioner v commissioner of internal revenue respondent docket no filed date john s black pro_se peter reilly and paul l dixon for respondent memorandum opinion armen special_trial_judge this case was assigned pursuant to the provisions of sec_7443a and rule sec_180 sec_181 and sec_182 unless otherwise indicated all section references are to the internal_revenue_code in effect for the taxable years in issue and all rule references are to the tax_court rules_of_practice and procedure continued this case is before the court on respondent's motion to dismiss for failure to state a claim upon which relief can be granted filed pursuant to rule john s black petitioner resided in las vegas nevada at the time that the petition was filed in this case respondent's notices of deficiency by separate notices each dated date respondent determined deficiencies in and additions to petitioner's federal income taxes for the taxable years and as follows additions to tax_year deficiency sec_6651 sec_6654 dollar_figure dollar_figure dollar_figure big_number dollar_figure dollar_figure the deficiency in income_tax for is based on respondent's determination that petitioner failed to report on an income_tax return for the taxable_year wages from three separate payors in the amounts of dollar_figure dollar_figure and dollar_figure respectively unemployment_compensation in the amount of dollar_figure short-term_capital_gains in the amount of dollar_figure and dividend income in the amount of dollar_figure the deficiency in income_tax for is based on respondent's determination that petitioner failed to report on an income_tax return for the taxable_year wages in the amount of dollar_figure and unemployment_compensation in the amount of dollar_figure the addition sec_1 continued to tax under sec_6651 are based on respondent's determination that petitioner's failure_to_file timely income_tax returns for and was not due to reasonable_cause the additions to tax under sec_6654 are based on respondent's determination that petitioner failed to pay the requisite amount of estimated income taxes for each of the years in issue petitioner's petition and amended petition petitioner filed an imperfect petition for redetermination on date attaching thereto the first page of the two notices of deficiency described above the imperfect petition states i would like to petition this notice_of_deficiency and all of the other liens lies criminal acts that the internal_revenue_service has committed against me if you people operate like the gestapo type individuals that i have been dealing with in the past-- this too is a waste of time because the tax_court has to be why the term deletion in original originated in the first place until you return the property that has been stolen from me i see no reason to deal with you on any level according to your own code-- sec_7806 construction or title--the internal_revenue_code has no legal effect a legend is stamped on the petition just above petitioner's signature which states with express reservation of all my the notices of deficiency indicate that petitioner is entitled to prepayment withholding credits in the amounts of dollar_figure and dollar_figure for the taxable years and respectively rights in law equity and all other natures of law 'without prejudice' ucc on date the court issued an order directing petitioner to file a proper amended petition on or before date on date petitioner filed an amended petition using a petition form furnished by the court although paragraph of the amended petition states that petitioner disagrees with tax deficiencies for the years through the items listed in paragraph of the amended petition identifying the specific amounts in dispute are limited to the deficiencies and additions to tax set forth in the deficiency notices for and paragraph of the amended petition provides in its entirety as follows as reads dollar_figure should be as reads dollar_figure should be as reads dollar_figure should be -0- as reads dollar_figure should be -0- disagreement is based on sec_3121 and sec_3121 b b and refundable under sec_3503 also see sub sec_7806 sec_6343 respondent's rule motion and subsequent development sec_3 we understand this citation to refer to sec of the uniform commercial code that section is entitled performance or acceptance under reservation of rights and the current version thereof appears as nev rev stat sec_104 respondent states that she is unaware of any notices of deficiency or collection actions pending against petitioner other than the notices of deficiency for and under the circumstances we conclude that the court's jurisdiction in this case is limited to petitioner's liability for the taxable years and on date respondent filed the motion to dismiss for failure to state a claim upon which relief can be granted that is presently pending before the court in her motion respondent contends inter alia that the amended petition includes no allegations of justiciable error as to the adjustments to taxable_income made by the respondent on date the court issued an order directing petitioner to file a second amended petition on or before date in particular the court directed that the second amended petition should set forth with specificity each error allegedly made by respondent in the determination of the deficiencies and separate statements of every fact upon which the assignments of error are based the order also served to notify petitioner that respondent's motion would be called for hearing at the court's motions session to be held in washington d c on date petitioner did not comply with the court's order dated date rather on date petitioner filed a rule c statement repeating the allegations set forth in his original imperfect petition the heart of petitioner's rule c statement provides as follows i see no reason to submit an amended claim because everything was listed on the original filing i was under the false impression that the tax_court was a legitimate court however further research revealed continued respondent's motion to dismiss was called for hearing in washington d c on date counsel for respondent appeared at the hearing and presented argument on her motion petitioner did not appear at the hearing discussion rule provides that a party may file a motion to dismiss for failure to state a claim upon which relief can be granted we may grant such a motion when it appears beyond doubt that the party's adversary can prove no set of facts in support of a claim which would entitle him or her to relief 355_us_41 677_f2d_676 8th cir rule b requires that a petition filed in this court contain clear and concise assignments of each and every error which the taxpayer alleges to have been committed by the commissioner in the determination of the deficiency and the additions to tax in dispute rule b further requires that the petition contain clear and concise lettered statements of the facts on which the taxpayer bases the assignments of error see continued that in all reality the tax_court could be the real reason that the term expletive deleted originated in the american language the only thing legal about you bunch of common criminals and would be killers is whatever concept of law that exists is whatever is in your sick minds i will pursue this matter at a later date because i don't have time at the moment for any of your little mind games this is submitted without prejudice under common_law and all other forms of law 78_tc_646 the failure of a petition to conform with the requirements set forth in rule may be grounds for dismissal rule sec_34 b in general the determinations made by the commissioner in a notice_of_deficiency are presumed to be correct and the taxpayer bears the burden of proving that those determinations are erroneous rule a 290_us_111 moreover any issue not raised in the pleadings is deemed to be conceded rule b jarvis v commissioner supra pincite n 73_tc_736 the petition and amended petition filed in this case do not satisfy the requirements of rule b and there is neither assignment of error nor allegation of fact in support of any justiciable claim at best petitioner's arguments amount to nothing more than tax_protester rhetoric and legalistic gibberish as demonstrated by the passages from those documents that we have quoted above see 82_tc_403 80_tc_1111 76_tc_1027 affd 696_f2d_1234 9th cir the court's orders dated date and date provided petitioner with opportunities to assign error and allege specific facts concerning his liability for the taxable years in issue unfortunately petitioner failed to properly respond to the court's orders rather petitioner elected to continue to proceed with time-worn tax_protester rhetoric see abrams v commissioner supra rowlee v commissioner supra mccoy v commissioner supra karlin v commissioner tcmemo_1990_496 we see no need to catalog petitioner's contentions and painstakingly address them we have dealt with many of them before e g nieman v commissioner tcmemo_1993_533 solomon v commissioner tcmemo_1993_509 affd without published opinion 42_f3d_1391 7th cir moreover as the court_of_appeals for the fifth circuit has remarked we perceive no need to refute these arguments with somber reasoning and copious citation of precedent to do so might suggest that these arguments have some colorable merit 737_f2d_1417 5th cir the short answer to petitioner's arguments is that he is not exempt from federal_income_tax or from the imposition of appropriate additions to tax see abrams v commissioner supra pincite because petitioner's pleadings do not state a claim upon which relief can be granted we shall grant respondent's motion to dismiss see 747_f2d_478 8th cir we turn now on our own motion to the award of a penalty against petitioner under sec_6673 as relevant herein sec_6673 authorizes the tax_court to require a taxpayer to pay to the united_states a penalty not in excess of dollar_figure whenever it appears that proceedings have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position in such proceeding is frivolous or groundless the record in this case convinces us that petitioner was never interested in disputing the merits of either the deficiencies in income taxes or the additions to tax as determined by respondent in the notices of deficiency rather the record demonstrates that petitioner regards this case as a vehicle to protest the tax laws of this country and espouse his own misguided views a petition to the tax_court is frivolous if it is contrary to established law and unsupported by a reasoned colorable argument for change in the law 791_f2d_68 7th cir petitioner's position as set forth in the petition and amended petition and as amplified by his rule c statement consists solely of tax_protester rhetoric and legalistic gibberish based on well-established law petitioner's position is frivolous and groundless we are also convinced that petitioner instituted and maintained this proceeding primarily if not exclusively for purposes of delay having to deal with this matter wasted the court's time as well as respondent's moreover taxpayers with genuine controversies were delayed under the circumstances herein a penalty is warranted under sec_6673 in view of the foregoing we will sua sponte exercise our discretion under sec_6673 and require petitioner to pay a penalty to the united_states in the amount of dollar_figure coleman v commissioner supra pincite crain v commissioner supra pincite8 coulter v commissioner 82_tc_580 82_tc_403 in order to reflect the foregoing an order and decision will be entered granting respondent's motion to dismiss and imposing a penalty upon petitioner pursuant to sec_6673


office_of_chief_counsel internal_revenue_service memorandum number release date cc pa apjp b03 jajebe postf-159686-05 uilc date april to associate area_counsel philadelphia group small_business self-employed from blaise g dusenberry special counsel administrative provisions judicial practice procedure administration subject missed assessment versus erroneous abatement this chief_counsel_advice responds to your request for assistance dated date this advice may not be used or cited as precedent issue whether these facts should be treated as a clerical_error for which erroneous abatements may be reversed after the expiration of the assessment statute_of_limitations or a missed or barred assessment to be listed in excess collections conclusion as there has been no assessment there cannot have been an abatement and therefore the abatement cannot be corrected this can only be a missed assessment facts the taxpayer timely filed his ------- income_tax return due to an error this return and the associated tax posted to the module for taxable_year -------------------- the philadelphia campus discovered the error when the ------- return was filed abated the tax on the ---------- module and sent the ------- return to be reprocessed the --------- postf-159686-05 return never posted to the module for taxable_year -------------------- by this time the assessment statute_of_limitations with respect to taxable_year ------- had expired therefore an assessment of tax on the ---------- module was never made on his ------- return the taxpayer reported a tax_liability of dollar_figure--------and a withholding credit of dollar_figure-------- from the withholding credit dollar_figure--------was transferred to excess collections the balance of the withholding credit dollar_figure-------- was both erroneously refunded to the taxpayer and applied to taxpayer’s outstanding liability for taxable_year - ------- the application of the funds to the liability for ------- was eventually reversed and the credit of dollar_figure--------was replaced in the ---------- module after the ------- return failed to post in the ---------- module the philadelphia campus sent the case to austin with instructions to recover the erroneous refund using erroneous abatement procedures the austin campus returned the file to philadelphia after concluding that the erroneous abatement procedures did not apply and the case should be treated as a missed or barred assessment law and analysis generally the service must assess taxes within three years after the tax_return is filed sec_6501 sec_6404 provides that the service may abate the unpaid portion of the assessment of any_tax or liability that is excessive in amount assessed after the expiration of the period of limitations or erroneously or illegally assessed various courts have held that where an amount is abated pursuant to sec_6404 and it is later determined that the abatement was both erroneous and the result of a clerical_error that abatement may be reversed after the period of limitations has expired see eg matter of bugge f 3d 5th cir 311_fsupp_1184 s d n y here an assessment was never made with respect to the amount abated from the ----- ---------- module so the abatement was not performed under sec_6404 no assessed amounts were ever abated pursuant to sec_6404 for either taxable_year ------- or ------- since there is no assessment or abatement there cannot be an erroneous abatement because there is no erroneous abatement to correct these facts can only be considered as a missed assessment from the facts presented it appears that the taxpayer’s liability per his return has been satisfied and that only the amount erroneously refunded remains outstanding on his account for the ------- taxable_year at this point since there is no erroneous abatement the only means to recover the erroneous refund in this case is to file an erroneous refund_suit under sec_7405 in district_court this writing may contain privileged information any unauthorized disclosure of this writing may undermine our ability to protect the privileged information if disclosure is determined to be necessary please contact this office for our views postf-159686-05 please call if you have any further questions cc ----------------------- ------------------------------------------------------ -------------------------------------------


department of the treasury internal_revenue_service washington jp c tax exempt and government entities oivision feb uniform issue list 7' ep la ar rekekrrekkeeekekrrerekk hrkekkkererkkreereeereeeeeaekeereaeerrekrerreere rekkkeekkrerrkereekrererke hakkkkkkkkekrekkrerereeekeeeke hrekeekekrekrerekrereekrekrer legend company plan a plan b kreekhekrererererrerererer kerikeri eerie re kerrier rerereeeerererkg eerkrekeereererrer kekkekekrerekerererere kueekeriekerererereek hakkar rererreerereererererer herereerereeereeekereaerererer hakkar eerie erierererrerire kek erererereere erekekeeecererrerer rerrkekeekrekrererreererer plan c wiaa ki tkr rrr reese kikeurereerereerereree kreereeeerer wma iki akere ree re ir eti kreiner reet kerrier erere hikhkkkkkekkeeekrekreeeekrerereerrereeree er plan d -_ kerikeri rereereeerrerrereree rrerkreererereerere reekrrerreereeeeekeeerkeeekrerererere dear akkkkkkkkkkrki this ietter constitutes notice that pursuant to your request of date waivers of the excise_tax under sec_4971 of the internal_revenue_code code for plan a plan b plan c and plan d arising from the unpaid minimum required contributions for the plan_year ending date have been granted to the company the waiver of the excise_tax has been granted in accordance with section b of the employment retirement income security act of erisa the amount for which these excise_tax waivers have been granted is equal to of the contribution which would otherwise be required to satisfy the minimum_required_contribution as of the end of each of the applicable_plan years for which a waiver is granted to the extent such deficiency has not been corrected the company has filed for bankruptcy under chapter of the u s bankruptcy code which does not allow for payment of debts incurred prior to the bankruptcy filing it submits that it could afford to make the contributions to the plan a plan b plan c and plan d but was barred from doing so because it had filed for bankruptcy upon emerging from bankruptcy company will make all required unpaid minimum required contributions to plan a plan b plan c and plan d the company has shown through its submission of financial data that imposition of the sec_4971 excise_tax would be a substantial business hardship and would be adverse to plan participants as a whole this ruling letter is directed only to the taxpayer requesting it code sec_6110 provides that it may not be used or cited as precedent we have sent a copy of this letter to the manager ep classification in baltimore maryland and to the manager ep compliance unit in chicago illinois additionally pursuant to the power_of_attorney on file with this office a copy of this letter_ruling is being sent to your authorized representative if you wish to inquire about this ruling please contact d sts at exx_eeee please address all correspondence to se t ep ra t2 sincerely william hulteng manager employee_plans technical cc krekkkkkkkeereekekrereereree kreakkkeekeaererererekeerereee rrerkkekeekereerreeeererrereretre


internal_revenue_service number release date index numbers -------------------------- ------------------------------------- -------------------------------- ------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------------- id no ------------- telephone number --------------------- refer reply to cc psi b01 plr-138189-11 date legend x --------------------------------------------------- ----------------------------- d state ----------------------- ------------- dear ----------------- this is in response to a letter dated date submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a corporation for federal tax purposes facts according to the information submitted x was formed on d as a limited_liability_company under the laws of state the parties conducted a transaction that included a stock purchase the parties intended that the stock purchase constitute a qualified_stock_purchase qsp within the meaning of sec_338 to achieve this intended result it was necessary that x be classified as a corporation for federal tax purposes however the form_8832 entity classification election was not timely filed with the appropriate service_center law and analysis plr-138189-11 sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with a single owner can elect to be classified as an association_taxable_as_a_corporation or to be disregarded as an entity separate from its owner sec_301_7701-3 provides a default classification for an eligible_entity that does not make an election under sec_301_7701-3 a domestic eligible_entity that does not otherwise elect will be considered as a disregarded_entity if it has a single owner sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 by filing form_8832 with the service_center designated on the form sec_301_7701-3 provides that an election made under sec_301_7701-3 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 form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after 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 sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or an announcement published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that x has satisfied the requirements of sec_301_9100-3 as a result x is granted an extension of time of days from the date of this letter to file a properly executed form_8832 with plr-138189-11 the appropriate service_center electing to be treated as an association_taxable_as_a_corporation for federal tax purposes effective d a copy of this letter should be attached to the election except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in particular no opinion is expressed as to whether the stock purchase is a qsp within the meaning of sec_338 this ruling is directed only to the taxpayer requesting it sec_6110 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 joy c spies joy c spies acting senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


tax_exempt_and_government_entities_division department of the treasury internal_revenue_service washington d c u uv jan uniform issue list set ep ati legend taxpayer a corporation b plan c plan c account d bank e account f amount g amount h amount i dear this letter is in response to a request for a letter_ruling dated date as supplemented by additional information dated date and date from your authorized representative in which you have applied for a waiver of the day rollover requirement contained in sec_402 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 age represents that he received a distribution from plan c totaling amount g taxpayer a asserts that his failure to accomplish a rollover within the 60-day period prescribed by sec_402 was due to a mistake made by bank e taxpayer a was a sole shareholder of corporation b corporation b maintained plan c a prototype profit sharing plan taxpayer a was the sole remaining participant in plan c taxpayer a decided to terminate corporation b and plan c plan c’s in assets were maintained by four different financial institutions taxpayer a represents that he contacted each institution with the intent to rollover his account balances in plan c into four separate individual_retirement_arrangements ira under code sec_408 three of the four financial institutions correctly followed taxpayer a’s instructions to rollover his account balance in plan c to an ira however on date bank e inadvertently transferred amount g from plan c account d to a non- ira account account f the mistake was discovered upon receipt of a form 1099-int taxpayer a withdrew amount h from account f in for retirement purposes believing 1t was a distribution from an ira taxpayer a represents that the remainder of account g amount j has not been used for any other purpose on based on the above facts and representations you request that the internal_revenue_service service waive the 60-day rollover requirement contained in code sec_402 with respect to the distribution of amount i amount g - amount h sec_402 of the code provides that if any portion of the balance_to_the_credit of an employee in a qualified_trust is paid to the employee in an eligible_rollover_distribution and the distributee transfers any portion of the property received in such distribution to an eligible_retirement_plan and in the case of a distribution_of_property other than money the amount so transferred consists of the property distributed then such distribution to the extent transferred shall not be includible in gross_income for the taxable_year in which paid sec_402 states that such rollover must be accomplished within days following the day on which the distributee received the property an individual_retirement_account ira constitutes one form of eligible_retirement_plan sec_402 of the code provides in relevant part that the secretary may waive the 60-day requirement under sec_402 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 under sec_402 of the code are eligible for the waiver sec_401 provides the rules for governing direct transfers of eligible rollover distributions’ sec_1 a of the income_tax regulations question and answer-15 provides in relevant part that an eligible_rollover_distribution that is paid to an eligible_retirement_plan in a direct_rollover is a distribution and rollover and not a transfer of assets and liabilities revproc_2003_16 lr b date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_402 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and the documentation submitted by taxpayer a is consistent with his assertion that his failure to accomplish a timely rollover was due to a mistake made by bank e therefore pursuant to code sec_402 the service hereby waives the 60-day rollover requirement with respect to the distribution of amount i amount g - amount h from plan c taxpayer a is granted a period of days from the issuance of this ruling letter to contribute amount i into a rollover ira provided all other requirements of sec_402 except the 60-day requirement are met with respect to such contribution amount i will be considered a rollover_contribution within the meaning of sec_402 no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter_ruling has been sent to your authorized representative pursuant to a power_of_attorney on file in this office if you wish to inquire about this ruling please contact se t ep ra t1 ld at sincerely yours colt a wether manager employee_plans technical group enclosures deleted copy of this letter notice of intention to disclose notice cc


internal_revenue_service number info release date index no conex-133448-03 cc ita b2 date dear commissioner everson has asked me to respond to your inquiry dated date on behalf of a constituent who requires large quantities of wound care supplies your constituent has been advised that she may not use her employer-sponsored flexible_spending_account to purchase these supplies all employer-provided health coverage is subject_to the same exclusion rules an amount_paid for a medicine or drug can be deducted as a medical_care expense only if the item is a prescribed_drug or insulin under sec_213 of the internal_revenue_code a prescribed_drug is defined under sec_213 as a drug or biological that requires a prescription for an individual’s use thus a medicine an individual can obtain without a prescription is not a prescribed_drug for purposes of the sec_213 deduction even if a physician actually issues a prescription for it the prescription requirement does not apply to other medical_supplies such as bandages and crutches we recently issued public guidance on this issue in revrul_2003_58 i have enclosed a copy for your convenience i hope this information is helpful please call me or if you have any questions sincerely robert m brown acting associate chief_counsel income_tax accounting enclosure revrul_2003_58 2003_22_irb_959 date patient accordingly a may not deduct the cost of the aspirin under sec_213 however sec_213 does not apply to items that are not medicines or drugs including equipment such as crutches supplies such as bandages and diagnostic devices such as blood sugar test kits such items may qualify as medical_care if they otherwise meet the definition in sec_213 in this case the crutches and bandages mitigate the effect of a’s injured leg and the blood sugar test kit monitors and assists in treating a’s diabetes therefore the costs of these items are amounts paid for medical_care under sec_213 and are deductible subject_to the limitations of sec_213 holdings amounts paid_by an individual for medicines or drugs that may be purchased without a prescription of a physician are not taken into account pursuant to sec_213 and are not deductible under sec_213 amounts paid_by an individual for equipment supplies or diagnostic devices may be expenses for medical_care deductible under sec_213 subject_to the other limitations of that section drafting information the principal author of this revenue_ruling is john t sapienza jr of the office of associate chief_counsel income_tax and accounting for further information regarding this revenue_ruling contact mr sapienza on not a toll-free call issues are amounts paid_by an individual for medicines that may be purchased without a prescription of a physician deductible under sec_213 of the internal_revenue_code are amounts paid_by an individual for equipment supplies or diagnostic devices that may be purchased without a prescription of a physician deductible under sec_213 facts taxpayer a has an injured leg and uses crutches to enhance mobility while the leg is healing a uses bandages to cover torn skin on the leg a’s physician recommends that a take aspirin to treat pain in the leg a also has diabetes and uses a blood sugar test kit to monitor a’s blood sugar level a is not compensated for these expenses by insurance or otherwise law and analysis sec_213 allows a deduction for expenses paid during the taxable_year not_compensated_for_by_insurance_or_otherwise for medical_care of the taxpayer spouse or dependent to the extent the expenses exceed percent of adjusted_gross_income under sec_213 medical_care includes amounts paid for the diagnosis cure mitigation treatment or prevention of disease or for the purpose of affecting any structure or function of the body sec_213 permits an amount_paid for a medicine or drug to be taken into account for purposes of the sec_213 deduction for medical_care expenses only if the medicine or drug is a prescribed_drug or insulin sec_213 defines a prescribed_drug as a drug or biological that requires a prescription of a physician for its use by an individual because aspirin is a drug and does not require a physician's prescription for use by an individual pursuant to sec_213 its cost may not be taken into account under sec_213 even if a physician recommends its use to a