t c memo united_states tax_court george kiourtsis petitioner v commissioner of internal revenue respondent docket no filed date alan e rabunski for petitioner gary w bornholdt and lewis j abrahams for respondent memorandum opinion raum judge the commissioner determined a dollar_figure deficiency in petitioner's federal_income_tax the issues for decision are whether pursuant to sec_104 petitioner may exclude from gross_income a dollar_figure pension he received from new york city on account of his disability retirement from its department of corrections whether the commissioner is precluded from including the new york city pension in petitioner's gross_income where the commissioner had issued a closing letter accepting as filed petitioner's return that failed to include in petitioner's gross_income the new york city pension payments received in that year and whether petitioner must include dollar_figure of benefits received from the social_security administration in gross_income unless otherwise indicated all section references are to the internal_revenue_code in effect for the year in issue the facts have been stipulated petitioner george kiourtsis resided in astoria new york when the petition in this case was filed he served in the u s armed_forces from date to date including months in the infantry in vietnam while thus serving in the armed_forces petitioner received the national defense service medal a parachute badge the vietnam service medal the combat infantryman's badge the vietnam campaign medal the purple heart and the bronze star medal in the veterans' administration awarded petitioner a percent service-connected disability based on the shortening of his right leg due to injuries resulting from active_service in the armed_forces the veterans' administration subsequently increased petitioner's service-connected disability compensation by percent based on an injury to his right ear caused by exposure to explosions while in active_service in vietnam the veterans' administration subsequently increased petitioner's service-connected disability by percent because he was suffering from post traumatic stress disorder caused by combat- related injuries incurred as a result of active_service in the armed_forces in february the veterans administration increased petitioner's service-connected disability compensation_for post traumatic stress disorder from to percent and he was granted individual unemployability effective date meaning that petitioner's disorder was severe enough to render him incapable of working in petitioner was working as a captain in the new york city department of corrections and was assigned to riker's island on date he applied for ordinary disability retirement under the new york city employees' retirement_system on the basis that he was suffering from post traumatic stress disorder on date he appeared before the medical board_of the new york city employees' retirement_system for an evaluation of his application_for ordinary disability the medical board report included the reports of several physicians who diagnosed petitioner as suffering from post traumatic stress disorder on date the board_of trustees of the employees' retirement_system accepted the recommendations of the medical board and granted petitioner's application_for ordinary disability as provided by the new york city employees' retirement_system on his u s individual_income_tax_return petitioner did not include in income the dollar_figure new york city pension payments received that year the irs sent petitioner an information request inquiring why his return did not include the new york pension income in the amount of dollar_figure reported by the new york city comptroller by letter dated date petitioner responded to that inquiry attaching a copy of his report of discharge from the armed services a copy of the veterans administration's letter granting him individual unemployability and a letter from the new york city employees' retirement_system granting him ordinary disability retirement after submitting the foregoing letter petitioner received a closing letter from respondent dated date which accepted petitioner's return as filed the commissioner's determination of deficiency for was based upon two adjustments a the inclusion in gross_income of the dollar_figure pension received in by petitioner from new york city b the inclusion in gross_income of a portion dollar_figure of the dollar_figure in benefits he received from the social_security administration in petitioner relies upon the exclusion provisions of sec_104 as applied to the new york city pension received by him he also argues that the commissioner should be equitably estopped from including the pension in his gross_income because of the closing letter in respect of petitioner's return since the amount of social_security_benefits to be included in gross_income depends entirely upon a computation to be made based upon the taxpayer's adjusted gross income1 petitioner makes no separate argument regarding this adjustment exclusion under sec_104 to the extent relevant in this case sec_104 provides that gross_income does not include amounts received as a pension annuity or similar allowance for personal injuries or sickness resulting from active_service in the armed_forces of any country pertinent portions of sec_104 and related portions of sec_104 are set forth in the margin see sec_86 sec_104 compensation_for injuries or sickness a in general gross_income does not include-- amounts received as a pension annuity or similar allowance for personal injuries or continued the principal case interpreting the application of sec_104 is 78_tc_864 affd 709_f2d_1206 8th cir on the basis of this court's opinion in that case the taxpayer had served in the u s air force and had sustained a hearing disability caused by a war injury after discharge from the air force he worked a number of years as a civilian auditor for the general service sec_2 continued sickness resulting from active_service in the armed_forces b termination of application of subsection a in certain cases in general subsection a shall not apply in the case of any individual who is not described in paragraph individuals to whom subsection a continues to apply an individual is described in this paragraph if-- a on or before date he was entitled to receive any amount described in subsection a c he receives an amount described in subsection a by reason of a combat- related injury or d on application therefor he would be entitled to receive disability compensation from the veterans' administration administration gsa and was finally retired from gsa on disability because of his hearing disability he sought to exclude from gross_income annuity payments thereafter received from the civil service retirement and disability fund he contended that the civil service disability amount should be excluded from gross_income regardless of whether the retirement_plan was a military one so long as the disability pension was paid for an injury incurred during active_service id pincite this court held otherwise focusing instead on the provisions of the retirement_plan no case has previously considered whether sec_104 can be applied to exclude from income payments made to persons who retire from nonmilitary employment although the ambiguous wording of sec_104 provides some superficial support for petitioner's position this is overshadowed by the fact that the civil service retirement act is not designed to provide compensation_for military injuries u s c sec defines disability to mean the total disability for useful and efficient service in the grade or class of position last occupied by the employee because of disease or injury under this provision the nature or cause of the disability is irrelevant all that is taken into consideration is the employee's ability to perform his or her job thus in determining eligibility for disability retirement and the amount of disability annuity payments no consideration is given to whether the disease or injury arose from military service id pincite emphasis added accord french v commissioner tcmemo_1991_417 cf lonestar v commissioner tcmemo_1984_80 petitioner contends that the result in his case should be different because unlike the taxpayer in haar he actually received disability compensation from the veterans administration he attempts to distinguish his case from haar and others following it on the ground that in those cases there was no specific finding that the injuries for which the taxpayer received disability retirement were caused by active_service in the armed_forces see french v commissioner tcmemo_1991_ grady v commissioner tcmemo_1989_55 tolotti v commissioner tcmemo_1987_13 since petitioner's disability pension from the new york city employees' retirement_system was based on the medical board report which included reports of physicians diagnosing petitioner as suffering from post traumatic stress disorder petitioner contends that his pension was received because of a disability incurred while serving in the military haar v commissioner t c pincite contrary to petitioner's assertions the key to the holding of haar and its progeny is not whether the taxpayer received disability compensation from the veterans administration or whether there was a specific finding that the disability was service-related haar looked to the retirement_plan under the civil service retirement act and determined that it was not designed to provide compensation_for military injuries id pincite in this case the new york city employees' retirement_system is governed by the new york city administrative code the applicable_section provides as follows b if such medical examination shows that any such member referred to in subdivision a of this section is physically or mentally incapacitated for the performance of duty and ought to be retired the medical board shall so report and the board shall retire such member for ordinary disability new york city admin code sec emphasis added the new york city administrative code awards disability retirement because of inability to perform duties regardless of the cause although petitioner could not perform his duties because he was suffering from post traumatic stress disorder he was awarded disability retirement because he could not perform the duties of a captain in the new york city department of corrections the specific finding of post traumatic stress disorder was incidental to the finding that he was disabled under haar petitioner is not entitled to exclude his pension payments from gross_income petitioner further contends on the basis of a senate_finance_committee report that the legislative_history of sec_104 supports his interpretation of the statute that report states in pertinent part at all times veterans' administration disability payments will continue to be excluded from gross_income in addition even if a future serviceman who retires does not receive his disability benefits from the veterans' administration he will still be allowed to exclude from his gross_income an amount equal to the benefits he could receive from the veterans' administration otherwise future members of the armed_forces will be allowed to exclude military disability retirement payments from their gross_income only if the payments are directly related to combat injuries tax reform act of s rept pincite 1976_3_cb_49 contrary to petitioner's argument that report supports the interpretation of the statute applied in haar--that disability payments may be excluded if the pension_plan whether civilian or military compensates for military injuries the payments at issue here as in haar are based upon a civilian pension received by the employee for his inability to do the required work regardless of whether such inability as pointed out in haar v commissioner t c pincite arose from military service moreover the report makes clear that congress was attempting to prevent abuse of the exclusion by military retirees who qualified for disability just before retirement and then engaged in full-time civil employment while receiving an excludable disability paycheck s rept supra pincite c b vol pincite to allow petitioner to exclude from income disability payments received from a civilian source thus in effect setting the stage for being compensated twice for the same injury would run counter to the congressional purpose explicitly stated in the committee report upon which petitioner relies equitable_estoppel petitioner contends further that equitable_estoppel prevents the commissioner from requiring petitioner to include the new york city pension payments in his gross_income because he had received a closing letter from the irs accepting as filed his return which had excluded such payments from gross_income the traditional elements of equitable_estoppel have been stated to be conduct constituting a representation of a material fact actual or imputed knowledge of such fact by the representor ignorance of the fact by the representee actual or imputed expectation by the representor that the representee will act in reliance upon the representation actual reliance thereon and detriment on the part of the representee 74_tc_743 affd 673_f2d_784 5th cir and the court in graff pointed out that although the doctrine_of equitable_estoppel is not inapplicable to the federal government it has been applied to such government with caution and only where justice and fair play require it 332_us_380 227_f2d_1 8th cir the doctrine_of equitable_estoppel does not bar the commissioner from correcting a mistake of law 353_us_180 absent unfair conduct on the part of the commissioner edens v commissioner tcmemo_1974_309 affd 549_f2d_798 4th cir the government has the power to correct mistakes of law because 'whoever deals with the government does so with notice that no agent can by neglect or acquiescence commit it to an erroneous interpretation of the law ' graff v commissioner t c pincite quoting 83_f2d_317 d c cir interpreting sec_104 so as to exclude petitioner's pension payments from income was a mistake of law petitioner contends that the commissioner should be bound by the closing letter however a closing letter is to be sharply distinguished from a closing_agreement under sec_7121 entered into by both the taxpayer and the commissioner which is binding in accordance with its terms the closing letter is nothing more than the commissioner's acceptance of a return as filed and the prior practice of the irs or the commissioner's acceptance of a prior year's return does not bar the commissioner as to later years 202_f2d_112 2d cir affg in part a memorandum opinion of this court 55_tc_28 52_tc_671 affd 431_f2d_511 2d cir 43_tc_824 cf 381_us_68 281_us_357 moreover even if it were otherwise relevant here petitioner has presented no evidence of unfair conduct by the irs apart from his bald assertion that he relied to his detriment on the closing letter and there is no showing here that the commissioner has even sought to reopen petitioner's liability for tax we hold that even though the irs made a mistake of law in respect of petitioner's return the commissioner certainly had the power to correct that mistake as it affected petitioner's return social_security payments the commissioner's inclusion of petitioner's new york city pension in his gross_income increased his adjusted_gross_income such increase resulted without dispute in an increase in the amount of taxable social_security_benefits petitioner received as indicated earlier herein petitioner does not contest this adjustment if as we have held his new york city pension is includable in his gross_income decision will be entered for respondent


t c memo united_states tax_court paul anthony cappel sr petitioner v commissioner of internal revenue respondent docket no filed date paul anthony cappel sr pro_se eliezer klein for respondent memorandum findings_of_fact and opinion lauber judge the internal_revenue_service irs or respondent deter- mined a deficiency of dollar_figure in petitioner’s federal_income_tax for the all statutory references are to the internal_revenue_code code in effect for the tax_year in issue and all rule references are to the tax_court rules_of_practice and procedure we round all monetary amounts to the nearest dollar central question for decision is whether petitioner is entitled to claim dependency_exemption deductions for three children the answer to that question determines whether he is entitled to head-of-household filing_status and child tax_credits although we are very sympathetic to petitioner’s predicament we have no alternative but to resolve these questions in respondent’s favor findings_of_fact the parties filed a stipulation of facts with accompanying exhibits that are incorporated by this reference petitioner resided in pennsylvania when he peti- tioned this court petitioner is the father of three children tiffany m cappel c a c and p a c j tiffany and c a c were born to petitioner and his first ex-wife p a c j was born to petitioner and his second wife with whom he is currently in divorce proceedings during tiffany c a c and p a c j were ages and respectively in a florida family court entered a child_support order in the divorce case between petitioner and his first ex-wife the court ordered that petitioner will receive the child dependency_exemption for tiffany and c a c each and every year beginning in but only if he remains current from this point we refer to minor children by their initials see rule a forward in his payments of child_support petitioner credibly testified that he has been current in his child_support payments at all relevant times and respondent does not contend otherwise petitioner timely filed a federal_income_tax return for on which he claimed tiffany c a c and p a c j as dependents notwithstanding the florida court’ sec_2002 order petitioner’s first ex-wife likewise claimed tiffany and c a c as dependents for and p a c j ’s mother claimed him as a dependent for that year as well neither tiffany nor c a c resided with petitioner during and he does not know where either of them resided p a c j resided with his mother in penn- sylvania for more than half the year during he did not reside with petitioner at any time during that year petitioner was the noncustodial_parent of c a c and p a c j during he did not obtain from c a c ’s mother or from p a c j ’s mother an executed form_8332 release revocation of release of claim to ex- emption for child by custodial_parent opinion the commissioner’s determinations in a notice_of_deficiency are generally presumed correct though this presumption can be rebutted by the taxpayer see rule a 290_us_111 petitioner does not contend that the burden_of_proof should shift to respondent under sec_7491 deductions and credits are a matter of legislative grace taxpayers bear the burden of proving their entitlement to deductions and credits allowed by the code and substantiating the amounts thereof 503_us_79 sec_151 provides as a deduction an exemption from taxable_income dollar_figure for for each dependent as defined in sec_152 sec_152 defines a dependent as either a qualifying_child or a qualifying_relative of the taxpayer to be considered a qualifying_child of the taxpayer the child must among other things have the same principal_place_of_abode as the taxpayer for more than one-half of the taxable_year see sec_152 p a c j and c a c were both children during because neither had attained the age of by yearend see sec_152 however neither resided with petitioner at any time during the year and thus neither was a qualifying_child it is unclear whether tiffany was a child during she was years old and petitioner did not provide any information as to whether she was a student see sec_152 regardless tiffany did not reside with petitioner at any time during and thus she was not a qualifying_child for a family_member to be a qualifying_relative a taxpayer must show among other things that he provided more than of that person’s support during the year sec_152 though petitioner paid child_support for c a c and p a c j during he provided no evidence that he supplied more than of their support or of tiffany’s support as a result none of them was a qualifying_relative of petitioner during though his children were neither qualifying children nor qualifying relatives during the code provides a mechanism for a noncustodial_parent such as petitioner to become entitled to a dependency_exemption for minor children when parents are legally_separated or divorced sec_152 gener- ally awards the dependency_exemption to the custodial_parent that is the parent having custody of the child for the greater portion of the year sec_152 sec_152 provides an exception to this rule if two conditions are met the custodial_parent signs a written declaration releasing his or her claim to the exemption and the noncustodial_parent attaches such written declaration to the noncustodial parent’s return for the taxable_year sec_152 and b the written declaration by the custodial_parent must be made on form_8332 or in a signed document substantially_similar to form_8332 see sec_152 139_tc_468 aff’d 745_f3d_890 8th cir 114_tc_184 aff’d on other grounds sub nom 293_f3d_1208 10th cir a judicial decree or child custody order standing alone does not qualify as a written declaration within the meaning of sec_152 see miller t c pincite neal v commissioner tcmemo_1999_97 77_tcm_1610 sec_1_152-4 income_tax regs a court order or decree or a separation agreement may not serve as a written declaration petitioner did not include in hi sec_2011 return a form_8332 or a signed declar- ation by which c a c ’s or p a c j ’s mother relinquished her right as the cus- todial parent to claim that child as a dependent petitioner has thus failed to carry his burden of proving his entitlement to a dependency_exemption deduction either for those children or for tiffany as a corollary of that conclusion we find that he is not entitled to head-of-household filing_status or to child tax_credits to be entitled to head-of-household status a taxpayer must maintain a home that constitutes for more than one-half of such taxable_year the principal_place_of_abode of at least one qualifying_child sec_2 petitioner agreed that none of the children resided with him for more than half of calendar_year to be entitled to the child_tax_credit a taxpayer must have a qualifying_child for which the taxpayer is allowed a deduction under sec_151 see sec_24 for the reasons discussed in the text petitioner is not entitled to any depen- dency exemption deductions under sec_151 this case resembles many that come before our court the situation is un- fortunate petitioner has acted honorably in paying child_support for many years but his ex-wife has apparently claimed two of their children as dependents in vio- lation of a florida court order but while the result may seem harsh in these cir- cumstances the law is unfortunately clear on the record before us we have no alternative but to sustain respondent’s determinations to reflect the foregoing decision will be entered for respondent


internal_revenue_service number release date index number -------------------------- -------------------------- -------------------------------------- ------------------------------------ department of the treasury washington dc person to contact --------------------- id no ------------- telephone number --------------------- refer reply to cc psi b1 - plr-118346-03 date march legend legend h w x ---------------------------------------------------------------------------------------- ----------------------------------------- --------------------- -------------------- ----------------------- y grat a grat b non exempt qsst a non exempt qsst b d1 d2 d3 d4 -------------------------- ------------------------ -------------------------------------------- ----------------------- --------------------------------------- ----------------------- --------------------------------------------------- ----------------------- ---------------------------------------------------- ----------------------- -------------------------- -------------------------- -------------------------- -------------------------- ---------- -------- ---------------- plr-118346-03 n1 n2 state dear ----- ------------------ this responds to your letter dated date on behalf of the taxpayer non exempt qsst a requesting a rulings under sec_61 sec_1001 and sec_1361 of the internal_revenue_code facts x is a corporation organized under the laws of state it filed an election to be treated as an s_corporation under sec_1362 effective d1 h and w as grantors formed grat a and grat b under the laws of state on d2 for the benefit of y on d2 grat a and grat b acquired n1 shares of x nonvoting common_stock and n2 shares of x voting common_stock the instruments creating the grats provide in part that article from the date of this agreement until the fifth anniversary of the date of this agreement or the grantor s earlier death athe trust term the trustee shall pay to the grantor the aannuitant an aannuity amount article the trust term expires on the fifth anniversary of the date of this agreement and grantor s daughter y or any of her descendants is living the trustee shall divide the trust assets as provided in article article if the trust term expires on the grantor’s death and the grantor has revoked his wife’s interest or the grantor’s wife did not survive the grantor then such portion of the trust assets as are includible in the grantor’s estate for federal estate_tax purposes shall be distributed to the personal representative of grantor’s estate the remaining assets if any shall be distributed as provided in article plr-118346-03 article if y is living at the time the trust estate is received by the trustee the trustee shall hold the property of the trust estate as a separate non exempt trust for the benefit of y under the provisions of this article article the trustee may distribute to or for the benefit of the beneficiary of each non exempt trust so much of the net_income and principal of the trust up to the whole thereof as the trustee determines is required to provide for the beneficiary’s health support maintenance and education in addition the trustee may pay from each beneficiary’s trust any tuition or health care expenses for the benefit of the beneficiary’s descendants provided that such payments are made directly to the educational_institution or health care provider respectively and that such payments are not subject_to the generation-skipping tax article any income of a_trust no distributed in a calendar_year shall be accumulated and added to principal at or prior to the end of such year article the non exempt trust for y shall terminate upon his death article the trustee of two or more trusts created by this or any other instrument may merge such trusts if the beneficiary or beneficiaries are the same and the terms of the trusts are substantially the same article the beneficiary or the beneficiary s legal_representative may elect to have sec_1361 of the code apply to one or more of such corporations if such an election is made all provisions of the trust shall be interpreted construed and administered in a manner consistent with the grantor s intention that the trust be treated for all purposes as a qualified_subchapter_s_trust article plr-118346-03 notwithstanding any provision of this agreement directing otherwise if rules applicable to a qualified_subchapter_s_trust at the time when subchapter_s stock is distributable to the trust in monthly or quarterly installments to or for the benefit of the beneficiary and no distributions of income or principal from the trust go to any other person except the beneficiary during the beneficiary s lifetime on d3 grat a’s term expired resulting in non exempt qsst a being formed on d4 grat a transferred n2 shares of x voting common_stock and n1 shares of x nonvoting common_stock to non exempt qsst a on d3 grat b’s term also expired resulting in non exempt qsst b being formed on d4 grat b transferred n2 shares of x voting common_stock and n1 shares of x nonvoting common_stock to non exempt qsst b non exempt qsst a and non exempt qsst b each filed a qualified_subchapter_s_trust qsst election under sec_1361 effective d4 non exempt qsst b proposes to merge with and into non exempt qsst a pursuant to article of the grat agreements in addition to the facts discussed above the taxpayer represents the following dollar_figure no additions have been made to non exempt qsst a or to non exempt qsst b since initial funding the terms and provisions of non exempt qsst a and non exempt qsst b are substantially identical y is the beneficiary of both non exempt qsst a and non exempt qsst b non exempt qsst a and non exempt qsst b have continuously qualified as qssts since the d3 effective date of their qsst elections x has consistently treated y as the owner of the x stock held by non exempt qsst a and non exempt qsst b and all of y’s tax returns have been filed consistent with that status the merger will not change the quality or value of y’s interest in either non exempt qsst a’s or non exempt qsst b’s assets and that it will not confer upon y any additional powers or beneficial interests dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure the merger is being proposed to simplify the management and administration of the trusts following the merger the terms of non exempt qsst a will continue to provide that during the life of the current income_beneficiary there shall be only one income plr-118346-03 beneficiary of trust any corpus distributed during the life of the current income_beneficiary may be distributed only to the income_beneficiary the income_interest of the current income_beneficiary in the trust shall terminate on the earlier of the beneficiary’s death or termination of the trust and upon the termination of the trust during the life of the current income_beneficiary the trust shall distribute all of its assets to that beneficiary and all of the income will be distributed or required to be distributed currently to one individual who is a citizen or resident_of_the_united_states law and analysis sec_61 and sec_1001 ruling sec_61 of the code provides that gross_income means all income from whatever source derived sec_61 provides that gross_income includes gains derived from dealings in property sec_1001 provides that the gain from the sale_or_other_disposition of property shall be the excess of the amount_realized therefrom over the adjusted_basis provided in sec_1011 for determining gain and the loss shall be the excess of the adjusted_basis provided in such section for determining loss over the amount_realized sec_1001 provides that the amount_realized from the sale_or_other_disposition of property shall be the sum of any money received plus the fair_market_value of the property received sec_1001 provides that except as otherwise provided in subtitle a the entire amount of the gain_or_loss determined under sec_1001 on the sale_or_exchange of property shall be recognized sec_1_1001-1 of the income_tax regulations provides that the gain_or_loss realized from the conversion of property into cash or from the exchange of property for other_property differing materially either in_kind or in extent is treated as income or as loss sustained in 499_us_554 the supreme court addressed whether a sale_or_exchange has taken place that results in a realization of gain_or_loss under sec_1001 of the code the court stated that an exchange of property gives rise to a realization event under sec_1001 if the properties exchanged are materially different consequently the court held that an exchange of mortgages constituted a realization event under sec_1001 because the exchanged interests - loans that were made to different obligors and secured_by different homes - were legally distinct entitlements sec_1361 ruling sec_1361 defines an s_corporation as a small_business_corporation for which an election under sec_1362 is in effect sec_1361 defines asmall plr-118346-03 business corporation as a domestic_corporation that is not an ineligible_corporation and that does not a have more than shareholders b have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in c who is not an individual c have a nonresident_alien as a shareholder and d have more than one class of stock sec_1361 provides that a_trust all of which is treated under subpart e of part i of subchapter_j of chapter as owned by an individual who is a citizen or resident_of_the_united_states may be a subchapter_s_corporation shareholder sec_1361 states that a qsst with respect to which a beneficiary makes an election under sec_1361 will be treated as a_trust described in sec_1361 and the qsst’s beneficiary will be treated as the owner for purposes of sec_678 of that portion of the qsst’s s_corporation stock to which the election under sec_1361 applies under sec_1361 the beneficiary of a qsst may elect to have sec_1361 apply under sec_1361 this election will be effective up to days and two months before the date of the election sec_1361 provides that a qsst is a_trust the terms of which require that i during the life of the current income_beneficiary there shall be only income_beneficiary of the trust ii any corpus distributed during the life of the current income_beneficiary may be distributed only to such beneficiary iii the income_interest of the current income_beneficiary in the trust shall terminate on the earlier of such beneficiary’s death or the termination of the trust and iv upon the termination of the trust during the life of the current income_beneficiary the trust shall distribute all of its assets to such beneficiary in addition sec_1361 requires that the trust distribute all of its income within the meaning of sec_643 currently to one individual who is a citizen or resident_of_the_united_states sec_1_1361-1 provides that the beneficiary of the qsst who is treated as the owner of that portion of the trust that consists of s_corporation stock is treated as the shareholder for the purpose of sec_1361 defining the term asmall business corporation conclusion sec_61 and sec_1001 ruling in the present case the terms and conditions of each of the merged trusts are substantially identical to the terms and conditions of each of the surviving trusts because the property interests and legal entitlements of the beneficiaries will remain unchanged by the proposed mergers it is consistent with cottage savings to find that the beneficiaries’ interests after the proposed mergers will not differ materially from the plr-118346-03 beneficiaries’ interests before the proposed merger thus the proposed mergers will not result in the realization of any gain_or_loss or other taxable_event under sec_61 or sec_1001 of the code to the current trust_beneficiary sec_1361 ruling article of the instrument creating non exempt qsst a and non exempt qsst b allows for a merger of similar trusts only when the trusts have the same income_beneficiary under sec_1_1361-1 the x shares which make up the corpus of non exempt qsst a and non exempt qsst b are treated as directly owned by y any transfer of the x shares pursuant to a merger under article would effectively be a transfer of the shares from y to y therefore inclusion of article permitting the merger of similar trusts did not make either trust ineligible to be a qsst provided that both non exempt qsst a and non exempt qsst b qualified as qssts on the date that non exempt qsst b transferred its x shares to non exempt qsst a the transfer did not terminate non exempt qsst a’s qsst election except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code specifically no opinion is expressed on whether x is a subchapter_s_corporation for federal tax purposes or whether any of the trusts discussed qualify as qssts this ruling is directly only to the taxpayer that requested it sec_6110 of the code provides that if may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer sincerely s dan carmody dan carmody senior counsel branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


id office uilc cca_2009012116501453 ---------------------------- number release date from -------------------- sent wednesday date pm to -------------------------- cc ------------------ subject fw voccola v commissioner tcmemo_2009_11 ------------------- -------------asked me to respond to your question regarding sec_6651 jurisdiction i have attached chief_counsel notice_1999_111 issue in the notice which is found on page directly addresses your question i have also attached the nemerov case that is cited in the notice in sum sec_6214 states that the tax_court shall have jurisdiction to determine whether any additional_amount or any addition to the tax should be assessed the legislative_history behind this section states that the tax_court has jurisdiction over additions to tax for failure to pay pursuant to sec_6651 where the court has jurisdiction to redetermine the underlying tax_deficiency please feel free to contact me if you have any further questions thank you -------- ---------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ------------------------------ ------------------


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division apr -ep rv r u i l xxxxxxxxxxxxxxxkxxxxxxx xxxxxxxxxxxxxxxxxxxxxx xxxxxxaxxxxxxxxxxxxxxkx legend taxpayer a xxxxxxxxxxxxxxxxxx individual b xxxxxxxxxxxxxxxxxxx plan x ira y xxxxxxxxxxxxxxxxaxxx xxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxx xxxxxxxxxxxaxxxxxxxx company n xxxxxxxxxxxxxxxxxxx amount a xxxxxxxxxxxxxxxxxxx amount b xxxxxxxxxxxxxxxxxxx amount c xxxxxxxxxxxxxxxxxxk dear xxxxxxxxxxx this is in response to your request dated date in which you request a waiver of the 60-day rollover requirement contained in sec_402 of the internal_revenue_code the code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a represents that he received a distribution from plan x totaling amount a taxpayer a asserts that his failure to accomplish a rollover within the 60-day period prescribed by sec_402 of the code was due to the medical_condition and death of his mother individual b on december taxpayer a received a statement from company n indicating the distribution of amount a less federal_income_tax withholding in the amount of amount b from plan x for a net distribution of amount c upon receipt of the statement taxpayer a called his former employer company n and was informed that a check representing his investment in plan x had been mailed to him on december taxpayer a represents that he told company n that he had never requested nor received the check that was mailed to him on december company n re-issued the check for the amount of amount c on march 20__ taxpayer a deposited the full amount a into ira y on february taxpayer a further represents that he was the primary caregiver of individual b starting on august _ until the death of individual b on april based on the above facts and representations you request a ruling that the internal_revenue_service waive the 60-day rollover requirement with respect to the distribution of amount a 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 included 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 that an eligible_rollover_distribution shall not include any distribution to the extent such distribution is required under sec_401 of the code 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 are eligible for the waiver under sec_402 of the code revproc_2003_16 r 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 documentation submitted by taxpayer a shows that amount a was successfully deposited into ira y within days after the check for amount c was actually received by taxpayer a therefore a waiver of the 60-day rollover period is denied since there is no need for a waiver provided all other requirements of code sec_402 were met with respect to the contribution of amount a into ira y on march valid rollover_contribution within the meaning of sec_402 of the code __ such contribution was a this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this 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 if you wish to inquire about this ruling please contact xxxxxxxxxxxxxx at xxxxxxx please address all correspondence to se t ep ra t3 laura b warshawsky manager employee_plans technical group deleted copy of letter_ruling notice of intention to disclose sincerely yours enclosures a


internal_revenue_service department of the treasury index numbers number release date washington dc person to contact telephone number refer reply to cc dom corp 3-plr-100710-00 date date shareholder parent distributing controlled disregarded_entity operating merger sub country x state y state z jurisdiction a plr-100710-00 year year date date a b c d e f dear this letter replies to a letter from your authorized representative dated date requesting that we supplement our ruling letter dated date control number plr-106450-99 published as plr the prior ruling letter the prior ruling letter concerned certain federal_income_tax consequences of a corporate separation under sec_355 of the internal_revenue_code all statements and representations set forth in the prior ruling letter are still valid except as set forth below the first line of page of the prior ruling letter should read single-member jurisdiction a corporation rather than single-entity state a corporation the name of disregarded_entity in the legend of the prior ruling letter should be corrected to the name given to disregarded_entity in the above legend in light of the additional information submitted the year supplied to year in the legend of the prior ruling letter has been amended to the year given to year in the above legend paragraph ix on page of the prior ruling letter reads as follows plr-100710-00 ix parent will transfer all of the shares of the distributing special preferred_stock and a fixed percentage of the shares of distributing new common_stock to controlled in exchange for additional shares of common_stock of controlled paragraph ix on page should be amended to read as follows ix parent will transfer all of the shares of the distributing special preferred_stock and a fixed percentage of the shares of distributing common_stock to controlled in exchange for additional shares of common_stock of controlled in the prior ruling letter_ruling on page read as follows provided that controlled attaches a statement to its timely filed including extensions federal_income_tax return agreeing that controlled will treat a disposition of part or all of the stock_or_securities of either or a successor-in-interest or disregarded_entity or a successor-in-interest as a disposition for purposes of sec_1_884-2t then distributing’s transfer of the stock to controlled will not be treated as a disposition of stock under sec_1_884-2t if in the future is liquidated into controlled in a liquidation under sec_332 such liquidation of will be treated as a disposition for purposes of sec_1_884-2t notwithstanding sec_1_884-2t this ruling should be amended by adding the following sentence at its conclusion this ruling is in lieu of and replaces ruling of the date transaction ruling control number plr-119706-98 published as plr for transfers occurring after distributing’s transfer of the stock to controlled other than ruling which is modified as stated above all of the rulings in the prior ruling letter remain in full force and effect no opinion is expressed about the tax treatment of any of the transactions described herein under other provisions of the code and regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the transactions not specifically covered by the above ruling this ruling letter is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent each affected taxpayer must attach a copy of this letter to the taxpayer's federal_income_tax return for the tax_year in which the transaction covered by this ruling letter is plr-100710-00 consummated we are sending a copy of this letter to the authorized representative specified in the power_of_attorney on file in this office sincerely yours assistant chief_counsel corporate by ken cohen senior technician reviewer branch


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi br - plr-139118-01 date date legend x state d1 this responds to your representative’s letter dated date submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts x was incorporated under state law on d1 the shareholders of x intended that x elect to be treated as an s_corporation effective d1 however the election to be treated as an s_corporation was not timely filed law and analysis sec_1362 provides that a small_business_corporation can elect to be treated as an s_corporation sec_1362 provides when an s election becomes effective 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 was made if an election is made after the first two and one-half months of a corporation’s taxable_year then the corporation will generally not be treated as an s_corporation until the following taxable_year however sec_1362 provides that if no election is made pursuant to sec_1362 or if the election is made after the date prescribed for making such an plr-139118-01 election and the secretary determines reasonable_cause existed for the failure to timely make the election then the secretary can treat such an election as timely made for that taxable_year and effective as of the first day of that taxable_year in the present case x failed to timely elect s_corporation treatment effective d1 however x has established reasonable_cause for not making a timely election and is thus entitled to relief under sec_1362 conclusion based solely on the facts submitted and representations made and provided that x otherwise qualifies as a subchapter_s_corporation we conclude that x will be recognized as an s_corporation effective d1 within days from the date of this letter x should submit a properly completed form_2553 with a copy of this letter attached to the relevant service_center 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 s requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative s dianna k miosi sincerely dianna k miosi chief branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes