internal_revenue_service number release date index number ------------------------------------------------------------- ---------------------------------------------- ------------------------------------------------ --------------------------------------------------------------- ---------------- ----------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ----------------- telephone number --------------------- refer reply to cc psi b03 plr-125791-11 date date x y z ------------------------------------------------------------------------------------------------ ---------------------- ------------------------------------------------------------------------------------------------ ----------------------- ------------------------------------------------------------------------------------------------ ----------------------- country country d1 d2 d3 d4 a -------- ------------------ ------------------- ---------------------- ---------------------- -------------------------- ----- dear -------- this letter responds to a letter dated date submitted on behalf of x requesting a determination that x may file an election to be treated as an association plr-125791-11 taxable as a corporation under sec_301_7701-3 of the procedure and administration regulations with an effective date within sixty months of a previous entity classification election facts x was formed on d1 under the laws of country x represents that it is a foreign_entity eligible to elect to be classified as an association_taxable_as_a_corporation for federal tax purposes x was a wholly-owned subsidiary of y a domestic_corporation x elected to be classified as a disregarded_entity for federal tax purposes effective d2 as of d3 x underwent an ownership_change whereby a of the ownership interests in x now are owned by persons that did not own any interests in x as of d2 z intended that x would be treated as an association_taxable_as_a_corporation effective d4 because an entity classification election was made within months prior to d4 x requests the service’s consent under sec_301_7701-3 to change its classification law and analysis sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 sec_301_7701-3 provides that an election 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 if an election specifies an effective date more than days prior to the date on which the election is filed it will be effective days prior to the date it was filed sec_301_7701-3 provides in part that if an eligible_entity makes an election under sec_301_7701-3 to change its classification the entity cannot change its classification by election again during the sixty months succeeding the effective date of the election however the commissioner may permit the entity to change its classification by election within the sixty months if more than fifty percent of the ownership interests in the entity as of the effective date of the subsequent election are owned by persons that did not own any interests in the entity on the filing_date or on the effective date of the entity’s prior election conclusion plr-125791-11 based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_7701-3 have been satisfied accordingly x may elect to be treated as an association_taxable_as_a_corporation for federal tax purposes effective d4 the election should be made by filing form_8832 with the appropriate service_center a copy of this letter should be attached to the election except as specifically set forth above we express no opinion concerning the federal tax consequences of the above described facts under any other provision of the internal_revenue_code this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to x’s authorized representative sincerely richard t probst senior technician reviewer branch passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number info release date index number ---------------------------- --------------------- ---------------------------------- department of the treasury washington dc person to contact -------------------- id no ------------- telephone number --------------------- refer reply to cc psi b01 -genin-135720-08 date january taxpayer -------------------------------- this letter responds to your letter dated date requesting sec_1_1362-6 generally provides that to rescind a revocation the legend dear ---- permission to rescind the revocation of taxpayer’s s_corporation_election based on the correspondence you included the revocation of the s election was made on date effective date corporation files a statement that the corporation rescinds the revocation made under section d the statement must be field with the service_center where the revocation was properly filed a rescission may be made only with the consent in the manner required under paragraph b of this section of each person who consented to the revocation and of each person who became a shareholder of the corporation within the period beginning on the first day after the date the revocation was made and ending on the date on which the rescission is made if the rescission statement is filed before the revocation becomes effective and is filed with the proper service_center the rescission is effective on the date it is so filed thus under sec_1_1362-6 a rescission of an s revocation is permissible only before an election takes effect sec_1362 of the internal_revenue_code generally provides that absent the commissioner’s consent an s_corporation whose election has terminated or successor_corporation may not make a new election under sec_1362 for five taxable years see also sec_1_1362-5 of the income_tax regulations the exclusive manner for obtaining the required consent is through receiving a favorable private_letter_ruling from the genin-135720-08 service the procedures for obtaining a private_letter_ruling are outlined in revproc_2008_1 along with the schedule of fees and a sample letter_ruling therefore we are unable to grant your request at this time connection with the election to rescind an s_corporation_election we appreciate this opportunity to provide you with assistance please keep a copy of this letter for your records this letter implies no opinion concerning any other federal tax issues in if you have further questions concerning any matter addressed in this letter please contact us at ----- -------------- not a toll free number sincerely dianna miosi dianna miosi chief branch office of the associate chief_counsel passthroughs and special industries


department of the treasury internal_revenue_service washington d c may tax exempt and - government entities division uic9100 5e t ep lat s legend taxpayera company m ira x companyn ira y annuity application bank o bank p ira z amountl amount2 dear on you submitted a request for letter_ruling to the internal_revenue_service service in which you ask the service to waive the 60-day rollover period requirement found in sec_408 of the internal_revenue_code with respect to a distribution you received of an individual_retirement_annuity your ruling_request as supplemented by correspondence dated reconsider private_letter_ruling plr issued to you on or about date and provided additional facts in support of your request this letter_ruling which modifies and revamps plr is based on the following facts and representations asked the service to page taxpayer a formerly maintained ira x with company m on or about taxpayer a received a distribution of the full amount of his ira x amount taxpayer a completed an application_for an individual the next day retirement annuity ira y annuity application from company n in the amount of amount amount consisted of amount and of his calendar_year ira contribution the annuity_contract and accompanying information was delivered on approximately a month later taxpayer a after reading the contract cancelled it the next day the ira y annuity_contract provides in relevant part that the customer has the right to return the policy or contract within the trial examination period which begins on the date the contract is received by the customer approximately two weeks later on or about taxpayer a mailed the check that he received from taxpayer a received a check in the amount of amount from company n evidencing his cancellation of the annuity_contract that he had purchased from company n approximately two weeks later on or about company n to bank p a subsidiary of bank o to purchase a certificate of deposit ira z documentation submitted by taxpayer a with this request shows that he signed the ira z application form on taxpayer a still maintains ira z with bank p taxpayer a asserts that he failed to roll over amount into another ira within the 60-day rollover period due to company n’s delay in refunding the proceeds after he cancelled the ira y annuity application and that he deposited amount into ira z inaletterdated in which company n noted that the ira y was withdrawn under the free look- taxpayer a requested reconsideration of the ruling plr he received on date based on a letter he received from company n dated annuity policy that was issued on provisions contained in the annuity_contract within the trial examination period the letter dated signed by a representative of company n also provided in relevant part that ‘ there is no binding contract between yourself and company n there is no individual_retirement_account established with company n all funds have been returned to you furthermore documentation dated the check taxpayer a received from company n on or about acknowledged that the pending ira y annuity_contract was surrendered during the trial examination period per taxpayer a’s request enclosed with also based on the above facts and representations you request the following letter_ruling that pursuant to code sec_408 and revproc_2003_16 2003_4_irb_359 date taxpayer a’s the annuity proceeds he received from company n on or about contribution of to the extent said proceeds consisted of amount previously page distributed from ira x on or about contribution within the meaning of code sec_408 constituted a valid rollover with respect to your ruling_request code sec_408 provides the general requirements which a_trust must meet in order to constitute an individual_retirement_account ira code sec_408 provides that except as otherwise provided in this subsection any amount_paid or distributed out of an individual_retirement_plan shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 code sec_408 provides that sec_408 does not apply to a rollover_contribution if such contribution satisfies the requirements of sec_408 and d b code sec_408 provides that sec_408 does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the account is maintained if the entire amount received including money and any other_property is paid into an ira other than an endowment_contract for the benefit of such individual not later than the 60th day after the day on which he receives the payment or distribution code sec_408 provides that this paragraph does not apply to any amount described in subparagraph a i received by an individual from an individual_retirement_account or individual_retirement_annuity if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in that subparagraph from an individual_retirement_account or individual_retirement_annuity which was not includible in his gross_income because of the application of this paragraph code sec_408 provides in relevant part that the secretary may waive the 60-day requirement under subparagraph a where the failure to waive the requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement revproc_2003_16 il 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 or d d 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 page amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred in this case taxpayer a received a distribution totaling amount from his ira the next day x on or about ira y annuity application with company n evidencing an intent to purchase an ira annuity_contract in the amount of amount which consisted of amount and an amount equal to his permitted calendar_year ira contribution no assertion has been made by taxpayer a that his attempted purchase of ira annuity y contravened the requirements of code sec_408 taxpayer a completed an company n by letter to taxpayer a dated and further in a letter to has confirmed that the contract was withdrawn by taxpayer a dated taxpayer a on or about examination period and that there was no ira account established with company n by taxpayer a since an ira had not been established by taxpayer a with company n using amount taxpayer a was eligible to make a tax-deferred rollover of that amount to another ira provided the 60-day rollover requirement was satisfied under the free look provision during the trial shortly after on or about approximately two weeks later taxpayer a received a check from company n in the amount of amount evidencing his cancellation of his attempted ira annuity y purchase company n never issued taxpayer a an ira annuity_contract taxpayer a subsequently used the check he received from company n to purchase a certificate of deposit ira z from bank p taxpayer a asserts that he failed to roll over amount into another ira within the 60-day rollover period due to company n’s delay in refunding amount to taxpayer a after he cancelled the ira y annuity application however as supported by documentation submitted by taxpayer a and to evidence taxpayer a’s intent to maintain amount in a tax-deferred ira account taxpayer a on the check he received from company n to establish ira z with bank p amount remains invested in ira z used _ subsequent to establishing ira z taxpayer a became concerned that he may have violated the one-year rollover rule found in code sec_408 in response to an earlier concluded that he had ruling_request submitted by taxpayer a the service in plr with respect to the this requested ruling code sec_408 and revproc_2003_16 authorize the service to extend the 60-day rollover period under certain circumstances in this case taxpayer a was eligible to roll over into an ira the check that he received from company n to the extent the check totaled amount in that the page proposed rollover to ira y annuity was never completed and no ira established however said rollover had to have been accomplished within days of taxpayer a did not comply with the day rollover requirement primarily because of the length of time required for company n to mail taxpayer a the check which taxpayer a then rolled over into ira z with bank p therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the from ira x as aresult taxpayer a’s placing amount into ira z with bank p is deemed to have constituted a valid rollover_contribution into an ira defined in code sec_408 provided all other requirements of sec_408 of the code except the 60-day requirement were met with respect to such contribution said contribution will be considered a rollover_contribution within the meaning of sec_408 of the code distribution of amount by necessity this letter_ruling based on additional information submitted by taxpayer a which concludes that his placing amount into ira z with bank p is deemed to have constituted a valid rollover_contribution into an ira defined in code sec_408 also concludes that said rollover_contribution did not result in a violation of the rule found in code sec_408 contrary to the service’s holding in plr this letter is directed only to the taxpayer who requested it sec_6110 of this ruling does not authorize the rollover of amounts that were required to be distributed by sec_401 of the code made applicable to iras under sec_408 of the code if any 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 furthermore no opinion is expressed as to whether the traditional_ira contribution made with respect to calendar_year referenced above satisfies the requirements of code sec_219 and sec_408 the code provides that it may not be used or cited as precedent page if a you wish to inquire about this ruling please contact ld not a toll-free number please address all correspondence to se t ep ra t3 sincerely yours rances v sloan ménager employee_plans technical group


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 b03 plr-100925-10 date date company ------------------------------------------------------------------------------------------------- ------------------------- date ------------------ country ----------------- dear ---------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of company by company’s authorized representative requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election to be classified as a disregarded_entity for federal tax purposes facts company was formed under country law on date company represents that it is a foreign_entity eligible to elect to be classified as a disregarded_entity for federal tax purposes company intended that it be classified as a disregarded_entity effective date however due to inadvertence a valid form_8832 entity classification election to treat company as a disregarded_entity effective date was not timely filed law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 an eligible plr-100925-10 entity with at least two members can elect to be classified as either an association and thus a corporation under sec_301_7701-2 or a partnership sec_301_7701-3 provides that unless the entity elects otherwise a foreign eligible_entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided in sec_301_7701-3 or to change its classification by filing form_8832 with the service_center designated on form_8832 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 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 sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result company is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center and elect to be treated as a disregarded plr-100925-10 entity for federal tax purposes effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose this ruling is contingent on the owner of company filing within days of this letter all required returns and amended income_tax returns consistent with the requested relief being effective date to the extent appropriate these returns must include but are not limited to the following forms i forms information_return of u s persons with respect to certain foreign_corporations ii forms return of u s persons with respect to certain foreign_partnerships and iii forms information_return of u s persons with respect to disregarded entities such that these forms reflect the consequences of the relief granted in this letter except as specifically set forth above no opinion is expressed or implied concerning the federal tax consequences of the facts described above under any other provision of the code this ruling is directed only to the taxpayer requesting it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to company’s authorized representative sincerely associate chief_counsel passthroughs special industries by s ________________________________ james a quinn senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


t c memo united_states tax_court bobbie e johnson petitioner v commissioner of internal revenue respondent docket no 20775-04l filed date terri a merriam for petitioner gregory m hahn and thomas n tomashek for respondent memorandum findings_of_fact and opinion haines judge petitioner filed a petition with this court in response to a notice_of_determination concerning collection action s under sec_6330 notice_of_determination for through and pursuant to sec_6330 sec_1 unless otherwise indicated all section references are to continued petitioner seeks review of respondent’s determination the issue for decision is whether respondent abused his discretion in sustaining the proposed collection action findings_of_fact some of the facts have been stipulated and are so found the first second third fourth and fifth stipulations of fact and the attached exhibits are incorporated herein by this reference continued the internal_revenue_code as amended and all rule references are to the tax_court rules_of_practice and procedure amounts are rounded to the nearest dollar petitioner also disputes respondent’s determination that he is liable for the increased rate of interest on tax-motivated transactions under sec_6621 as to this dispute the parties filed a stipulation to be bound by the court’s determination in ertz v commissioner tcmemo_2007_15 which involves a similar issue respondent reserved relevancy objections to many of the exhibits attached to the stipulations of fact fed r evid provides the general_rule that all relevant evidence is admissible while evidence which is not relevant is not admissible fed r evid defines relevant evidence as evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence while the relevance of some exhibits is certainly limited we find that the exhibits meet the threshold definition of relevant evidence and are admissible the court will give the exhibits only such consideration as is warranted by their pertinence to the court’s analysis of petitioner’s case respondent also objected to many of the exhibits on the basis of hearsay even if we were to receive those exhibits into evidence they would have no impact on our findings_of_fact or on the outcome of this case petitioner resided in lodi california when he filed his petition at the time of trial petitioner wa sec_76 years old his wife mrs johnson wa sec_71 years old and they had been married for more than years petitioner and mrs johnson are retired in petitioner became a partner in durham genetic engineering ltd dge and shorthorn genetic engineering ltd sge cattle breeding partnerships organized and operated by walter j hoyt iii hoyt from about through hoyt organized promoted and operated more than cattle breeding partnerships hoyt also organized promoted and operated sheep breeding partnerships from to his subsequent removal by the tax_court in through hoyt was the tax_matters_partner of each hoyt partnership from approximately through hoyt was a licensed enrolled_agent and as such he represented many of the hoyt partners before the internal_revenue_service irs in petitioner was also a partner in other hoyt-related partnerships identified as tbs tbs jv hs truck and tbs the details of these partnerships are not in the record though unclear it appears that all adjustments made to petitioner’s income_tax_liability for and arose from his involvement in dge and sge only hoyt’s enrolled_agent status was revoked hoyt was convicted of various criminal charges in beginning in until at least petitioner claimed losses and credits on his federal_income_tax returns arising from his involvement in the hoyt partnerships petitioner also carried back unused investment credits to and as a result of these losses and credits petitioner reported overpayments of tax for through and and received refunds in the amounts claimed petitioner asks the court to take judicial_notice of certain facts in other hoyt-related cases and apply judicial estoppel to facts respondent has asserted in previous hoyt- related litigation we do neither a judicially noticeable fact is one not subject_to reasonable dispute in that it is either generally known within the territorial jurisdiction of the trial_court or capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned fed r evid b petitioner is not asking the court to take judicial_notice of facts that are not subject_to reasonable dispute instead petitioner is asking the court to take judicial_notice of the truth of assertions made by taxpayers and the commissioner in other hoyt-related cases such assertions are not the proper subject of judicial_notice the doctrine_of judicial estoppel prevents a party from asserting in a legal proceeding a claim that is inconsistent with a position successfully taken by that party in a previous proceeding new 532_us_742 among the requirements for judicial estoppel to be invoked a party’s current litigating position must be clearly inconsistent with a prior litigating position id pincite petitioner has failed to identify any clear inconsistencies between respondent’s current position and his position in any previous litigation respondent issued notices of final partnership administrative adjustments fpaas to dge for at least its taxable_year and to sge for its through taxable years after completion of the partnership-level proceedings respondent determined deficiencies in petitioner’s income_tax for his through tax years on date respondent issued petitioner a final notice--notice of intent to levy and notice of your right to a hearing final notice the final notice included petitioner’s outstanding tax_liabilities for through and on date petitioner submitted a form request for a collection_due_process_hearing petitioner argued that the proposed levies were inappropriate and that an offer-in- compromise should be accepted petitioner’s case was assigned to settlement officer linda cochran ms cochran ms cochran scheduled a telephone sec_6330 hearing for date on date petitioner’s representative terri a merriam ms merriam requested additional time to submit information to be considered during the the fpaas and other information specific to dge 84-4’s and sge 84-4’s partnership-level proceedings are not in the record it does not appear that the changes made to petitioner’s income_tax for and were made pursuant to the orders and decisions the details regarding petitioner’s and taxable years are not in the record hearing ms cochran extended petitioner’s deadline for producing information to date on date petitioner submitted to ms cochran a letter with exhibits on date petitioner submitted to ms cochran a form_656 offer_in_compromise a form 433-a collection information statement for wage earners and self- employed individuals one letter explaining the offer amount and three letters setting out in detail petitioner’s position regarding the offer-in-compromise petitioner’s letters included several exhibits not provided with the date letter the form_656 indicated that petitioner was seeking an offer- in-compromise based on either doubt as to collectibility with special circumstances or effective tax_administration petitioner offered to pay dollar_figure to compromise his outstanding tax_liabilities for through petitioner estimated that his outstanding tax_liabilities for through and only were dollar_figure on the form 433-a petitioner listed the following assets asset checking account money market account stocks retirement accounts ford crown victoria chevrolet cavalier pace arrow motor home house pasture land total current balance value dollar_figure big_number big_number big_number big_number loan balance n a n a -0- -0- -0- big_number big_number big_number big_number big_number dollar_figure -0- big_number the reported value of the retirement accounts included only percent of their then-current value petitioner reported gross monthly income of dollar_figure representing petitioner’s pension social_security income of dollar_figure mrs johnson’s pension social_security income of dollar_figure net rental income of dollar_figure and interest_income of dollar_figure petitioner also reported the following monthly living_expenses expense item food clothing misc housing and utilities transportation health care taxes income and fica life_insurance attorney’s fees total monthly expense dollar_figure big_number big_number in the letter explaining the offer amount petitioner stated that he was offering dollar_figure to be paid_by withdrawing the funds from the retirement account and from other cash assets this offer is for all hoyt related years to be paid in one lump sum payment the remainder of the retirement_funds and the equity in the home is needed for necessary living_expenses this offer amount fully pays the majority of estimated_tax liability but does not include interest the letter also included medical and retirement considerations and a retirement analysis petitioner’s medical and retirement considerations included petitioner and mrs johnson are retired petitioner suffers from arthritis and must take medications and undergo therapy for his condition mrs johnson suffers from high blood pressure and must take medications for her condition and due to their age and health it is certain that they will have continuing and substantial medical_expenses the retirement analysis outlined the likelihood of increased housing and medical costs as petitioner and mrs johnson aged in the remaining three letters petitioner alleged that he was a victim of hoyt’s fraud and asserted various arguments regarding the appropriateness of an offer-in-compromise on date respondent issued petitioner a notice_of_determination in evaluating petitioner’s offer-in- compromise respondent made the following changes to the values of assets reported by petitioner on the form 433-a determined that the house was worth dollar_figure instead of dollar_figure determined that the pasture land was worth dollar_figure instead of dollar_figure included the full value of petitioner’s and mrs johnson’s retirement accounts instead of their 70-percent value and included the quick-sale value of the vehicles and the motor home respondent determined that petitioner had total net realizable equity in assets of dollar_figure respondent accepted petitioner’s pension and interest_income as reported but increased the net rental income from dollar_figure to dollar_figure based on petitioner’s federal_income_tax return respondent accepted the majority of petitioner’s monthly expenses but made the following changes reduced the foods clothing etc expense from dollar_figure to dollar_figure to reflect the national standard reduced the housing expense from dollar_figure to dollar_figure to reflect actual documented costs and disallowed the taxes expense because petitioner paid no federal_income_tax in and provided no documentation regarding state taxes regarding the possible future increases in expenses outlined in petitioner’s letter explaining the offer amount respondent determined that these were general projections from the taxpayers’ representative and may never in fact be incurred and thus did not take them into account after making adjustments to petitioner’s monthly expenses respondent determined that dollar_figure was collectible from petitioner’s future income respondent concluded that petitioner had the ability to pay dollar_figure because petitioner had the ability to pay substantially more than the amount offered respondent rejected his offer-in- compromise based on doubt as to collectibility with special circumstances respondent also rejected petitioner’s effective tax_administration offer-in-compromise because he did not have the ability to pay his outstanding tax_liability in full respondent concluded that petitioner did not offer an acceptable collection alternative that all requirements of law and administrative procedure had been met and that respondent could proceed with the proposed collection action respondent determined that petitioner had monthly disposable income of dollar_figure and multiplied this by the number of months remaining on the collection statute in response to the notice_of_determination petitioner filed a petition with this court on date opinion sec_7122 provides that the secretary may compromise any civil case arising under the internal revenue laws whether to accept an offer-in-compromise is left to the secretary’s discretion 447_f3d_706 9th cir affg tcmemo_2004_13 sec_301_7122-1 proced admin regs the regulations under sec_7122 set forth three grounds for the compromise of a tax_liability doubt as to liability doubt as to collectibility or promotion of effective tax_administration sec_301_7122-1 proced admin regs doubt as to liability is not at issue in this case petitioner proposed an offer-in-compromise based alternatively on doubt as to collectibility with special circumstances or effective tax_administration petitioner offered to pay dollar_figure to compromise his outstanding tax_liabilities for through which totaled at least while petitioner contests his liability for sec_6621 interest see supra note he did not raise doubt as to liability as a basis for his offer-in-compromise dollar_figure respondent determined that petitioner’s reasonable collection potential was dollar_figure and that his offer-in- compromise did not meet the criteria for an offer-in-compromise based on either doubt as to collectibility with special circumstances or effective tax_administration because the underlying tax_liability is not at issue our review under sec_6330 is for abuse_of_discretion see 114_tc_604 114_tc_176 this standard does not ask us to decide whether in our own opinion petitioner’s offer-in- compromise should have been accepted but whether respondent’s rejection of the offer-in-compromise was arbitrary capricious or without sound basis in fact or law 112_tc_19 keller v commissioner tcmemo_2006_ fowler v commissioner tcmemo_2004_163 a effective tax_administration if the taxpayer has the ability to pay his tax_liability in full the secretary may compromise the tax_liability on the ground of effective tax_administration when collection of the full liability will create economic hardship or exceptional circumstances exist such that collection of the full petitioner estimated that his total outstanding tax_liabilities for and were dollar_figure this amount does not include his outstanding tax_liabilities for and thus it appears that petitioner is actually seeking to compromise an amount greater than dollar_figure liability would undermine public confidence that the tax laws are being administered in a fair and equitable manner and compromise of the liability would not undermine compliance by taxpayers with the tax laws sec_301_7122-1 proced admin regs ms cochran determined that petitioner could not afford to pay his outstanding tax_liability in full and therefore did not qualify for an effective tax_administration offer-in-compromise petitioner does not argue that he has the ability to pay his tax_liability in full because he did not have the ability to pay his outstanding tax_liability in full petitioner does not qualify for an effective tax_administration offer-in-compromise see barnes v commissioner tcmemo_2006_150 sec_301 b proced admin regs ms cochran’s determination that petitioner did not qualify for an effective tax_administration offer-in-compromise was not arbitrary or capricious and was not an abuse_of_discretion b doubt as to collectibility with special circumstances the secretary may compromise a tax_liability based on doubt as to collectibility where the taxpayer’s assets and income are less than the full amount of the assessed liability sec_301_7122-1 proced admin regs generally under the commissioner’s administrative pronouncements an offer-in- compromise based on doubt as to collectibility will be acceptable only if it reflects the taxpayer’s reasonable collection potential revproc_2003_71 sec_4 2003_2_cb_517 in some cases the commissioner will accept an offer of less than the reasonable collection potential if there are special circumstances id special circumstances are circumstances demonstrating that the taxpayer would suffer economic hardship if the irs were to collect from him an amount equal to the reasonable collection potential or circumstances justifying acceptance of an amount less than the reasonable collection potential of the case based on public policy or equity considerations see internal_revenue_manual irm sec_5 however in accordance with the commissioner’s guidelines an offer-in-compromise based on doubt as to collectibility with special circumstances should not be accepted even when economic hardship or considerations of public policy or equity circumstances are identified if the taxpayer does not offer an acceptable amount see irm sec_5 and petitioner argues that his offer-in-compromise based on doubt as to collectibility with special circumstances should have been accepted because collection of an amount equal to his reasonable collection potential would create an economic hardship and public policy and equity considerations justify acceptance of an amount less than his reasonable collection potential economic hardship petitioner asserts that ms cochran abused her discretion by rejecting his offer-in-compromise because there is no indication that so cochran gave any substantive consideration to petitioner’s demonstrated special circumstances or to the fact that he would experience a hardship if required to make a full payment in support of this assertion petitioner argues ms cochran failed to discuss petitioner’s special circumstances in the notice_of_determination and ms cochran erroneously determined petitioner’s reasonable collection potential income and failed to take into account his future expenses sec_301_6343-1 proced admin regs states that economic hardship occurs when a taxpayer is unable to pay his or her reasonable basic living_expenses sec_301 c proced admin regs sets forth factors to consider in evaluating whether collection of a tax_liability would cause economic hardship as well as some examples one of the examples involves a taxpayer who provides full-time care to a dependent_child with a serious long-term illness a second example involves a taxpayer who would lack adequate means to pay his basic living_expenses were his only asset to be liquidated a third example involves a disabled taxpayer who has a fixed income and a modest home specially equipped to accommodate his disability and who is unable to borrow against his home because of his disability see sec_301_7122-1 examples and proced admin regs none of these examples bears any resemblance to this case but instead they describe more dire circumstances 454_f3d_782 8th cir affg 124_tc_165 see also barnes v commissioner supra nevertheless we address petitioner’s arguments a discussion of special circumstances in the notice_of_determination petitioner argues that ms cochran failed to follow proper procedure by discussing petitioner’s and mrs johnson’s special circumstances what equity was considered in relation to their special circumstances and how the special circumstances affected her determination of petitioner’s ability to pay petitioner infers that because the special circumstances were not discussed in detail in the notice_of_determination ms cochran failed to adequately take the circumstances into consideration we do not believe that appeals must specifically list in the notice_of_determination every single fact that it considered in arriving at the determination see barnes v commissioner supra this is especially true in a case such as this where petitioner provided ms cochran with multiple letters and hundreds of pages of exhibits as discussed below ms cochran considered all of the arguments and information presented to her given the amount of information it would be unreasonable to put the burden on ms cochran to specifically address in the notice_of_determination every single asserted fact circumstance and argument presented the fact that all of the information was not specifically addressed in the notice_of_determination was not an abuse_of_discretion b petitioner’s reasonable collection potential petitioner asserts that ms cochran erroneously determined his reasonable collection potential by considering months of petitioner’s future income instead of months failing to adequately consider petitioner’s and mrs johnson’s age health retirement status medical costs and the likelihood of future increases in medical and housing costs and erroneously redetermining the value of petitioner’s assets and the amount of his expenses petitioner’s arguments are not persuasive sec_5 of the irm provides that when a taxpayer makes a cash offer to compromise an outstanding tax_liability only months of future income should be considered petitioner made a cash offer but ms cochran used months of future income at trial ms cochran acknowledged that she should have used only months of future income ms cochran recomputed petitioner’s reasonable collection potential using months and determined that it was dollar_figure instead of dollar_figure as reflected in the notice_of_determination ms cochran testified that the change would not have had an effect on her final_determination because using either calculation petitioner’s reasonable collection potential was much greater than his offer amount dollar_figure we find that ms cochran’s error did not amount to an abuse_of_discretion because even when the error is corrected petitioner’s reasonable collection potential of dollar_figure far exceeds his offer amount of dollar_figure with regard to age health and retirement status petitioner’s argument is not supported by the record on his form 433-a petitioner reported monthly medical_expenses of dollar_figure in his letter describing the offer amount petitioner represented that he and mrs johnson were retired ms cochran accepted petitioner’s monthly medical_expenses without change because petitioner and mrs johnson were retired ms cochran considered only pension income and other income not contingent upon employment given that ms cochran accepted petitioner’s medical_expenses as reported and considered future income consistent with the retirement considerations listed by petitioner we reject petitioner’s assertion that ms cochran failed to consider his and mrs johnson’s age health retirement status and current medical costs petitioner’s argument is also unavailing with regard to the likelihood of future increases in medical and housing costs petitioner did not inform ms cochran with any specificity that he would have to pay a greater amount of unreimbursed medical_expenses in the future or that his housing_expenses would increase instead he made general assertions about the increase of medical costs as people age and about the need for some seniors to seek in-home care or nursing home care or to make their houses handicapped accessible as reflected in the notice_of_determination ms cochran took into consideration the information petitioner presented but concluded that these possible future expenses are general projections from the taxpayer’s representative and may never in fact be incurred the present offer therefore must be considered within the framework of present facts given the information presented to her it was not arbitrary or capricious for ms cochran to ignore these speculative future costs in making her final_determination petitioner also raises challenges to various other determinations made by ms cochran including the determination that the house was worth more than what petitioner reported the determination that the pasture land was worth more than what petitioner reported and the reduction of his food clothing etc housing and tax expenses we need not discuss in detail these and other minor disputes raised by petitioner even assuming arguendo that petitioner’s income expenses and value of assets should have been accepted as reported we would not find that ms cochran abused her discretion in rejecting petitioner’s offer-in-compromise ms cochran testified that had she accepted the income expenses and value of assets as reported petitioner’s reasonable collection potential would have been dollar_figure respondent may accept an offer-in-compromise based on doubt as to collectibility with special circumstances even if the offer amount is less than petitioner’s reasonable collection potential however given all other considerations discussed herein we do not believe that ms cochran abused her discretion by rejecting an offer-in-compromise that bore no relationship to petitioner’s ability to pay based on his own calculations c encouraging voluntary compliance with the tax laws we are also mindful that any decision by ms cochran to accept petitioner’s offer-in-compromise based on doubt as to collectibility with special circumstances must be viewed against the backdrop of sec_301_7122-1 proced admin regsdollar_figure see barnes v commissioner tcmemo_2006_150 that section requires that ms cochran deny petitioner’s offer-in- the prospect that acceptance of an offer-in-compromise will undermine compliance with the tax laws militates against its acceptance whether the offer-in-compromise is predicated on promotion of effective tax_administration or on doubt as to collectibility with special circumstances see revproc_2003_71 2003_2_cb_517 irm sec_5 see also barnes v commissioner tcmemo_2006_150 compromise if its acceptance would undermine voluntary compliance with tax laws by taxpayers in general thus even if we were to assume arguendo that petitioner would suffer economic hardship a finding that we decline to make we would not find that ms cochran’s rejection of petitioner’s offer-in-compromise was an abuse_of_discretion as discussed below in our discussion of petitioner’s equitable facts argument we conclude that acceptance of petitioner’s offer-in-compromise would undermine voluntary compliance with tax laws by taxpayers in general public policy and equity considerations petitioner asserts that respondent abused his discretion by not accepting the equitable facts of this case as grounds for an offer-in-compromise in support of his assertion petitioner argues the longstanding nature of this case justifies acceptance of the offer-in-compromise and respondent failed to consider petitioner’s other equitable facts dollar_figure petitioner also argues that respondent abused his discretion by relying on the second example in irm sec_5 this section deals with effective tax_administration offers-in-compromise see administration internal_revenue_manual cch sec_5 at big_number as discussed above petitioner does not qualify for an effective tax_administration offer-in-compromise because he does not have the ability to pay his outstanding tax_liability in full thus we need not consider whether the example in the irm is analogous to petitioner’s case a longstanding case petitioner asserts that the legislative_history requires respondent to resolve longstanding cases by forgiving penalties and interest which would otherwise apply petitioner argues that because this is a longstanding case respondent abused his discretion by failing to accept their offer-in-compromise petitioner’s argument is essentially the same considered and rejected by the court_of_appeals for the ninth circuit in fargo v commissioner f 3d pincite see also keller v commissioner tcmemo_2006_166 barnes v commissioner supra we reject petitioner’s argument for the same reasons stated by the court_of_appeals we add that petitioner’s counsel participated in the appeal in fargo as counsel for the amici on brief petitioner suggests that the court_of_appeals knowingly wrote its opinion in fargo in such a way as to distinguish that case from the cases of counsel’s similarly situated clients eg petitioner and to otherwise allow those clients’ liabilities for penalties and interest to be forgiven we do not read the opinion of the court_of_appeals in fargo to support that conclusion see keller v commissioner supra barnes v commissioner supra respondent’s rejection of petitioner’s longstanding case argument was not arbitrary or capricious b petitioner’s other equitable facts petitioner argues that respondent abused his discretion by failing to consider the other equitable facts of this case petitioner’s equitable facts include reference to petitioner’s reliance on bales v commissioner tcmemo_1989_ petitioner’s reliance on hoyt’s enrolled_agent status hoyt’s criminal conviction hoyt’s fraud on petitioner and other letters and cases the basic thrust of petitioner’s argument is that he was defrauded by hoyt and that if he were held responsible for penalties and interest incurred as a result of his investment in a tax_shelter it would be inequitable and against public policy petitioner’s argument is not persuasive while the regulations do not set forth a specific standard for evaluating an offer-in-compromise based on claims of public policy or equity the regulations contain two examples see sec bales v commissioner tcmemo_1989_568 involved deficiencies determined against various investors in several hoyt partnerships this court found in favor of the investors on several issues stating that the transaction in issue should be respected for federal_income_tax purposes taxpayers in many hoyt-related cases have used bales as the basis for a reasonable_cause defense to accuracy-related_penalties this argument has been uniformly rejected by this court and by the courts of appeals for the sixth ninth and tenth circuits see eg 471_f3d_1021 9th cir affg tcmemo_2004_269 440_f3d_375 6th cir affg tcmemo_2004_279 439_f3d_1243 10th cir affg tcmemo_2004_275 c iv examples and proced admin regs the first example describes a taxpayer who is seriously ill and unable to file income_tax returns for several years the second example describes a taxpayer who received erroneous advice from the commissioner as to the tax effect of the taxpayer’s actions neither example bears any resemblance to this case unlike the exceptional circumstances exemplified in the regulations petitioner’s situation is neither unique nor exceptional in that his situation mirrors those of numerous other taxpayers who claimed tax_shelter deductions in the 1980s and 1990s see keller v commissioner supra barnes v commissioner tcmemo_2006_150 of course the examples in the regulations are not meant to be exhaustive and petitioner has a more sympathetic case than the taxpayers in fargo v commissioner supra pincite for whom the court_of_appeals for the ninth circuit noted that no evidence was presented to suggest that taxpayers were the subject of fraud or deception such considerations however have not kept this court from finding investors in the hoyt tax_shelters to be liable for penalties and interest nor have they prevented the courts of appeals for the sixth ninth and tenth circuits from affirming our decisions to that effect see 471_f3d_1021 9th cir affg tcmemo_2004_269 440_f3d_375 6th cir affg tcmemo_2004_279 439_f3d_1243 10th cir affg tcmemo_2004_275 ms cochran testified that she considered all of ms merriam’s and petitioner’s assertions including the numerous letters and exhibits nevertheless ms cochran determined that petitioner did not qualify for an offer-in-compromise the mere fact that petitioner’s equitable facts did not persuade respondent to accept his offer-in-compromise does not mean that those assertions were not considered the notice_of_determination and ms cochran’s testimony demonstrate respondent’s clear understanding and careful consideration of the facts and circumstances of petitioner’s case we find that respondent’s determination that the equitable facts did not justify acceptance of petitioner’s offer-in-compromise was not arbitrary or capricious and thus it was not an abuse_of_discretion we also find that compromising petitioner’s case on grounds of public policy or equity would not enhance voluntary compliance by other taxpayersdollar_figure a compromise on that basis would place the government in the unenviable role of an insurer against poor business decisions by taxpayers reducing the incentive for taxpayers to investigate thoroughly the consequences of transactions into which they enter it would be particularly see supra note inappropriate for the government to play that role here where the transaction at issue is participation in a tax_shelter reducing the risks of participating in tax_shelters would encourage more taxpayers to run those risks thus undermining rather than enhancing compliance with the tax laws see barnes v commissioner supra c petitioner’s other argument sec_1 compromise of penalties and interest in an effective tax_administration offer-in-compromise petitioner advances a number of arguments focusing on his assertion that respondent determined that penalties and interest could not be compromised in an effective tax_administration offer-in-compromise petitioner argues that such a determination is contrary to legislative_history and is therefore an abuse_of_discretion as discussed above petitioner does not qualify for an effective tax_administration offer-in-compromise because he does not have the ability to pay his outstanding tax_liability in full thus we do not need to consider whether respondent can or should compromise penalties and interest in an effective tax_administration offer-in-compromise information sufficient for the court to review respondent’s determination petitioner argues that respondent failed to provide the court with sufficient information so that the court can conduct a thorough probing and in-depth review of respondent’s determinations petitioner’s argument is without merit generally a taxpayer bears the burden of proving the commissioner’s determinations incorrect rule a 290_us_111 dollar_figure the burden was on petitioner to show that respondent abused his discretion the burden was not on respondent to provide enough information to show that he did not abuse his discretion nevertheless we find that we had more than sufficient information to review respondent’s determination deadline for submission of information petitioner argues that ms cochran abused her discretion by not allowing his counsel additional time to submit information to be considered petitioner’s argument is not supported by the record petitioner asserts that he was initially only given weeks to provide all information however he ignores the fact that ms cochran granted his requested extension and allowed him until date to submit information additionally petitioner has not identified any documents or other information that he while sec_7491 shifts the burden_of_proof and or the burden of production to the commissioner in certain circumstances this section is not applicable in this case because respondent’s examination of petitioner’s returns did not commence after date see internal_revenue_service restructuring and reform act of publaw_105_206 sec c 112_stat_727 believes ms cochran should have considered but that he was unable to produce because of the deadline for submission given the thoroughness and the amount of information submitted it is unclear why petitioner needed additional time we do not believe that ms cochran abused her discretion by establishing a deadline for the submission of information mrs johnson’s pending innocent spouse case petitioner argues that ms cochran abused her discretion by considering mrs johnson’s income and assets even though mrs johnson currently has an innocent spouse case pending before the tax courtdollar_figure petitioner’s argument is without merit the final notice and the notice_of_determination were issued to petitioner only nevertheless petitioner filed a form_656 jointly with mrs johnson and indicated that he was seeking to compromise both his and mrs johnson’s outstanding tax_liabilities for through additionally the form 433-a was submitted jointly and included the assets of both petitioner and mrs johnson petitioner did not identify which assets if any belonged to mrs johnson and instead grouped all of the assets together it is not reasonable to expect ms cochran to in support of his argument petitioner cites sec_6015 which states that no levy or proceeding in court shall be made begun or prosecuted against a taxpayer requesting innocent spouse relief this section is not relevant there is no indication that respondent has sought to levy against mrs johnson’s separate_property separate petitioner’s assets from mrs johnson’s assets when petitioner has given her no information on which to base that separation given that petitioner was offering to compromise both his and mrs johnson’s outstanding tax_liabilities and given the manner in which petitioner presented the information to ms cochran it was not arbitrary or capricious for ms cochran to consider mrs johnson’s income and assets in evaluating the joint offer-in-compromise efficient collection versus intrusiveness petitioner argues that respondent failed to balance the need for efficient collection_of_taxes with the legitimate concern that the collection action be no more intrusive than necessary see sec_6330 petitioner’s argument is not supported by the record petitioner has an outstanding tax_liability in his sec_6330 hearing petitioner proposed only an offer-in-compromise because no other collection alternatives were proposed there were no less intrusive means for respondent to consider we find that respondent balanced the need for efficient collection_of_taxes with petitioner’s legitimate concern that collection be no more intrusive than necessary d conclusion petitioner has not shown that respondent’s determination was arbitrary or capricious or without sound basis in fact or law for all of the above reasons we hold that respondent’s determination was not an abuse_of_discretion and respondent may proceed with the proposed collection action in reaching our holdings herein we have considered all arguments made and to the extent not mentioned above we find them to be moot irrelevant or without merit to reflect the foregoing decision will be entered for respondent


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division uniform issue list dec 20t1 xxxxkxkxkkxkkxkkx xxxxxxxxkkxkxx xxxxxxxxkkxkkx legend taxpayer a taxpayer b xxxxxxxxkxkxxkkx xxxxxxxxxxxxxx financial_institution r xxxxxxxxxxxxxx ira x xxxxxxxxxxxkxkxk xxxxxkxkxxkkxxkk xxxxxxxkxxkxxkkxk amount a xxxxxxxkkxxkxxk xxxxxxxxxkxxkxkxk xxxxxxxxxkxkkk xxxxxxkxxxxxkkxk xxxkxxxkxkxkxkkxkkk xxxkxxxkxxxxxxkk xxxxxxxxxxxxkxk xxxxxxkxxxkxxxkx xxxxxxxxxxxxkk xxxkxxxxxxkxkxk xxxxxxxxkxxkxxkk xxxxxkxxkkxxkxkxkk xxxxxxxxxxxxxx court b state m form a date date date date date date year year xxxxxxxkxxkx page dear xxxx this letter is in response to your request for a letter_ruling dated date as supplemented by additional correspondence dated date and date submitted by your authorized representative on your behalf in which you request a ruling under sec_408 of the internal_revenue_code the code’ the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a age _ represents that taxpayer b whose date of birth was date died on date having attained age taxpayer a taxpayer b’s surviving_spouse was designated the personal representative and the sole beneficiary of his estate at his death taxpayer b maintained an individual_retirement_account ira x with financial_institution r form a the beneficiary designation form for ira x designated as beneficiary taxpayer a as trustee of a testamentary_trust under the will of taxpayer b dated date year will the value of ira x on date was amount a no distributions have been made from ira x taxpayer b revised the year will on date year will to eliminate the testamentary_trust and to pass his entire estate to taxpayer a free and clear of the trust the revision updated and revoked the year will in its entirety but did not update the ira x beneficiary designation form which listed taxpayer a as beneficiary of the testamentary_trust under the year will taxpayer a was the sole personal representative of taxpayer b’s estate and was the sole beneficiary of ira x article viii sec_4 of ira x’s custodian agreement provides that if no designation is in effect at a depositor’s death the beneficiary of the depositor’s custodial_account shall be deemed to be the depositor’s estate on date taxpayer a was appointed as the personal representative of taxpayer b’s estate and has submitted letters of appointment issued by court b located in state m on date all of taxpayer b’s assets were assigned to taxpayer a including ira x as taxpayer b's surviving_spouse taxpayer a intends that ira x be transferred directly to her ira account with financial_institution r in a trustee-to-trustee transfer based on the facts and representations you request the following ruling that as surviving_spouse and sole beneficiary of taxpayer b’s estate you may in a trustee-to- trustee transfer roll over the proceeds from ira x within the meaning of code sec_408 of the code and the trustee-to-trustee transfer will be exempt from the withholding requirements of sec_3405 of the code oooo page sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code provides that sec_408 does not apply to a rollover_contribution if such contribution satisfies the requirements of sec_408 and d b the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includibie in gross_income because of the application of sec_408 sec_408 of the code provides in summary that in the case of an inherited ira sec_408 shall not apply to any amount received by an individual from such account and no amount transferred from such account to another ira shall be excluded from income by reason of such transfer and such inherited account shall not be treated as an ira for purposes of determining whether any other amount is a rollover_contribution sec_408 of the code provides that the term inherited ira means an ira obtained by an individual other than the ira owner's spouse as a result of the death of the ira owner thus under circumstances that conform with the requirements of sec_408 a surviving_spouse who acquires a decedent's ira after and as a result of the death of an ira owner will be able to roll over the decedent's ira into an ira set up and maintained in the name of the surviving_spouse xxxxxxxxxxx page sec_408 of the code provides generally that sec_408 does not apply to any amount required to be distributed pursuant to sec_408 on date final income_tax regulations regulations were published in the federal_register with respect to code sec_401 and sec_408 see also 2002_19_irb_852 date sec_1_408-8 question and answer of the regulations provides that a surviving_spouse of an ira owner may elect to treat the spouse's entire_interest as a beneficiary in an individual's ira as the spouse's own ira in order to make this election the spouse must be the sole beneficiary of the ira and have an unlimited right to withdraw amounts from the ira if a_trust or estate is named as beneficiary of the ira this requirement is not satisfied even if the spouse is the sole beneficiary of the trust or estate the preamble to the regulations provides in relevant part that a surviving_spouse who actually receives a distribution from a deceased spouse's ira is permitted to roll that distribution over into his her own ira even if the spouse is not the sole beneficiary of the deceased's ira as long as the rollover is accomplished within the requisite 60-day period a rollover may be accomplished even if ira assets pass through either a_trust and or an estate sec_1_401_a_31_-1 of the regulations question and answer q-5 provides that an eligible rollover that is paid to an eligible_retirement_plan in a direct_rollover is not currently includible in a distributee’s gross_income under code sec_402 and is exempt from the 20-percent withholding imposed under sec_3405 of the code with respect to your ruling_request generally if either a decedent's plan or ira proceeds pass through a third party eg an estate_or_trust and then are distributed to the decedent's surviving_spouse said spouse will be treated as acquiring them from the third party and not from the decedent thus generally said surviving_spouse would not be eligible to roll over either the qualified_plan or the ira proceeds into his her ira in the present case taxpayer b's interest in ira x did not pass to the trust that was listed on the ira beneficiary designation because the year will revoked the trust thus in the absence of a designated_beneficiary the ira x account balance remaining at taxpayer b's death became payable to his estate because taxpayer a was executrix and sole beneficiary of the estate with the right to direct any and all amounts from the estate without restriction taxpayer a could have demanded in writing that the full ira x balance be paid to her under this set of circumstances no third party could have prevented the surviving_spouse from rolling over or transferring by means of a trustee-to-trustee transfer the full amount standing in ira x into an ira set up and maintained in the surviving spouse's name under this set of circumstances the general_rule set forth above will not apply therefore we conclude as follows with respect to your ruling_request that as surviving_spouse and sole beneficiary of taxpayer b’s estate you may either xxxxxxxxxkx page by means of a trustee-to-trustee transfer transfer the proceeds from ira x into an ira set up and maintained in your name or take a distribution of the proceeds of ira x and rollover such proceeds into an ira set up and maintained in your name as long as the rollover transaction occurs no later than the 60th day from the date said proceeds of ira x are distributed in either case the proceeds in the trustee-to-trustee transfer or the timely rollover will be exempt from the withholding requirements under sec_3405 of the code this ruling does not authorize the rollover of amounts if any 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_61 k of the code provides that it may not be used or cited as precedent a copy of this letter is being 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 _ please address all correspondence to se t ep ra t3 sincerely uli caura b warshawsky manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose


internal_revenue_service number release date index number ---------------------------------- ------------------ ----------------------------------- attn ---------------------------------------------------- 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 plr-139180-15 date date legend decedent -------------------------- ----------------------------------------------------- spouse ----------------------------------------------------- ---------------------- date date --------------------- --------------------------- dear ---------------- this letter responds to your personal representative’s letter of date and subsequent correspondence 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 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 submitted 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 plr-139180-15 decedent’s form_706 was due on date the estate discovered its failure to elect portability after the due_date for making the election decedent’s estate represents that the value of decedent’s gross_estate is less than the basic exclusion amount in the year of the decedent’s death and that during her lifetime decedent made no taxable_gifts decedent’s estate requests 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 plr-139180-15 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 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 a 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 plr-139180-15 and a 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 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 decedent’s estate represents 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-139180-15 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 leslie h finlow leslie h finlow senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


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 1-plr-112226-03 date june legend x d1 state dear this letter responds to your representative’s letter dated date submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations for x to elect to be treated as an association_taxable_as_a_corporation for federal tax purposes facts according to the information submitted x was formed on d1 under state law with a single owner x intended to elect to be treated as an association_taxable_as_a_corporation effective d1 however x failed to timely file the form_8832 entity classification election law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with a single owner may elect to be classified as an association and thus a corporation under plr-112226-03 sec_301_7701-2 or to be disregarded as an entity separate from its owner a disregarded_entity sec_301_7701-3 provides that except as provided in sec_301_7701-3 unless the entity elects otherwise a domestic eligible_entity is disregarded as an entity separate from its owner if it has a single owner sec_301_7701-3 provides in general that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 by filing form_8832 with the applicable service_center sec_301_7701-3 provides that such an election becomes effective on the date specified by the entity on form_8832 or on the date filed if no effective date is specified 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 internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 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 sec_301_9100-3 conclusion based solely on the information submitted and the representations made we conclude that x has satisfied the requirements of sec_301_9100-1 and sec_301_9100-3 as a result x is granted an extension of time for making the election to be treated as an association_taxable_as_a_corporation for federal tax purposes effective d1 until days following the date of this letter x should make the election by filing form_8832 with the philadelphia service_center a copy of this letter should be attached to that form a copy is included for that purpose plr-112226-03 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative s heather c maloy sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index no department of the treasury p o box ben franklin station washington dc person to contact telephone number refer reply to cc psi - plr-156880-02 date march re legend date husband wife trust y year year year cpa firm date attorney dear this is in response to a letter dated date and subsequent correspondence requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations and sec_2642 of the internal_revenue_code to make allocations of generation-skipping_transfer gst exemptions to transfers to a_trust the facts and representations submitted are summarized as follows on date husband established an irrevocable_trust trust for the benefit of his spouse his children and their issue transferring dollar_figurey to the trust under the terms of trust the trustees must allocate all property received unless directed to allocate to a specific share to shares among husband’s issue then living by right of representation each share will be held as a separate trust whenever a gift is made to trust to be added to a separate trust for a child of husband that child and that child’s then living issue have rights to withdraw amounts plr-156880-02 from the principal of the separate trust within days of receiving notice of the gift but not later than the end of the calendar_year of the gift unless the donor directs otherwise the amount that may be withdrawn by each person is the lesser_of the value_of_the_gift divided by the number of persons having such rights with respect to such gifts and the maximum amount then permitted as an annual exclusion from taxable_gifts to a single donee under sec_2053 the trustees must pay to any among wife the child for whom a_trust is held and that child’s issue any part of the net_income and principal other than principal required to satisfy unexpired withdrawal rights of the child’s trust as the disinterested trustee deems desirable for the health education maintenance and support of a beneficiary however each distribution to wife must be charged pro_rata against each child’s share and the share of each further descendant of husband after the deaths of both husband and wife the trustees must also pay from a child’s trust any part of the principal that the child requests not to exceed in the aggregate in any calendar_year the greater of dollar_figure or percent of the value of the trust principal at the time of the request on the death of a child for whom a_trust is held the remaining trust assets will be distributed as the child appoints to the extent the child fails to appoint those assets they will be distributed by right of representation to husband’s then living issue however any portion for a child or further descendant of husband for whom a_trust is then held under the terms of trust must be added to that trust the trustees must hold in a separate trust any share retained or received by them for the benefit of a further descendant of husband under terms substantially identical to those for a child’s trust trust terminate sec_21 years after the death of the last to survive among husband wife and all of their issue living when trust was created in year husband and wife taxpayers engaged cpa firm to prepare their individual income_tax returns and all tax returns relating to trust for years from year through year taxpayers each transferred amounts to trust at least annually for the benefit of their two children and of their grandchildren cpa firm failed to advise them to file form sec_709 united_states gift and generation- skipping transfer_tax return for and to allocate taxpayers’ gst exemptions to any of these transfers on date taxpayers sought estate_planning advice from attorney who discovered the failure to allocate taxpayers’ gst exemptions to the transfers to trust in year sec_1 through it is represented that there have been no distributions since the creation of trust taxpayers have requested an extension of time under sec_2642 of the internal_revenue_code and sec_301_9100-1 and sec_301_9100-3 to allocate taxpayers’ gst plr-156880-02 exemptions to the transfers to trust in year sec_1 through taxpayers also request a ruling that such allocations are to be made based on the value of the assets transferred to trust as of the dates of transfer to trust sec_2601 imposes a tax on every generation-skipping_transfer gst a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip under sec_2602 the amount of tax imposed under sec_2601 is determined by multiplying the taxable_amount by the applicable_rate sec_2641 provides that the term applicable_rate means the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer under sec_2642 the inclusion_ratio with respect to any property transferred in a generation-skipping_transfer is generally the excess if any of over the applicable_fraction determined for the trust from which such transfer is made the applicable_fraction is a fraction the numerator of which is the amount of the gst_exemption allocated to the trust and the denominator of which is the value of the property transferred to the trust sec_2631 provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure adjusted for inflation under sec_2631 which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable sec_2632 provides that any allocation by an individual of his or her gst_exemption under sec_2631 may be made at any time on or before the date prescribed for filing the estate_tax_return for such individual’s estate determined with regard to extensions regardless of whether such a return is required to be filed sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides that an allocation of gst_exemption to property transferred during the transferor’s lifetime other than in a direct_skip is made on form_709 sec_2642 provides that except as provided in sec_2642 if the allocation of the gst_exemption to any transfers of property is made on a gift_tax_return filed on or before the date prescribed by sec_6075 for such transfer or is deemed to be made under sec_2632 or c the value of such property for purposes of sec_2642 shall be its value as finally determined for purposes of chapter within the meaning of sec_2001 or in the case of an allocation deemed to have been made at the close of an estate_tax_inclusion_period its value at the time of the close of the estate_tax_inclusion_period and such allocation shall be effective on and after the date of such transfer or in the case of an allocation deemed to have been made at the close of an estate_tax_inclusion_period on and after the close of such estate_tax_inclusion_period plr-156880-02 sec_2642 provides that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 or and an election under sec_2632 or c such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of this paragraph sec_2642 provides that in determining whether to grant relief under this paragraph the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant for purposes of determining whether to grant relief under this paragraph the time for making the allocation or election shall be treated as if not expressly prescribed by statute notice_2001_50 2001_34_irb_189 provides that under sec_2642 the time for allocating the gst_exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust as a generation-skipping_trust are to be treated as if not expressly prescribed by statute the notice further provides that taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-3 provides the standards used 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 under sec_301_9100-1 a regulatory election includes an election whose due_date is prescribed by a notice published in the internal_revenue_bulletin in accordance with sec_2642 and notice_2001_50 taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the 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 plr-156880-02 based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied therefore taxpayers are granted an extension of time of days from the date of this letter to make allocations of taxpayers’ available gst exemptions with respect to taxpayers’ transfers to trust from year through year each allocation will be effective as of the date of the respective transfer to trust and the gift_tax value of each transfer to trust will be used in determining the amount of gst_exemption to be allocated to trust for that transfer 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 except as specifically ruled herein we express or imply no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code this ruling is directed only to the taxpayers requesting it sec_6110 provides that it may not be used or cited as precedent this election should be made on supplemental form sec_709 and filed with the internal_revenue_service center cincinnati oh a copy of this letter should be attached to the supplemental form_709 a copy is enclosed for this purpose sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosures copy for sec_6110 purposes copy of this letter