internal_revenue_service number release date index number ---------------------------------------- --------------------------- ---------------------------- ---------------------------- department of the treasury washington dc person to contact -------------------------- id no ------------- telephone number --------------------- refer reply to cc psi b02 - plr-164087-03 date date ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------- ----------------------- -------------------------- -------------------------- -------------------------- ------------------------ ----------------------- -------- ------- ------- year year dear -------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x by x’s authorized representative requesting a ruling under ' f of the internal_revenue_code - x a b c trust trust d1 plr-164087-03 the information submitted states that x elected to be an s_corporation for its taxable_year beginning d1 of year as of d1 of year the shareholders of x included trust and trust the trusts a the grantor of the trusts represents that the trusts qualified as electing small_business trusts esbts as defined in sec_1361 but that the trustees of the trusts failed to timely file esbt elections for the trusts because they incorrectly believed that the trusts were grantor trusts wholly owned by their respective beneficiaries b and c under sec_678 for year and all subsequent taxable years all of the items attributable to the shares of x owned by each of the trusts were reported on the individual_income_tax_return of the beneficiary of that trust the corporate_income_tax returns of x were filed consistent with all of the shares being owned by the trusts as wholly owned grantor trusts a on behalf of x represents that the circumstances resulting in the ineffectiveness of x s s_corporation_election were inadvertent and were not motivated by tax_avoidance or retroactive tax planning x and its shareholders agree to make any adjustments consistent with the treatment of x as an s_corporation that the secretary may require sec_1362 provides that except as provided in ' g a small_business_corporation may elect in accordance with the provisions of ' to be an s_corporation sec_1361 defines an s_corporation as a small_business_corporation for which an election under ' a is in effect for the taxable_year sec_1361 provides that a small_business_corporation means a domestic_corporation that is not an ineligible_corporation and that does not have as a shareholder a person other than an estate a_trust described in ' c or an organization described in ' c who is not an individual sec_1361 provides that for purposes of ' b b an esbt may be a shareholder of an s_corporation sec_1361 provides that an esbt is any trust if i such trust does not have as a beneficiary any person other than i an individual ii an estate iii an organization described in sec_170 or or iv an organization described in sec_170 which holds a contingent_interest in such trust and is not a potential_current_beneficiary ii no interest in such trust was acquired by purchase and iii an election under sec_1361 applies to such trust sec_1362 provides that if an election under ' a by any corporation was not effective for the taxable_year for which made determined without plr-164087-03 regard to ' b by reason of failure to meet the requirements of ' b or to obtain shareholder consents or was terminated under ' d or the secretary determines that the circumstances resulting in such ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in the ineffectiveness or termination steps were taken so that the corporation is a small_business_corporation and the corporation and each person who was a shareholder of the corporation at any time during the period specified under ' f agrees to make the adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary for that period then notwithstanding the circumstances resulting in such termination the corporation shall be treated as an s_corporation during the period specified by the secretary based solely on the facts and representations submitted we conclude that x's s_corporation_election was ineffective beginning on d1 of year because of the ownership of x stock by the trusts which were ineligible s_corporation shareholders we also conclude that the ineffectiveness of x s s_corporation_election was an inadvertent invalid election within the meaning of ' f we further conclude that under the provisions of ' f x will be treated as being an s_corporation from d1 of year and afterwards provided x's s_corporation_election was otherwise valid and was not otherwise terminated provided that trust and trust file esbt elections meeting the requirements of sec_1_1361-1 effective for the year taxable_year with the appropriate internal_revenue_service center within days of the date of this letter a copy of this letter should be attached to each esbt election in addition b and c will be treated as the owners of the x stock owned by trust and trust respectively during the taxable_year beginning d1 of year as if trust and trust were qualified subchapter_s trusts qssts treated as owned by b and c under sec_678 trust and trust as esbts will be treated as the owners of the x stock beginning with the year taxable_year the shareholders of x must include their pro_rata share of the separately_stated and nonseparately computed items of x as provided in ' make any adjustments to basis provided in ' and take into account any distributions made by x as provided in ' if x or its shareholders fail to treat x as described above during the period beginning d1 of year this ruling will be null and void except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under ' b or whether the trusts are otherwise eligible to be esbts 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 plr-164087-03 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to x's authorized representative sincerely j thomas hines chief branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi 1-plr-126407-02 date june legend x y state d1 d2 d3 a b dear this responds to your letter dated date submitted on behalf of x requesting a ruling that the rental income received by x in the course of its operations from a real_property is not passive_investment_income within the meaning of sec_1362 of the internal_revenue_code facts x was incorporated in state on d1 x made an election to be treated as an s_corporation effective d2 x owns a rental real_property x employs y as property manager to manage x’s real_property plr-126407-02 in operating the property y is responsible for obtaining and negotiating leases handling all aspects of tenant billings and collections monitoring tenant compliance with lease terms collecting rents from delinquent tenants either directly or with the aid of collectors or attorneys payments of all expenses maintenance of required insurance policies preparation of monthly and quarterly financial reports being on call hours a day inspection of the buildings for cleanliness general conditions and mechanical systems not less than once a week comprehensive inspection of structural mechanical and utility supply systems not less than seasonally assisting in the procurement of and approving of all contracts with respect to operations and management and supervising and coordinating the maintenance and repairs of tenant space common area roofs and other structural elements of the buildings in operating the property x pays for advertizing and marketing capital improvements janitorial services insurance fire-safety inspection landscaping repairs and maintenance rubbish removal security snow removal and utilities in addition x pays commissions management fees payroll and payroll_taxes professional fees including legal and accounting and real_estate_taxes for the tax_year ending d3 x received or accrued dollar_figurea in rental income and paid_or_incurred dollar_figureb in relevant operating_expenses law and analysis except as provided in sec_1362 sec_1362 provides that a small_business_corporation may elect in accordance with the provisions of sec_1362 to be an s_corporation sec_1362 provides that an election under sec_1362 terminates whenever the corporation i has accumulated_earnings_and_profits at the close of each of three consecutive tax years and ii has gross_receipts for each of such tax years more than percent of which are passive_investment_income sec_1375 imposes a tax on the income of an s_corporation if the s_corporation has accumulated_earnings_and_profits at the close of such taxable_year and gross_receipts more than percent of which are passive_investment_income sec_1362 provides that except as otherwise provided the term passive_investment_income means gross receipt derived from royalties rents dividends interest annuities and sales or exchanges of stock_or_securities sec_1_1362-2 of the income_tax regulations provides that rents means amounts received for_the_use_of or the right to use property whether real or personal of the corporation sec_1_1362-2 provides that rents does not include rents derived in the active trade_or_business of renting property rents received by a plr-126407-02 corporation are derived in an active trade_or_business of renting property only if based on all the facts and circumstances the corporation provided significant services or incurs substantial costs in the rental business generally significant services are not rendered and substantial costs are not incurred in connection with net leases whether significant services are performed or substantial costs are incurred in the rental business is determined based upon all the facts and circumstances including but not limited to the number of persons employed to provide the services and the types and amounts of costs and expenses_incurred other than depreciation conclusion based solely on the facts as presented in this ruling_request and viewed in light of the applicable law and regulations we conclude that the rents x receives from the rental of its property are not passive_investment_income under sec_1362 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts of this case under any other provision of the code specifically no opinion is expressed concerning whether x otherwise satisfies the s_corporation eligibility requirements under sec_1361 further the passive_investment_income rules of sec_1362 are completely independent of the passive_activity rules of sec_469 unless an exception under sec_469 applies the rental_activity remains passive for purposes of sec_469 this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer sincerely carolyn gray acting assistant to the branch chief branch office of associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number --------------------------------------------------------- -------------------------------------------- ------------------------ -------------------------------------- department of the treasury washington dc person to contact ----------------------- id no telephone number --------------------- refer reply to cc psi b02 plr-115497-07 date february ---------------- -------------------------- --------------------------------------------- legend x ----------------------------------------- ------------------ country date dear ----- --------- this responds to a letter dated date and additional correspondence submitted on behalf of x requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations for x to make an election to be treated as a disregarded_entity date x represents that x is a foreign_entity eligible to elect to be treated as a disregarded_entity however x inadvertently failed to timely file a form_8832 entity classification election electing to treat x as a disregarded_entity effective date eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if the foreign eligible_entity has only one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 the information submitted states that x was formed under the laws of country on sec_301_7701-3 provides guidance on the classification of a foreign sec_301_9100-1 through provide the standards the sec_301_9100-3 provides the standards the commissioner will use to sec_301_9100-1 provides that the commissioner may grant a reasonable sec_301_7701-3 provides that an entity classification election must be filed plr-115497-07 on form_8832 and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form is filed extension of time 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_9100-1 provides that the term regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register commissioner will use to determine whether to grant an extension of time to make the election determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief 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 based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-1 and -3 have been satisfied as a result x 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_entity effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose as a condition for this late election relief x and all other entities affected by x’s disregarded_entity classification election must amend their federal_income_tax returns and or informational returns consistent with x having made a timely entity classification election to be treated as a disregarded_entity effective date federal_income_tax consequences of the transactions described above under any other provision of the code provides that it may not be used or cited as precedent this ruling is directed only to the taxpayer s requesting it sec_6110 except as specifically set forth above we express no opinion concerning the plr-115497-07 being sent to x’s authorized representatives sincerely pursuant to a power_of_attorney on file with this office a copy of this letter is william p o'shea associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ------------------------------------------------------------ ------------ ---------------------- --------------------------- ----------------------------- in re --------------------------------------------------- ------------------------------ department of the treasury washington dc person to contact --------------- id no ------------- telephone number --------------------- refer reply to cc psi - plr-122766-04 date july -------------------------------------------------------------------------------- legend trust -------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------- trust --------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------- settlor daughter date date trustees court ----------------------------------------------------------------------------------------------------------------- --------------------------------------------------------- state state statute dear --------------------------------------------- ----------------------------------------------- -------------------------------------------------------- -------------------------- ---------------------- ----------------------------------------------------------- -------------------------------------------------------------------------------- ------------------ ------------------------------------ this is in response to the date letter and subsequent correspondence concerning the generation-skipping_transfer gst tax and income_tax consequences of the proposed merger of two trusts the facts and representations submitted are summarized as follows settlor executed an irrevocable_trust agreement trust dated date which is prior to plr-122766-04 date trust was created for the primary benefit of settlor’s daughter daughter the trustees of trust are trustees article one of trust provides in part that the trustees shall hold manage invest and reinvest the trust property shall collect the income therefrom and shall pay the net_income in convenient installments in such proportions and with such exclusions as the trustees shall deem advisable among the following class of persons daughter a child of settlor the spouse of said child the issue of said child the respective spouses of the issue of said child the brothers and sisters of said child their respective spouses their issue and the respective spouses of such issue or the trustees shall have the right to and are authorized to accumulate any or all of such net_income as they shall deem advisable and add the same to the principal of the trust property further in the event that any payment of income authorized to be made to any individual beneficiary shall be insufficient in the opinion of the trustees to defray the expenses of any illness accident or other emergency or to provide for the proper maintenance support and education of such beneficiary the trustees are authorized to use from time to time so much of the principal of the trust property as the trustees may deem advisable therefor article two of trust provides in part that this trust shall continue in effect unless sooner terminated as herinafter provided until twenty-one years after the death of the last to die of the four children of the settlor living at the date this agreement or until the earlier failure of all living takers in the class of persons above described in article one hereof the trustees however are authorized to terminate this trust in whole or in part before the time aforesaid whenever they deem it to be in the best interest of the beneficiaries of this trust or for any other reasons advisable to do so upon any termination of trust the trustees shall transfer deliver and pay over the then trust property to the said child of the settlor if such child is then living and if not to the then living issue of the said child per stirpes failing such then living issue the then trust property shall be divided equally among and added to the other three trusts of even date with this agreement established by the settlor for his other children and their families for which trusts there are takers then living and failing all such then living takers the then trust property shall be transferred delivered and paid over to such charitable_organization or organizations as the trustees shall select on date a date prior to date settlor executed a second irrevocable_trust agreement trust for the primary benefit of settlor’s daughter daughter the trustees of trust are trustees the terms of trust are virtually identical to the terms of trust trust and trust have identical dispositive provisions and identical beneficiaries the only significant variation between trust and trust is contained in the fiduciary powers plr-122766-04 provision of trust article nine specifically trust permits the trustees of trust to delegate to each other their rights power and duties thereunder any of the trustees shall have full power and authority to delegate from time to time to any one or more of the other trustees by an instrument in writing any or all of such trustee’s rights power and duties hereunder since the establishment of trust and trust the trusts have been separately administered under state law it is represented that this separate administration has proved to be costly and cumbersome resulting in frequent duplication in connection with investment oversight court filing_requirements annual accounting statements and tax reporting matters state statute provides that the court for cause shown may authorize the trustees propose to file a petition to state court to seek the court’s permission to combination of separate trusts with substantially_similar provisions upon such terms and conditions and with such notice as the court shall direct notwithstanding that the trusts may have been created by separate instruments and by different persons combine the assets of trust with trust and to seek state court authority to administer the combined assets under the provisions of trust the petition will further provide that the merger of trust and trust is contingent upon the issuance of a ruling by the internal_revenue_service that the merger will not result in a forfeiture of trust 2’s exempt status from gst tax trust and trust were irrevocable on date it is represented you have requested the following rulings the proposed merger of trust into trust with the combined corpus thereof that no actual or constructive additions have been made to trust and trust after that date being administered in accordance with trust will not give rise to a constructive_addition to trust nor otherwise cause trust to lose its grandfathered exempt status under gst tax provisions of sec_2601 to recognize gain_or_loss for purposes of sec_1001 and the basis of the assets of trust and trust as well as the holding_period of those assets will remain the same after the proposed merger issue sec_2601 imposes a tax on each generation-skipping_transfer gst which includes under sec_2611 a taxable_distribution a taxable_termination and a direct_skip the proposed merger of trust into trust will not cause either of trust sec_1 or plr-122766-04 under section a of the tax_reform_act_of_1986 act the gst tax is generally applicable to generation-skipping transfers made after date however under section b a of the act and sec_26_2601-1 of the generation-skipping_transfer_tax regulations the tax does not apply to a transfer from a_trust if the trust was irrevocable on date and no addition actual or constructive was made to the trust after that date see sec_26_2601-1 regarding constructive additions sec_26_2601-1 provides rules for determining when a modification judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the gst tax will not cause the trust to lose its exempt status sec_26_2601-1 provides that a modification will not cause an exempt trust to be subject_to the gst tax if the modification does not shift a beneficial_interest in the trust to any beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification and the modification does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided for in the original trust a modification of an exempt trust will result in a shift in beneficial_interest to a lower generation beneficiary if the modification can result in either an increase in the amount of a generation-skipping_transfer or the creation of a new generation-skipping_transfer a modification that is administrative in nature that only indirectly increases the amount transferred will not be considered to shift a beneficial_interest in the trust sec_26_2601-1 example considers a situation where in grantor established an irrevocable_trust for grantor's child and the child's issue in grantor's spouse also established a separate irrevocable_trust for the benefit of the same child and issue the terms of the spouse's trust and grantor's trust are identical in the appropriate local court approved the merger of the two trusts into one trust to save administrative costs and enhance the management of the investments the merger of the two trusts does not shift any beneficial_interest in the trust to a beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the merger in addition the merger does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided for in the original trust therefore the trust that resulted from the merger will not be subject_to the provisions of chapter in the present case trust and trust were irrevocable on date it is represented that no additions actual or constructive were made to trust or trust after that date the merger of trust into trust is substantially_similar to the situation described in example of sec_26_2601-1 the merger of trust into trust will not result in a shift of any beneficial_interest in the trust assets to any plr-122766-04 beneficiary who occupies a generation lower than the persons holding the beneficial interests prior to the merger trust will terminate on the same date that trust was required to terminate thus the merger will not extend the time for vesting of any beneficial_interest in the surviving trust beyond the period provided for in trust and trust accordingly we conclude that based on the facts submitted and the sec_1001 provides that the gain from the sale_or_other_disposition of sec_61 provides that gross_income includes gains derived from dealings sec_1_1001-1 of the income_tax regulations provides as a general_rule representations made the proposed merger of trust into trust with the combined corpus thereof being administered in accordance with trust will not give rise to a constructive_addition to trust nor otherwise cause trust to lose its grandfathered exempt status under gst tax provisions of sec_2601 issue in property property is the excess of the amount_realized therefrom over the adjusted_basis provided in sec_1011 for determining gain and the loss is the excess of the adjusted_basis provided in sec_1011 over the amount_realized sec_1001 provides that except as otherwise provided the entire amount of the gain_or_loss on the sale_or_exchange of property is recognized that except as otherwise provided in subtitle a the gain_or_loss realized from the conversion of property into cash or from the exchange of property for other_property differing materially in either kind or in extent is treated as income or as loss sustained exchange gives up a property interest in return for a new or additional property interest such an exchange of property is a disposition under sec_1001 see sec_1_1001-1 property is not a sale_or_other_disposition of property where the co-owners of the joint property sever their joint_interests in order to extinguish their survivorship interests the properties exchanged are materially different 499_us_554 a material difference exists when the exchanged properties embody legal entitlements different in_kind or extent or if they confer different rights and powers id pincite an exchange of property results in the realization of gain under sec_1001 if for purposes of sec_1001 in an exchange of property each party to the revrul_56_437 1956_2_cb_507 holds that a partition of jointly owned trust and trust have substantially_similar provisions the trusts have based on the information submitted and the representations made in the ruling sec_1011 provides that the adjusted_basis for determining gain_or_loss from a plr-122766-04 identical dispositive provisions and identical beneficiaries the proposed merger of trust into trust will not result in any change in the beneficial interests of any beneficiary request the proposed merger of trust into trust will not result in a material difference in the beneficial interests of any beneficiary the beneficiaries will hold the same interests before and after the merger accordingly the proposed merger will not cause any of the trusts to recognize any gain_or_loss from the sale_or_other_disposition of property under sec_61 or sec_1001 sale_or_other_disposition of property whenever acquired is the basis as determined under sec_1012 or other applicable sections sec_1012 provides that the basis_of_property is the cost of the property except as otherwise provided in subchapter_o in the present case the basis of the assets in trust and trust are determined under sec_1012 and other sections in subchapter_o as the proposed merger of the two separate trusts will not constitute a sale_or_other_disposition of property for purposes of sec_1001 no gain_or_loss will be realized under sec_1_1001-1 accordingly the basis of the assets in the surviving trust after the proposed merger will remain the same as the basis of those assets in the current trusts before the merger held property however acquired there shall be included the period for which such property was held by any other person if under chapter of the code such property has for the purpose of determining gain_or_loss from a sale_or_exchange the same basis in whole or in part in the taxpayer’s hands as it would have in the hands of such other person proposed merger will remain the same as the basis of those assets in the current trusts before the merger accordingly the holding periods of the assets in the surviving trust after the proposed merger will include the holding periods of the assets in the current trusts before the merger sec_1223 provides that in determining the period for which a taxpayer has as mentioned above the basis of the assets in the surviving trust after the 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 taxpayers requesting it sec_6110 provides that it may not be used or cited as precedent 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 plr-122766-04 material submitted in support of the request for rulings it is subject_to verification on examination 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 lorraine e gardner senior counsel branch office of associate chief_counsel passthroughs special industries enclosures copy for sec_6110 purposes copy of this letter cc


internal_revenue_service department of the treasury index number washington dc person to contact telephone number refer reply to cc intl br1-plr-104798-98 date aug i999 ty country b year year year date c country d this is in response to your letter dated date requesting a ruling under sec_877 of the internal_revenue_code_of_1986 code that a's surrender of her u s alien registration card green card did not have for one of its principal purposes the avoidance of u s taxes under subtitle a or subtitle b of the code additional information was submitted in a letter dated date the information submitted for consideration is substantially as set forth below the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by penalty of perjury statements executed plr-104798-98 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 a was born in country b in year a's parents were also born in country b in year a married a u s citizen and obtained a green card a lived in the united_states until year when she returned to country b parents a is resident in country b and is subject_to country b income_tax at rates that are comparable to the applicable u s income_tax rates on date c a surrendered her green card expatriated at the u s embassy in country b on the date of a’s expatriation her net_worth exceeded the amount set forth in sec_877 a’s assets consist primarily of u s stocks held in a grantor_trust with respect to which a is treated as the owner of the property held in the trust u s treasury bills a u s government fund and country d real_estate to care for her elderly ailing sec_877 generally provides that a citizen who loses u s citizenship or a u s long-term_resident who ceases to be taxed as a lawful permanent resident individuals who expatriate within the 10-year period immediately preceding the close of the taxable_year will be subject_to the special rules of sec_877 for such taxable_year unless such loss did not have for one of its principal purposes the avoidance of u s taxes sec_2107 and sec_2501 provide special estate and gift_tax regimes respectively for individuals who expatriate with a principal purpose to avoid u s taxes a former u s citizen or former u s long-term_resident will be treated as having expatriated with a principal purpose to avoid u s taxes for purposes of sec_877 sec_2107 and sec_2501 if the individual's average income_tax_liability or the individual’s net_worth on the date of expatriation exceed certain thresholds see sec_877 sec_2107 and sec_2501 a former u s citizen whose net_worth or average tax_liability exceeds these thresholds however will not be presumed to have a principal purpose of tax_avoidance if that former citizen is described within certain statutory categories and submits a request for a ruling within one year of the date of loss of u_s citizenship for the secretary's determination as to whether such loss had for one of its principal purposes the avoidance of u s taxes see sec_877 sec_2107 and sec_2501 under notice_98_34 1998_27_irb_30 madifying notice_97_19 1997_1_cb_394 a former long-term_resident whose net_worth or average tax_liability exceeds the applicable thresholds will not be presumed to have a principal purpose of tax_avoidance if that former resident is described within certain categories and submits a complete and good_faith request for a ruling as to whether such loss had for one of its principal purposes the avoidance of u s taxes plr-104798-98 notice_98_34 requires that certain information be submitted with a request for a ruling that an individual's expatriation did not have for one of its principal purposes the avoidance of u s taxes a is eligible to request a ruling pursuant to notice_98_34 because she is a resident and fully liable to tax on her worldwide income in country the country in which she was born a submitted all of the information required to be submitted by notice_97_19 as modified by notice_98_34 including additional information requested by the service after review of the submission accordingly based solely on the information submitted and the representations made it is held that a has made a complete and good_faith submission in accordance with sec_877 and notice_98_34 therefore a will not be presumed under sec_877 to have as one of her principal purposes for expatriating the avoidance of u s taxes it is further held that a will not be treated under sec_877 as having as one of her principal purposes for expatriating the avoidance of u s taxes because the information submitted clearly establishes the lack of a principal purpose to avoid taxes under subtitle a or b of the code except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in addition no opinion is expressed as to a's u s tax_liability for the taxable years prior to or after her expatriation under sections of the code other than sec_877 sec_2107 and sec_2501 a copy of this letter must be attached to a's u s income_tax return for the year in which a obtained the ruling whether or not a is otherwise required to file a return 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 plr-104798-98 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to a sincerely yours ‘ w edward williams senior technical reviewer cc intl br1 cc


t c summary opinion united_states tax_court zoilo a urena petitioner v commissioner of internal revenue respondent docket no 18427-03s filed date zoilo a urena pro_se patricia riegger for respondent goldberg special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure respondent determined a deficiency in petitioner’s federal_income_tax of dollar_figure for the taxable_year after concessions by both parties the issues remaining for decision are whether petitioner’s filing_status for the taxable_year is married_filing_separately as determined in the notice_of_deficiency or single as claimed on petitioner’s form_1040 u s individual_income_tax_return and whether petitioner is entitled to an earned_income_tax_credit in the amount of dollar_figure for the taxable_year some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference petitioner resided in brooklyn new york on the date the petition was filed in this case petitioner appeared in court with an interpreter because his understanding of the english language was limited background in petitioner married brenda rodriguez ms rodriguez in new york new york petitioner and ms rodriguez were divorced in petitioner had no children from this marriage petitioner’s daughter gabriella urena gabriella was born in maria hernandez ms hernandez petitioner’s friend 1among the concessions respondent conceded that petitioner was entitled to claim gabriella as a dependant for and that he was entitled to a child_tax_credit for in the amount of dollar_figure is the mother of gabriella gabriella turned years old during the year in issue there is no support arrangement between petitioner and ms hernandez as to their daughter during gabriella attended first grade at forest elementary_school in queens new york during petitioner earned_income as an independent taxi driver in the amount of dollar_figure petitioner reported this income on schedule c profit or loss from business_discussion a taxpayer generally bears the burden of proving the commissioner’s determinations in a notice_of_deficiency to be in error rule a in certain circumstances however if the taxpayer introduces credible_evidence with respect to any factual issue relevant to ascertaining the proper tax_liability sec_7491 places the burden_of_proof on the commissioner sec_7491 rule a credible_evidence is ‘the quality of evidence which after critical analysis a court would find sufficient to base a decision on the issue if no contrary evidence were submitted ’ 116_tc_438 quoting h conf rept pincite 1998_3_cb_747 filing_status the first issue for decision is whether petitioner’s filing_status for the taxable_year is married_filing_separately as determined in the notice_of_deficiency or single as claimed on petitioner’s form_1040 petitioner testified that he obtained a divorce from his first wife ms rodriguez in petitioner also testified that he never married ms hernandez gabriella’s mother and that he was single during the year in issue this court finds petitioner’s testimony on this issue to be credible there is nothing in the record to indicate that petitioner was married during the year in issue respondent claims that his determination in the notice_of_deficiency is based on petitioner’ sec_2001 tax_return however as discussed above such contention is unsupported by any evidence neither petitioner’ sec_2001 nor hi sec_2002 federal_income_tax return was offered into evidence to support respondent’s contention upon the basis of the record this court finds that petitioner’s credibility has not been impeached by any evidence offered by 2in the notice_of_deficiency respondent determined that petitioner’s filing_status was married_filing_separately and computed the deficiency accordingly respondent contends that petitioner did not dispute this adjustment in his petition to this court therefore respondent contends that such adjustment should be sustained although petitioner did not raise the issue in his petition to this court we interpret his testimony as to call such issue into question the court does not find that a consideration of petitioner’s filing_status as an issue in this case would result in prejudice to respondent respondent before trial was aware of petitioner’s contention as to his filing_status in the taxable_year accordingly the issue of petitioner’s filing_status during the year in issue will be considered respondent therefore this court finds that petitioner’s filing_status in was single as claimed by petitioner on form_1040 earned_income_tax_credit the final issue for decision is whether petitioner is entitled to an earned_income_tax_credit in the amount of dollar_figure for the taxable_year the relevant parts of sec_32 provide that an individual is eligible for the earned_income_tax_credit if the individual has a qualifying_child a qualifying_child is a son or daughter of the taxpayer who has not attained the age of at the end of the taxable_year and shares the same principal_place_of_abode in the united_states with the taxpayer for more than one-half of the taxable_year sec_32 respondent has conceded that gabriella is petitioner’s daughter and that she is under the age of therefore two of the three elements required have been satisfied if gabriella is to be considered a qualifying_child for earned_income_tax_credit purposes however respondent contends that petitioner has not shown that gabriella had the same principal_place_of_abode as he did for more than half of in order for him to claim an earned_income_tax_credit as a single_person with a qualifying_child petitioner testified that during the year in issue gabriella lived with him and his brother robert urena pincite bleeker street queens new york petitioner never signed a lease for his occupancy at this apartment petitioner also did not introduce any evidence such as utility bills for the above residence petitioner further explained that during ms hernandez lived pincite south fourth street brooklyn new york petitioner testified that ms hernandez would periodically visit him and gabriella at his residence on bleeker street however respondent called a paralegal specialist in the office_of_chief_counsel to testify this witness testified that on a prior occasion petitioner stated that he lived with ms hernandez gabriella and ms hernandez’s other child petitioner testified that he and gabriella moved to south fourth street apartment brooklyn new york later in the year of or early but that he did not notify gabriella’s school of this move because he wanted to keep her in the school to which she had grown accustomed petitioner testified that during he drove gabriella to school at about a m in the morning then worked as an independent taxi driver throughout the day gabriella attended an after-school program until p m when she was then picked up by petitioner petitioner then drove gabriella to her maternal grandmother’s house where gabriella stayed while petitioner went back to work at her grandmother’s house gabriella had dinner and was taken care of by her grandmother petitioner testified that late at night after work he picked up gabriella and she returned with him to his residence on bleeker street petitioner testified that he was the custodial_parent of gabriella however at trial petitioner attempted to introduce a form_8332 release of claim to exemption for child of divorced or separated parents which allegedly was completed by petitioner and ms hernandez in this form petitioner and ms hernandez acknowledged that she was the custodial_parent in but was releasing her dependency_exemption to petitioner the form_8332 was not attached to petitioner’s federal_income_tax return for and obviously was prepared in anticipation of trial upon the basis of the record and taking into account inconsistencies in petitioner’s testimony petitioner has not persuaded the court that gabriella lived with him at the same principal_place_of_abode for more than one-half of the taxable_year therefore we find that petitioner is not entitled to an earned_income_tax_credit for the tax_year respondent’s disallowance of an earned_income_tax_credit is sustained reviewed and adopted as the report of the small_tax_case division decision will be entered under rule