t c memo united_states tax_court hermine leventhal petitioner v commissioner of internal revenue respondent harvey r leventhal petitioner v commissioner of internal revenue respondent docket nos filed date guy b maxfield for petitioner in docket no stuart a smith for petitioner in docket no anthony h jones for respondent memorandum findings_of_fact and opinion gale judge by separate notices of deficiency respondent determined the following deficiencies addition_to_tax and penalty with respect to petitioners' federal income taxes -- - hermine leventhal addition_to_tax penalty year deficiency sec_6651 a sec_6662 a dollar_figure dollar_figure dollar_figure big_number --- -- harvey r leventhal year deficiency dollar_figure big_number these cases were consolidated for trial briefing and opinion all section references are to the internal_revenue_code in effect for the years in issue and all rule references are to the tax_court rules_of_practice and procedure unless otherwise indicated after concessions ’ the issue for decision is whether certain payments made by petitioner harvey leventhal harvey constitute alimony or separate_maintenance payments includable in the gross_income of petitioner hermine leventhal hermine under sec_71 and deductible by harvey under sec_215 respondent issued inconsistent notices of deficiency to harvey and hermine determining that harvey was not entitled to deduct and hermine was not entitled to exclude from gross_income the disputed payments at trial and on brief respondent argues ' respondent concedes that petitioner hermine leventhal is not liable for the addition_to_tax under sec_6651 or the penalty under sec_6662 - - in support of hermine’s position while reserving his rights to assess deficiencies against her findings_of_fact some of the facts have been stipulated and are so found the stipulation of facts together with the exhibits attached thereto is incorporated herein by this reference hermine resided in new york new york and harvey had a legal address in staten island new york at the time their petitions were filed hermine and harvey were married on date in or around date petitioners separated due to marital difficulties at this time hermine moved out of the house they had shared on emerson drive staten island new york marital home and stayed with various friends from date until june or date at some point in hermine commenced an action for divorce in the supreme court of the state of new york hermine engaged an attorney charles moser to handle the divorce proceedings and property settlement and to negotiate a place for her to live in the interim harvey engaged an attorney irvin rosenthal to handle the divorce proceedings and property settlement as well as any interim matters on date mr rosenthal sent a letter to mr moser april letter clearly marked as privileged and confidential and without prejudice the letter states dear mr moser this is in reply to your letter of date occupancy of marital home dr leventhal is amenable to alternate sharing of the marital home on an equal time-share basis with three months alternatively to the wife and husband the foregoing is contingent on the wife agreeing to presently placing the marital home on the market for sale at the highest obtainable market price with the net_proceeds of sale to be held in escrow until a final judgment of the court in the divorce action or agreement with the parties the husband will pay all normal and usual expenses of maintenance and operation of the marital home and the alternate residence the occupancy of both of which are to be shared by the parties our clients shall agree with respect to the alternate residence accordingly no appraisal will be required since the home will presumably be sold before the conclusion of the action tangible_personal_property with regard to the tangible personalty of value viz antiques our client dr leventhal is agreeable to having the parties select the items on an alternate selection basis with the first selection to the wife this again will obviate the necessity for an appraisal of the personalty professional corporation's payment in view of the fact that mrs leventhal is no longer on the payroll of the professional_corporation no further payments of dollar_figure bi-weekly can be nor will they be made to mrs leventhal the referenced date letter is not a part of the record in this case counsel fee our client and we both feel that no counsel fee payment by the husband is indicated in this action since your client mrs hermine leventhal has assets in her own name and control in excess of dollar_figure of which at least dollar_figure is in liguid funds in the form of bank funds and marketable_securities exclusive of real_property mrs leventhal can well afford to advance her own counsel and expert fees our client did agree without prejudice to advance dollar_figure toward your client's expert fees and same is enclosed under separate cover matrimonial support mrs leventhal has available to her dollar_figure per week from a joint account regularly and periodically funded by her husband and an additional dollar_figure per week paid to her by her husband from funds of a joint account the wife pays dollar_figure a week for a maid from the aforesaid sums and the husband has in the past and continues to pay all other expenses in connection with the operation and maintenance of the home and further pays all charge accounts review of professional_corporation as i advised you on the phone on march 31st and as my partner rona shays previously wrote to you if you will send us a list of the books_and_records of the professional_corporation you wish to have examined by your accountants the years involved and the names of your accountants we will arrange to have the professional_corporation arrange a mutually satisfactory appointment for your experts to review same obviously there will be excluded from your inspection any records pertaining to patients so as not to breach patient confidentiality afforded them by law venue our position regarding venue is clearly and succinctly set forth in our motion papers it is our intention to timely pursue our motion very truly yours irvin h rosenthal on date mr moser sent a letter to mr rosenthal stating dear mr rosenthal with reference to your telephone conversation with my offices yesterday our prior communications and phone conversations and with specific reference to the lease from silver lake associates owner to our clients tenants it is understood and agreed as follows our clients will alternate on a two month each basis both apartment 5n on the fifth floor of victory boulevard and the marital home located pincite emerson drive both staten island new york harvey leventhal to occupy the home for the months of june and date hermine leventhal to occupy the apartment during that period and hermine leventhal to occupy the home for the months of august and date harvey leventhal to occupy the apartment during that period and thereafter they shall similarly alternate the occupancy of both premises harvey leventhal will pay all normal and usual expenses of maintenance and operation of the marital home and the alternate residence the occupancy of which are to be shared by the parties as aforesaid of course as we discussed on the phone earlier today all of the foregoing is based upon silver lake associates owner accepting the changes you made in the lease previously forwarded - jj - kindly acknowledge the acceptance of the above conditions by signing and returning to me via my messenger the enclosed copy of the instant communication together with both copies of the lease very truly yours charles be moser cem tp encl understood accepted and agreed rosenthal shays by irvin h rosenthal esq attorneys for defendant harvey leventhal the letter was signed by mr moser and countersigned by mr rosenthal on behalf of harvey later that day mr moser sent a second letter to mr rosenthal stating dear mr rosenthal enclosed herewith is a signed copy of the communication hand delivered to your offices earlier today this communication will further confirm the agreement of the parties and our understanding regarding the alternating occupancy of the marital home and apartment 5n pincite victory boulevard staten island new york on a two month basis assuming that the changes made in the apartment lease are accepted by silver lake associates owner-lessor as follows the marital home located pincite emerson drive staten island new york will be forthwith placed on the market and listed for sale at the highest fair market price with a licensed real_estate broker a member of the local multiple listing service that such a listing will not preclude a private sale at no less than the listing price and that we will hold the net_proceeds of the sale in escrow the same to be released and distributed pursuant to the judgment of divorce to be entered herein or the mutual agreement in writing of the parties --- - in the haste of the hand delivery of my earlier communication the instant listing and sale provision was omitted kindly acknowledge the acceptance of the above by signing and returning to me in the envelope provided the enclosed copy of this letter very truly yours charles e moser cem tp understood accepted and agreed rosenthal shays by irvin h rosenthal esq attorneys for defendant again this letter was signed by mr moser and countersigned by mr rosenthal on behalf of harvey these two letters set forth above dated date are collectively referred to hereinafter as the june letters during and the first months of petitioners alternately occupied the apartment on victory boulevard in staten island new york apartment and the marital home on a 2-month rotation ie each petitioner occupied one of the residences for months and then petitioners switched locations petitioners were designated as tenants on the lease for the apartment ’ in date harvey refused to renew the lease on the apartment and from july to date petitioners shared occupancy of the marital home but did not live together a sec_3 we reach this conclusion on the basis of the first june letter which makes specific reference to the lease from silver lake associates owner to our clients tenants --- - husband and wife title to the marital home was in hermine’s name during this 2-year period during harvey made cash payments totaling dollar_figure to hermine directly the parties have stipulated that harvey also made payments on hermine’s behalf for that year specifically described as follows dollar_figure as car payments dollar_figure as mortgage payments on the marital home dollar_figure as rent for the apartment dollar_figure for furniture rental dollar_figure to brooklyn union gas dollar_figure to a gardener dollar_figure to con edison for electricity dollar_figure to quinlan oil dollar_figure to town country pool dollar_figure as insurance payments dollar_figure to new york telephone dollar_figure as miscellaneous expenses plumbing electricity water etc on his return harvey deducted as alimony dollar_figure during harvey made cash payments totaling dollar_figure to hermine directly the parties have stipulated that harvey also made payments on hermine’s behalf for that year specifically described as follows although the total amount stipulated as paid in directly to or on hermine’s behalf equals dollar_figure harvey claimed an alimony deduction for that year of dollar_figure the parties have offered no explanation for this discrepancy however because we conclude that harvey is entitled to an alimony deduction for that is substantially less than dollar_figure the discrepancy has no significance -- - dollar_figure as car payments dollar_figure as mortgage payments on the marital home dollar_figure as rent for the apartment dollar_figure to brooklyn union gas dollar_figure to a gardener dollar_figure to con edison for electricity dollar_figure to quinlan oil dollar_figure to town country pool dollar_figure as insurance payments dollar_figure to new york telephone dollar_figure as miscellaneous expenses plumbing electricity water etc on his return harvey deducted as alimony dollar_figure during and with certain exceptions harvey sent weekly checks to hermine these checks were generally for dollar_figure although they were frequently for lesser amounts sometimes with an offset for some item such as utilities noted on the check and sometimes without explanation similarly harvey generally made out monthly checks to hermine during this period on which car payment was noted harvey did not make the dollar_figure weekly payments unfailingly on date hermine’s counsel mr moser sent a letter to harvey’s counsel mr rosenthal as follows dear mr rosenthal it am advised that your client harvey has failed to remit his maintenance payments for the following as was the case for the amount deducted as alimony by harvey for dollar_figure does not equal the amount stipulated as paid directly to or on behalf of hermine dollar_figure the parties have also offered no explanation for this discrepancy but it is likewise without significance because we conclude that harvey is entitled to an alimony deduction for that is less than dollar_figure periods may 31st june 7th and date representing the total sum of dollar_figure dollar_figure in addition his check representing the car lease payment for the month of june in the sum of dollar_figure has also not been remitted the only payment made of late was his check just received and without explanation whatsoever dated date and in the sum of dollar_figure x if the total monies due and owing my client are not received by her on or before date i will without further notice seek judicial intervention and make a formal application to the court on june 24th a second letter that month from hermine’s to harvey’s counsel similarly took the position that harvey was in arrears with respect to his obligation to make maintenance and car payments finally in date before petitioners’ execution of a final settlement agreement hermine’s counsel sent a letter to harvey’s counsel suggesting a need to verify maintenance payments for the last one-third of during and harvey paid dollar_figure and dollar_figure respectively for homeowner’s insurance on the marital home the policies listed hermine as the named insured and covered the dwelling as well as certain personal_property therein including fine art jewelry and furs the remaining amounts stipulated as for insurance covered life and other insurance there was no court decree of divorce or separate_maintenance in effect during or a settlement agreement providing -- for the division of petitioners’ marital property and settlement of all their respective obligations was executed by petitioners on date and a final judgment of divorce was granted by the supreme court of the state of new york on date for both the and taxable years petitioners each filed federal_income_tax returns under the status of married filing separate_return as noted earlier harvey claimed a deduction for alimony payments of dollar_figure in and dollar_figure in hermine did not include any amount as alimony in her gross_income for those years respondent issued inconsistent notices of deficiency to harvey and hermine disallowing harvey’s alimony deductions and determining that hermine must include in gross_income for and dollar_figure and dollar_figure respectively opinion alimony or separate_maintenance payments as defined in sec_71 are includable in the gross_income of the the alimony income determined for hermine in matches the alimony deduction disallowed for harvey in that year however for the amount of alimony income determined for hermine exceeds the deduction disallowed for harvey by dollar_figure furthermore as with harvey’s deductions the income attributed to hermine in both years exceeds the amounts stipulated as received directly by or on behalf of hermine as we sustain respondent’s determination with respect to hermine’s alimony income in amounts less than those stipulated as received by her in each year these discrepancies are without significance - - recipient and deductible by an individual payor in the year paid see secs 7l a and a sec_71 defines alimony_or_separate_maintenance_payment as any payment in cash if-- a such payment is received by or on behalf of a spouse under_a_divorce_or_separation_instrument b the divorce_or_separation_instrument does not designate such payment as a payment which is not includible in gross_income under this section and not allowable as a deduction under sec_215 c in the case of an individual legally_separated from his spouse under a decree of divorce or of separate_maintenance the payee spouse and the payor spouse are not members of the same household at the time such payment is made and d there is no liability to make any such payment for any period after the death of the payee spouse and there is no liability to make any payment in cash or property as a substitute for such payments after the death of the payee spouse the parties do not dispute that the requirements of sec_71 b and c are met in the instant case the principal dispute concerns sec_71 a while harvey contends that the amounts in dispute meet the requirements of sec_71 a hermine and respondent argue that the amounts were not received by or on behalf of hermine under_a_divorce_or_separation_instrument in addition respondent argues that the amounts do not in any event qualify as alimony or separate_maintenance payments because harvey’s liability for the payments did not terminate upon hermine’s death as required by sec_71 d were payments received under_a_divorce_or_separation_instrument under sec_71 the term divorce_or_separation_instrument means a a decree of divorce or separate_maintenance or a written instrument incident to such a decree b a written_separation_agreement or c a decree not described in subparagraph a requiring a spouse to make payments for the support or maintenance of the other spouse as no decree of divorce or separate_maintenance was in effect during the years in issue we must decide whether all or some of the payments were received by or on behalf of hermine under a written_separation_agreement the term written_separation_agreement is not defined in the code the applicable regulations or in the legislative_history 79_tc_340 keegan v commissioner tcmemo_1997_359 a written_separation_agreement has been interpreted to require a clear statement in written form memorializing the terms of support between the parties see jacklin v commissioner supra pincite 59_tc_97 letters which do not show a meeting of the minds between the parties cannot collectively constitute a written_separation_agreement see -- - 84_tc_809 affd without published opinion 800_f2d_260 4th cir 59_tc_846 hwell v commissioner tcmemo_1996_253 mercurio v commissioner tcmemo_1995_ harlow v commissioner tcmemo_1984_393 greenfield v commissioner tcmemo_1978_386 however where one spouse assents in writing to a letter proposal of support by the other spouse a valid written_separation_agreement has been held to exist see azenaro v commissioner tcmemo_1989_224 furthermore a written_separation_agreement will not fail simply because it does not enumerate a specific amount of required support so long as there is some ascertainable_standard with which to calculate support amounts see jacklin v commissioner supra pincite harvey takes the position that the april and june letters together constitute a written_separation_agreement within the meaning of sec_71 b under which he paid all amounts stipulated as paid directly to or on hermine’s behalf we do not believe the april letter constitutes a written_separation_agreement its language is vague eg mrs leventhal has available to her dollar_figure per week and when fairly read constitutes at best a set of unilateral proposals or offers the letter is clearly marked without prejudice and some items are expressly contingent on hermine’s agreement to take other -- - actions the letter has not been countersigned or otherwise endorsed by hermine or her attorney thus the april letter does not memorialize a mutual agreement moreover harvey is selective in choosing the terms of the april letter that he argues evidence an agreement regarding hermine’s support in an effort to show an agreed dollar_figure per week support obligation harvey cites the letter’s language in the matrimonial support paragraph which represents that dollar_figure per week is available to hermine from an account funded by harvey that another dollar_figure per week is paid_by him and that dollar_figure per week from these sums is paid_by hermine for a maid however harvey ignores language in the same paragraph which represents that he in addition pays all charge accounts he offers no explanation why the purported support agreement embodied in the april letter either includes or excludes an obligation by harvey to pay charge accounts it makes no difference to our conclusion that harvey generally though far from consistently paid hermine dollar_figure per week during the years in issue which she accepted and presumably used for her support mere acquiescence and receipt of a payment by the recipient spouse do not transform a unilateral offer of support into the bilateral written_agreement contemplated in sec_71 b see harlow v commissioner supra saniewski v commissioner tcmemo_1979_337 greenfield v commissioner supra nor does it matter that hermine ultimately took the position that harvey was obligated to pay her dollar_figure per week even if the parties eventually reached some kind of agreement perhaps an oral one regarding hermine’s support there is no evidence of a written_agreement in the record as required by sec_71 b see ewell v commissioner supra mercurio v commissioner supra nemeth v commissioner tcmemo_1982_646 harvey argues that hermine’s failure to agree to the april letter in writing does not by itself make the letter insufficient in support of this argument harvey cites jefferson v commissioner t cc and osterbauer v commissioner tcmemo_1982_266 where letters lacking one spouse’s written assent were held sufficient for purposes of an alimony deduction however both cases are clearly distinguishable jefferson and osterbauer construed predecessors of sec_71 a involving the regquirement of a written instrument incident to a decree of divorce or separation not the written_separation_agreement requirement presently embodied in sec_71 b moreover the facts in jefferson and osterbauer are readily distinguishable from the instant case in both prior cases we found that an oral agreement clearly had been reached prior to its memorialization in awriting the evidence in the instant case shows the contrary hermine -- - vigorously denies in testimony that she agreed to dollar_figure per week as support in connection with the april letter the april letter is ambiguous regarding the terms of support and harvey routinely disregarded his purported obligation to pay this amount all of which suggests that petitioners had not reached an oral agreement regarding support prior to or by means of the april letter finally harvey argues that the matrimonial support paragraph of the april letter was incorporated by reference in the first of the june letters this june letter begins with reference to your telephone conversation with my offices yesterday our prior communications and phone conversations and with specific reference to the lease from silver lake associates owner to our clients tenants it is understood and agreed as follows xk kek harvey contends that the reference to our prior communications incorporated the terms of the april letter we reject this contention the reference is too vague to support such a construction particularly in the context of the specificity with which the june letters address their intended subject of living arrangements while the april letter does not constitute or form part of a written_separation_agreement within the meaning of sec_71 b the june letters are another matter these letters written and signed by hermine’s attorney and countersigned by harvey’s attorney’ as understood accepted and agreed outline specific and detailed terms under which harvey agreed to pay all normal and usual expenses of maintenance and operation of the marital home and the alternate residence ie the apartment and harvey and hermine agreed to alternating month occupancy of both premises hermine argues that the june letters are not a written_separation_agreement because they constitute only an agreement as to providing a place to live for her respondent appears to agree while conceding that the june letters constitute a meeting of the minds he nevertheless contends that there was no meeting of the minds on the issue of alimony or separate_maintenance we disagree to the extent respondent suggests that an agreement to pay hermine’s rent or mortgage is not an agreement to pay alimony he contradicts his own regulations see sec_1_71-1t q a-6 temporary income_tax regs fed reg date cash payments of rent mortgage tax or tuition liabilities of the payee spouse made under the terms of a divorce_or_separation_instrument will qualify as alimony or separate_maintenance payments hermine points to no authority for the proposition that a written_separation_agreement must be more comprehensive than providing for shelter ’ none of the parties dispute that each petitioner’s attorney had authorization to execute the letters on that petitioner’s behalf - - and we have found none payments to third parties covering expenses for shelter such as utilities pursuant to a divorce_or_separation_instrument can certainly constitute alimony see eg 79_tc_415 cologne v commissioner tcmemo_1999_102 zampini v commissioner tcmemo_1991_395 as noted neither the statute nor the regulations define written_separation_agreement as used in sec_71 b with respect to the general requirements of a written_separation_agreement we have stated logically it appears congress was interested ina clear statement in written form of the terms of support where the parties are separated in this manner it is administratively convenient for the commissioner to apprise himself of the amount of gross_income to the wife and the corresponding deduction allowable to the husband 59_tc_97 we have rejected the commissioner’s attempt to require formalities in a separation agreement when we are satisfied that mutual agreement is evidenced see id rejecting any requirement that the agreement recite the fact of separation nor need the agreement state a specific dollar amount of support it is sufficient if the agreement states an ascertainable although 59_tc_97 construed the meaning of written_separation_agreement as used in a prior version of sec_71 the regulations provide that the term has the same meaning under the current statute see sec_1_71-1t q a-4 temporary income_tax regs fed reg date --- - standard see 79_tc_340 agreement to provide funds necessary to sustain a standard of living eguivalent to that which obtained before the separation not insufficient as matter of law based on the foregoing authority we believe petitioners’ agreement in the june letters that harvey would pay all normal and usual expenses of maintenance and operation of the two identified residences qualifies as a written_separation_agreement with ascertainable standards that petitioners did not execute a written_agreement covering all elements of hermine’s support does not negate the fact that they had a written_agreement covering a part accordingly cash payments received by or on behalf of hermine within the terms of the june letters were payments made under_a_divorce_or_separation_instrument as required by sec_71 b a applying this conclusion to the payments that were stipulated as made by harvey either directly to or on behalf of hermine we find that some of the payments clearly fall outside the terms of the june letters which constitute the only sec_71 b written_separation_agreement established by the evidence specifically the payments of dollar_figure in and dollar_figure in stipulated as having been made directly to hermine by harvey have not been shown to come within the terms of normal and usual expenses of maintenance and operation of the -- - two residences likewise the payments of dollar_figure in and dollar_figure in that are described as car payments in the stipulations do not come within the terms of the june letters the letters make no mention of car payments and we do not believe such payments come within any fair reading of normal and usual expenses of maintenance and operation of the marital home or apartment thus the direct payments to hermine and the car payments were not made under_a_divorce_or_separation_instrument and therefore are not includable in the gross_income of hermine under sec_71 nor deductible by harvey under sec_215 however the mortgage payments on the marital home and rent for the apartment clearly do come within the terms of the written_separation_agreement embodied in the june letters and therefore were made under_a_divorce_or_separation_instrument we believe the remaining payments with certain exceptions in the case of insurance payments were also made under the terms of the june letters--that is based on the available evidence they may fairly be inferred as constituting normal and usual expenses of maintenance and operation of the two residences we base this conclusion on their stipulated descriptions relating to utilities a gardener a pool etc the undisputed facts that hermine owned the marital home and regularly occupied it as well as the apartment and on the stipulation that these payments were - - on behalf of hermine although hermine contends---for the first time on reply brief--that some of these payments have not been shown to be connected to the marital home or apartment she has offered no evidence to support this speculation we believe the stipulation that the payments as described were on her behalf supports the inference that the payments were related to the marital home or apartment in the absence of any other evidence we reach a different conclusion with respect to some of the insurance payments the stipulated description insurance payments is not on its face connected with the operation or maintenance of a residence further there is other evidence in the record bearing upon the appropriate classification of these payments namely harvey’s canceled checks and the homeowner’s policies on the marital home a review of the checks written for insurance and the homeowner’s policies shows that dollar_figure of the stipulated insurance payments of dollar_figure made in was for premiums on a homeowner’s policy covering the marital home the remaining dollar_figure went towards life_insurance or other insurance not shown to be connected to the marital home or apartment similarly in dollar_figure of the stipulated insurance payments of dollar_figure was for premiums on a policy covering the marital home the remaining dollar_figure went towards -- - life or other unspecified insurance ’ we thus conclude that insurance payments of dollar_figure in and dollar_figure in for coverage of the marital home’ were made under the written_separation_agreement embodied in the june letters the remaining insurance payments were not were the payments to third parties received on behalf of hermine rule a contemplates stipulations of matters involving fact or opinion or the application of law to fact rule e provides generally that a stipulation shall be treated as a conclusive admission by the party to it which the party is not permitted to gualify change or contradict hermine has stipulated that the payments to third parties at issue in this case were on hermine’s behalf she is therefore generally precluded from qualifying or contradicting that stipulation see id however where the court finds that a stipulation is plainly contrary to the facts revealed by the record the court is justified in disregarding the stipulation see jasionowski v we note in this regard the likelihood in the context of the record that some of the generically described insurance payments were for insurance covering the automobile harvey was providing for hermine while a portion of the homeowner policy premiums for the marital home represented extra coverage for jewelry and furs we conclude that insurance for such high value contents fairly falls within the terms of normal and usual expenses of maintenance and operation of a residence - - commissioner 66_tc_312 insofar as hermine’s stipulation may be interpreted as expressing a conclusion regarding the application of law to fact--that is the conclusion that all the stipulated payments were made on her behalf for purposes of the legal requirement of sec_71 a --we disregard it because the undisputed facts in this case contradict such a conclusion in the instant case harvey’s payments stipulated as on hermine’s behalf covered both his own housing_expenses as well as those of hermine it is harvey’s position that the entire amount of the expenses he paid with respect to the marital home and apartment are deductible as alimony notwithstanding that he occupied each of those properties for approximately the same number of months that hermine did during the period in issue what harvey’s argument overlooks is that the separation agreement we have found within the june letters both delineated an obligation for harvey payment of the expenses associated with the marital home and apartment and secured for him a valuable right sole occupancy for months annually of each residence insofar as harvey’s payments secured for him a right of occupancy and defrayed the costs of his occupancy we conclude that they were not made on behalf of hermine within the meaning of sec_71 a they are instead merely personal or living_expenses nondeductible under sec_262 cf - - cologne v commissioner tcmemo_1999_102 spouses separately using jointly owned second residence on equal basis pursuant to written_separation_agreement husband paying all utilities entitled to alimony deduction for one-half of same we shall determine which portion of the payments made by harvey with respect to the marital home and apartment related to his own occupancy based on the available evidence in the record the june letters indicate that with respect to the lease of the would equally share occupancy in payments of the rent obligations both petitioners were tenants apartment and provided that they alternating 2-month intervals of the payee spouse under the terms of a divorce_or_separation_instrument are payments on behalf of the payee spouse that qualify as alimony sec_1 1t b temporary income_tax regs fed reg date thus we conclude that one-half of the rent payments satisfied hermine’s liabilities and related to her occupancy of the apartment making them deductible as alimony by harvey and includable in hermine’s income pursuant to sec_215 and sec_71 respectively the remaining one-half of the rent payments related to the occupancy of harvey and are not deductible by him or includable by her similarly we conclude that one-half of the payments for furniture rental to brooklyn union gas to a gardener to con edison for electricity to quinlan oil to town county pool to new york telephone and for miscellaneous -- p7 - plumbing electrical and water expenses whether made with respect to the marital home or the apartment related to the occupancy of harvey these expenditures do not appear to have been capital in nature but merely ordinary expenses of operation and maintenance thus one-half of these payments were not received on behalf of hermine the remainder were and are therefore alimony includable in hermine’s income and deductible by harvey the mortgage payments on the marital home and payment of premiums on the homeowner’s policies covering the home require different treatment hermine held sole title to the marital home neither hermine nor harvey offered evidence concerning the terms of the mortgage indebtedness on it in the absence of any other evidence we rely on hermine’s stipulation that the mortgage payments on the marital home were on her behalf to conclude that hermine alone was liable on the indebtedness the temporary regulations provide that payment of the mortgage liabilities of the payee spouse under the terms of a divorce_or_separation_instrument qualifies as alimony see sec_1_71-1t q a-6 temporary income_tax regs supra and thus an amount egqual to the stipulated mortgage payments on the marital home must be included in income by hermine and is deductible by - - harvey ’ likewise we believe the entire amount of the payments for the homeowner’s insurance covering the marital home is alimony income to hermine and a deduction for harvey we reach this conclusion because hermine stipulated that such payments were on her behalf she is the named insured on the policies and the insurance primarily protected real_property owned by her the question arises should only one-half of the mortgage payments or homeowner’s insurance premiums be considered to be on behalf of hermine due to harvey’s half-time occupancy of the marital home we think not in light of a position taken in the temporary regulations the temporary regulations provide any payments to maintain property owned by the payor spouse and used by the payee spouse including mortgage payments real_estate_taxes and insurance premiums are not payments on behalf of a spouse even if those payments are made pursuant to the terms of the divorce_or_separation_instrument sec_1_71-1t q a-6 temporary income_tax regs supra we infer from the regulation that payments on a mortgage or of insurance or taxes relating to property owned by one spouse do not benefit and are not on behalf of the nonowner spouse who merely uses the property pursuant to a divorce_or_separation_instrument thus the mortgage and homeowner’s insurance payments ‘ to the extent the mortgage payments included qualified_residence_interest within the meaning of sec_163 hermine may be entitled to a deduction for such interest in the year paid we expect the parties to address this issue as part of their rule_155_computations - - are entirely on behalf of hermine notwithstanding harvey’s part use of the marital home would harvey’s liability for the payments have terminated with hermine’s death under sec_71 d liability to make payments must terminate on the death of the payee spouse for such payments to gualify as alimony or separate_maintenance payments respondent citing sec_1 71-t b q a-11 temporary income_tax regs fed reg date argues that even if we find a written_separation_agreement did exist such an agreement is insufficient because it does not state that liability for payments terminates on the death of hermine ’ however congress amended sec_71 d in after the promulgation of the temporary regulations specifically to remove the requirement that a divorce_or_separation_instrument affirmatively state that liability terminates upon the death of the payee spouse effective for instruments executed after sec_1_71-1t q a-11 temporary income_tax regs fed reg date states q-11 what are the conseguences if the divorce_or_separation_instrument fails to state that there is no liability for any period after the death of the payee spouse to continue to make any payments which would otherwise qualify as alimony or separate_maintenance payments a-11 if the instrument fails to include such a statement none of the payments whether made before or after the death of the payee spouse will qualify as alimony or separate_maintenance payments -- - date see tax_reform_act_of_1986 publaw_99_514 sec b 100_stat_2085 thus payments qualify so long as termination would occur under state law see notice_87_ 1987_1_cb_421 human v commissioner tcmemo_1998_ in the instant case the june letters are silent as to whether harvey is liable to make any payments after the death of hermine but harvey argues that the payments would otherwise terminate under new york law we agree under new york law maintenance is defined as payments provided for in a valid agreement between the parties or awarded by the court in accordance with the provisions of subdivision six of this part to be paid at fixed intervals for a definite or indefinite period of time but an award of maintenance shall terminate upon the death of either party or upon the recipient's valid or invalid marriage or upon modification pursuant to sec 236b9 b n y dom rel law sec 236bl a mckinney emphasis added thus the statute differentiates between maintenance payments made pursuant to agreement and those made under court decree see scheinkman practice commentaries in mckinney’s consol laws of n y book domestic relations law c236b pincite with respect to court-awarded maintenance the payments automatically terminate upon any of the events listed in the statute terminating events see id in the case of maintenance payments made pursuant to agreement the obligation generally terminates upon the death of either spouse but the parties may modify or extend the duration of the payments by --- - agreement see in re riconda n e 2d n y generally the obligation to make maintenance payments terminates upon the death of either party foster et al law and the family new york sec_12 2d ed supp new york civil practice matrimonial actions sec_51 because there is nothing in the record to indicate that harvey had agreed or was otherwise obligated to make the payments required by the june letters after hermine’s death the reguirement of sec_71 d is satisfied conclusion for the reasons discussed above harvey’s direct payments to hermine of dollar_figure in and dollar_figure in and the stipulated car payments of dollar_figure in and dollar_figure in do not gualify as alimony or separate_maintenance payments although we concluded in megibow v commissioner tcmemo_1998_455 that a payment_liability at issue therein did not automatically terminate on the death of the payee spouse under new york law the single payment at issue in that case had the appearance of an equitable distribution and the payor’s liability would therefore not have terminated on the death of the payee spouse ‘ although in the event of hermine’s death harvey might remain contractually liable to third parties for some of these payments e g apartment rent utility bills etc any such post mortem payments would no longer be received on behalf of hermine israel v commissioner tcmemo_1995_500 cf cologne v commissioner tcmemo_1999_102 fact that husband’s liability for utility bills on shared second residence would continue after wife’s death does not disqualify alimony deduction under sec_71 d for utility payments attributable to wife’s use - - under sec_71 however the mortgage payments on the marital home of dollar_figure for and dollar_figure for do so qualify in addition one-half of the rent for the apartment and one-half of the amounts stipulated as paid for furniture rental to brooklyn union gas to the gardener to con edison to quinlan oil to town country pool to new york telephone and as miscellaneous expenses for plumbing electricity and water qualify as alimony or separate_maintenance payments the other half does not finally dollar_figure in and dollar_figure in of the stipulated insurance payments which the record demonstrates were for homeowner’s policies covering the marital home qualify as alimony or separate_maintenance payments the remaining insurance payments do not thus in total harvey is entitled to deduct as alimony dollar_figure for and dollar_figure for and hermine must include these amounts as gross_income to reflect the foregoing and concessions decisions will be entered under rule


number release date id office uilc cca-127147-09 ---------------- from ---------------- sent to ----------------- cc ---------------------------- subject short_sales and firpta_withholding -------- here is the response i received from branch ---of ----- which handles basis issues i believe the basic message from ------- is that he doesn't see an ---- basis issue please let me know if you need further help -------------- from ------------------ sent tuesday date pm to --------------- cc --------------------------- subject re short_sales and firpta_withholding -------- - i spoke to ------- he agrees that we don’t handle withholding questions we can help with amount_realized however as i mentioned below i don’t think that’s the question in a recourse situation taxpayer is required to bifurcate the transaction the amount_realized is dollar_figure------------and the cod is dollar_figure------- ---------- sec_121 may or may not apply to gain realized sec_108 may or may not apply to the cod in a nonrecourse situation the amount_realized is dollar_figure------------and there is no cod sec_121 may or may not apply to gain realized i don’t know how the firpta_withholding regulations apply or what they latch onto for withholding purposes selling_price or amount_realized or cod or gain realized or something else let me know if you need anything more --------------


id office uilc cca_2010122112074537 ---------- number release date from ------------------- sent tuesday date pm to -------------------- cc ---------------------------------------------------- subject re specialist referral-aar a form 872-p of a tier partner should extend the statute for items flowing from source partnership items under section b which only requires that the consent specifically state that it applies to tax attributable to partnership items the preprinted language of the form 872-p meets this requirement -------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------


department of the treasury internal_revenue_service te_ge - eo mandatory review commerce street mc 4920-dal dallas tx tax_exempt_and_government_entities_division release number release date date date uil code legend org organization name org address xx date employer_identification_number person to contact identification_number contact telephone number in reply refer to te_ge review staff last day for filing a petition with tax_court september 20xx certified mail - return receipt requested dear’ this is a final adverse determination that you do not qualify for exemption from income_tax under sec_501 of the internal_revenue_code i r c as an organization described in sec_501 internal_revenue_service recognition of your status as an organization described in i r c sec_501 is revoked effective january 20xx our adverse determination is made for the following reason s you have not established you are operated exclusively for charitable educational scientific or religious purposes because you failed to comply with the rmine if you still qualify for tax exempt status irs’s requests for information to dete under sec_501 contributions made to you are no longer deductible as charitable_contributions by donors for purposes of computing taxable_income for federal_income_tax purposes see revproc_82_39 1982_2_cb_759 for the rules concerning the deduction of contributions made to you between january 20xx and the date a public announcement such as publication in the internal_revenue_bulletin is made stating that contributions to you are no longer deductible you are required to file income_tax returns on form_1041 and for all years beginning after december 20xx returns for the years ending december 20xx december 20xx december 20xx and december 20xx must be filed with this office within days from the date of this letter unless a request for an extension of time is granted send such returns to the following address tax returns for subsequent years are to be filed with the appropriate campus identified in the instructions for those returns if you decide to contest this determination under the declaratory provisions of sec_7428 of the code a petition to the united_states tax_court the united_states claims_court or the district_court of the united_states for the district of columbia must be filed i r c section before the day after the date this determination was mailed to you please contact the clerk of the appropriate court for rules regarding filing petitions for declaratory_judgment you may write to the united_states tax_court at the following address the processing of income_tax returns and assessment of any taxes due will not be delayed because a petition for declaratory_judgment has been filed under if you have questions about this letter please write to the person whose name and address are shown on this letter if you write please attach a copy of this letter to help identify your account keep a copy for your records also please include your telephone number and the most convenient time for us to call so we can contact you if we need additional information you also have the right to contact the office_of_the_taxpayer_advocate however you should first contact the person whose name and telephone number are shown above since this person can access your tax information and can help you get answers you can call and ask for taxpayer_advocate assistance or you can contact the taxpayer_advocate office located nearest you by calling faxing or writing to internal_revenue_service taxpayer advocates office taxpayer_advocate assistance cannot be used as a substitute for established irs procedures formal appeals processes etc the taxpayer_advocate is not able to reverse legal or technically correct_tax determinations nor extend the time fixed by law that you have to file a petition in the united_states tax_court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling we will notify the appropriate state officials of this action as required by sec_6104 this is a final revocation letter sincerely marsha a ramirez director eo examinations form 886a department of the treasury - internal_revenue_service explanation of items name of taxpayer org ein schedule no or exhibit year period ended 20xx december legend org organization name xx date co-1 company issue l whether the org is operated exclusively for exempt purposes described within internal_revenue_code sec_501 whether org tax-exempt status a sec_501 private org should be revoked effective january 20xx facts org was organized by a_trust document trust document was signed november 20xx schedule a of the trust document was not included the purpose of the organization is to provide funds to charitable and educational organizations the organization's purposes are within the scope of sec_501 the org was recognized as exempt from federal_income_tax as a private org within the meaning of sec_501 by our letter dated december 20xx the determination_letter contains no caveats or provisions that adversely affect the examination he stated that the were to fund the org he received a loan from co- trustee stated that he made a business investment in co-1 selling proceeds from the sell of these in the amount of dollar_figure to purchase these the founder used the checking accounting set-up for the trust to make two of the loan payments in the amount of dollar_figure the information provided by trustee did not show any charitable activities going on within the operations of the org for contributions gift and grants paid there were no documents verifying that the form_990-pf shows dollar_figure submitted only show cash withdrawals transactions were for charitable purposes you have failed to provide the information requested in our information document requests and attachments to establish that you are operated exclusively for exempt purposes within the meaning of sec_501 and no part of your earnings inure to the benefit of private shareholders or individuals the bank statements these department of the treasury - internal_revenue_service page -1- form 886-a rev department of the ween - internal_revenue_service explanation of items schedule no or exhibit year period ended 20xx december form 886a name of taxpayer org ein law internal_revenue_code sec_501 provides that an organization described in section c is exempt from income_tax internal_revenue_code sec_501 -provides for the exemption from federal_income_tax of corporations and any community chest fund or org organized and operated exclusively for religious charitable scientific testing for public safety literary or educational_purposes or to foster national or international amateur sports competition but only if no part of its activities involve the provision of athletic_facilities or equipment or for the prevention of cruelty to children or animals no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual the term charitable includes relief of the poor and distressed the words private_shareholder_or_individual refer to persons having a personal and private interest in the activities of the organization sec_1_501_c_3_-1 of the regulations provides that an organization will be regarded as operated exclusively for one or more exempt purposes only if it engaging primarily in activities that accomplish one or more of such exempt purposes specified in sec_501 an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose c -1 c - clarifies that an organizations is not operated exclusively for exempt purposes if its net_earnings inure in whole or in part to the benefit of private shareholders or individuals sec_1_501_c_3_-1 ii -clarifies that an organization is not organized or operated exclusively for one or more of the purposes specified in subdivision i of this subparagraph unless it serves a public rather than a private interest thus to meet the requirement of this subdivision it is necessary for an organization to establish that it is not organized or operated for the benefit of private interests such as designated individuals the creator or his family shareholders of the organization or persons controlled directly or indirectly by such private interests sec_7602 give the internal_revenue_service the authority to examine any books records or other relevant data for the purpose of ascertaining the correctness of any return making a return where none has been made determining the liability of any person for any internal revenue tax or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax or collecting any such liability reg sec_1_6001-1 and sec_6001 of the income_tax regulation and internal_revenue_code states that the books_or_records required by this section shall be kept at all times and made form 886-a rev department of the treasury - internal_revenue_service page -2- form 886a name of taxpayer explanation of items schedule no or exhibit year period ended department of the treasury - internal_revenue_service 20xx december org ein available for inspection by authorized internal revenue officers or employees and shall be retained as long as the contents thereof may be material in the administration of any internal revenue law section i of the income_tax regulations provides in part that every organization which is exempt from tax whether or not it is required to file an annual information_return shall submit such additional information as may be required by the internal_revenue_service for the purpose of inquiring into its tax exempt status failure to comply with our request for information could result in the loss of your tax-exempt status revrul_59_95 1959_1_cb_627 prescribes that failure to comply with the provision of sec_6033 of the code and the regulations which implement it may result in the termination of the exempt status of an organization previously held exempt on the grounds that the organization has not established that it is observing the conditions required for the continuation of an exempt status sec_61 of the internal_revenue_code of and the income_tax regulations hereunder provide that except as otherwise provided by law gross_income means all income from whatever source derived including compensation_for services under sec_162 of the code a taxpayer may deduct all of the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying_on_a_trade_or_business the performance of services as an employee is the carrying on of a trade_or_business however employee business_expenses are deductible only as itemized_deductions in computing taxable_income unless they are for travel meals_and_lodging while away from home in performance of services as an employee or covered by a reimbursement or other expense allowance arrangement by the employer or transportation costs or outside salesmen’s expenses taypayer position taxpayer has not provide a position government position sec_1_501_c_3_-1 ii -clarifies that an organization is not organized or operated exclusively for one or more of the purposes specified in subdivision i of this subparagraph unless it serves a public rather than a private interest thus to meet the requirement of this subdivision it is necessary for an organization to establish that it is not organized or operated for the benefit of private interests such as designated individuals the creator or his family form 886-a rev department of the treasury - internal_revenue_service page -3- form 886a name of taxpayer explanation of items schedule no or exhibit year period ended department of the treasury - internal_revenue_service 20xx december org ein shareholders of the organization or persons controlled directly or indirectly by such private interests you failed to provide documents to establish that you are operated exclusively for exempt purposes within the meaning of sec_501 and no part of your earnings inure to the benefit of private shareholders or individuals also you have failed to keep adequate books_and_records as required by sec_6001 conclusion org did not have adequate business records or documents ie ledger brochure receipt itinerary flyer etc to substantiate that the expenditures were in furtherance of the exempt_purpose of the organization revocation is being proposed because org has not complied with the requirements of income_tax regulation sec_1_501_c_3_-1gi i and internal revenue codes sections and to provide the information requested in order to make a determination on the organization exempt status as a private org described in internal_revenue_code sec_501 if the revocation is either agreed to or upheld charitable_contributions and or donations to the org will no longer be deductible to donors as charitable_contributions as defined in sec_170 of the internal_revenue_code org will continue to file the form_990-pf you will also need to file form_1041 for the tax period ending december 20xx form 886-a rev department of the treasury - internal_revenue_service page -4- tax exempt and government entities pvision org address department of the treasury internal_revenue_service date taxpayer_identification_number form tax_year s ended person to contact id number contact numbers telephone fax certified mail - return receipt requested dear we have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the internal_revenue_code code is necessary lf you accept our findings take no further action we will issue a final revocation letter if you do not agree with our proposed revocation you must submit to us a written request for appeals_office consideration within days from the date of this letter to protest our decision your protest should include a statement of the facts the applicable law and arguments in support of your position an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in publication if we issue a determination_letter to you based on technical_advice no further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice letter catalog number 34809f if we do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the code you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at if you have any questions please call the contact person at the telephone number shown in the heading of this letter the most convenient time to call if we need to contact you if you write please provide a telephone number and thank you for your cooperation sincerely marsha a ramirez director of eo examinations enclosures publication publication report of examination letter catalog number 34809f


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 corp b02 plr-107664-07 date date ----------------------------------- legend common parent ----------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ------ ----------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------- subsidiary ---------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------- controlled a ---------------------------------------------------------------------------------------------------------- controlled b ---------------------------------------------------------------------------------------------------------- controlled c ---------------------------------------------------------------------------------------------------------- date date -------------------------------------------- --------------------------------------- ------------------------------------ ---------------------- ---------------------- plr-107664-07 date date dear ------------------- --------------------- ---------------- this letter responds to your date request for a ruling pursuant to sec_355 and sec_1_355-6 and request to enter into a closing_agreement pursuant to sec_7121 with respect to the determination of common parent’s basis in the stock of subsidiary the information submitted in that request and in later correspondence is summarized below the ruling contained in this letter is based on facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for rulings other than as specifically mentioned in this letter_ruling verification of the information representations and other data may be required as part of the audit process summary of facts common parent acquired all of the outstanding common_stock of subsidiary the acquisition on date common parent represents that the acquisition qualified as a reorganization under sec_368 by reason of sec_368 and believes the acquisition also qualified as a reorganization under sec_368 following the acquisition common parent engaged in a series of transactions pursuant to which the businesses of common parent and subsidiary were combined in order to facilitate the integration of such businesses in a timely manner the restructuring as part of the restructuring subsidiary and its subsidiaries contributed to controlled a controlled b and controlled c the following assets i certain non-u s entities that were disregarded as entities separate from subsidiary for u s federal tax purposes ii certain non-u s entities in which subsidiary owned interests that were treated as partnerships for u s federal tax purposes and iii subsidiary's less than percent- owned corporate subsidiaries each of controlled a controlled b and controlled c is a corporation for u s federal tax purposes subsidiary then distributed the stock of controlled a controlled b and controlled c to common parent on date date and date respectively collectively the distributions common parent represents that assuming the requested closing_agreement is entered into the requirements of sec_368 and sec_355 have been satisfied with respect to each of the distributions and has provided documentation in support of its representations each of the distributions occurred within five years of date thus sec_355 will prevent the distributions from qualifying for nonrecognition treatment under plr-107664-07 sec_355 or sec_361 if common parent acquired fifty percent or more of the stock of subsidiary by purchase within the meaning of sec_355 if common parent's acquisition of subsidiary qualified as a reorganization under both sec_368 by reason of sec_368 and sec_368 the general_rule of sec_1_355-6 treats common parent as purchasing an amount of subsidiary stock equal to the higher of a the amount of surviving corporation stock that would be treated as purchased on the date of the deemed sec_351 transfer by the controlling_corporation if the controlling_corporation acquired the surviving corporation's assets and assumed its liabilities in a transaction in which the controlling corporation's basis in the surviving corporation assets was determined under sec_362 and then transferred the acquired assets and liabilities to the surviving corporation in a sec_351 transfer see sec_1_358-6 and ii a and b or b the amount of surviving corporation stock that would be treated as purchased on the date the surviving corporation shareholders purchased their surviving corporation stock if the controlling_corporation acquired the stock of the surviving corporation in a transaction in which the basis in the surviving corporation's stock was determined under sec_362 see sec_1_358-6 and sec_1 b the general_rule of sec_1_355-6 however is subject_to an exception under sec_1_355-6 if a taxpayer receives a letter_ruling and enters into a closing_agreement in which it agrees to determine its basis in surviving corporation stock under sec_1_358-6 or under sec_1_1502-30 by applying sec_1_358-6 then for purposes of determining the amount of surviving corporation stock that is treated as purchased within the meaning of sec_355 the taxpayer is permitted to use the method described in sec_1_355-6 common parent has agreed to determine its basis in subsidiary stock under sec_1_1502-30 by applying sec_1_358-6 and has agreed to enter into a closing_agreement to that effect ruling based solely on the information submitted the representations made and the entry into the closing_agreement attached hereto and made a part hereof we rule that for purposes of sec_355 sec_355 and sec_1_355-6 through iv apply and sec_355 and sec_1_355-6 do not apply in determining the amount of stock in subsidiary that is to be treated as purchased by common parent as a result of the date acquisition we will accordingly approve a closing_agreement with common parent with respect to those issues affecting the method by which common parent will determine its basis in plr-107664-07 the stock of subsidiary as set forth above the necessary closing_agreement with common parent has been prepared in triplicate and is enclosed in pursuance of our practice with respect to such agreements the agreement contains a stipulation to the effect that any change or modification of applicable statutes enacted subsequent to the date of this agreement and made applicable to the taxable_period involved will render the agreement ineffective to the extent that it is dependent upon such statutes caveats we express no opinion about the tax treatment of the acquisition or the restructuring under other provisions of the code or regulations or the tax treatment of any conditions existing at the time of or effects resulting from the acquisition or the restructuring that are not specifically ruled upon in this letter in particular we express no opinion regarding i the qualification of the acquisition as a reorganization under sec_368 by reason of sec_368 or under sec_368 ii the qualification of the distributions as transactions described in sec_368 and sec_355 and whether the distributions would be disqualified distributions as defined in sec_355 iii the tax consequences under sec_1248 relating to the distributions and the determination of common parent’s basis in controlled a controlled b or controlled c procedural statements this ruling is addressed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling in accordance with the power_of_attorney on file in this office a copy of this ruling letter will be sent to the authorized representatives named therein cc sincerely ___________________________ mark a schneider deputy associate chief_counsel office of associate chief_counsel corporate ----------------------------- plr-107664-07 ----------------------------- - form_906 rev date department of the treasury - internal_revenue_service closing_agreement on final_determination covering specific matters under sec_7121 of the internal_revenue_code ------------------------------------------------- --------------------------------------------------------------------------------------------------------------- taxpayer ------------------------a domestic_corporation with its principal_place_of_business at -----------------------------------------------------------------------on behalf of itself and as agent for the consolidated_group of which it is the common parent the group and the commissioner of internal revenue the commissioner make the following closing_agreement whereas based on representations made and information submitted with taxpayer’s request for a private_letter_ruling dated date and in subsequent correspondence taxpayer and the commissioner wish to resolve with finality the method by which taxpayer is to determine its basis in the stock of ---------------------------- -------------------------------------- subsidiary whereas taxpayer represents that on -----------------------taxpayer acquired all of the outstanding common_stock of subsidiary whereas taxpayer represents that its acquisition of subsidiary common_stock qualified as a reorganization under sec_368 by reason of sec_368 and also believes that its acquisition qualified as a reorganization under sec_368 now it is hereby determined and agreed for federal_income_tax purposes that based upon the representations made and the information submitted by taxpayer in its request for a private_letter_ruling dated date and in subsequent correspondence and under the circumstances stated in the private_letter_ruling from the associate chief_counsel corporate to taxpayer dated date a copy of which is attached hereto and made a part hereof and in the absence of other material factual or legal circumstances concerning the completed transactions described therein that -----------------------under sec_1_1502-30 by applying sec_1_358-6 through iv apply and sec_355 and sec_1_355-6 do not apply in taxpayer will determine its basis in the common_stock of subsidiary acquired on for purposes of sec_355 sec_355 and sec_1_355-6 i ii the matter it relates to may be reopened in the event of fraud this closing_agreement was drafted or reviewed by counsel for both parties this closing_agreement resolves only the aforementioned determinations this plr-107664-07 determining the amount of stock in subsidiary that is to be treated as purchased by taxpayer as a result of the acquisition on ---------------------- closing_agreement does not resolve or apply to any other issues accordingly the parties agree that the rule_of construction resolving ambiguities against the drafting party has no bearing in interpreting this closing_agreement whereas the determinations set forth above are hereby agreed to by taxpayer this agreement is final and conclusive except malfeasance or misrepresentation of material fact it is subject_to the internal_revenue_code sections that expressly provide that effect be given to their provisions including any stated exception for sec_7122 notwithstanding any other law or rule_of law and subject_to any law enacted after the agreement date which applies to that tax period by signing the above parties certify that they have read and agreed to the terms of this document taxpayer signing on behalf of itself and as agent for the group by _______________________________ title ______________________________ commissioner of internal revenue by _______________________________ title ______________________________ if it relates to a tax period ending after the date of this agreement it is date signed ___________ date signed ___________ iii


t c memo united_states tax_court kenneth j sigel petitioner v commissioner of internal revenue respondent docket no filed date kenneth j sigel pro_se frederick petrino for respondent memorandum opinion swift judge this case is before us on respondent's motion to dismiss the issue presented is whether we lack jurisdiction over petitioner's claims that an addition_to_tax under sec_6654 should be waived and that assessed interest should be abated under sec_6404 unless otherwise indicated all section references are to the internal_revenue_code in effect for the year in issue background as a result of an error by petitioner in the computation of his estimated income_tax due_date petitioner underpaid estimated income_tax for the last quarter of by approximately dollar_figure upon recognizing the error on date petitioner filed early his individual federal_income_tax return for and petitioner paid the above dollar_figure plus additional taxes owed on date respondent indicated by letter to petitioner that petitioner owed dollar_figure as an addition_to_tax under sec_6654 relating to petitioner's dollar_figure underpayment of estimated income_tax for the last quarter of and that petitioner owed dollar_figure of interest with respect thereto on date by letter to respondent's office_of_the_taxpayer_advocate in memphis tennessee petitioner requested that based on his unblemished record in years before of full compliance with federal tax laws the dollar_figure addition_to_tax be waived and that the dollar_figure of interest be abated on date respondent mailed a letter to petitioner explaining generally how additions to tax for underpayment_of_estimated_income_taxes are computed on date by letter to respondent's office_of_the_taxpayer_advocate in nashville tennessee petitioner again requested waiver of the dollar_figure addition_to_tax and abatement of the dollar_figure of interest by letter dated date respondent's nashville office_of_the_taxpayer_advocate informed petitioner that his requests for waiver of the addition_to_tax and for abatement of the interest were denied because it was concluded that petitioner's dollar_figure underpayment of estimated income_tax for the last guarter of was not caused by casualty disaster or other unusual circumstances and because it was concluded that imposition of the addition_to_tax would not be against equity and good conscience the letter from respondent also informed petitioner that he possessed certain appeal rights but the letter did not explain those appeal rights on date petitioner filed his petition with the tax_court seeking relief from the above addition_to_tax and abatement of the above interest at the time the petition was filed petitioner resided in the bronx new york as of date the date of trial petitioner had not filed a form_843 claim_for_refund and request for abatement of interest and respondent had not issued to petitioner a notice of final_determination with regard thereto q4e- discussion sec_6654 provides additions to tax for taxpayers who fail to pay a sufficient amount of estimated income taxes see 75_tc_1 hart v commissioner tcmemo_2000_78 respondent has the authority to waive a sec_6654 addition_to_tax where respondent determines that by reason of a casualty disaster or other unusual circumstances the imposition of such addition_to_tax would be against equity and good conscience sec_6654 e a generally the tax_court has jurisdiction to redetermine additions to tax attributable to a deficiency under the deficiency procedures of sec_6213 see reese v commissioner tcmemo_1997_346 because such additions to tax generally are assessed and collected in the same manner as income taxes respondent generally issues a notice_of_deficiency before collecting those additions to tax see sec_6665 and b a taxpayers may then petition the tax_court within days of receiving the notice_of_deficiency to redetermine the additions to tax determined by respondent see sec_6213 additions to tax under sec_6654 however are subject_to the deficiency procedures of sec_6213 only if no federal_income_tax return was filed for the year before the court and the tax_court therefore has jurisdiction to redetermine additions to tax under sec_6654 only if no federal_income_tax return was filed see sec_6665 meyer v commissioner 97_tc_555 hart v commissioner tcmemo_2000_78 miner v commissioner tcmemo_1999_358 harvey v commissioner tcmemo_1999_229 fujita v commissioner tcmemo_1999_164 affd without published opinion 225_f3d_662 9th cir cherry v commissioner tcmemo_1998_360 reese v commissioner supra in other words if a federal_income_tax return is filed for the year before the court a proposed sec_6654 addition_to_tax will not be subject_to the deficiency procedures of sec_6213 no notice_of_deficiency will be mailed to the taxpayer and the tax_court will not have jurisdiction to redetermine the addition_to_tax under sec_6654 relating to the underpayment of estimated income_tax see sec_6665 as stated petitioner timely filed his federal_income_tax return accordingly we lack jurisdiction under sec_6665 to redetermine the dollar_figure addition_to_tax relating to petitioner's underpayment of estimated income_tax for the last guarter of with regard to petitioner's claim that we abate the dollar_figure of interest the tax_court under sec_6404 1i does not have jurisdiction to decide whether respondent's failure to abate interest under sec_6404 constitutes an abuse_of_discretion unless or until respondent has made a final_determination not to abate interest see 110_tc_20 declining to treat a notice_of_deficiency as notice of final_determination not to abate interest dai ho cho v -- - commissioner tcmemo_1998_363 declining to treat respondent's 6-month delay responding to a formal request for abatement of interest as final_determination not to abate interest in order for respondent to make a final_determination regarding a request for abatement of interest sec_301_6404-1 proced admin regs directs that taxpayers first file with respondent's appropriate office a formal request for abatement form_843 see also bourekis v commissioner supra pincite as of date petitioner had not filed a form_843 and respondent had not made a final_determination with regard to petitioner's request for abatement of the dollar_figure of interest accordingly we lack jurisdiction thereof while we empathize with petitioner's situation in light of the unclear letters petitioner received from respondent ’ we simply do not have jurisdiction to grant petitioner relief from either the addition_to_tax or the related interest in respondent's date date and date letters to petitioner respondent did not inform petitioner that before respondent could make a final_determination with regard to the abatement of the dollar_figure of interest petitioner must submit a form_843 claim_for_refund and request for abatement of interest to reflect the foregoing an order will be entered granting respondent's motion to dismiss for lack of jurisdiction