tcmemo_2007_53 united_states tax_court lloyd t asbury attorney at law p a petitioner v commissioner of internal revenue respondent docket no filed date lloyd t asbury an officer for petitioner monica j miller for respondent memorandum opinion whalen judge this case is before the court to decide respondent’s motion to dismiss for lack of jurisdiction the substantive issues in the case involve a notice_of_deficiency issued to petitioner lloyd t asbury attorney at law p a in which respondent determined a deficiency and penalties in petitioner’s corporate_income_tax for respondent moves to dismiss the case for lack of jurisdiction on the ground that no proper person has petitioned this court on petitioner’s behalf the petition alleges that petitioner is an involuntarily dissolved florida professional_corporation and that lloyd t asbury is an indigent former florida attorney presently incarcerated in the florida state prison system the petition also alleges that mr asbury was the only director and shareholder of petitioner during its corporate existence mr asbury signed the petition without a title or any indication that he signed on petitioner’s behalf respondent moves to dismiss this case for lack of jurisdiction and has yet to answer the petition we reject petitioner’s assertion that respondent was required to file the subject motion within the time specified by rule a of the tax_court rules_of_practice and procedure hereinafter all rule references are to the tax_court rules_of_practice and procedure respondent’s motion to dismiss can be made at any time because it goes to the jurisdiction of the court see eg 114_tc_268 affd 22_fedappx_837 9th cir starvest u s inc v commissioner tcmemo_1999_314 respondent’s motion asserts that the case must be dismissed because it was not brought by a party with the capacity to engage in litigation in this court respondent’s motion notes that pursuant to rule c the capacity of a corporation to engage in litigation in this court is determined in accordance with the law of the state in which the corporation was organized according to respondent’s motion under florida law only a licensed attorney may represent a corporation in court respondent’s motion points out that mr asbury was not a licensed attorney when he filed the instant petition and thus he lacked the capacity to file such action pursuant to t c rule in a supplement to petitioner’s notice of objection mr asbury asserts on petitioner’s behalf that petitioner was incorporated in the state of florida in and was administratively dissolved in for failure_to_file its corporate annual report and to pay the necessary fees to renew its corporate charter according to mr asbury during petitioner’s existence he was its only officer president secretary and treasurer and he signed all corporate documents in that capacity mr asbury cites rule c and asserts that under florida law an administratively dissolved corporation is not precluded from bringing an action in its corporate name he claims authority to represent petitioner pursuant to rule b as petitioner’s only corporate officer respondent’s reply to the supplement to petitioner’s notice of objection does not deny any of the facts alleged by petitioner respondent’s reply also makes it plain that it is not petitioner’s status as an administratively dissolved florida corporation that is the basis for respondent’s position that the instant petition must be dismissed for lack of jurisdiction respondent concedes that petitioner is entitled to bring this action on the basis of fla stat ann secs and west those provisions of the florida statutes according to respondent allow administratively dissolved corporations to carry on or defend an action in their corporate name respondent’s position is that petitioner as represented by mr asbury did not have the capacity to file the instant petition because mr asbury was not authorized under florida law to file the instant petition on petitioner’s behalf respondent argues that under rule c the capacity of a representative to litigate in this court is determined under the law of the jurisdiction where the authority is derived according to respondent nothing in the law of the state of florida grants authority to a former officer director or shareholder to represent a dissolved corporation in a representative capacity furthermore respondent cites a number of cases holding that in florida it is well established that only a licensed attorney may represent a corporation in court respondent points out that mr asbury is not currently licensed to practice law in florida or in any other jurisdiction accordingly respondent argues that mr asbury lacked the capacity to file the instant petition and the court lacks jurisdiction to consider it respondent acknowledges that rule b allows for a corporation to be represented by an authorized officer of the corporation in tax_court however respondent argues that while rule b allows for a corporation to be represented by an ‘authorized officer’ it does not allow for a dissolved corporation to be represented by a former officer according to respondent the purpose of rule b is to limit to officers of the corporation as opposed to directors shareholders or other agents the persons who can be authorized by state law to represent the corporation in this court according to respondent mr asbury cannot act in a representative capacity for petitioner because florida law does not grant authority to a former officer to represent a dissolved entity with exceptions not applicable here petitioner bears the burden of establishing affirmatively all facts giving rise to our jurisdiction see patz trust v commissioner 69_tc_497 65_tc_346 35_tc_177 petitioner must establish that respondent issued to petitioner a valid notice_of_deficiency and petitioner or someone authorized to act on petitioner’s behalf filed a timely petition with the court see rule a c 93_tc_22 fehrs v commissioner supra pincite in order to meet this burden petitioner must establish that mr asbury has authority to act on petitioner’s behalf see 27_tc_837 22_bta_686 cf scenic wonders gallery llc v commissioner tcmemo_2000_64 if the petition is not filed by petitioner or by someone lawfully authorized to act on petitioner’s behalf then we are without jurisdiction to consider it see eg fehrs v commissioner supra pincite photo art mktg trust v commissioner tcmemo_2000_57 rule provides in pertinent part as follows a petitioner deficiency or liability actions a case shall be brought by and in the name of the person against whom the commissioner determined the deficiency in the case of a notice_of_deficiency or by and with the full descriptive name of the fiduciary entitled to institute a case on behalf of such person see rule a a case timely brought shall not be dismissed on the ground that it is not properly brought on behalf of a party until a reasonable_time has been allowed after objection for ratification by such party of the bringing of the case and such ratification shall have the same effect as if the case had been properly brought by such party c capacity the capacity of a corporation to engage in such litigation shall be determined by the law under which it was organized the capacity of a fiduciary or other representative to litigate in the court shall be determined in accordance with the law of the jurisdiction from which such person’s authority is derived rule b provides as follows b personal representation without counsel in the absence of appearance by counsel a party will be deemed to appear on the party’s own behalf a corporation may be represented by an authorized officer of the corporation any such person shall state in the initial pleading or other paper filed by or for the party such person’s name address and telephone number and thereafter shall promptly notify the clerk in writing in duplicate for each docket number involving that party of any change in that information under rule c the capacity of a corporation to litigate in this court is determined by the law of the state in which it was organized this has been the rule in this court and in our predecessor the board_of_tax_appeals since see 63_tc_304 petitioner was organized under the laws of the state of florida therefore petitioner’s capacity to file a petition in this court seeking redetermination of the tax_deficiency underlying this action is governed by the law of the state of florida see rule c two provisions of the florida statutes are pertinent to our decision fla stat ann sec effect of dissolution provides in relevant part a dissolved corporation continues its corporate existence but may not carry on any business except that appropriate to wind up and liquidate its business and affairs dissolution of a corporation does not a transfer title to the corporation's property c subject its directors or officers to standards of conduct different from those prescribed in ss except as provided in s e prevent commencement of a proceeding by or against the corporation in its corporate name g terminate the authority of the registered agent of the corporation fla stat ann sec procedure for and effect of administrative dissolution provides in relevant part a corporation administratively dissolved continues its corporate existence but may not carry on any business except that necessary to wind up and liquidate its business and affairs under s and notify claimants under s a director officer or agent of a corporation dissolved pursuant to this section purporting to act on behalf of the corporation is personally liable for the debts obligations and liabilities of the corporation arising from such action and incurred subsequent to the corporation’s administrative dissolution only if he or she has actual notice of the administrative dissolution at the time such action is taken but such liability shall be terminated upon the ratification of such action by the corporation’s board_of directors or shareholders subsequent to the reinstatement of the corporation under ss the administrative dissolution of a corporation does not terminate the authority of its registered agent according to these provisions of the florida statutes an administratively dissolved florida corporation continues in existence indefinitely to wind up and liquidate its business and affairs and it retains the right to sue and be sued in its own name see fla stat ann sec and ron’s quality towing inc v se bank so 2d fla dist ct app cygnet homes inc v kaleny ltd inc so 2d fla dist ct app see also starvest u s inc v commissioner tcmemo_1999_314 a dissolved florida corporation continues in existence indefinitely to the extent necessary to wind up and liquidate its business and affairs including the right to sue and be sued in its own name it is undisputed that filing the instant petition for redetermination of the deficiency and penalties determined in petitioner’s tax for was necessary for petitioner an administratively dissolved florida corporation to wind up and liquidate its business and affairs cf starvest u s inc v commissioner supra the adjustment and settlement of the tax_liabilities of a corporation are necessary steps in closing the business of the corporation see 32_tc_187 affd without published opinion 286_f2d_960 6th cir bos lines inc v commissioner tcmemo_1965_71 affd 354_f2d_830 8th cir on the basis of the above we find that under florida law petitioner continues in existence notwithstanding its administrative dissolution during the time necessary to seek redetermination of the instant notice_of_deficiency in this court and to wind up its other business affairs we further find that petitioner has the legal capacity under florida law to file the subject petition for redetermination and to litigate in this court even though petitioner had been administratively dissolved at the time the petition was filed see rule c starvest u s inc v commissioner supra cf 87_tc_586 77_tc_1194 72_tc_391 63_tc_304 lee enters inc v commissioner tcmemo_1992_629 am police fire found inc v commissioner tcmemo_1981_704 respondent does not seem to disagree with these findings as mentioned above respondent concedes that petitioner is entitled to bring this action we take this statement as respondent’s concession that petitioner has the capacity under rule c and the laws of the state of florida to litigate in this court and to seek redetermination of the subject notice_of_deficiency respondent’s position that this case should be dismissed focuses on mr asbury’s authority under state law to act as petitioner’s representative respondent’s position is that the case must be dismissed because mr asbury is not authorized under florida law to act on petitioner’s behalf it appears that respondent challenges mr asbury’s authority both to approve the filing of the instant petition as an officer of petitioner and to appear in these proceedings as petitioner’s representative as we view it the issues raised by respondent’s motion are whether mr asbury is an active and authorized officer of petitioner under florida law who properly acted on petitioner’s behalf in approving the filing of the instant petition and whether mr asbury is an authorized officer within the meaning of that term in rule b who can represent petitioner in these proceedings without counsel as to the first issue respondent argues that florida law does not authorize a former officer director or shareholder to represent a dissolved corporation in a representative capacity contrary to respondent’s argument the above-quoted provisions of the florida statutes which explicitly apply to a dissolved corporation and its former officers provide not only that the dissolved corporation continues in existence and retains the right to sue and be sued but also in effect that the individuals who were officers and directors of the dissolved corporation continue in those positions and retain the authority to act on behalf of the corporation during the time necessary to wind up the business of the corporation see fla stat ann secs c furthermore florida law specifically provides that the officers or directors of the dissolved corporation are not subject_to standards of conduct that are different from those prescribed for officers and directors of other corporations except that they may be personally liable for the corporation’s debts obligations and liabilities arising from their actions see id questions about the authority of an officer of a corporation to act for and to bind the corporation are questions of fact to be decided under the common_law of agency see eg trans world travel v commissioner tcmemo_2001_6 starvest u s inc v commissioner supra it is undisputed that mr asbury was petitioner’s only officer or director before petitioner was administratively dissolved since petitioner was dissolved mr asbury has continued as petitioner’s only officer and director by operation of florida law and he retains the authority to act on petitioner’s behalf to wind up and liquidate petitioner’s business and affairs see fla stat ann secs as petitioner’s only officer or director after the dissolution mr asbury is the only person who can act on petitioner’s behalf accordingly he is the only person who could have the authority to approve the filing of the instant petition for redetermination on petitioner’s behalf see bared cobo co v commissioner supra starvest u s inc v commissioner supra we find that mr asbury had the authority to sign the petition on petitioner’s behalf we further find that he is an authorized officer for purposes of rule b respondent’s motion argues that mr asbury cannot appear on petitioner’s behalf in this court without counsel as an authorized officer of petitioner within the meaning of rule b according to respondent an officer of a florida corporation is not authorized by rule b to represent the corporation in this court unless the officer is also an attorney who can represent the corporation before the courts of the state of florida respondent cites no authority in support of this interpretation of rule b the explanatory note that accompanied the promulgation of rule b states as follows par b is concerned with pro_se appearances and is the counterpart of present t c rule however par b states a rule not expressed in t c rule that a party is deemed to appear for himself in the absence of appearance by counsel in such event the clerk can make service of papers by directing them by mail to the party foreclosing any claim of failure to serve counsel par b goes beyond t c rule in specifying the information required of the pro_se party and expands the provision on the persons who may act in a representative capacity for a pro_se party t c thus among other things rule b was intended to expand the scope of former rule its counterpart regarding the persons who could act in a representative capacity for a pro_se party former rule provided in part as follows a taxpayer corporation may be represented by a bona_fide officer of the corporation upon permission granted in its discretion by the court or the division sitting thus under former rule an officer of a corporation could represent the corporation in this court but the officer was required to obtain the permission of the court to do so rule b expanded the scope of former rule by permitting a corporation to be represented in this court by an authorized officer of the corporation under respondent’s interpretation of rule b a corporate officer can represent the corporation only if the officer is specifically authorized by state law to represent the corporation in litigation conducted in the courts of that state this would be a contraction of the former rule not an expansion contrary to respondent’s interpretation rule b allows an authorized officer of a corporation such as mr asbury to represent the corporation in this court without counsel this is an exception to the usual rule in federal courts under which corporations are required to be represented in court by a duly licensed attorney see eg rowland v cal men’s colony unit ii men’s advisory counsel 506_us_194 rule b does not require an officer to be specifically permitted to represent the corporation in state court see 24_fedappx_608 7th cir at trial house proceeded pro_se and also elected to appear on jjh’s joseph j house inc ’s behalf as the tax_court rules permit him to do see tax_court rule b affg tcmemo_2000_22 illinois corporation 126_tc_359 n tennessee limited_liability_company wfo corp v commissioner tcmemo_2004_186 ohio corporation oliver family found v commissioner tcmemo_1997_220 nevada nonprofit corporation upon consideration of the foregoing an appropriate order will be issued denying respondent’s motion


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc corp - plr-120760-01 date date legend parent target us sub purchaser sellers disregarded sub disregarded sub company official tax professional date b date c state a country b country c country d c this letter responds to a letter dated date submitted on behalf of parent who is requesting an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election on behalf of purchaser parent is requesting an extension to file a sec_338 election under sec_338 of the internal_revenue_code with respect to purchaser’s acquisition through disregarded sub and disregarded sub of the stock of target sometimes hereinafter referred to as the sec_338 election on date b all citations in this letter to regulations under sec_338 are to the regulations as in effect on date b the material information submitted for consideration is summarized below parent a state a corporation is the common parent of a consolidated_group of corporations us sub is a member of parent’s consolidated_group purchaser a corporation incorporated under the laws of country b is a controlled_foreign_corporation that is wholly-owned by us sub purchaser is not engaged in the conduct_of_a_trade_or_business within the united_states target is a corporation formed under the laws of country c prior to its acquisition by purchaser the stock of target was owned by sellers purchaser owned all of the shares of stock of disregarded sub a country d corporation and disregarded sub owned all of the shares of stock of disregarded sub a country c_corporation prior to date b disregarded sub sec_1 and had each filed elections under sec_301_7701-3 of the procedure and administration regulations to be disregarded for federal_income_tax purposes on date b purchaser through disregarded sub and disregarded sub purchased all of the outstanding shares of target for an aggregate cash purchase_price of dollar_figurec it has been represented that the acquisition of the stock of target was a qualified_stock_purchase within the meaning of sec_338 prior to the acquisition neither target nor sellers filed a united_states income_tax return were subject_to united_states income_taxation nor were required under sec_1_6012-2 to file a united_states income_tax return in addition target was not a controlled_foreign_corporation within the meaning of sec_957 a passive_foreign_investment_company for which an election under sec_1295 was in effect nor a foreign_investment_company or foreign_corporation the stock ownership of which is described in sec_552 parent on behalf of purchaser subsequently filed a form_8832 entity classification election to make a retroactive election with respect to target the form_8832 specified an effective date of date b sellers did not sign the form_8832 parent on behalf of purchaser intended to file the sec_338 election the sec_338 election was due on date c but for various reasons a valid sec_338 election was not filed after the due_date for the sec_338 election it was discovered that the sec_338 election had not been filed subsequently this request was submitted under sec_301_9100-1 for an extension of time to file the sec_338 election the period of limitations on assessment under sec_6501 has not expired for parent’s purchaser’s or target’s taxable years in which the acquisition occurred the taxable years in which the sec_338 election should have been filed or any taxable years that would have been affected by the sec_338 election had it been timely filed law and analysis target is a foreign eligible_entity parent has represented that all of the members of target have limited_liability within the meaning of sec_301_7701-3 sec_301_7701-3 provides that unless a foreign eligible_entity elects otherwise the entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owners if it has a single owner that does not have limited_liability sec_301_7701-3 provides that for purposes of sec_301_7701-3 a member of a foreign eligible_entity has limited_liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member sec_301_7701-3 allows an eligible_entity to elect to change its classification by filing form_8832 entity classification election with the service_center designated on that form sec_301_7701-3 provides that all such elections become effective on the date specified by the entity on form_8832 or on the date filed if no effective date is specified the specified effective date must not be earlier than days prior to the filing_date of form_8832 nor later than months after that filing_date sec_301_7701-3 generally provides that an election made under sec_301_7701-3 must be signed by each member of the electing entity who is an owner at the time the election is filed or any officer manager or member of the electing entity who is authorized under local law or the entity’s organizational documents to make the election and who represents to having such authorization under penalties of perjury sec_301_7701-3 provides that if an election is to have a retroactive effective date each person who was an owner between the date the election is to be effective and the date the election is filed and who is not an owner at the time the election is filed must also sign the election accordingly in the present case target is treated as an association_taxable_as_a_corporation unless a different treatment is elected under the facts presented the entity classification election filed with respect to target was filed with a retroactive effective date of date b therefore for the entity classification election to have been valid the signatures of the prior owners of target ie sellers were required in addition to other deficiencies in the entity classification election filed with respect to target the signatures of the sellers were not obtained there is no authority under the regulations to treat an election that fails to comply with sec_301_7701-3 as valid accordingly target retained its default classification as an association sec_338 permits certain stock purchases to be treated as asset acquisitions if the purchasing_corporation makes or is treated as having made a sec_338 election or a h election and the acquisition is a qualified_stock_purchase under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 in this case the time for filing the sec_338 election is fixed by the regulations ie sec_1_338-1 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant an extension of time for parent to file the sec_338 election provided parent acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government information affidavits and representations submitted by parent company official and tax professional explain the circumstances that resulted in the failure to timely file a valid sec_338 election the information establishes that a qualified_tax professional was responsible for the sec_338 election and was aware of all relevant facts that parent relied on the tax professional to make the sec_338 election and that the interests of the government will not be prejudiced if relief is granted see sec_301 b v based on the facts and information submitted including the representations made we conclude that parent has shown it acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government accordingly an extension of time is granted under sec_301_9100-1 until days from the date on this letter for parent on behalf of purchaser to file the sec_338 election with respect to the acquisition of the stock of target as described above the above extension of time is conditioned on the filing within days of the date on this letter of all returns and amended returns if any necessary to report the transaction in accordance with the sec_338 election and the purchaser’s parent’s consolidated group’s and target’s tax_liability if any being not lower in the aggregate for all years to which the sec_338 election applies than it would have been if the sec_338 election had been timely made taking into account the time_value_of_money no opinion is expressed as to the taxpayers’ tax_liability for the years involved a determination thereof will be made by the applicable director’s office upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the taxpayers’ tax_liability is lower sec_301_9100-3 parent on behalf of purchaser must file the sec_338 election in accordance with sec_1_338-1 and g that is a new election on form_8023 must be executed on or after the date on this letter which grants an extension and filed in accordance with the instructions to the form a copy of this letter must be attached to the election form parent must file or amend as applicable its returns to report the transaction as a sec_338 transaction for the taxable_year in which the transaction was consummated and for any other affected_taxable_year and to attach to the returns a copy of this letter and a copy of the sec_338 election we express no opinion as to whether the acquisition of the target stock qualifies as a qualified_stock_purchase under sec_338 or any other tax consequences arising from the sec_338 election the form_8023 must be attached to form_5471 information_return of u s persons with respect to certain foreign_corporations for purchasing for the year of the qualified_stock_purchase of target in addition as of the date of this letter no form_5471 has been filed with respect to target since target was acquired the form_5471 and schedules are used to satisfy the reporting requirements of sec_6035 sec_6038 and sec_6046 and the regulations thereunder the information required under sec_6038 is to be furnished for the annual_accounting_period of the foreign_business_entity ending with or within the united_states person’s taxable_year sec_6038 provides a dollar penalty for failure to furnish information required under sec_6038 within the prescribed time we express no opinion as to any penalties that may be applied as a result of u s sub failing to timely file the forms for target in addition we express no opinion as to the tax consequences of filing the sec_338 election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or resulting from filing the sec_338 election late that are not specifically set forth in the above ruling for purposes of granting relief under sec_301_9100-1 we relied on certain statements and representations made by the taxpayers however the director should verify all essential facts in addition notwithstanding that an extension is granted under sec_301_9100-1 to file the sec_338 election penalties and interest that would otherwise be applicable if any continue to apply this letter is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file in this office a copy of this letter_ruling is being sent to your authorized representative sincerely yours associate chief_counsel corporate by ken cohen senior technician reviewer branch


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 b05 plr-103893-09 date date legend grandparent -------------------- parent --------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------- ---------------------------------------- sub1 --------------------------------------------------------------------- ------------------------------ sub2 -------------------------------------------------------------------------------------------- --------------------------------------------------------------------- ----------------------------- statea ------------- taxableyear1 -------------------------------------------------------------------------- ------------------ taxableyear2 -------------------------------------------------------------------------- ------------------ datea dateb datec -------------- --------------------------- -------------------------- plr-103893-09 dated --------------------------- parent official -------------------------------------------------------------------------- ----------------------------------------------------------------------------------- ----------------------- -------------------------- previous parent official -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- -------------------------------------------------------------------------------- previous tax professional -------------------------------------------------------------------------- ----------------------------------------------------------------------------------------- --------------------------------- dear -------------- this letter responds to a letter dated date submitted on behalf of parent requesting the internal_revenue_service service to grant an extension of time under sec_301_9100-1 through of the procedure and administration regulations to file an election the extension is being requested for parent and its includible subsidiaries to make an election to file a consolidated federal_income_tax return with parent as the common parent under sec_1_1502-75 of the income_tax regulations hereinafter referred to as the election effective for taxableyear1 additional information was received in subsequent correspondence the material information is summarized below parent is a corporation incorporated in datea under the laws of statea shortly after its incorporation in datea parent acquired all the stock in a domestic subsidiary sub1 with sub1 acquiring all the stock in a second domestic_corporation sub2 as of the end of taxableyear1 parent directly held all the stock in sub1 and sub1 directly held all the stock in sub2 this is hereinafter referred to as parent group on datec in an unrelated transaction at a time subsequent to the matters discussed herein all the stock in parent was acquired by grandparent the election for parent group to file a consolidated_return for taxableyear1 was due on dateb however for various reasons the election by parent was not filed subsequent to datec it was discovered that the election had not been filed plr-103893-09 thereafter this request was submitted under sec_301_9100-3 for an extension of time to file the election for parent group as of the date the request for this ruling was submitted to this office the service had not contacted grandparent parent or any member of parent group concerning parent group’s failure to timely file a consolidated federal_income_tax return for taxableyear1 or any subsequent year the period of limitations on assessment under sec_6501 of the internal_revenue_code code has not expired for parent’s or any other parent group member’s taxableyear1 or for any taxable years that would have been affected by the election had it been timely filed the period of limitations on assessment for parent group’s taxableyear1 will expire no earlier than dated sec_1_1502-75 provides that an affiliated_group_of_corporations which did not file a consolidated_return for the immediately preceding_taxable_year may file a consolidated_return in lieu of separate returns for the taxable_year provided that each corporation which has been a member of the group during any part of the taxable_year for which the consolidated_return is to be filed consents to the regulations under sec_1502 in accordance with sec_1_1502-75 if a group wishes to exercise its privilege of filing a consolidated_return such consolidated_return must be filed not later than the last day prescribed by law including extensions of time for filing the common parent’s return with regard to the consent of a corporation for a group’s first consolidated_year sec_1_1502-75 provides as a general_rule that the consent of a corporation shall be made by such corporation joining in the making of the consolidated_return for such year and that a corporation shall be deemed to have joined in the making of such return if it files a form_1122 in the manner specified in sec_1_1502-75 under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-1 defines the term regulatory election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making regulatory elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 plr-103893-09 in this case the time for filing the election is fixed by the regulations sec_1 a therefore the commissioner has discretionary authority under sec_301_9100-3 to grant an extension of time for parent and its subsidiaries to file the election provided that parent and its subsidiaries show they acted reasonably and in good_faith that the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and that granting relief will not prejudice the interests of the government information affidavits and representations submitted by parent parent official previous parent official and previous tax professional explain the circumstances that resulted in the failure to timely file the election the information establishes that parent reasonably relied on a qualified_tax professional who failed to make or advise parent to make the election based solely on the information and affidavits submitted and the representations made we conclude that parent and its subsidiaries have shown that they acted reasonably and in good_faith the requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied and granting relief will not prejudice the interests of the government provided parent group qualifies substantively to file a consolidated_return for taxableyear1 we grant an extension of time under sec_301_9100-3 until sixty days from the date on this letter plr-103893-09 for parent group to file the election by filing a consolidated_return for taxableyear1 in accord with all applicable regulations see sec_1_1502-75 the above extension of time is conditioned on the tax_liability if any of parent group being not lower in the aggregate for all years to which the election applies than it would have been if the election had been timely made taking into account the time_value_of_money no opinion is expressed as to the amount of tax_liability for the years involved a determination thereof will be made upon audit of the federal_income_tax returns involved further no opinion is expressed as to the federal_income_tax effect if any if it is determined that the amount of tax_liability is lower sec_301_9100-3 we express no opinion as to whether in fact parent and its subsidiaries qualify substantively to file a consolidated_return for taxableyear1 or taxableyear2 or any other taxable_year furthermore except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any matter or item discussed or referenced in this ruling letter in addition we express no opinion as to the tax consequences of filing the election late under the provisions of any other section of the code and regulations or as to the tax treatment of any conditions existing at the time of or effects resulting from filing the election late that are not specifically set forth in the above ruling notwithstanding that an extension is granted under sec_301_9100-3 to file the election penalties and interest that would otherwise be applicable if any continue to apply plr-103893-09 for purposes of granting relief under sec_301_9100-3 we relied upon certain information representations and affidavits submitted by parent parent official previous parent official and previous tax professional with all submissions accompanied by a penalties of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings all of this material is subject_to verification on examination procedural statements this ruling letter is directed only to the taxpayer s who requested it sec_6110 of the code 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 a taxpayer filing its return electronically may satisfy this requirement by attaching to the return a statement that provides the date and control number plr-103893-09 of this ruling letter pursuant to a power_of_attorney on file in this matter a copy of this letter is being sent to your authorized representative sincerely _virginia s voorhees_______ virginia s voorhees senior technician reviewer branch office of associate chief_counsel corporate


department of the treasury internal_revenue_service washington d c q ne i tax_exempt_and_government_entities_division aug uniform issue list tek pat ls kkk kk kk legend taxpayer a financial_institution s amount a plan x fund y dear this is in response to your request dated date in which you requested a waiver of the 60-day rollover requirement contained in sec_402 of the internal_revenue_code code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a represents that he received a distribution from plan x totaling big_number shares of fund y stock taxpayer a asserts that his failure to accomplish a rollover within the 60-day period prescribed by sec_402 was due to taxpayer a’s involvement with the medical_condition of his wife and daughter as well as his own medical_condition at the time taxpayer a further represents that amount a has not been used for any other purpose taxpayer a has submitted documentation evidencing his wife’s his daughter’s and his own illnesses during the 60-day period on date taxpayer a requested a distribution from plan x for the purpose of rolling over the investment into a traditional individual_retirement_account ira the distribution was split into two parts a cash distribution of amount a and big_number shares of fund y stock which included both before-tax shares and after-tax page shares the cash distribution of amount a was sent directly to financial_institution s in a trustee-to-trustee transfer and was timely deposited into taxpayer a’s traditional_ira the stock_distribution of big_number shares of fund y stock were sent as stock certificates to taxpayer a’s home address taxpayer a was unaware at the time that the stock certificates would be sent to his home address prior to the distribution taxpayer a’s disabled daughter gave birth to a baby with underdeveloped lungs and digestive system taxpayer a and his wife provided full time care for their disabled daughter and her baby taxpayer a’s wife suffered back and knee problems as a result of the constant care they were required to provide leaving taxpayer a as the sole caregiver for all of them in january of taxpayer a was diagnosed with melanoma which was removed within the same month in april of taxpayer a was diagnosed with glaucoma on date taxpayer a discovered the stock certificates and requested that financial_institution s deposit them into a roth_ira taxpayer a paid the income_tax on this transfer in and however due to an error on the part of financial_institution s the shares of stock were not deposited into a roth_ira taxpayer a discovered in that the before-tax shares of fund y stock were not in a roth_ira but were in a regular non-retirement brokerage account while financial_institution s was correcting this mistake they discovered that neither the before-tax shares nor the after-tax shares were deposited into a roth_ira account and both were in non-retirement brokerage accounts at this time financial_institution s also discovered that taxpayer a’s request to deposit the shares into a roth_ira was not made within the required 60-day time period based on the facts and representations you request a ruling that the internal_revenue_service service waive the day rollover requirement in sec_402 of the code with respect to the distribution from plan x totaling big_number shares of fund y stock sec_402 of the code provides that if any portion of the balance_to_the_credit of an employee in a qualified_trust is paid to the employee in an eligible_rollover_distribution and the distributee transfers any portion of the property received in such distribution to an eligible_retirement_plan and in the case of a distribution_of_property other than money the amount so transferred consists of the property distributed then such distribution to the extent transferred shall not be includible in gross_income for the taxable_year in which paid sec_402 states that such rollover must be accomplished within days following the day on which the distributee received the property an individual_retirement_account constitutes one form of eligible_retirement_plan sec_402 of the code provides that an eligible_rollover_distribution shall not include any distribution to the extent such distribution is required under sec_401 page sec_402 of the code provides in relevant part that the secretary may waive the 60-day requirement under sec_402 where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_402 of the code sec_401 provides the rules for governing direct transfers of eligible rollover distributions sec_1_401_a_31_-1 q a-15 of the regulations provides in relevant part that an eligible_rollover_distribution that is paid to an eligible_retirement_plan in a direct_rollover is a distribution and rollover and not a transfer of assets and liabilities revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_402 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer a is consistent with his assertion that his failure to accomplish a timely rollover was due to taxpayer a’s involvement with the medical_condition of his wife and daughter as well as his own medical_condition at the time therefore pursuant to sec_402 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution from plan x totaling big_number shares of fund y stock taxpayer a is granted a period of days from the issuance of this ruling letter to contribute the big_number shares of fund y stock into a roth_ira provided ail other requirements of sec_402 of the code except the 60-day requirement are met with respect to such contribution the contribution of the big_number shares of fund y stock into a roth_ira will be considered a rollover_contribution within the meaning of sec_402 of the code this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent if you wish to inquire about this ruling please contact please address all correspondence to se t ep ra t3 page sincerely yours laura b warshawsky manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division u ll xxxxxxxxxx xxxxxxxxxx xxxxxxxxxx cofome l002 tep fa to - tt wy attn xxxxxx legend state a group b employees plan x employer m resolution n statute p statute q statute r dear ek kk rak ek ek kek ek az this is in response to a ruling_request dated as supplemented by correspondence dated and submitted on your behalf by your authorized representative concerning tlfe federal_income_tax treatment under sec_414 of the internal_revenue_code code of certain contributions to plan x the following facts and representations have been submitted in support of your ruling_request employer m a political_subdivision of state a established and created plan x in accordance with statute p and statute q for the benefit of group b employees you represent that plan x meets the qualification requirements set forth under sec_401 of the code xxxxxxxxx the foregoing statutes permit government employers such as employer m to reduce the current salaries paid to group b employees and pay the mandatory employee contributions directly to plan x in lieu of contributions by group b employees statute r provides that dollar_figure percent of group b employees’ salaries shall be withheld and paid to plan x statute r also provides that when mandatory employee contributions are picked up by employer m the contributions shall be considered as employee contributions statute r states that picked up contributions shall be treated as employer contributions in determining tax treatment under the code statute r further provides that employer m shall continue to withhold federal and state income taxes based upon these contributions until the internal_revenue_service or the federal courts rule that pursuant to sec_414 of the code these contributions shall not be included in gross_income of group b employees until such time as they are distributed or made available resolution n provides that employer m will pick up and pay the mandatory group b employees’ contributions to plan x in accordance with statute r the group b employees’ salaries will be reduced by an amount equal to the amount picked up by employer m employer m will cease to withhold federal and state income taxes on the picked-up contributions the contributions although designated as employee contributions will be paid_by employer m in lieu of contributions by group b employees and group b employees participating in plan x will not be given the option to receive cash directly in lieu of having such contributions paid_by employer m to plan x based on the aforementioned facts you request the following rulings the mandatory employee contributions picked up by employer m shall be excluded from the current gross_income of group b employees until distributed the picked up contributions paid_by employer m are not wages for federal_income_tax withholding purposes and federal income taxes need not be withheld on the picked up contributions sec_414 of the code provides that contributions otherwise designated as employee contributions shall be treated as employer contributions if such contributions are made to a plan determined to be qualified under sec_401 a of the code established by a state government or a political_subdivision thereof and are picked up by the employing unit the federal_income_tax treatment to be accorded contributions which are picked up by the employer within the meaning of sec_414 of the code is specified in revrul_77_462 1977_2_cb_358 in that revenue_ruling the employer school district agreed to assume and pay the amounts employees were required by state law to contribute to a state pension_plan revrul_77_462 concluded that the schoo district’s picked-up contributions to the plan are excluded from the employees’ gross_income until such time as they are distributed to the employees the revenue_ruling held further that under the provisions of sec_3401 of the code the school district’s contributions to the plan are excluded from wages for purposes xxxxxkxxx we of the collection of income_tax at source on wages therefore no withholding is required from the employees’ salaries with respect to such picked-up contributions the issue of whether contributions have been picked up by an employer within the meaning of sec_414 of the code is addressed in revrul_81_35 1981_1_cb_255 and the revrul_81_36 1981_1_cb_255 these revenue rulings established that the following two criteria must be met the employer must specify that the contributions although designated as employee contributions are being paid_by the employer in lieu of contributions by the employee and the employee must not be given the option of choosing to receive the contributed amounts directly instead of having them paid_by the employer to the pension_plan revrul_87_10 1987_1_cb_136 provides that in order to satisfy revenue rulings and the required specification of designated employee contributions must be completed before the period to which such contributions relate thus employees may not exclude from current gross_income designated employee contributions to a qualified_plan that relate to compensation earned for services prior to the date of the last governmental action necessary to effect the pick up in this request resolution n satisfies the criteria set forth in revrul_81_35 and revrul_81_36 by providing in effect that employer m will make contributions to plan x in lieu of contributions by group b employees and group b employees participating in plan x will have no option to receive such contributions directly instead of having such contributions paid_by employer m to plan x accordingly we conclude with respect to ruling requests number sec_1 and that the amounts picked up by employer m on behalf of group b employees who participate in plan x shall be treated as employer contributions and will not be includible in group b employees’ gross_income in the year in which such amounts are contributed to plan x these amounts will be includible in the gross_income of group b employees or their beneficiaries only in the taxable_year in which they are distributed to the extent that the amounts represent contributions made by employer m because we have determined that the picked-up amounts are to be treated as employer contributions they are excepted from wages as defined in sec_3401 of the code for federal_income_tax withholding purposes in addition no part of the amounts picked up by employer m will constitute wages for federal_income_tax withholding purposes in the taxable_year in which they are contributed to plan x these rulings apply only if the effective date for the commencement of the pick-up is no earlier than the later of the date resolution n is signed or the date the pick-up is put into effect for purposes of the application of sec_414 of the code it is immaterial whether an employer picks up contributions through a reduction in salary an offset against future salary increases or a combination of both this ruling is based on the assumption that plan x will be qualified under sec_401 of the code at the time of the proposed contributions and distributions xxxxxxxxx we no opinion is expressed as to whether the amounts in question are subject_to tax under the federal_insurance_contributions_act no opinion is expressed as to whether the amounts in question are paid pursuant to a salary reduction agreement within the meaning of sec_3121 this ruling is directed only to the taxpayer who requested it sec_61 k of the code provides that it may not be used or cited by others as precedent a copy of this letter has been sent to your authorized representative in accordance with the power_of_attorney on file with this office if you have any questions please contact t ep ra t2 at sincerely yours sf - joyce e floyd manager employee_plans technical group tax_exempt_and_government_entities_division enclosures deleted copy of the letter notice


internal_revenue_service number release date index number ----------------- ------------------------------- ------------------------------------- ------------------ -------------------------------- department of the treasury washington dc third party communication date of communication month dd yyyy person to contact ------------------------- id no -------------- telephone number --------------------- refer reply to cc intl b04 plr-132704-08 date date ty ty legend taxpayer ------------------------------------- ------------------- -------------------------- taxpayer --------------------------------------- taxpayer -------------------------------------- taxpayer ----------------------------- taxpayer --------------------------------------- us sub us sub date date country a state x ----------------------- ------------------------- ------------------- ------------------- --------------------- ------------- dear ----------------- plr-132704-08 this replies to a letter dated date in which taxpayer 1’s authorized representative requested an extension of time under sec_301_9100-3 to satisfy the statement and notice requirements of sec_1_897-2 and sec_1 h the information submitted for consideration is substantially as set forth below note that the procedures of revproc_2008_27 apply with respect to requests for relief for untimely statements and notices under sec_1_897-2 and sec_1_897-2 filed after date the rulings contained in this letter are based upon information and representations submitted by taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request_for_ruling verification of the factual information representations and other data may be required as a part of the audit process factual background taxpayer is a country a company that is treated as a corporation for u s federal tax purposes in anticipation of the acquisition described below taxpayer established two wholly-owned subsidiaries taxpayer a country a entity that is treated as a corporation for u s federal_income_tax purposes and us sub a state x corporation taxpayer is a country a entity that is treated as a corporation for u s federal_income_tax purposes on date taxpayer acquired taxpayer from an unrelated_person at the time of this acquisition taxpayer owned of taxpayer a country a entity that is treated as a corporation for u s federal_income_tax purposes and taxpayer owned of us sub a state x corporation as a result of the acquisition taxpayer was treated for u s federal tax purposes as selling the stock of its wholly-owned subsidiary us sub to taxpayer a country a entity that is treated as a corporation for u s federal_income_tax purposes and that is wholly-owned by taxpayer this transaction is hereinafter referred to as the acquisition on date taxpayer transferred its wholly-owned subsidiary us sub to us sub in exchange for a note in the approximate amount of amount a subsequently on date us sub changed its legal status from a state x corporation to a state x limited_liability_company and did not elect to be treated as an association these transactions were treated for u s tax purposes as if us sub transferred its assets to us sub in exchange for a nominal share of us sub stock and as if this nominal share of us sub stock were transferred from us sub to taxpayer to taxpayer and to taxpayer these transactions that occurred on date are hereinafter referred to as the reorganization plr-132704-08 as to the acquisition taxpayer did not request from us sub a statement certifying that taxpayer 4’s interest in us sub was not a united_states_real_property_interest as defined in sec_897 of the code usrpi as of the date of the acquisition moreover neither taxpayer nor taxpayer received a statement certifying that taxpayer 4’s interest in us sub was not a uspri as of the date of the acquisition consequently the required notice was not sent to the irs taxpayer now seeks relief under the provisions of sec_301_9100-1 and -3 to request the applicable statement from us sub and to forward that statement to taxpayer and for us sub to file the applicable notice late with respect to the acquisition as to the reorganization taxpayer did not request or receive from us sub a statement certifying that taxpayer 5’s interest in us sub was not a usrpi as of the date of the reorganization consequently the required notice was not sent to the irs taxpayer now seeks relief under the provisions of sec_301_9100-1 and -3 to request the applicable statement from us sub and for us sub to file the applicable notices late with respect to the reorganization similarly none of taxpayer sec_2 or requested or received statements from us sub certifying that each of taxpayer sec_2 and 5’s interests in us sub were not usrpis as of the date of the reorganization consequently the required notices were not sent to the irs taxpayer sec_2 and now seek relief under the provisions of sec_301_9100-1 and -3 to request the applicable statement from us sub and for us sub to file the applicable notices late with respect to the reorganization discussion sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the standards set forth in sec_301_9100-3 to make a regulatory election under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election as an election whose due_date is prescribed by a regulation a revenue_ruling revenue_procedure notice or announcement an election includes an application_for relief in respect of tax sec_301_9100-3 provides that requests for relief subject_to this section will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that plr-132704-08 the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government rulings based on the facts and circumstances of this case we conclude that the standards of sec_301_9100-3 have been satisfied accordingly we provide the following rulings as to the acquisition taxpayer taxpayer and us sub are granted an extension of time until days from the date of this ruling letter to satisfy the statement and notice requirements of sec_1_897-2 and sec_1_897-2 as to the reorganization taxpayer taxpayer taxpayer us sub and us sub are granted an extension of time until days from the date of this ruling letter to satisfy the statement and notice requirements of sec_1_897-2 and sec_1 h with respect to the reorganization the granting of an extension of time is not a determination that taxpayer taxpayer taxpayer taxpayer us sub or us sub is otherwise eligible to comply with the statement and notice requirements sec_301_9100-1 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 including the characterization of the transactions as a reorganization a copy of this ruling letter should be attached with the statement and the notice mailed to the irs 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-132704-08 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely david b bailey assistant to the branch chief associate chief_counsel international branch cc


internal_revenue_service significant index no department of the treasury washington dc person to contact - talenhane number refer reely toy date sep in re this letter constitutes notice that with respect to the above-named money_purchase_pension_plan your request for waivers of the excise_tax under sec_4971 of the internal_revenue_code for the seven plan years ended date-2000 has been granted the waivers have been granted for the tax that would otherwise apply to the accumulated funding deficiencies for those seven plan years the waivers of the excise_tax have been granted in accordance with section b of the employee_retirement_income_security_act_of_1974 erisa the amount for which each of these excise_tax waivers has been granted is equal to percent of the accumulated fundin deficiency in the funding_standard_account as of the end of each of the applicable_plan years for which a waiver js granted to the extent such deficiency has not been corrected according to the information received the plan is of being terminated the sole active_participant in the plan was the company president who died in date the company’s assets are being liquidated and proceeds will be used to fund vested benefits for terminated participants excise_tax under sec_4971 of the code for eac issue in addition the com any had paid the of the plan years at in the process we have sent a copy of this letter to the employee_plans area manager for the key district in sincerely fr q hbotlaa dollar_figureofken yednock manager employee_plans technical tax_exempt_and_government_entities_division e270


internal_revenue_service number release date index number --------------------------------------- --------------------------------- -------------------------------------------- --------------------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------- telephone number --------------------- refer reply to cc psi b01 plr-158717-04 date date legend x --------------------------------------------------- date dear ---------------- ---------------------- --------------------------------------- this responds to a letter dated date submitted on behalf of x requesting relief under ' b of the internal_revenue_code facts according to the information submitted x was incorporated on date the sole shareholder of x intended for x to be an s_corporation effective date but the election to be treated as an s_corporation was not timely filed x requests a ruling under sec_1362 that it will be treated as an s_corporation effective date law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective sec_1362 provides in relevant part that if an s election is made within the first two and one-half months of a corporation's taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made under ' b however if an s election is made after the first two and one-half months of a corporation's taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is filed plr-158717-04 sec_1362 provides that if no ' a election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year and ' b shall not apply x did not file an election to be treated as an s_corporation under ' a x has however established reasonable_cause for not making a timely s election and is entitled to relief under ' b conclusion except as expressly provided herein no opinion is expressed or implied based solely on the facts submitted and the representations made and provided that x otherwise qualifies as an s_corporation we conclude that x will be treated as an s_corporation effective date within days from the date of this letter x should submit a properly completed form_2553 effective date with a copy of this letter attached to the relevant service_center concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter the code provides that it may not be used or cited as precedent letter is being sent to your authorized representative this ruling is directed only to the taxpayer s requesting it sec_6110 of in accordance with the power_of_attorney on file with this office a copy of this sincerely s dianna k miosi dianna k miosi chief branch 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 -------------------------- -------------------------------- --------------------------------------------------- ------------------------------------- legend department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------ telephone number --------------------- refer reply to cc tege eb ec plr-132518-08 date date corporation x ----------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------- corporation y -------------------------------- date --------------------- date --------------------- dear ------------ this letter is in response to a letter dated date submitted by your authorized representative requesting a ruling under sec_162 of the internal_revenue_code code specifically corporation x requested a ruling that the deduction limitation of sec_162 does not apply to corporation x or its subsidiary_corporation y the facts as represented are as follows corporation x a foreign_corporation acquired_corporation y on date corporation y’s taxable_year ended on date as a result of the acquisition corporation y’s outstanding shares of common_stock were converted into american depository shares of corporation x one day before the acquisition corporation y filed a form_15 with the sec to terminate the registration of its securities under sec_12 of the securities exchange act of exchange act in addition after the acquisition corporation x was a foreign private issuer under c f_r section 3b-4 c because it is incorporated under the laws of a foreign_country and does not meet the following definition more than percent of the issuer's outstanding voting_securities are directly or indirectly held of record by residents of the united_states and one or more of the following apply plr-132518-08 i the majority of the executive officers or directors are united_states citizens or residents ii more than percent of the assets of the issuer are located in the united_states or iii the business of the issuer is administered principally in the united_states as a foreign private issuer corporation x is required to file a form 20-f with the securities_and_exchange_commission sec form 20-f does not require disclosure of executive compensation pursuant to the compensation disclosure rules in item b of regulation s-k under the exchange act accordingly company x is not required to file with the sec a summary compensation table that is described in item of regulations s-k under the exchange act sec_162 of the code allows a deduction for all of the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying on any trade_or_business including a reasonable allowance for salaries or other compensation_for_personal_services actually rendered sec_162 of the code provides that for any publicly_held_corporation no deduction shall be allowed for applicable_employee_remuneration with respect to any covered_employee to the extent that the amount of such remuneration for the taxable_year exceeds dollar_figure million sec_162 of the code defines publicly_held_corporation to mean any corporation issuing any class of common equity securities required to be registered under sec_12 of the exchange act sec_1_162-27 of the income_tax regulations provides that whether a corporation is publicly held is determined based solely on whether as of the last day of its taxable_year the corporation is subject_to the reporting obligations of sec_12 of the exchange act sec_162 of the code defines covered_employee as any employee of the employer if a as of the close of the taxable_year such employee is the chief_executive_officer of the employer or is an individual acting in such capacity or b the total compensation of such employee for the taxable_year is required to be reported to shareholders under the exchange act by reason of such employee being among the four highest compensated officers for the taxable_year other than the chief_executive_officer sec_1_162-27 generally provides that whether an individual is a covered_employee for purposes of sec_162 is determined pursuant to the executive compensation disclosure rules under the exchange act the securities and exchange commission’s rules relating to executive compensation disclosure under the exchange plr-132518-08 act are contained in item of regulations s-k crf these rules require disclosure of compensation awarded to earned by or paid to certain executive officers in the notice of proposed rulemaking containing the proposed_regulations under sec_162 the preamble contains the following language concerning the definition of covered_employee the regulations clarify which employees are ‘covered employees’ for purposes of sec_162 the legislative_history to sec_162 provides that ‘covered employees’ are defined by reference to the sec rules governing executive compensation disclosure under the exchange act under the regulations an individual is generally a ‘covered employee’ if the individual’s compensation is reported on the ‘summary compensation table’ under the sec’s executive compensation disclosure rules as set forth in item of regulations s-k c f_r under the exchange act however the regulations specifically provide that in order to be a ‘covered employee’ for sec_162 purposes an individual must be employed as an executive officer on the last of the taxable_year thus only those employees who appear on the ‘summary compensation table’ and who are also employed on the last day of the taxable_year are ‘covered employees ’ therefore based solely on the facts presented we rule as follows the deduction limitation of sec_162 does not apply to corporation x because it is a foreign private issuer and therefore it is not subject_to the executive compensation disclosure rules under the exchange act in addition the deduction limit of sec_162 does not apply to corporation y for its taxable_year ending on date because as of date it is not registered or required to be registered under sec_12 of the exchange act except as expressly provided herein no opinion is expressed or implied as to the federal tax consequences of the facts described above under any other provision of the code this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter should be attached to any income_tax return to which it is relevant the rulings contained in this letter are based upon information and representations submitted by corporations x and y and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material plr-132518-08 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 john b richards senior technician reviewer executive compensation branch office of division counsel associate chief_counsel tax exempt government entities


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 b05 plr-135839-12 date date legend taxpayer ---------------------------------------------------------- -------------------------------------------------- ----------------------------------- state a exchange date date ------------ ------------------------------------ ----------------------- ----------------------- dear ---------------- this letter responds to your date request for rulings submitted by your authorized representatives under sec_301 and sec_305 of the internal_revenue_code_of_1986 as amended the code the information received in that request is summarized below facts taxpayer a state a corporation is registered as a closed-end management investment_company under the investment_company act of as amended taxpayer has elected to be treated as a regulated_investment_company a ric under subchapter_m plr-135839-12 of chapter of the code and files its federal_income_tax returns as a ric taxpayer for all relevant periods qualifies as a ric and intends to maintain such qualification taxpayer has one class of common_stock outstanding common_stock the shares of which are publicly traded and listed on the exchange taxpayer has adopted a dividend_reinvestment_plan drip that generally provides for the reinvestment of its distributions on behalf of each holder of its common_stock unless a shareholder affirmatively elects to receive cash subject_to the approval of taxpayer’s board_of directors taxpayer intends to make one or more future dividends and or future spillback dividends dividends made after the close of a taxable_year that relate back to that taxable_year pursuant to an election under sec_855 with respect to its common_stock for its taxable years ending on date and date in the form of cash subject_to the cash limit as defined below or common_stock at the election of each shareholder the proposed distributions taxpayer will transmit to each shareholder an election form relating to a proposed distribution each shareholder may elect on the form by the election deadline to receive its portion of a proposed distribution in a cash the cash_option or b common_stock of equivalent value the stock_option if a shareholder fails to make a valid election by the election deadline that shareholder will be deemed to have made an election to receive percent common_stock the total number of shares of common_stock to be issued in a proposed distribution will equal a the total amount of the proposed distribution minus the amount of cash payable pursuant to elections under the cash_option but subject_to the cash limit divided by b the average trading price of a share of common_stock on the exchange as of the close of trading during a three-business-day period ending on a date that is as close as practicable to the dividend payment_date but that is sufficiently in advance of that date to allow taxpayer to determine the number of shares of common_stock that it will issue and distribute in the proposed distribution the average trading price there may be some change in value of the common_stock between the time the average trading price is determined and the dividend payment_date which may be substantial depending upon then-current market conditions in that event the total value of the shares of common_stock actually distributed in the proposed distribution may not be equal to the amount of cash that the shareholders electing to receive such shares would have received if they had elected to receive all-cash distributions while each shareholder will have the option to elect to receive cash in lieu of common_stock for the shareholder’s entire entitlement under a proposed distribution taxpayer intends to limit the aggregate amount of cash to be distributed in a proposed distribution to an amount not less than percent of the total value of the proposed distribution such amount the cash limit in no event will the total amount of cash available be less than percent of the total value of a proposed distribution any cash plr-135839-12 paid in lieu of fractional shares of common_stock will not count towards the cash limit thus taxpayer may pay more than percent of the total amount of a proposed distribution in cash if for any proposed distribution the total number of shares of common_stock for which shareholders have made a cash election cash election shares would result in the payment of cash in an aggregate amount that is less than or equal to the cash limit then the entire portion of such proposed distribution that is payable with respect to the cash election shares will be paid in cash if for any proposed distribution however the total number of cash election shares would result in the payment of cash in an aggregate amount that is greater than the cash limit then each holder of cash election shares will receive its respective portion of that proposed distribution with respect to the cash election shares as follows in cash in an amount equal to the proportion that such shareholder’s cash election shares bear to the total number of cash election shares multiplied by an amount equal to the cash limit plu sec_2 in shares of common_stock based on the average trading price as to the remainder of the proposed distribution as a result if too many shareholders elect to receive a proposed distribution in cash a holder of cash election shares will instead receive a pro_rata amount of cash but in no case less than percent of its entitlement under a proposed distribution in cash with respect to any shareholder participating in the drip the drip will apply to a proposed distribution only to the extent that in the absence of the drip the shareholder would have received the distribution in cash rulings based solely on the information provided and the representations made we rule as follows any and all cash and common_stock distributed in a proposed distribution by taxpayer will be treated as a distribution of cash and property with respect to its stock to which sec_301 applies sec_301 and sec_305 the amount of any distribution of common_stock received by any shareholder that receives common_stock in a proposed distribution will be considered equal to the amount of cash which could have been received instead by such shareholder sec_1_305-1 and sec_1_305-2 ex caveats plr-135839-12 except as expressly provided herein no opinion is expressed or implied concerning the tax treatment of the proposed distributions under other provisions of the code and regulations or the tax treatment of any condition existing at the time of or effects resulting from the proposed distributions that is not specifically covered by the above rulings in particular no opinion is expressed with regard to whether taxpayer qualifies as a ric under subchapter_m of the code or whether the distributions made pursuant to the ruling will satisfy the required_distribution requirement under sec_4981 as modified by sec_852 procedural statements the rulings contained in this letter are based upon facts and representations submitted by the taxpayer and accompanied by a penalties 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 verification of the information representations and other data may be required as part of the audit process this ruling is directed only to the taxpayer requesting 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 this letter_ruling in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely ______________________ a graham magill assistant branch chief branch office of associate chief_counsel corporate cc


t c memo united_states tax_court jose hernandez petitioner v commissioner of internal revenue respondent docket no filed date jose hernandez pro_se willis b douglas for respondent memorandum opinion nameroff special_trial_judge this case was heard pursuant to the provisions of sec_7443a and rule sec_180 sec_181 and sec_182 respondent determined a deficiency in petitioner’s federal_income_tax in the amount of dollar_figure all section references are to the internal_revenue_code in effect for the year at issue all rule references are to the tax_court rules_of_practice and procedure after a concession by petitioner the sole issue for decision is whether petitioner is entitled to exclude from gross_income amounts received as disability payments during background some of the facts have been stipulated and they are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference at the time he filed his petition petitioner resided in costa mesa california petitioner worked for the city of santa ana california the city as a grounds maintenance worker earning approximately dollar_figure per month the city provided petitioner with long-term disability insurance through standard insurance co of portland oregon standard standard offers two disability insurance options to the city’s employees under plan a a disabled_employee is eligible to receive one-half of his base monthly salary until his disability ends or until he reaches age the city pays the entire premium for this coverage but an employee is not eligible for the benefits until he is unable to work for days because of the disability under plan b a disabled_employee receive sec_2 sec_1 of standard’s group policy states the amount of monthly income shall be of the first dollar_figure of the member’s basic monthly earnings reduced by any deductible benefits the same benefits as above with the exception that the waiting_period is reduced from days to days enrollment in plan b requires the submission of a medical history statement and is subject_to standard’s approval the employee cost of plan b is approximately dollar_figure per month the city pays the rest during all relevant times petitioner was enrolled in plan a on date while working for the city petitioner tripped on an unrepaired crack in the sidewalk and struck his head on the pavement sustaining permanent injuries to his head back and right eye nevertheless petitioner returned to work with the city in date as a result of these injuries petitioner applied for disability benefits under plan a standard however rejected his claim in date petitioner applied to change his long-term disability insurance coverage from plan a to plan b as requested by standard petitioner submitted a medical history statement standard denied petitioner’s request and petitioner remained covered under plan a on date petitioner suffered another work-related accident this time petitioner while trimming high tree branches fell and suffered head back and neck injuries as a result of the accident he was unable to perform his regular duties for the city after the accident petitioner’s work schedule was as follows from april to date petitioner performed light-duty work from date to date petitioner did not perform any work for the city as none was available that he could perform from january to date petitioner performed nonmaintenance night-man work on date petitioner was instructed not to report to work pending the investigation of an altercation occurring on date between him and several city security guards and on date the city terminated petitioner’s employment on date petitioner filed a long-term disability claim with standard asserting that he had become totally and permanently disabled because of the two accidents described above soon after standard denied his claim petitioner pursued the issue during the subsequent years but was unable to secure payment it was not until petitioner elicited the assistance of the california state insurance commissioner’s office in date that standard agreed to honor petitioner’s claim retroactively to date through a series of checks standard paid petitioner the sum of dollar_figure during on the basis of information supplied to him by the city and standard petitioner believed that the benefits he had received were nontaxable in accordance with this belief petitioner did not report the dollar_figure on his federal_income_tax return in the notice_of_deficiency respondent determined that petitioner should have reported the above amount petitioner’s year-to-date earning reports for and ie the city’s employment records show that no funds were withheld from petitioner’s wages to pay for the long-term disability plan francisco gutierrez the city’s administrative service manager in charge of payroll functions testified that standard’s insurance premiums to the extent paid_by employees are typically paid through withholding and would be reflected on those earning reports discussion respondent asserts that the distributions should be included in petitioner’s gross_income because the city not petitioner exclusively funded the long-term disability plan under which petitioner benefited petitioner on the other hand argues that the payments should be excluded from gross_income because he funded the disability plan through employee withholdings and because he was advised that the payments were not taxable petitioner prepares his tax returns on the cash_method_of_accounting respondent’s determination is presumed correct and petitioner bears the burden of proving otherwise rule a 290_us_111 sec_105 provides that amounts received by an employee under accident or health_plans funded by the employer are included in the employee’s gross_income sec_105 however provides this exception to the general_rule sec_105 payments unrelated to absence from work --gross income does not include amounts referred to in subsection a to the extent such amounts-- constitute payment for the permanent loss or loss of use of a member or function of the body or the permanent disfigurement of the taxpayer and are computed with reference to the nature of the injury without regard to the period the employee is absent from work we hold that the distribution amounts are not excludable under sec_105 from petitioner’s gross_income petitioner received the disability payments under a long-term disability plan ie plan a that was fully funded by the city the record clearly demonstrates that no funds were withheld from petitioner’s wages and that petitioner did not pay for the plan from other sources moreover the sec_105 exception does not apply petitioner did not establish that the payments were computed with reference to the nature of his injuries without regard to the period he was absent from work 814_f2d_1304 9th cir affg en_banc tcmemo_1985_25 72_tc_715 accordingly respondent’s determination shall be sustained petitioner argues that his form_w-2 indicates that the entire distribution is nontaxable sick_pay we disagree petitioner misunderstands the form_w-2 particularly box which contains the terms j code j is explained as sick_pay and dollar_figure indicates that no amount is to be applied for that category thus in our estimation the form_w-2 indicates the opposite that none of the distributions were for nontaxable sick_pay and that the distributions are in fact taxable petitioner also asserts that assuming we find that the distributions are taxable they should not be includable in his gross_income because many payments pertain to years prior to during which petitioner was unable to work we disagree petitioner as a cash_basis taxpayer must include income during the taxable_year it was actually or constructively received sec_451 since petitioner received dollar_figure during that amount is income for that year to reflect the foregoing decision will be entered for respondent