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-146077-05 date date legend legend x state d1 year d2 y a z year year -------------------------------------------------------------------- ------------------------ ------------ ------------------------- ------- -------------------------- ---------------------------- ------------------------ --------------- ------------------------------ ------------------------ ------- ------- ------- ------- plr-146077-05 year year d3 n dear ----------------- related correspondence submitted on behalf of x requesting relief under ' f of the internal_revenue_code acode for an inadvertent termination of s election letter dated date and ---------------------- -------------- responds this the to facts the information submitted states that x was incorporated under the laws of state and elected to be treated as an s_corporation for federal tax purposes effective d1 in year y a c_corporation with dollar_figurea of accumulated_earnings_and_profits ce p merged into x in a reorganization under sec_368 as a result x acquired the ce p under sec_381 on d2 x sold its assets to z x used the installment_sale_method to report income from the sale of its assets for each of the consecutive years of year year and year x had passive_investment_income from the installment_sale exceeded percent of its yearly gross_receipts in year after receiving the last payment on the sale the accountant of x discovered the ce p which were erroneously recorded and determined that the s election of x terminated on d3 to correct the error x distributed the entire amount of the ce p in year and elected to distribute the ce p first for year pursuant to sec_1_1368-1 of the income_tax regulations law and analysis sec_1361 defines an s_corporation as a small_business_corporation for sec_1362 provides that an election under sec_1362 shall be which an election under sec_1362 is in effect for the taxable_year terminated whenever the corporation has accumulated_earnings_and_profits at the close of each of three consecutive taxable years and has gross_receipts for each of the taxable years more than percent of which are passive_investment_income the termination is effective on and after the first date of the first taxable_year beginning after the third consecutive taxable_year referred to in sec_1362 sec_1362 sec_1362 provides that if an election under sec_1362 by any except as otherwise provided in sec_1362 sec_1362 provides that plr-146077-05 the term passive_investment_income means gross_receipts derived from royalties rents dividends interest annuities and sales or exchanges of stock_or_securities corporation a was not effective for the taxable_year for which made determined without regard to sec_1362 by reason of a failure to meet the requirements of sec_1361 or to obtain shareholder consent or b was terminated under sec_1362 or the secretary determines that the circumstances resulting in such ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in the termination steps were taken - a so that the corporation is a small_business_corporation or b to acquire the required shareholder consents and the corporation and each person who was a shareholder of the corporation at any time during the period specified pursuant to this subsection agrees to make such adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in such termination such corporation shall be treated as an s_corporation during the period specified by the secretary sec_1368 provides rules for determining the source of distributions made by an s_corporation having accumulated_earnings_and_profits with respect to its stock sec_1368 and sec_1_1368-1 provide that an s_corporation may with the consent of all its affected_shareholders elect to distribute earnings_and_profits first part of its accumulated_earnings_and_profits through a deemed_dividend if an s_corporation makes the election provided in sec_1_1368-1 the s_corporation will be considered to have made the election under sec_1368 and sec_1_1368-1 to distribute earnings_and_profits first sec_1_1368-1 provides that an s_corporation may elect to distribute all or sec_1375 imposes a tax on the income of an s_corporation that has accumulated_earnings_and_profits at the close of a taxable_year and that has gross_receipts more than percent of which are passive_investment_income within the meaning of sec_1362 conclusion based solely upon the representations made and the information submitted we conclude that x’s s election terminated on d3 we further conclude that the termination of x’s s election was an inadvertent termination within the meaning of sec_1362 pursuant to the provisions of sec_1362 x will be treated as continuing to be an s_corporation on and after d3 unless x’s s election is otherwise terminated under sec_1362 and provided that the following plr-146077-05 conditions are met as an adjustment under sec_1362 x must send a payment of dollar_figuren with a copy of this letter to the following address internal_revenue_service cincinnati service_center attn accounting branch stop west rivercenter blvd covington ky if all of the above conditions are not met then this ruling is null and void x must send this payment no later than days from the date of this letter furthermore if these conditions are not met x must notify cincinnati service_center that its s election has terminated federal_income_tax consequences of the facts described above under any other provision of the code the code provides that it may not be used or cited as precedent except as specifically ruled upon above no opinion is expressed as to the this ruling is directed only to the taxpayer who requested it sec_6110 of in accordance with the power_of_attorney on file with this office a copy of this letter_ruling will be sent to your authorized representative sincerely dianna k miosi chief branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for ' purposes


internal_revenue_service number info release date cc psi 1-cor-103573-02 date uilc we are responding to a letter submitted on your behalf by cpa requesting relief in order to establish date as the effective date for your s_corporation_election the information submitted explains that since inception you have treated your corporation as though it had been granted s_corporation status however information provided to this office by the internal_revenue_service indicates that although a timely 1120s was filed for and several other years a form_1120 was filed for the taxable_year taxable_year therefore automatic late s_corporation relief pursuant to revproc_97_48 is unavailable although we are unable to respond to to your request as submitted this letter provides useful information relating to your situation and no return has been received for the announcement copy enclosed provides guidance on seeking relief for late s_corporation elections and inadvertent invalid s_corporation elections generally to request relief for a late or invalid s_corporation_election you must request a private_letter_ruling from the national_office the procedures for requesting a private_letter_ruling are set out in revproc_2002_1 copy enclosed in addition revproc_2002_1 requires taxpayers to submit a user_fee along with their ruling_request the standard user_fee for a private_letter_ruling is dollar_figure however taxpayers with gross_income of less than dollar_figure million on their last-filed tax_return qualify for a reduced user_fee in the amount of dollar_figure if you are eligible to use the reduced fee provision you must include the statement described in b b of appendix a with your request please review appendix b for a sample format for requesting a private_letter_ruling if you decide to submit a formal request for a private_letter_ruling please include the proper user_fee if applying under the reduced fee provisions send a statement certifying gross_income and refer your request to our office by adding the following to the address attn cc pa t p o box ben franklin station washington dc direct to cc psi room for further specialized information and useful links relating to small businesses consider visiting the irs website at www irs gov smallbiz please keep this letter with your tax records and feel free to provide a copy of it to your authorized representative we hope that the above information proves helpful sincerely yours s dianna k miosi chief branch associate chief_counsel passthroughs and special industries enclosures announcement revproc_2002_1


internal_revenue_service number info 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 genin-143192-04 date date taxpayer ------------------------------ dear ------------- ---------------------- we are responding to a letter dated date submitted on behalf of the above captioned taxpayer generally to obtain relief for a late filing of form_2553 election by a small_business_corporation and form_8832 entity classification election the taxpayer needs to request a private_letter_ruling from the national_office the information submitted to our office is insufficient for us to process a private_letter_ruling request the procedures for requesting a private_letter_ruling are set out in revenue_procedure rev_proc copy enclosed requests for letter rulings must be accompanied by an appropriate amount of the user_fee the standard user_fee for a private_letter_ruling is dollar_figure however taxpayers with gross_income of less than dollar_figure million on their tax_return for the most recent 12-month taxable_year qualify for a reduced user_fee in the amount of dollar_figure if the taxpayer qualifies for the reduced fee the ruling_request must include a statement certifying the taxpayer’s gross_income for the last 12-month taxable_year otherwise the higher fee will apply for details please refer to appendix a of revproc_2005_1 if the taxpayer decides to submit a formal request for a private_letter_ruling please review appendix b of revproc_2005_1 and be certain to include all required procedural statements also include the proper user_fee and any documents that genin-143192-04 substantiate your intent to be an s_corporation from the time of the desired effective date requests for letter rulings should be sent to the following address internal_revenue_service attn cc pa lpd dru p o box ben franklin station washington dc for general tax information concerning small businesses please go to www irs gov smallbiz which is dedicated to providing information to small_business taxpayers and educating small_business owners on their tax responsibilities we hope that the above information proves helpful sincerely dianna k miosi branch chief branch passthroughs special industries enclosure ------------------------


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc corp b03 - plr-113621-02 date date re distributing controlled state n a b c d e f g h i j business y year date plr-113621-02 k l agreements dear we respond to your letter dated date requesting rulings on the federal_income_tax consequences of a proposed transaction additional information was submitted in and with letters dated march and date the information submitted for consideration is summarized below distributing is a state n corporation that has outstanding d shares of class a voting_stock and e shares of class b nonvoting common_stock both classes of which are owned by two brothers a and b and their lineal decendants and their sister c and other minority interests the a group of shareholders collectively owns f shares of the class a stock and g shares of the class b stock the b group of shareholders collectively owns f shares of the class a stock and h shares of the class b stock c and other minority interests collectively own i shares of the class a stock and j shares of the class b stock controlled is a state n corporation recently formed to effectuate the proposed transaction distributing has been engaged continuously in business y since year distributing has provided financial information that indicates that distributing has had gross_receipts and operating_expenses representative of the active_conduct of business y for the past years due to disagreements over the management operation and expansion of business y and as a result of a mediated settlement reached on date of a lawsuit between the shareholder groups the a group and the b group together with c and the minority interests have decided to divide distributing’s business_assets and liabilities and go their separate ways accordingly they propose the following transaction i distributing will transfer to controlled a portion of its assets in exchange for k shares of controlled class a voting common_stock and l shares of controlled class b non voting common_stock and controlled’s assumption_of_liabilities ii distributing then will distribute all of these shares of controlled stock to the a group shareholders categorically and proportionately in exchange for all of their shares of distributing stock with the result that no member of the a group will own any stock in distributing after the exchange plr-113621-02 the taxpayers have made the following representations in connection with the proposed transaction a b c d e f g h the fair_market_value of the stock of controlled received by each of the a group shareholders will be approximately equal to the fair_market_value of the distributing stock to be surrendered by each of the a group shareholders in the exchange no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of the corporation the years of financial information submitted on behalf of distributing is representative of the corporation’s present operations and with regard to such corporation there have been no substantial operational changes since the date of the last financial statement submitted following the transaction distributing and controlled each will continue independently and with its separate employees the active_conduct of its share of all of the integrated activities of the business conducted by distributing prior to the consummation of the transaction the distribution of the stock of controlled is carried out for the following corporate business purposes to resolve shareholder disputes and different management plans and to comply with a mediated settlement resulting from a lawsuit between the shareholder groups the distribution of the stock of controlled is motivated in whole or substantial part by one or more of these corporate business purposes distributing is an s_corporation within the meaning of sec_1361 of the internal_revenue_code and controlled will elect to be an s_corporation pursuant to sec_1362 on the first available date after the proposed transaction there is no plan or intent to revoke or otherwise terminate the s_corporation_election of either distributing or controlled there is no plan or intention by the shareholders of distributing to sell exchange transfer by gift have redeemed or otherwise dispose_of any of their stock in either distributing or controlled after the transaction there is no plan or intention by either distributing or controlled directly or through any subsidiary_corporation to purchase any of its outstanding_stock after the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 i there is no plan or intention to liquidate either distributing or controlled to merge either corporation with any other corporation or to sell or plr-113621-02 j k l m n o p otherwise dispose_of the assets of either corporation after the transaction except in the ordinary course of business the total adjusted_basis and the fair_market_value of the assets transferred to controlled by distributing each equals or exceeds the sum of the liabilities assumed as determined under sec_357 by controlled the liabilities assumed as determined under sec_357 in the transaction were incurred in the ordinary course of business and are associated with the assets being transferred no property is being transferred between distributing and controlled upon which any investment_credit determined under sec_46 has been or will be claimed distributing neither accumulated its receivables nor made extraordinary payment of its payables in anticipation of the transaction no intercorporate debt will exist between distributing and controlled at the time of or subsequent to the distribution of the controlled stock there are no continuing planned or intended transactions between distributing and controlled following the distribution except as described in agreements regarding an option to purchase certain inventories and assets from controlled by a b group corporation but any payments made in connection with all continuing transactions if any will be for fair_market_value based on the terms and conditions arrived at by the parties bargaining at arm’s length no two parties to the transaction are investment companies as defined in sec_368 and iv the distribution is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock entitled to vote or stock possessing percent or more of the total value of all classes of stock of distributing or controlled based solely on the information submitted and on the representations set forth above we hold as follows the transfer by distributing to controlled of assets in exchange for the stock of controlled and the assumption_of_liabilities followed by the distribution of all of the stock of controlled to the a group in exchange for all of the stock of distributing owned by such shareholder group will qualify as a reorganization within the meaning of sec_368 plr-113621-02 distributing and controlled each will be a_party_to_a_reorganization within the meaning of sec_368 no gain_or_loss will be recognized by distributing upon the transfer of assets to controlled solely in exchange for the stock of controlled and the assumption_of_liabilities sec_361 and sec_357 no gain_or_loss will be recognized by controlled upon the receipt of the assets in exchange for the stock of controlled sec_1032 no gain_or_loss will be recognized by distributing upon the distribution of all of the stock of controlled to the a group shareholders in exchange for all of their stock in distributing sec_361 the basis of the assets received by controlled will be the same as the basis of such assets in the hands of distributing immediately before their transfer to controlled sec_362 the holding_period of the assets transferred to controlled will include the period during which such assets were held by distributing sec_1223 no gain_or_loss will be recognized by and no amount will otherwise be included in the income of the a group shareholders upon receipt of the controlled stock in exchange for their distributing stock sec_355 the basis of the controlled stock in the hands of each of the a group shareholders will be the same as the basis of the distributing stock surrendered by each of them in exchange therefor sec_358 the holding_period of the controlled stock received by each of the a group shareholders will include the holding_period of the distributing stock surrendered by each of them provided such stock is held as a capital_asset on the date of the transaction sec_1223 as provided in sec_312 following distribution of the stock of controlled proper allocation of earnings_and_profits will be made between distributing and controlled in accordance with sec_1_312-10 of the income_tax regulations we express no opinion about the tax treatment of the proposed transaction under other provisions of the code and regulations or about the tax treatment of any conditions existing at the time of or effects resulting from the proposed transaction that are not specifically covered by the about rulings the ruling contained in this letter is predicted upon the facts and representations submitted by the taxpayers and accompanied by a penalties of perjury statement plr-113621-02 executed by an appropriate party this office has not verified any of the materials submitted in support of the request for a ruling verification of the information representations and other data may be required as part of the audit process this ruling is directed only to the taxpayers who requested it sec_6110 provides that it may not be used or cited as precedent it is important that a copy of this letter be attached to the federal_income_tax returns of the taxpayers involved for the taxable_year in which the transaction covered by this letter is consummated pursuant to the power_of_attorney on file in this office a copy of this letter has been sent to the taxpayer’s authorized representative sincerely filiz a serbes chief branch office of the associate chief_counsel corporate cc


internal_revenue_service number release date index number dollar_figure ----------------------------------------- -------------------------- ----------------------------- -------------- ------------------------------- department of the treasury washington dc person to contact --------------- id no ------------- telephone number --------------------- refer reply to cc corp b03 - plr-163601-03 date date legend parent -------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- ------------------------- sub sub sub ----------------------------------------------------------- ------------------------- -------------------------------------------------------------------------------------- --------------------- ------------------------- -------------------------------------------------------------------------------------- ----------------------------------------------------------- -------------------------------------- --------------------- ------------------------- sub ----------------------------------------------------- sub ----------------------------------------------------- sub ----------------------------------------------------- sub ----------------------------------------------------- -------------------------------- ----------------------------------------- -------------------------- plr-163601-03 date a date b date c company official ------------------------------------------- -------------------------------------------------------- tax professional --------------------------- --------------------------- dear --------------------- ---------------------------------------------------------------------- --------------------- this letter responds to your letter dated date requesting an extension of time under '301 of the procedure and administration regulations to file an election the extension is being requested for parent to file an election under '1 1502-20t i of the income_tax regulations to apply the provisions of sec_1_337_d_-2t to determine the allowable losses sustained upon the sale of the stock of certain subsidiary members of its consolidated_group during the taxable_year ending date a the material information submitted for consideration is summarized below parent is the common parent of a consolidated_group parent owned all the stock of sub which owned all the stock of sub which owned all the stock of sub and sub sub owned all the stock of sub and sub sub owned all the stock of sub during the taxable_year ending date a sub sold at a loss all of the stock of sub and sub and sub sold at a loss all of the stock of sub parent intended to file an election under sec_1 1502-20t i to determine the allowable loss on these sales under the provisions of sec_1_337_d_-2t the election was due on date b but for various reasons a valid election was not filed on date which is after date it was discovered that a valid election was not filed subsequently this request was submitted under '301 for an extension of time to file a valid election the period of limitations on assessment under '6501 a has not expired for the taxable_year for which the election should have been filed or for any subsequent taxable_year s sec_1 1502-20t i ii provides in general that in the case of a disposition of stock of a subsidiary before date a consolidated_group may determine the plr-163601-03 amount of the member’s allowable loss by making an election to apply the provisions of sec_1_337_d_-2t sec_1 1502-20t i of the regulations provides in general that for dispositions of stock on or before date an election to determine allowable loss by applying the provisions described in sec_1 1502-20t i i or ii is made by including the statement described in sec_1 1502-20t i with or as part of any timely filed including any extensions original return for a taxable_year that includes any date on or before date or with or as part of an amended_return filed before the date the original return for the taxable_year that includes date is due including any extensions under ' c 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 sec_301_9100-3 provides extensions of time for making regulatory elections that do not meet the requirements of '301 requests for relief under '301 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 in this case the time for filing the election is fixed by the regulations ie '1 1502-20t i therefore the commissioner has discretionary authority under '301 to grant an extension of time for parent to file the election provided parent establishes it acted reasonably and in good_faith the requirements of and 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 election the information establishes that parent reasonably relied on a qualified_tax professional who failed to make or advise parent to make the election and that the interests of the government will not be prejudiced if relief is granted see '301 b v based on the facts and information submitted including the representations that have been made we conclude that parent has established it acted reasonably and in plr-163601-03 good_faith in failing to timely file the election the requirements and are satisfied and granting relief will not prejudice the interests of the government accordingly we grant an extension of time under ' until days from the date on this letter for parent to file the election described in sec_1 20t i to apply the provisions of sec_1_337_d_-2t a copy of this letter should be attached to the election statement the above extension of time is conditioned on parent s consolidated_group s tax_liability if any not being lower in the aggregate for all years to which the election applies than it would have been if the election had been made timely taking into account the time_value_of_money no opinion is expressed as to parent s consolidated_group s 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 parent s consolidated_group s liability is lower sec_301_9100-3 no opinion is expressed as to the tax effects or 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 resulting from filing the election late that are not specifically set forth in the above ruling for purposes of granting relief under '301 we relied on certain statements and representations made by the taxpayer and its representatives however all of the essential facts must be verified in addition notwithstanding that an extension is granted under '301 to file the election penalties and interest that would otherwise be applicable if any continue to apply this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely _ken cohen __ ken cohen senior technician reviewer branch office of associate chief_counsel corporate cc


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division feb uniform issue list tep rat i legend decedent taxpayer a ira annuity b annuity c amount d amount e amount f company l company m financial advisor n date dear in a letter dated date as supplemented by correspondence dated date you requested through your authorized representative a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code’ the following facts and representations were submitted under penalty of perjury in support of your request for a waiver taxpayer a represents that she received a total_distribution of amount d from ira annuity b taxpayer a asserts that her failure to accomplish a rollover within the 60-day period prescribed by sec_408 of the code was due to a mistake by the offices of financial advisor n which used amount e of amount d to purchase a non-ira annuity annuity c taxpayer a is the surviving_spouse of decedent whose date of death was date decedent was over the age of taxpayer a was the beneficiary of decedent's ira annuity b maintained by company l taxpayer a was also the beneficiary of certain life_insurance_proceeds taxpayer a is over the age amount d was distributed from ira annuity b and _ taxpayer a wrote a check to company l in amount e on taxpayer a wrote a check to company l equal to amount on september placed in taxpayer a’s bank account life_insurance_proceeds equal to amount f were also placed in taxpayer a’s bank account with company m on september september f a letter from taxpayer a’s financial advisor n states that it had been taxpayer a’s intention to roll over amount e into an ira but that due to an error amount e was commingled with amount f and used to purchase annuity c a non-ira annuity maintained with company l taxpayer a first became aware of the mistake when she received a notice from the service dated april stating that the total_distribution of amount d from ira annuity b was a taxable_distribution the ira funds amount e used in the purchase of non-ira annuity c are still in annuity c and have not been used by taxpayer a for any other purpose based on the above facts and representations you request that the service waive the 60-day rollover requirement with respect to the rollover of amount e of the distribution of amount d from ira annuity b sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money or any other_property is paid into an ira for the benefit of such individual not later than the 60th day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary_of_the_treasury may waive the 60-day requirement under sec_408 and d of the code 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_408 of the code revproc_2003_16 2003_4_irb_359 provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 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 and documentation submitted by taxpayer a is consistent with her assertion that she intended to roll over amount e into an ira but that due to a mistake by the offices of financial advisor n amount e was commingled with other funds and used to purchase a non-ira annuity taxpayer a did not discover the mistake until she received a notice from the service dated date which was after the 60-day period prescribed by sec_408 of the code therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the rollover of amount e from the distribution of amount d taxpayer a is granted a period of days from the issuance of this ruling letter to contribute amount e into a rollover ira provided all other requirements of sec_408 of the code except the day rollover requirement are met with respect to such contribution amount e will be considered a rollover_contribution within the meaning of sec_408 of the code please note that pursuant to sec_408 of the code this ruling does not authorize the rollover of code sec_401 minimum required distributions 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 that may be applicable hereto this ruling is directed solely to the taxpayer who requested 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 with this office a copy of this letter_ruling is being sent to your authorized representative if you have any questions regarding this ruling you may contact sincerely yours curkdor a wattins carlton a watkins manager employee_plans technical group enclosures notice of intention to disclose deleted copy of this letter cc


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi 4-plr-112509-00 date date re legend decedent spouse child trust date date date dear this is in response to the letter dated date and prior correspondence requesting an extension of time under sec_301_9100-1 of the procedure and administration regulations to make a reverse qualified_terminable_interest_property reverse_qtip_election under sec_2652 of the internal_revenue_code and to sever a_trust under sec_26_2654-1 of the generation-skipping_transfer_tax gstt regulations decedent executed a revocable_trust trust on date decedent died testate on date survived by spouse and child spouse is the executor of decedent’s estate and spouse and child are co-trustees of trust under the terms of decedent’s will the residue of decedent’s estate passed to trust article ix of trust provides that at decedent’s death the assets of trust are to be divided into two separate trusts the family_trust and the marital trust the family_trust is to be plr-112509-00 funded with an amount equal to the largest amount that can pass free of the federal estate_tax and the marital trust is to be funded with the remaining trust property article xi of trust provides that the net_income of the family_trust is to be paid in quarterly or more frequent installments to or for the benefit of spouse for spouse’s lifetime the principal of the family_trust is to be paid to spouse as is necessary for spouse’s health maintenance support and education to enable spouse to maintain spouse’s standard of living maintained during decedent’s lifetime no distributions of principal from the family_trust are to be made until all of the income and principal from the marital trust have been entirely consumed after the death of spouse or if spouse does not survive decedent the family_trust is to be segregated into three separate and equal trusts for the benefit of child and decedent’s two grandchildren article xii of trust provides that the net_income of the marital trust is to be paid in quarterly or more frequent installments to or for the benefit of spouse for spouse’s lifetime the principal of the marital trust is to be paid to spouse as is necessary for spouse’s health maintenance support and education to enable spouse to maintain spouse’s standard of living maintained during decedent’s lifetime after the death of spouse the remaining property of the marital trust is to be added to and administered as part of the family_trust article xiii of trust provides that the personal representative and trustee have absolute discretion to elect under sec_2652 to treat any qualified_terminable_interest_property as if decedent rather than spouse is the transferor for gstt purposes article xxi provides that the trustee may divide any trust including the marital trust into two separate trusts for gstt purposes the two trusts are to represent two fractional shares of the property being divided one trust is to be funded with property that is exempt from the gstt and the other trust is to be funded with property that is not exempt from the gstt spouse as executor of decedent’s estate retained an accountant for purposes of preparing decedent’s federal estate_tax_return and an attorney for assistance in administering the estate the estate_tax_return was timely filed on extension on date a qtip_election under sec_2056 was made on schedule m with respect to the full value of the marital trust schedule r was filed with the return but was not completed therefore the reverse_qtip_election under sec_2652 was not made and no allocation of decedent’s gstt exemption was made on the estate_tax_return the estate_tax_return did not evidence any intent to divide the marital trust into an exempt trust and a nonexempt trust for gstt purposes after the estate_tax_return was filed spouse retained another attorney who advised spouse of the need to make the reverse_qtip_election and to divide the marital trust into two separate trusts spouse requests an extension of time under sec_301_9100-1 of the procedure and administration regulations to make the reverse_qtip_election and to divide the marital trust into an exempt trust and a nonexempt trust for gstt purposes sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2056 provides that for purposes of the tax imposed by sec_2001 the value of plr-112509-00 the taxable_estate is to be determined by deducting from the value of the gross_estate an amount equal to the value of any interest in property that passes or has passed_from_the_decedent to the surviving_spouse sec_2056 provides the general_rule that no deduction shall be allowed for an interest passing to the surviving_spouse if on the lapse of time on the occurrence of an event or contingency or on the failure of an event or contingency to occur the interest will terminate or fail sec_2056 provides that in the case of qualified_terminable_interest_property such property shall be treated as passing to the surviving_spouse for purposes of sec_2056 and no part of the property shall be treated as passing to any person other than the surviving_spouse sec_2056 defines qualified_terminable_interest_property as property which passes from the decedent in which the surviving_spouse has a qualifying_income_interest_for_life and to which an election under sec_2056 applies under sec_2044 any property in which a decedent possessed a qualifying_income_interest_for_life and for which a deduction was allowed under sec_2056 is includible in the decedent's gross_estate sec_2601 imposes a tax on every generation-skipping_transfer gst made after date sec_2631 provides for a generation-skipping_transfer_exemption of dollar_figure adjusted under sec_2631 which may be allocated by the individual or the individual's estate to any property with respect to which such individual is the transferor under sec_2632 the allocation may be made at any time on or before the date prescribed for filing the individual's estate_tax_return including extensions sec_2652 provides that for gstt purposes the transferor_of_property is the decedent in whose gross_estate the property is included thus in the case of property subject_to a qtip_election that is subsequently includible in the surviving spouse's gross_estate under sec_2044 the surviving_spouse would become the transferor of the property for gstt purposes however sec_2652 provides that in the case of any trust with respect to which a deduction is allowed to the decedent under sec_2056 the estate of the decedent may elect to treat all of the property in the trust for purposes of the gstt as if the election to be treated as qualified_terminable_interest_property had not been made this election is referred to as the reverse_qtip_election the consequence of a reverse_qtip_election is that the decedent remains for gstt purposes the transferor of the qtip_trust for which the election is made as a result the decedent's gst_exemption may be allocated to the qtip_trust under sec_301_9100-1 of the procedure and administration regulations the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i if the taxpayer demonstrates to the satisfaction of the commissioner that the taxpayer has acted reasonably plr-112509-00 and in good_faith and granting relief will not prejudice the interests of the government sec_301_9100-2 and sec_301_9100-3 provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government sec_301_9100-3 in this case the standards of sec_301_9100-1 and sec_301_9100-3 have been satisfied consequently an extension of time for making the reverse_qtip_election under sec_2652 is granted until days from the date of this letter further an extension of time for dividing the marital trust into exempt and nonexempt trusts for gstt purposes is granted until days from the date of this letter except as specifically ruled herein we express no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer this ruling 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 sincerely yours ___________________________ paul f kugler associate chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes


internal_revenue_service number release date index number -------------------------- -------------------------------------------- ------------------------------------- -------------------------------- in re ------------------------------------------- -------------------------------- --------------------------- --------------------------------------------------- --------- department of the treasury washington dc person to contact ------------------------ id no ------------- telephone number --------------------- refer reply to cc ita b03 - plr date date ty ------- legend taxpayer ------------------------------ date ----------------- defendant -------------------- defendant --------------------- defendant ----------------------- country ------------ country --------------------------- country ---------------------- regulator --------------------------------------------------------------------------------------------------- ------------------------------------------------- company ------------------- company --------------------------- company -------------------------------- company ----------------------------- company ----------------- trust ----------------------------- year ------- year ------- year ------- year ------- year ------- us district_court ------------------------------------ us bankruptcy court ----------------------------------------- - date --------------------------- plr a ---------------------- b ---------------------- c --------------- d ------------- e --------------- f ------------------ appellate court ------------------------------------------------ date ------------------- date ------------------ dear --------------------- this is in reply to your letter dated date and subsequent submissions requesting a ruling under sec_166 of the internal_revenue_code taxpayer is a corporation that has a calendar_year accounting_period and utilizes the accrual_method of accounting for maintaining its accounting books_and_records and for filing its federal_income_tax return prior to date company a country corporation owned of company a country corporation and company owned of the shares of taxpayer as well as of the shares of company a country corporation which in turn owned of the shares of taxpayer on date defendant sec_1 and who were minority shareholders but controlling board members of company restructured the ownership of taxpayer so that various shell offshore business entities created to accomplish the restructuring and under the control of defendant sec_1 and became owners of taxpayer’s shares the restructuring was accomplished through companie sec_4 and and trust all foreign_corporations and a_trust created solely to hold ownership of taxpayer’s shares subsequently company was left with no ownership_interest in company or taxpayer in early year country was in the midst of a banking crisis and various banks sought financial assistance from regulator one of company 1’s subsidiaries received financial assistance from regulator regulator ultimately placed both company and its subsidiary into receivership and also removed the defendants from management of company and replaced them with an individual appointed by regulator director during a subsequent investigation company 1’s director discovered the documents detailing the date transactions also upon learning of the date transactions and in order to prevent the defendants from selling taxpayer’s shares regulator and company 1’s director began an investigation into possible legal action against the defendants in june year in order to prevent the defendants from selling taxpayer’s shares a lawsuit was filed in us district_court by regulator and company 1’s director against plr defendant sec_1 and as well as the various business entities under their control companie sec_3 and trust and taxpayer the suit sought a constructive trust over taxpayer’s shares or the proceeds from the sale of the shares the suit alleged that defendants had perpetrated a fraud arising out of insider loans self-dealing the misuse of financial aid provided by regulator breach of fiduciary duties conversion and fraudulent transfer although the district_court proceeding was still ongoing on date the defendants caused taxpayer to declare and pay out a dividend and on date to declare and pay out another dividend on date the us district_court entered summary_judgment in favor of the regulator and company 1’s director as to the claims for conversion and wrongful transfer of shares the district court’s order states that all of the date transfers are declared void and shall be reversed to recreate the ownership interests prior to the transfers all dividends disbursed since date are to be returned and added to taxpayer’s stock to the extent that dividends cannot be repaid the party to whom the dividend was disbursed shall be declared a debtor of taxpayer the dividends had been ultimately disbursed to defendant sec_1 and and were never repaid to taxpayer the district court’s final judgment states that defendant sec_1 and are ordered to repay taxpayer all dividends disbursed by taxpayer since date together with interest from the date_of_issuance of each dividend plus post-judgment interest until paid in addition the district_court stated that to the extent that any such dividends and interest are not repaid judgment is entered jointly and severally in favor of the taxpayer and against the defendants defendants appealed the decision taxpayer immediately began collection efforts against the defendants various assets were located such as automobiles a boat real_property safe deposit boxes bank accounts and other_securities taxpayer successfully seized several of these assets and sold them during march year defendant sec_2 and had depositions taken in country in which they stated that they did not have any assets other than those already seized during june year taxpayer continued its collection efforts it attempted to garnish money owed to defendant and also investigated the fraudulent transfer of additional assets from defendant to various third parties in july year defendants’ attorneys filed motions seeking to withdraw as counsel because the defendants could no longer pay their fees in dispositions taken in year defendant stated that companie sec_3 and and trust had no assets in july year defendant filed for chapter bankruptcy in us bankruptcy court collection efforts against defendant were stayed pursuant to federal_law collection efforts against the remaining two defendants were reduced significantly due to the inability to locate assets titled in their names plr in september year taxpayer filed proof of claims with us bankruptcy court in amount a an amount which included dividends pre and post-judgment interest attorneys fees and costs less the amounts already recovered in taxpayer’s collection efforts by december year taxpayer was working with the trustee of the bankruptcy_estate to develop evidence that would support an action in the court denying the dischargeability of the debt owed by defendant to taxpayer and or denying any bankruptcy discharge during november year various depositions allowed taxpayer and the bankruptcy trustee to locate additional assets concealed from the bankruptcy_estate which defendant had fraudulently transferred to various third parties after completing the depositions in january year taxpayer filed an adversary complaint against defendant requesting the bankruptcy court to declare that the debt to taxpayer was not dischargeable in bankruptcy and or that defendant should not obtain a discharge_in_bankruptcy at all the complaint was based on the grounds that defendant had misrepresented his financial condition to the court shortly thereafter defendant made a motion to postpone the hearing on the complaint until the appeal of the judgment of the us district_court ordering the return of the dividends and other assets was decided thus the bankruptcy court proceedings were stayed throughout this entire process the trustee had subpoenaed records from various financial institutions in an attempt to locate additional assets fraudulently transferred from the bankruptcy_estate in april year taxpayer again deposed defendant sec_2 and seeking additional assets for collection a possible united_states bank account for defendant was noted by july year the trustee obtained various records leading to the identification of evidence purporting to show that defendant had lied under oath to the bankruptcy court and the trustee determined it would utilize the evidence to support taxpayer’s objection to defendant 1’s discharge_in_bankruptcy in august year regulator filed several proofs of claims with the bankruptcy court in amount b taxpayer’s claims were amount c remaining creditors had claims of amount d regulator’s claim involved the following three claims claims for damages from defendant 1’s fraudulent and negligent management of company and affiliated institutions rendering them illiquid and insolvent claims resulting from defendant 1’s fraudulent and or negligent misrepresentations and failures to disclose to regulator at the time that financial aid was sought and claims for unpaid debts of approximately related companies in which defendant his family and associates had direct and or indirect ownership interests pursuant to country 1’s law defendant is personally liable to regulator for all the companies’ outstanding debts taxpayer’s counsel explained that based on the amount of administrative expenses and prorated distributions which might be expected on the various claims taxpayer could expect to receive only a nominal distribution from the bankruptcy_estate priority payments administrative expenses would go to regulator in august year the appellate court upheld the district court’s judgment which found the defendants liable and upheld the order which required the defendants to repay the plr dividends to taxpayer subsequently the bankruptcy court sought records pertaining to accounts or assets held by defendant or on which he had signing authority at any time prior to the date of the initial bankruptcy proceeding in november year the investigation regarding the bank account of defendant was still pending the bank at which the suspected bank account was located indicated that no account existed in defendant’s name taxpayer’s option was to consider engaging counsel of record from country to record the district_court judgment against defendant sec_2 and in country in february year the trustee uncovered evidence that as of the date of filing of bankruptcy defendant had a foreign bank account in amount e but as of the date of locating the account assets were no longer in the account also trustee located both corporate stock and real_property that were concealed from the bankruptcy_estate the trustee also obtained an order from the bankruptcy court authorizing the seizure of records from one of defendant 1’s entities the records provided the trustee with additional evidence of defendant 1’s violation of bankruptcy law requiring the proper turning over of property to the bankruptcy_estate in february year a bankruptcy court contempt hearing considered defendant 1’s concealment of material assets defendant offered to turn over to the bankruptcy_estate in lieu of the concealed foreign bank account a mortgage in the same amount and a deed for his residence in lieu of foreclosure the court agreed to this arrangement with a deadline of one month defendant also stated an intention to obtain funds to pay taxpayer’s judgment and all other liquidated claims in full by the end of march year defendant had failed to return the money from the foreign bank account and thus trustee recorded the deed in lieu of foreclosure against defendant 1’s residence after trustee was awarded the residence defendant paid the trustee amount e plus interest and fees in april year defendant 1’s deposition was taken and he claimed the fifth_amendment privilege_against self-incrimination with respect to questions about fraud and concealment of assets and the use of fictitious aliases in may year a hearing was held on trustee’s motion to compel turnover of additional assets to estate in may year the bankruptcy court entered an order granting a motion for summary_judgment requiring defendant to execute a quit claim deed to a condominium he owned in favor of the trustee and to account for and turn over all rental income received from the condominium for approximately the last two years in october year the trustee learned that defendant was in the process of selling the subject condominium and the court permitted the sale with the proceeds being held in escrow by defendant 1’s counsel in october year the bankruptcy court granted trustee’s motion to compel turnover of additional assets to the estate the assets included shares of several corporations artwork and an apartment in country defendant failed to comply with the order plr in november year taxpayer again sought to determine whether defendant sec_2 and had any additional assets to disclose since the last discovery action no assets were located taxpayer had not recorded the district court’s judgment in country as it determined that any further collection efforts against these two defendants would not produce recoveries and that further collection actions would be costly in november year the bankruptcy court granted a motion for contempt and a motion to enter defendant 1’s residence to remove any artwork or other_property that belonged to the estate nothing of value was found and at the motion hearing defendant’s attorney disclosed that he had not had any contact or communication with defendant in two weeks continuing efforts were made to locate defendant and the missing assets through dispositions and discovery it was determined that defendant and his wife had flown to country in november year and that a large amount of their furniture and household_items had also been shipped there by the end of year trustee had collected amount f for distribution to the bankruptcy estate’s creditors as discussed above amount b was the claim of regulator amount c was taxpayer’s claim and amount d represented claims of remaining creditors as stated payments to regulator had priority administrative expenses including actual and necessary expenses of preserving the estate as well as trustee’s fees taxes expenses including attorneys fees incurred by the creditors who recover property for the benefit of the estate are paid ahead of general unsecured claims which are paid pro_rata taxpayer’s attorney for the bankruptcy proceedings stated that all claims of which proof is filed are deemed allowed unless a party in interest including a creditor or trustee objects to the claim no objections were asserted to any of the claims by the end of year all of the wrongfully transferred shares of taxpayer were returned to the rightful party or were held in escrow for such parties’ benefit as ordered by the district_court taxpayer requests a ruling that these facts establish the worthlessness of the remaining debt obligation due to taxpayer giving rise to a bad_debt deduction under sec_166 in year in summary the ruling_request is based on the following the non-individual defendants companie sec_3 and and trust had no assets with which to satisfy the court judgment taxpayer determined that collection efforts against these entities would be futile plr with respect to defendant sec_2 and in march year depositions were taken in country and no assets were located beyond those already seized efforts to locate assets in their names continued in april year and november year depositions were again taken seeking information on assets and none were located taxpayer had not recorded the judgment in country because there was virtually no possibility of any recovery as to defendant in june year attempts were made to garnish money owed to defendant and information was sought on possible fraudulent transfer of assets in september year taxpayer filed proof_of_claim with the bankruptcy court in year taxpayer took action in bankruptcy court alleging defendant was concealing assets and misrepresenting his financial condition in year there was a bankruptcy court contempt hearing regarding the concealment of assets defendant agreed to turn over a mortgage and a deed to his residence he also stated his intention to pay taxpayer’s judgment in full later defendant failed to comply with a bankruptcy court order to turn over various assets subsequently it was determined that defendant and his wife had left the united_states for country by the end of year it was clear that the amount collected by the trustee for distribution to the bankruptcy_estate creditors would result in only a minimal recovery for taxpayer sec_166 provides that with regard to wholly worthless debts there shall be allowed as a deduction any debt which becomes worthless within the taxable_year sec_1_166-1 of the income_tax regulations provides that only a bona_fide debt qualifies for purposes of sec_166 a bona_fide debt is a debt which arises from a debtor-creditor relationship based upon a valid and enforceable obligation to pay a fixed or determinable sum of money sec_1_166-2 of the regulations provides that in determining whether a debt is worthless all pertinent evidence is to be considered including the value of the collateral if any securing the debt and the financial condition of the debtor sec_1_166-2 provides that where the surrounding circumstances indicate that a debt is worthless and uncollectible and that legal action to enforce payment would in all probability not result in the satisfaction of execution on a judgment a showing of these facts will be sufficient evidence of the worthlessness of the debt for purposes of the deduction under sec_166 sec_1_166-2 and provide that bankruptcy is generally an indication of the worthlessness of at least a part of an unsecured and unpreferred debt and in bankruptcy a debt may become worthless before settlement or sometimes only when a settlement in bankruptcy has been reached in either case the fact that bankruptcy proceedings are terminated in a later year confirming the worthlessness of a debt does not authorize the shifting of the deduction to such later year plr bad_debts may be deducted to the extent of their worthlessness which is a question of fact and worthlessness can occur before the debt is due 7_tc_1310 in this case the district_court judgment ordering the return by the defendants of the converted stock and the repayment of dividends and interest to taxpayer created a bona_fide debt for purposes of sec_166 see iowa southern utilities co v united_states ct_cl judgment against the officers determined a valid and enforceable obligation of the officers to pay a fixed or determinable sum of money to the taxpayer within the meaning of c furthermore we find that the succession of events up to and including those of year establish that as of year taxpayer’s debt had become worthless immediately after the district_court judgment taxpayer began collecting assets of the defendants to satisfy the judgment the submission states that a portion of the judgment was collected from defendants immediately after the district_court judgment subsequently and prior to year further collection action against defendant sec_2 and became futile the facts show that their counsel withdrew because they were no longer able to pay counsel fees depositions located no more assets and lastly taxpayer determined that recording the district court’s judgment in country would have been both costly and futile as the facts showed that any further collection efforts against defendant sec_2 and would not have been successful companie sec_3 and trust were all foreign entities with no assets collection efforts against these entities were deemed futile because the defendants were jointly and severally liable the debt was not worthless until the debt was deemed worthless as to defendant subsequent to defendant 1’s bankruptcy the prospect of recovery remained through year sec_3 and various assets were discovered which had not been turned over to the bankruptcy_estate the facts show that taxpayer continued to pursue recovery but in november year defendant left the united_states and the prospects for recovery no longer existed see briant v commissioner t c memo taxpayer entitled to bad_debt deduction where debtor in another country and that even if the debtor could have been located there was no reasonable expectation of recovery by the end of year some funds had been collected for distribution to the bankruptcy estate’s creditors but based on priority payments and proration requirements taxpayer’s potential recovery was a small portion of the debt owed as of year the prospect of any further bankruptcy recoveries ended due to defendant 1’s flight from the country this establishes the worthlessness of taxpayer’s debt in that year based on all the facts presented it is apparent that diligent efforts were made up to year to secure recovery and that further legal action was futile upon defendant 1’s flight from the country even though the bankruptcy case was not settled as of year plr we find that the debt was worthless as of year see revrul_71_577 1971_2_cb_129 in conclusion we rule that taxpayer is entitled to a worthless_debt deduction in year except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer sincerely ___________________________ christopher f kane branch chief branch office of associate chief_counsel income_tax accounting enclosure cc -----------------------------------------------------


department of the treasury internal_revenue_service washington d c jan tax_exempt_and_government_entities_division uil no t p-rati legend dear this is in response to a letter dated date as supplemented by correspondence dated date and date in which you request relief under sec_301 of the procedure and administration regulations the regulations the following facts and representations were submitted in connection with your request taxpayer a maintained ira u an individual_retirement_arrangement described in sec_408 of the internal_revenue_code the code with company m taxpayer a converted his traditional_ira u into roth_ira v effective in which is also maintained by company m the amount converted from traditional_ira u to roth_ira v was sum n taxpayer a and taxpayer b taxpayer a’s spouse filed a joint federal_income_tax return for calendar_year with respect to calendar_year taxpayer a’s and taxpayer b’s modified_adjusted_gross_income exceeded the limit found in sec_408a taxpayers a and b used a professional tax advisor in preparing their calendar_year federal_income_tax return and were not informed that taxpayer a was not eligible for the roth_ira_conversion since their modified_adjusted_gross_income exceeded the dollar_figure limit april of it was pointed out by a new tax advisor to taxpayer a and taxpayer b that in gk taxpayer a was not eligible for the conversion recharacterize the conversion since it was past the due_date plus extensions of taxpayer a’s and taxpayer b’s joint federal_income_tax return this request for relief under sec_301_9100-3 of the regulations was submitted prior to the service’s discovering taxpayer a’s ineligibility to convert ira u into roth_ira v and subsequent failure to timely elect to recharacterize roth_ira v back to a traditional_ira at this time it was too late to based on your submission and the above facts and representations you request a ruling that pursuant to sec_301_9100-3 of the regulations taxpayer a be granted an extension to recharacterize roth_ira v back to a traditional_ira with respect to your ruling_request code sec_408a and sec_1_408a-5 of the federal_income_tax regulations the i t regulations provide that except as otherwise provided by the secretary a taxpayer may elect to recharacterize an ira contribution made to one type of ira as having originally been made to another type of ira by making a trustee-to- trustee transfer of the ira contribution plus earnings to the other type of ira ina recharacterization the ira contribution is treated as having been made to the transferee ira and not the transferor ira under sec_408a and sec_1_408a-5 this recharacterization election generally must occur on or before the date prescribed by law including extensions for filing the taxpayer’s federal_income_tax returns for the year of contributions sec_1_408a-5 q a-6 of the i t regulations describes how a taxpayer makes the election to recharacterize the ira contribution to recharacterize an amount that has been converted from a traditional_ira to a roth_ira the taxpayer must notify the roth_ira trustee of the taxpayer’s intent to recharacterize the amount the taxpayer must provide the trustee and the transferee trustee if different from the transferor trustee with specified information that is sufficient to effect the recharacterization and the trustee must make the transfer code sec_408a provides that an individual with an adjusted_gross_income as modified within the meaning of subparagraph c c in excess of dollar_figure for a taxable_year is not permitted to make a qualified_rollover_contribution to a roth_ira from an individual_retirement_plan other than a roth_ira during that taxable_year sec_1_408a-4 q a-2 of the i t regulations provides that an individual with modified_adjusted_gross_income in excess of dollar_figure big_number for a taxable_year is not permitted to convert an amount to a roth_ira during that taxable_year sec_1_408a-4 q a-2 further provides that an individual and his spouse must file a joint federal tax_return to convert a traditional_ira to a roth_ira and that the modified_adjusted_gross_income agi subject_to the dollar_figure limit for a taxable_year is the modified agi derived from the joint_return using the couple's combined income sec_301_9100-1 sec_301_9100-2 and sec_301_9100-3 of the regulations provide guidance concerning requests for relief submitted to the service on or after date sec_2h c provides that the commissioner of internal revenue in his discretion may grant a reasonable extension of the time fixed by a regulation a revenue_ruling a revenue_procedure a notice or an announcement published in the internal_revenue_bulletin for the making of an election or application_for relief in respect of tax under among others subtitle a of the code sec_301_9100-2 of the regulations lists certain elections for which automatic extensions of time to file are granted sec_301_9100-3 generally provides guidance with respect to the granting of relief with respect to those elections not referenced in sec_301_9100-2 the relief requested in this case is not referenced in sec_301_9100-2 sec_301_9100-3 of the regulations provides that applications for relief that fall within sec_301_9100-3 will be granted when the taxpayer provides sufficient evidence including affidavits described in sec_301_9100-3 to establish that the taxpayer acted reasonably and in good_faith and granting relief would not prejudice the interests of the government sec_301_9100-3 of the regulations provides that a taxpayer will be deemed to have acted reasonably and in good_faith i if its request for sec_301_9100-1 relief is filed before the failure to make a timely election is discovered by the internal_revenue_service the service ii if the taxpayer inadvertently failed to make the election because of intervening events beyond the taxpayer’s control iii if the taxpayer failed to make the election because after exercising reasonable diligence the taxpayer was unaware of the necessity for the election iv the taxpayer reasonably relied upon the written advice of the service or v the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election sec_301_9100-3 of the regulations provides that ordinarily the interests of the government will be treated as prejudiced and that ordinarily the service will not grant relief when tax years that would have been affected by the election had it been timely made are closed by the statute_of_limitations before the taxpayer’s receipt of a ruling granting relief under this section in this case taxpayer a was not eligible to convert traditional_ira u into roth_ira v since taxpayer a’s and taxpayer b’s combined modified_adjusted_gross_income for exceeded dollar_figure taxpayers a and b filed their joint federal_income_tax return taxpayer a was unaware that he was ineligible for the roth_ira_conversion until the year therefore it is necessary to determine whether the taxpayers are eligible for relief under the provisions of sec_301_9100-3 of the regulations although taxpayer a was ineligible for the roth_ira_conversion taxpayer a was not so informed until advised by his current tax advisor in the year upon realizing the mistake taxpayers a and b requested relief from the service before the service discovered taxpayer a’s ineligibility to convert ira u into roth_ira v and failure to timely elect to recharacterize roth_ira v back to a traditional_ira the taxable_year is not closed under the statute_of_limitations thus taxpayer a and taxpayer b clauses i and v of sec_301_9100-3 of the regulations accordingly we rule that pursuant to sec_301_9100-3 of the regulations taxpayer a is granted a period not to exceed six months from the date of this ruling letter to recharacterize ira v back to a traditional_ira satisfy the requirements of this letter assumes that the above iras qualify under code sec_408 at all relevant times this letter is directed only to the taxpayers who requested it code sec_61 k provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this ruling letter is being should you have any concems regarding this ruling sent to your authorized representative please contact hd ws oan swiecaf manager john empfoyee plans technical group tax_exempt_and_government_entities_division cc enclosures deleted copy of ruling notice 2w


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division uniform issue list apr legend institution a institution b individuald amount m date m daten - date p date r ira x ira y account z dear this is in response to your request dated date in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code correspondence dated date supplemented the request page the following facts and representations have been submitted under penalty of perjury in support of the ruling requested -_--years old and maintained ira x with institution a you assert that your failure you are to accomplish a rollover within the 60-day period prescribed by sec_408 of the code was due to errors committed by your financial advisor which resulted in amount m being place in a non-ira account where it still remains on date p you requested a distribution of amount m from ira x with the intent of rolling amount m into ira y a rollover ira that you had previously established with institution b you received amount m approximately 10-days later and on date n you wrote a check for amount m which you intended to deposit into ira y individual d your financial advisor sent your check to institution b however individual d in an affidavit dated date r and other documentation submitted by him indicated that amount m was erroneously deposited in account z anon-ira account and such error occurred through no fault of your own you were unable to determine the error until after the 60-day rollover period had expired due in part to the fact that you are legally blind based on the facts and representations you request a ruling that the internal_revenue_service waive the 60-day rollover requirement with respect to amount d contained in sec_408 of the code in this instance sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any page e0u72z7u2e time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial _ rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 - sec_408 of the code provides that the secretary may waive the 60-day requirement under sec_408 and sec_408 of the code 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 waiver under sec_408 of the code only distributions that occurred after date are re eligible for the 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_408 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 you presented and the documentation submitted by you demonstrate that your financial advisor erred by requesting that institution a deposit amount m in account z anon-ira therefore pursuant to sec_408 d of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount m from ira x you are granted a period of days from the issuance of this ruling letter to contribute amount m less amounts described below into a rollover ira provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such contribution amount m will be considered a rollover_contribution within the meaning of sec_408 of the code this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 of the code the required_minimum_distribution 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 page 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 id at please address all correspondence to se t ep ra t sincerely yours ances v sloan employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose