internal_revenue_service number release date index number ---------------------------------------- ---------------------------------------------- ------------------ ------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------- id no ----------------- telephone number ------------------- refer reply to cc psi b03 plr-131805-10 date date legend legend company -------------------------------------------------- ----------------------------------------- shareholder --------------------------------------------------- ------------------ state date -------------- ------------------ dear --------------- this letter responds to a letter dated date written on behalf of company requesting a ruling under sec_1362 of the internal_revenue_code code facts company was incorporated in state on date company's sole shareholder intended for company to be an s_corporation effective date however company's form_2553 election by a small_business_corporation was not timely filed company requests a ruling that it will be recognized 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 that an election under sec_1362 may be made by a plr-131805-10 small_business_corporation for any taxable_year at any time during the preceding_taxable_year or at any time during the taxable_year and on or before the 15th day of the third month of the taxable_year sec_1362 provides that if a small_business_corporation makes an election under sec_1362 for any taxable_year and the election is made after the 15th day of the third month of the taxable_year and on or before the 15th day of the third month of the following taxable_year then the election is treated as made for the following taxable_year sec_1362 provides that if an election under sec_1362 is made for any taxable_year determined without regard to sec_1362 after the date prescribed by sec_1362 for making the election for the taxable_year or no election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for the taxable_year and sec_1362 shall not apply conclusion based solely on the facts submitted and the representations made we conclude that company has established reasonable_cause for failing to make an s_corporation_election in a timely manner thus we conclude that company is eligible for relief under sec_1362 accordingly if company makes an election to be an s_corporation effective date by filing a completed form_2553 with the appropriate service_center within days from the date of this letter then such election will be treated as timely made a copy of this letter should be attached to the form_2553 filed with the service_center except as expressly provided herein we express or imply no opinion concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we express or imply no opinion concerning whether company is otherwise eligible to be an s_corporation for federal tax purposes in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to company's authorized representatives 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 the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed plr-131805-10 by an appropriate party while this office has not verified any of the material submitted in support of the ruling_request it is subject_to verification on examination sincerely s mary beth carchia senior technician reviewer branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


department of the treasury internal_revenue_service washington d c date mar employer_identification_number eo area manager office contact person id number telephone number t p n o n o w dear sir this letter is in response to your letter dated date and subsequent correspondence requesting rulings under sec_501 c a and of the internal_revenue_code t is a nonprofit corporation which received exemption under sec_501 and is classified as a public charity under sec_509 of the code t was also recognized as a community_foundation within the meaning of sec_1_170a-9 of the income_tax regulations one of the purposes of t was to solicit and administer gifts from christians in the r area to donor advised funds within the meaning of sec_1_170a-9 and of the regulations these funds benefit civic and christian charities in the rarea the donor advised funds are operated in a manner similar to most community foundations t solicits funds from the public on a regular basis the fund raising effort is primarity by personal contact and word of mouth x is a nonprofit corporation x is exempt from tax under sec_501 and is classified as a private_foundation within the meaning of sec_509 of the code x has made grants primarily to christian organizations scholarship programs have been maintained by both x and t for students at christian theological seminaries t and x have had a relationship with each other since the formation of t xisa substantial_contributor to t they share the same offices they share operating_expenses under a written document each entity has a separate board_of directors the two board sec_30 meet together on a monthly basis and have a joint annual retreat the executive director of t who is also the executive director of x meets with the two boards as was disclosed in t’s application_for exemption the ultimate use of a single organization to serve the purposes of t and x was contemplated before the formation of t accordingly the directors have decided that the purposes of the two organizations can be satisfied by a single organization the merger will achieve a substantial saving in expenses under articles of merger to be adopted by the two parties the assets of x will be merged with and into t and t will be the surviving entity the merger will be accomplished pursuant to state law x will terminate upon the completion of the merger the assets transferred from x to t will not be subject_to any restriction or the advice of any party other than the board_of directors of t it is represented that with respect to x’s status as a private_foundation there have been no willful repeated acts or failure to act or a willful and flagrant act or failure to act giving rise to liability for tax under chapter during the years the following rulings have been requested the merger of t and x will not adversely affect the status of t as an exempt charitable_organization under sec_501 x will not be subject_to termination taxes under sec_507 when its existence terminates by merger into t the transfer of assets from x to t in the merger will not result in tax to x under sec_4940 sec_4941 sec_4942 sec_4944 or sec_4945 of the code law and analysis sec_501 of the code provides for the exemption from federal_income_tax of an organization formed and operated for exclusively charitable educational or other exempt purposes provided that no part of the organization’s net_earnings inures to the benefit of any private_shareholder_or_individual sec_509 of the code defines a private_foundation as an organization other than an organization described in sec_170 including sec_170 sec_507 of the code provides that except as provided in subsection b the status of any organization as a private_foundation will be terminated only if in essence such organization notifies the secretary or the secretary notifies the such organization of termination by reason of willful repeated acts or a willful and flagrant act giving rise to liability under chapter and in either of such case or such organization either pays the tax imposed under sec_507 or such tax is abated under sec_507 if there is a sec_507 termination of private_foundation_status sec_507 imposes a termination_tax equal to the lower_of the aggregate tax_benefit received by the terminating foundation or the net asset value of the terminating foundation sec_507 permits the termination of private_foundation_status with respect to a private_foundation which distributes all of its net assets to a public charity which has been in existence for at least calendar months if such private_foundation has not previously engaged in willful repeated acts or a willful and flagrant act giving rise to a tax_liability under chapter sec_4940 of the code imposes a tax on the net_investment_income of a private_foundation sec_4941 a of the code imposes a tax on acts of self-dealing between a disqualified_person and a private_foundation sec_4941 d of the code imposes an excise_tax on private_foundations for self- dealing which includes but is not limited to the transfer of assets between a foundation anda disqualified_person sec_4942 of the code imposes a tax on the undistributed income’ of a private_foundation for any taxable_year sec_4944 of the code imposes a tax on a private_foundation if it invests any amount in such a manner as to jeopardize the carrying out of any of its exempt purposes sec_4945 of the code imposes tax on taxable_expenditures including grants to organizations not qualified under sec_509 of the code unless expenditure_responsibility is exercised sec_53_4946-1 of the regulations provides that for purposes of sec_4941 only the term disqualified person’ shall not include any organization which is described in sec_501 sec_1_507-2 of the regulations provides generally that an organization terminating its private_foundation_status pursuant to sec_507 will remain subject_to the provisions of chapter until the distribution of all of its net assets to distributee organizations described in sec_507 has been completed since t will be the surviving corporation and x will be the terminating private_foundation the merger of x with and into t pursuant to state law will not adversely affect the status of t as an organization exempt under sec_501 of the code it has been represented that during x’s existence there have been no willful repeated acts or failures to act or a willful and flagrant act or failure to act giving rise to liability for tax under chapter of the code based on sec_507 and c the merger of x with and into t will result in the termination of x without any_tax liability associated with such termination finally based on the facts presented the termination of x will not expose x to any_tax liability under chapter except to the extent provided in sec_1_507-2 of the regulations where x remains subject_to the imposition of taxes under sec_4942 until the distribution of all of its net assets to t accordingly we rule as follows the merger of t and x will not adversely affect the status of t as an exempt charitable_organization under sec_501 of the code t will continue to be an exempt charitable_organization under sec_501 x will not be subject_to termination taxes under sec_507 when its existence terminates by merger into t the transfer of assets from x to t will not result in tax to x under sec_4940 sec_4941 sec_4942 sec_4944 or sec_4945 after the completion of the transfer of all of x’s assets we express no opinion as to the effect of the existence or operation of donor advised funds on t’s continued tax exemption under sec_501 of the code we are sending a copy of this ruling letter to your authorized representative listed on the power_of_attorney on file with this office this ruling is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as precedent sincerely robert c harper jr manager exempt_organizations technical group


cca_2015032710120101 id uilc number release date third party communication date of communication month dd yyyy from sent friday date am to cc bcc subject fw sec_882 and tefra posts-143012-14 the sec_882 limitations on deductions is not a partnership items because it is not something the partnership must determine under subtitle a sec_6231 and sec_703 instead the limitation is a partner-level affected_item similar to partner limitations on partnership deductions under the at risk sec_465 passive loss sec_469 and outside_basis limitations sec_704 rules see sec_301_6231_a_5_-1 through -1 d consequently the deductions should be disallowed through an affected_item notice_of_deficiency issued under section a a i under 94_tc_853 we do not have to open and close a tefra partnership proceeding before issuing such affected_item notice_of_deficiency but for the purposes of the affected_item notice we will be bound by the amounts reflected on the partnership return before application of the partner-level limitations on those amounts id pincite


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 b05 plr-157783-06 date date ---------------------------------------- legend taxpayer --------------------------------------------------------------- state a sub dear ------------- ---------- ---------------------------------- this is in response to a request for a ruling dated date submitted on behalf of taxpayer by your authorized representative the ruling concerns the application of cooperative tax law to a transaction described below taxpayer was incorporated in ------ pursuant to the state a cooperative statute taxpayer is a rural telephone company operated on a cooperative non-profit basis for the mutual benefit of its members it serves --------- access lines in rural western state a effective ------------------- taxpayer was granted exemption under sec_501 of the internal_revenue_code while taxpayer’s primary business_purpose is to provide each of its approximately -- ------- members local exchange telephone carrier services it also provides internet entertainment and communications_services sub is a wholly-owned subsidiary of the taxpayer with investments and minimal operations plr-157783-06 under taxpayer’s restated articles of incorporation taxpayer is organized as a cooperative to provide telecommunications and information services and related communications_services further taxpayer’s articles provide that it shall operate on a cooperative basis for the mutual benefit of its members with the net savings derived from transactions with members belonging to such members in proportion to their respective patronage and returned either in the form of cash or credits on date the rural telephone bank rtb or bank was established by amendment to the rural electrification act re act as a source of supplemental financing for telecommunications companies and rural telephone cooperatives eligible to borrow under the re act’s telephone loan program a board_of directors was appointed to manage the operations of the bank and the employees of rural electrification administration now usda rural development utilities programs performed the bank’s day to day operations by establishing a capital structure which provided for a mixed federal and private ownership the bank was designed to assure rural telephone systems access to private sources of capital by establishing a supplemental credit mechanism to which borrower systems could turn for all or part of their future capital requirements the capital structure of the bank consists of three classes of stock class a class b and class c class a stock was issued by the bank in exchange for approximately dollar_figure million of capital provided by various taxpayers this provided the bank with its initial seed money to begin its lending operations the bank paid an annual dividend of two percent on class a stock class b stock was required to be purchased by recipients of rtb loans in an amount equal to five percent of the face value of the loan class b stock did not earn a cash dividend but bank borrowers acquired additional shares of class b stock through annual patronage refunds class c stock was acquired through the conversion of class b stock after repayment of the loans associated with the class b stock and earned a cash dividend at a rate determined by the board_of directors since the class b stock paid no cash dividends and could not be otherwise redeemed conversion was the only route available to borrowers that extinguished their loans class c stock was also available for purchase by bank borrowers and by organizations controlled by bank borrowers however such voluntary transactions were extremely rare because no borrower would want to invest in instruments that have no schedule of principal repayment in addition to providing for a mixed-ownership through the a b and c classes of stock the re act amendment also provided that the ownership control and operation of the plr-157783-06 bank be transferred to the class b and class c stockholders after a percent of the class a stock was retired known as privatization of the bank the retirement of class a stock began in fiscal_year in date the fiscal_year federal budget proposed the dissolution of the rtb the rtb’s board_of directors unanimously approved resolutions to liquidate and dissolve the bank on date after more than nine months of congressional negotiations the bill was signed into law on date authorizing the initiation of the liquidation and dissolution process stock_redemption agreements were sent to shareholders beginning on date for final consideration and ratification by borrowers’ boards of directors the dissolution process is expected to be largely completed by the end of fiscal_year taxpayer first borrowed money from the rtb in ------- and continued to have outstanding loans through ------- taxpayer purchased ----------- shares of rtb class b stock during the period it held loans with the rtb the rtb class b stock_dividends received by taxpayer over the years totaled dollar_figure------------- taxpayer has paid off its rtb debt and converted all of its class b stock to class c stock taxpayer received the proposed liquidation and stock_redemption agreements from the rtb on ---------------------- taxpayer’s board_of directors ratified the agreement on -------- ------------------------ the total amount of class c stock redeemed was -------- shares valued at dollar_figure------------- taxpayer received the rtb liquidation funds on -------------------- taxpayer does not expect any additional payments relating to the liquidation based on the foregoing taxpayer requests a ruling that the income realized by taxpayer by the liquidation payment for class c stock of the rtb constitutes patronage-sourced income which may be excluded from its gross_income when allocated to taxpayer’s patrons by a true patronage_dividend in the event a rural telephone cooperative such as taxpayer loses its tax-exempt status sec_501 of the code no longer applies until such time as the cooperative again satisfies the requirements for exemption during any taxable_period the rules applicable to the telephone cooperative depend on the reasons why it failed its exemption tests if exemption was lost because the company failed to operate on a cooperative basis then it will be taxed under the same rules applicable to for-profit corporations alternatively if the cooperative becomes taxable because it failed the so-called percent income test imposed by sec_501 then the organization will be taxed as a cooperative plr-157783-06 while the requirements of subchapter_c of the code regarding corporate_distributions and adjustments and other provisions are generally applicable to nonexempt cooperatives these entities are distinguished from other types of corporations by a specific body of tax law the scheme of taxation for nonexempt cooperatives was developed from the administrative pronouncements of the service and decision of the judiciary over a fifty-year period these rules for tax treatment of most nonexempt cooperatives and their patrons were finally codified with the enactment subchapter_t of the code as part of the revenue act of pub_l_no h_r with passage of subchapter_t the rules for deduction of patronage_dividends and the treatment of patronage_dividends in the hands of a cooperative’s patrons were defined however sec_1381 of the code states that subchapter_t is not applicable to organization engaged in furnishing electric energy or providing telephone service to persons in rural areas according to the senate_finance_committee report accompanying the act the intent of congress was that nonexempt rural electric and telephone cooperatives would continue to be treated as under present law in its report accompanying the legislation the senate_finance_committee described present law as follows under present law patronage_dividends paid_by taxable cooperatives result in a reduction in the cooperative’s taxable_income only if they are paid during the taxable_year in which the patronage occurred or within the period in the next year elapsing before the prior year’s income_tax return is required to be filed including any extensions of time granted s rep no 87th cong 1st sess under this earlier body of tax law applicable to nonexempt telephone cooperatives a cooperative may reduce its taxable_income by any qualifying patronage_dividends paid to their members patrons further under pre-1962 cooperative rules the term paid means paid in cash or paid_by notice of allocation see also revrul_83_135 1983_2_cb_149 a taxable cooperative not subject_to the provisions of subchapter_t of the code may exclude from gross_income the patronage_dividends paid or allocated to its patrons in accordance with its by-laws while subchapter_t does not control the taxation of nonexempt telephone cooperatives its foundations rest upon pre-1962 cooperative tax law as a result there are certain basic parallels between the tax treatment of nonexempt utility cooperatives and treatment of other cooperative organizations under subchapter_t therefore to extent that subchapter_t reflects cooperative taxation as it existed prior to it is in instructive resolving certain issues facing rural telephone cooperatives this is because congress stated that in enacting subchapter_t it was merely codifying the long common_law history of cooperative taxation with the exception of ensuring at least one annual plr-157783-06 level of tax at the cooperative or patron level see s rep no 87th cong 1st sess and arguably the case law post-enactment is merely a continuation and refinement of the pre-enactment common_law this is particularly true with respect to defining certain terms such as operating_on_a_cooperative_basis and patronage income perhaps the most succinct definition of the term cooperative for federal_income_tax purposes was provided by the u s tax_court in 44_tc_305 acq 1966_1_cb_3 the tax_court said under the cooperative association form or organization on the other hand the worker-members of the association supply their own capital at their own risk select their own management and supply their own direction for the enterprise through worker meetings conducted on a democratic basis and then themselves receive the fruits of their cooperative endeavors through allocations of the same among themselves as co-workers in proportion to the amounts of their active_participation in the cooperative undertaking the tax_court went on to describe three guiding principles at the core of economic cooperative theory as subordination of capital both as regards control_over the cooperative undertaking and as regards the ownership of the pecuniary benefits arising therefrom democratic control by the worker-members themselves and the vesting in and allocation among the worker-members of all fruits and increases arising from their cooperative endeavor ie the excess of operating revenues over the costs incurred in generating those revenues in proportion to the worker- members’ active_participation in the cooperative endeavor t c pincite the mechanism by which telephone cooperative achieve operation at cost is the patronage_dividend or capital credit since the payment of patronage_dividends and operation at cost is so critical to achieving cooperative status as defined by puget sound it is important to analyze this issue rural telephone cooperatives perform a final accounting at year-end to determine the net margin derived from their members’ patronage during the course of the year then the excess over cost collected from members is returned to them by a capital credit allocation based on each member’s patronage those capital credits are typically paid_by allocations of capital credit certificates or notices of allocation rather than in cash the capital credits retained form the foundation for the organization’s equity_capital a true patronage_dividend that may be excluded from the income of a rural telephone cooperative must meet the three tests set forth in farmers cooperative co v plr-157783-06 it must be made subject_to a preexisting legal_obligation birmingham f_supp n d ia and 31_tc_674 acq aod 1959_2_cb_6 those tests are the margins allocated must be derived from the profits generated from patrons’ dealings with the cooperative the allocation must be made on the basis of patronage and although the code does not provide specific guidance as to what constitutes patronage-sourced income for a nonexempt telephone cooperative regulations and rulings address the issues for cooperatives governed by subchapter_t of the code while not directly applicable to taxable utility cooperatives per se arguably they reflect the correct analysis with respect patronage income of cooperatives subject_to pre-1962 law the senate committee report accompanying the cooperative provisions in the revenue act of indicated that the congress intended to tax ordinary ie non-farmer cooperatives for non-operating income not derived from patronage as for example in the case of interest or rental income even if distributed to patrons on a pro_rata basis s rep no 82d cong 1st sess in response to that guidance of congress the service promulgated regulations distinguishing nonpatronage income from that which is patronage derived sec_1388 of the code specifies that a patronage_dividend must be determined by reference to the net_earnings of the organization from business done with or for its patrons that section further provides that the term patronage_dividend does not include any amount_paid to a patron to the extent that such amount is out earnings other than from business done with or for patrons further it does not include earnings from business done with or for other customers to whom no amounts are paid or to whom smaller amounts are paid with respect to substantially identical transactions in revrul_69_576 1969_2_cb_166 a nonexempt farmers’ cooperative borrowed money from a bank for cooperatives itself a cooperative to finance the acquisition of agricultural supplies for resale to its members the bank for cooperatives allocated and paid interest from its net_earnings to the nonexempt farmers’ cooperative which it in turn allocated to its members states in determining whether the allocation was from patronage sources the ruling plr-157783-06 the classification of an item_of_income as from either patronage or nonpatronage sources is dependent on the relationship of the activity generating the income to the marketing purchasing or service activities of the cooperative if the income is produced by a transaction which actually facilitates the accomplishment of the cooperative's marketing purchasing or service activities the income is from patronage sources however if the transaction producing the income does not actually facilitate the accomplishment of these activities but merely enhances the overall profitability of the cooperative being merely incidental to the association's cooperative operation the income is from nonpatronage sources revrul_69_576 pincite sec_1_1382-3 of the income_tax regulations defines income from in st louis bank for cooperatives v united_states ct_cl f 2d the ruling concluded that in as much as the income received by the nonexempt_cooperative from the bank for cooperatives resulted from a transaction that financed the acquisition of agricultural supplies which were sold to its members thereby directly facilitating the accomplishment of the cooperative’s marketing purchasing or service activities the income was patronage sourced sources other than patronage nonpatronage income to mean incidental income derived from sources not directly related to the marketing purchasing or service activities of the cooperative association such as income derived from lease of premises from investment in securities or from the sale_or_exchange of capital assets cl_ct the court held that interest on demand deposits in farm credit banks or on loans to brokerage funds received by st louis bank for cooperatives was patronage sourced income the court stated that a particular item_of_income is patronage sourced when the transactions involved are directly related to the marketing purchasing or service activities of the cooperative association f 2d pincite cooperative was denied deductions for patronage_dividends for interest on a certificate of deposit bought from a nonpatron bank because the dividend income was not patronage sourced the court held that the relation of income activity to the cooperative’s business was too tenuous courts have ruled in several instances that income from corporations organized by cooperatives to conduct activities related to the cooperative business is patronage sourced in farmland industries v commissioner 78_tcm_846 acq aod citing 765_f2d_1102 675_f2d_988 8th cir 88_tc_238 illinois grain corp v in twin county grocers inc v united_states cl_ct a nonexempt plr-157783-06 commissioner 87_tc_435 the taxpayer a cooperative organized for the purpose of providing petroleum products to its patrons sought to have the proceeds from the disposition of its stock in three subsidiaries classified as patronage-sourced income in reaching its decision the court stated that its task was to determine whether each of the gains and losses at issue was realized in a transaction that was directly related to the cooperative enterprise or in one which generated incidental income that contributed to the overall profitability of the cooperative but did not actually facilitate the accomplishment of the cooperative s marketing purchasing or servicing activities on behalf of its patrons t c m pincite in land o’lakes inc supra the court held that dividends received by the nonexempt_cooperative from the st paul bank for cooperatives was patronage derived and could be allocated to land o’lakes patrons as deductible patronage_dividends the court noted that the taxpayer was required to acquire and hold the stock to obtain a loan the proceeds of which were used to finance cooperative activities on favorable terms finding that the subject transaction was not significantly distinguishable from the transaction in revrul_69_576 in the instant case taxpayer borrowed from the congressionally established rtb pursuant to the re act’s purposes as a result it was required to purchase the class b stock and pursuant to the bank’s regulations have that class b stock converted to class c stock when its loans were repaid these loans and stock acquisitions were directly related to taxpayer’s cooperative purpose in providing telephone service to rural customers its member patrons further in light of the fact that the federal government has caused the dissolution of the rtb the redemption of taxpayer’s class c stock in liquidation of the rtb also can be seen as directly related to taxpayer’s cooperative purposes accordingly based solely on the foregoing we rule that the income realized by taxpayer by the liquidation payment for the class c stock of the rtb constitutes patronage-sourced income which may be excluded from its gross_income when allocated to taxpayer’s patrons by a true patronage_dividend however to the extent if any that taxpayer conducted telecommunications or related business with nonmembers or on a noncooperative basis it is required to make an allocation of the income between patronage and nonpatronage sources based on the proportion of business conducted with members and nonmembers and between its cooperative and noncooperative activities plr-157783-06 this ruling is directed only to the taxpayer that requested it under sec_6110 k of the code it may not be used or cited as precedent in accordance with a power_of_attorney filed with the request a copy of the ruling is being sent to your authorized representative sincerely yours paul f handleman senior technician reviewer branch office of the associate chief_counsel passthroughs special industries


department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date cc ita b04 -------------------- conex-127319-10 o f f i c e o f t h e c h i e f c o u n s e l number release date uil the honorable john mccain united_states senator west congress street suite tucson az dear senator mccain this letter responds to your inquiry dated date submitted on behalf of your constituents ----------------------------------------------- they requested information about the first-time_homebuyer credit as you requested i responded directly to -------------- i am enclosing a copy of my response i hope this information is helpful if you have any further questions please call me or ---------------------------- at -------------------- sincerely michael j montemurro chief branch office of associate chief_counsel income_tax and accounting enclosure o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c cc ita b04 -------------------- conex-127319-10 uil ---------------------------------------------- --------------------------------------- -------------------------- dear -------------------------- this letter responds to your letter dated date to senator john mccain about the first-time_homebuyer credit senator mccain wrote to us on your behalf and asked us to reply directly to you you asked whether you can take a homebuyer credit for the home you purchased on date you indicated that ---------------never owned a home prior to the purchase but --------------owned and used another principal_residence for at least five consecutive years out of the eight years prior to the purchase sec_36 of the internal_revenue_code code provides two types of credits for homebuyers a married taxpayer qualifies for a homebuyer credit only if that taxpayer and the taxpayer’s spouse both meet the statutory requirements for the type of credit claimed first-time_homebuyer credit sec_36 creates a credit for certain taxpayers purchasing their first principal_residence the credit equals ten percent of the purchase_price of the residence up to a maximum credit of dollar_figure a taxpayer can take the first-time_homebuyer credit if the taxpayer and the taxpayer’s spouse if married has not owned an interest in another principal_residence for the three years ending on the purchase date of the residence see sec_36 b and c of the code you do not qualify for this credit because ---------------had a prior ownership_interest in another principal_residence during the three years prior to the purchase of the new home on date long-time residents homebuyer credit sec_36 also creates a credit for certain long-time homeowners purchasing a replacement residence the credit equals ten percent of the purchase_price of the residence up to a maximum credit of dollar_figure a taxpayer can take the long-time conex-127319-10 residents homebuyer credit if the taxpayer and the taxpayer’s spouse if married has owned and used the same home as a principal_residence for any five-consecutive-year period during the eight-year period ending on the purchase date of the new residence see sec_36 and c of the code as amended you do not qualify for the credit because ---------------did not own and use the same home as her principal_residence for the statutory five-consecutive-year period prior to purchasing the new home on date unfortunately you do not meet the requirements to qualify for the homebuyer credit under sec_36 of the code the law does not grant the internal_revenue_service administrative authority to expand the statutory scope of the credit i hope this information is helpful more on the first-time_homebuyer credit is available at http www irs gov newsroom article id html if you have any further questions please contact me or ----------------------------- identification_number ----------------- at -------------------- sincerely michael j montemurro chief branch office of associate chief_counsel income_tax and accounting cc the honorable john mccain


cca_2013120410413210 id uilc number release date from sent wednesday december am to cc bcc subject re statute extension for tefra case hi --------- as per our discussion the following comes from one of our tefra folks ------------- please direct any follow up questions to ---- this would likely be an invalid statute extension since the bankruptcy of the tmp terminated his status as tmp under sec_301_6231_a_7_-1 and sec_301_6231_c_-7 and thus terminated his authority to extend the statute under section b b section b provides an exception if the tmp has not notified us of his bankruptcy in accordance with the regulations but the fact that the bankruptcy is disclosed on the form 872-p itself may lead a court to conclude that we have been notified best -------


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-104096-16 date date x y state a state b d1 d2 d3 ------------------------------------------------------------------------------------- --------------------------------------- ------------------------------------------------------------------------------------- -------------------- ------------ ---------------- ---------------------- ------------------- ------------------------ dear ----------------- this responds to the letter dated date and other information submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations for x to treat y as a qualified_subchapter_s_subsidiary qsub under sec_1361 of the internal_revenue_code code facts the information submitted states that x was incorporated under the laws of state a on d1 and timely elected to be treated as an s_corporation effective on that same date y was incorporated under the laws of state b on d2 and timely elected to be treated as an s_corporation effective on that same day x acquired of the stock of y as of d3 and represents that it intended to elect to treat y as a qualified subchapter plr-104096-16 s subsidiary qsub effective d3 however due to inadvertence y failed to timely file form_8869 qualified_subchapter_s_subsidiary election x represents that both it and y have filed tax returns and reported tax items consistent with the tax treatment of y as a qsub for all relevant years since d3 law and analysis sec_1361 provides that a qsub shall not be treated as a separate corporation and all assets liabilities and items of income deduction and credit of a qsub shall be treated as assets liabilities and such items as the case may be of the s_corporation sec_1361 defines a qsub as a domestic_corporation which is not an ineligible_corporation if percent of the stock of the corporation is owned by the s_corporation and the s_corporation elects to treat the corporation as a qualified_subchapter_s_subsidiary sec_1_1361-3 of the income_tax regulations provides the time and manner for making a qsub election a taxpayer makes a qsub election with respect to a subsidiary by filing a form_8869 with the appropriate service_center sec_1 a provides that a qsub election cannot be effective more than two months and days prior to the date of filing sec_1_1361-3 provides that an extension of time to make a qsub election may be available under procedures applicable under sec_301_9100-1 and sec_301_9100-3 sec_301_9100-1 provides that 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 code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government plr-104096-16 conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly x is granted an extension of time of days from the date of this letter to elect to treat y as a qsub effective d3 the election should be made by filing form_8869 with the appropriate service_center and a copy of this letter should be attached to the election a copy is enclosed for that purpose except as specifically set forth above we express or imply no opinion concerning the federal tax consequences of the facts described above under any other provision of the code specifically we express or imply no opinion concerning whether x is in fact an s_corporation or whether y is eligible to be a qsub this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely associate chief_counsel passthroughs special industries by david r haglund david r haglund branch chief branch passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


department of the treasury washington dc third party communication date of communication month dd yyyy person to contact --------------- id no ------------------ telephone number fax number ---------------------- ---------------------- refer reply to cc ita plr-145698-12 date date internal_revenue_service number release date index number ------------------------------------------- ------------------------------- --------------------------------- ------------------------ ----------------------------------- legend tin ----------------- year ------- dear -------------------- this letter_ruling is in reference to taxpayer’s request that its form_1128 application to adopt change or retain a tax_year be considered timely filed under the authority in of the regulations on procedure and administration taxpayer filed a late form_1128 to change its accounting_period for federal_income_tax purposes from a taxable_year ending february ---- to a taxable_year ending april ---- effective april ---- year revproc_2006_45 2006_45_cb_851 provides procedures for certain corporations to obtain automatic approval to change their annual_accounting_period under sec_442 of the internal_revenue_code a corporation complying with all the applicable provisions of this revenue_procedure has obtained the consent of the commissioner of the internal_revenue_service to change its annual_accounting_period section of revproc_2006_45 provides that a form_1128 filed pursuant to the revenue_procedure will be considered timely filed for purposes of sec_1_442-1 of the income_tax regulations only if it is filed on or before the time including extensions for filing the return for the short_period required to effectuate the change the information furnished indicates that taxpayer did not file its form_1128 by the due_date of the return for the short_period required to effectuate the change however taxpayer requested an extension of time to file its form_1128 under sec_301_9100-3 shortly after the required time sec_301_9100-3 provides that requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 automatic extensions such as this case must be made under the rules of sec_301_9100-3 requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer establishes that the taxpayer plr-145698-12 acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government based on the facts and information submitted and the representations made we conclude that taxpayer has acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government accordingly taxpayer has satisfied the requirements of the regulations for the granting of relief and taxpayer’s late filed form_1128 requesting to change to april ---- effective april ---- year is considered timely filed because a change in accounting_period under revproc_2006_45 is under the jurisdiction of the director internal_revenue_service center where the taxpayer’s returns are filed we are returning your application so that you may forward it along with a copy of this letter to the director ---------- service_center within days of the date of this letter please answer yes to question of section a of part ll if you qualify under revproc_2006_45 any further communication regarding this matter should be directed to the service_center the user_fee submitted with the taxpayer’s form_1128 will be refunded in a later correspondence this ruling is based upon facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for a ruling however as part of an examination process the service may verify the factual information representations and other data submitted this ruling addresses only the granting of sec_301_9100-3 relief we express no opinion regarding the tax treatment of the instant transaction under the provisions of any other sections of the code or regulations that may be applicable or regarding the tax treatment of any conditions existing at the time of or effects resulting from the instant transaction specifically we express no opinion as to whether the taxpayer is permitted under the code and applicable regulations to change to the tax_year requested in the form_1128 or whether the change may be effectuate under revproc_2006_45 a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling the taxpayer’s application_for a change in accounting_period may be processed under revproc_2006_45 as timely filed plr-145698-12 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 enclosed is a copy of the letter_ruling showing the deletions proposed to be made when it is disclosed under sec_6110 sincerely donna welsh senior technician reviewer income_tax accounting office_of_chief_counsel enclosures


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date number info release date conex-108398-10 uil the honorable mark warner united_states senate washington dc attention ------------------------ dear senator warner i am responding to your letter dated date to commissioner shulman requesting that we publish formal guidance under sec_165 of the internal_revenue_code on the availability of a casualty_loss deduction for damage from imported drywall as you explain in your letter the consumer product safety commission cpsc has issued preliminary guidance on this matter that suggests a strong association between the problem drywall the hydrogen sulfide levels and corrosion in the homes with this drywall since then the cpsc has published interim guidance on the identification of homes with this problem drywall this information is available on their website at http www cpsc gov info drywall interimidguidance012810 pdf we recognize that this issue affects a significant number of taxpayers including many in virginia we continue to evaluate the interim guidance and other information we have received to determine if this damage qualifies as a casualty_loss under sec_165 we are doing so as quickly as possible and in consultation with the treasury department’s office of tax policy to determine if published guidance is appropriate i appreciate your continued attention to this issue if you have any questions please contact------------------- or me at -------------------- sincerely christopher f kane branch chief branch income_tax and accounting


internal_revenue_service number release date index numbers --------------------- ------------------------------------- ------------------------------------------ ---------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------------- --------------------------------------------------- telephone number ---------------------- refer reply to cc psi b03 plr-151511-12 date date x ------------------------------------------------------------ --------------------------------- d1 ---------------------- event -------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- -- ------------------------------------------------------------------------------------------------------------ -------------------------------------------------------------------------------------------------- dear -------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code code x made an election to be treated as an s_corporation x’s election was inadvertently terminated effective d1 due to event x represents that the termination was not motivated by tax_avoidance or retroactive tax planning x and its shareholders have agreed to make any adjustments that the commissioner may require consistent with the treatment of x as an s_corporation sec_1362 provides that if an election under sec_1362 by any 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 consents or b was terminated under sec_1362 or the secretary determines that the circumstances resulting in the plr-151511-12 ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in the ineffectiveness or termination steps were taken a so that the corporation is a small_business_corporation or b to acquire the shareholder consents and the corporation and each person who was a shareholder of the corporation at any time during the period specified pursuant to sec_1362 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 the ineffectiveness or termination the corporation will be treated as an s_corporation during the period specified by the secretary based solely on the facts submitted and the representations made we conclude that the termination of x’s s_corporation_election on d1 was inadvertent within the meaning of sec_1362 we further hold that pursuant to the provisions of sec_1362 x will be treated as continuing to be an s_corporation from d1 and thereafter provided x’s s_corporation_election was valid and provided that the election was not otherwise terminated under sec_1361 this ruling is conditioned upon x and all its shareholders treating x as having been an s_corporation for the termination period and thereafter moreover the shareholders of x must include their pro_rata share of the separately_stated and nonseparately computed items of income loss deduction or credit as provided in sec_1366 make any adjustments to basis as provided in sec_1367 and take into account any distributions made by x as provided in sec_1368 if x or its shareholders fail to treat themselves as described above this ruling is null and void except as specifically ruled above we express no opinion concerning the federal tax consequences of the transactions described above under any other provisions of the code this ruling is directed only to the taxpayer that requested it sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file we are sending a copy of this letter to x’s authorized representative sincerely s richard t probst senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court scott ray holmes petitioner v commissioner of internal revenue respondent docket no filed date scott ray holmes pro_se ann l darnold for respondent memorandum findings_of_fact and opinion thornton judge respondent determined a dollar_figure deficiency in petitioner’s federal_income_tax and additions to tax of dollar_figure under sec_6651 for failure_to_file dollar_figure under sec_6651 for failure_to_pay_tax and dollar_figure under sec_6654 for failure to make sufficient estimated_tax payments the issues for decision are whether petitioner received taxable_income in the amounts respondent determined whether petitioner is liable for a 10-percent additional tax under sec_72 whether petitioner is liable for additions to tax as respondent determined and whether petitioner is liable for a penalty under sec_6673 for instituting proceedings primarily for delay and for maintaining frivolous or groundless positions findings_of_fact the parties have stipulated some facts which we incorporate herein by this reference petitioner born in resided in texas when he filed his petition in he received dollar_figure of wages from cooper tire rubber co dollar_figure of interest and a qualified_retirement_plan distribution dollar_figure of which was taxable petitioner made no federal_income_tax payments for apart from the dollar_figure his employer withheld from his wages during the year on his form_1040 u s individual_income_tax_return petitioner reported zero wages and dollar_figure of taxable pension and annuity income he claimed the standard_deduction and 1unless otherwise indicated all section references are to the internal_revenue_code in effect for the year in issue amounts have been rounded to the nearest dollar a refund in the amount of his dollar_figure of withholdings in addition to the form_1040 petitioner submitted form_4852 substitute for form_w-2 wage and tax statement which also reflected zero wages petitioner wrote the phrase non assumpsit by next to his signature on both form_1040 and form_4852 petitioner attached to the form_1040 a 51-page document entitled notice of affidavit statement in rebuttal to internal_revenue_code sec_6011 for year period ending date in this document petitioner asserted that he was not subject_to tax for because inter alia filing federal_income_tax returns is voluntary paying income_tax based on a form_1040 is an illegal kickback taxable_income applies only to sources from international or foreign_commerce petitioner’s domicile is outside the united_states because he lives in the compact state of texas state republic he is not a united_states_person domestic_partnership domestic_corporation estate_or_trust the term employee applies only to those working for public service the income_tax is a slave tax prohibited by the thirteenth amendment the term secretary_of_the_treasury in the internal_revenue_code applies only to the secretary_of_the_treasury of puerto rico the capitalization of the letters of petitioner’s name in court documents creates a false legal impression that he is a fictional legal entity and not entitled to his constitutional rights and his wages are not includable in gross_income petitioner attached about pages of exhibits to the 51-page document by notice_of_deficiency respondent determined that for petitioner had a deficiency of dollar_figure respondent also determined that petitioner owed additional tax under sec_72 and additions to tax under sec_6651 and and a in response to the notice_of_deficiency petitioner sent to respondent a letter that asserted more frivolous arguments and repeated a demand for a refund of his withholdings plus interest i taxable_income opinion in petitioner received wages and other income as respondent determined petitioner’s assertions that this income is not taxable are similar to assertions that he raised unsuccessfully in holmes v commissioner tcmemo_2006_80 holmes i with respect to hi sec_2002 tax_liability these groundless and frivolous assertions warrant no further discussion see 737_f2d_1417 5th cir we perceive no need to refute these arguments with somber reasoning and copious citation of precedent to do so might suggest that these arguments have some colorable merit we sustain respondent’s determination as to petitioner’s deficiency for ii sec_72 additional tax respondent determined that petitioner is liable for a 10-percent additional tax on the dollar_figure taxable_portion of his distribution from a qualified_retirement_plan in sec_72 generally imposes subject_to various exceptions under sec_72 a 10-percent additional tax on early distributions from a qualified_retirement_plan petitioner reported the distribution on his form_4852 thereby admitting that he received it in when he had not yet attained age petitioner has not shown and the evidence does not suggest that any exception under sec_72 applies we sustain respondent’s determination iii other additions to tax the petition contains no specific allegations or supporting statements of facts regarding any of the additions to tax that respondent determined in the notice_of_deficiency pursuant to sec_6651 and and a petitioner’s frivolous challenges to his obligation to pay tax do not specifically address any issue regarding the additions to tax we deem petitioner to have conceded these issues and hold that respondent has no burden of production under sec_7491 as to the additions to tax see 123_tc_213 118_tc_358 we sustain respondent’s determinations as to the additions to tax under sec_6651 and and a iv sec_6673 penalty respondent has moved to impose a penalty under sec_6673 which authorizes this court to require a taxpayer to pay to the united_states a penalty not in excess of dollar_figure whenever it appears that proceedings have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer’s position in such proceedings is frivolous or groundless in holmes i we found that petitioner was liable for a dollar_figure penalty under sec_6673 because he took frivolous positions before and during trial despite ample warnings before trial from respondent holmes v commissioner supra notwithstanding the sanctions imposed in holmes i issued more than a year before he filed his petition in this case petitioner has persisted in his misguided course of conduct in furtherance of the purpose of sec_6673 to deter such conduct we believe a more significant sanction is now appropriate pursuant to sec_6673 we shall require petitioner to pay to the united_states a penalty of dollar_figure to reflect the foregoing decision will be entered for respondent


internal_revenue_service number release date index number ----------------- ------------------------------------- --------------------------------------------------- ------------------------------- -------------------------- in re --------------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------- id no ---------------- telephone number -------------------- refer reply to cc psi plr-117279-16 date date legend tribe --------------------------------------------------- ---------------------- dear ------------ as discussed in a telephone conversation with taxpayer’s authorized representative we are revoking private_letter_ruling dated date in private_letter_ruling the internal_revenue_service concluded that tribe may elect to pass investment credits associated with the renewable energy assets to an unrelated third party lessee lessee under sec_50 after reconsideration we have concluded that tribe may not elect to pass investment credits associated with the renewable energy assets to lessee under sec_50 accordingly private_letter_ruling is revoked prospectively and tribe may place no further reliance on the ruling plr-117279-16 in accordance with the power_of_attorney we are sending a copy of this letter to tribe’s authorized representative we are also sending a copy of this letter to the appropriate sb_se office sincerely yours theresa m melchiorre assistant to the branch chief branch office of associate chief_counsel passthroughs and special industries enclosure copy for purposes cc


internal_revenue_service number info release date index number ---------------------------------------- ------------------------------ --------------------------------- ---------------------------- department of the treasury washington dc person to contact -------------------- id no ----------------- telephone number --------------------- refer reply to cc psi b1 - genin-151258-04 date nov taxpayer ---------------------------------------- this responds to a letter dated date submitted by your representative in which it was requested that we recognize taxpayer’s election to be an s_corporation effective for the tax_year a corporation which meets the definition of a small_business_corporation under sec_1362 of the internal_revenue_code may elect to be treated as an s_corporation in order for an s_corporation_election to be effective for the taxable_year in which it is made it must be made within the first two and one-half months of the corporation’s taxable_year sec_1362 if an s election is made after that time then the corporation will not be treated as an s_corporation until the taxable_year following the one in which the s election was filed sec_1362 an election made after the first two and one-half months of the taxable_year in which it is intended to be effective may be treated as effective if the secretary determines that there was reasonable_cause for the corporation’s failure to make a timely election sec_1362 as was noted in the letter the taxpayer is eligible for the relief granted within revproc_2003_43 however the letter sent on taxpayer’s behalf does not conform to the requirements specified within that rev_proc you should ensure to take the steps to satisfy rev_proc form_2553 should be filed with the cincinnati service_center by december the statement filed pursuant to rev_proc should appear at the top of the filed form_2553 a statement establishing reasonable_cause for the failure to timely file form_2553 should be attached to the filed form_2553 the filed form_2553 must be signed by an officer eg the president and by all persons who were shareholders at any time during the period that began on the first day of the taxable_year for which the election is to be effective statements from all shareholders during the period between the date the s_corporation_election was to have become effective and the date the completed election was filed providing that they have reported their income on all affected returns consistent with the s_corporation_election for the year the year the election should have been made and for all subsequent years must be attached to the flied form_2553 attached to the filed form_2553 must be a dated declaration signed by an officer of the corporation authorized to sign which states under penalties of perjury i declare that to the best of my knowledge and belief the facts presented in support of this election are true correct and complete please contact -------------- at -------------------- not a toll-free call we hope that this information is helpful to you if you have additional questions s dianna k miosi sincerely dianna k miosi chief branch office of the associate chief_counsel passthroughs and special industries enclosures revproc_2003_43


internal_revenue_service department of the treasury index number u i l no washington dc number release date legend person to contact telephone number refer reply to cc dom p si plr-110937-99 date date company state a dear this letter responds to a letter dated date requesting a ruling on behalf of company under sec_1362 of the internal_revenue_code the information submitted discloses that company was incorporated on a under the laws of state company has several shareholders it is represented that company has intended to be an s_corporation since its incorporation believing itself to be an s_corporation company has operated accordingly since a after the end of its taxable_year beginning on a however company discovered that its s election had not been timely filed company requests a ruling that its sec_1362 election will be treated as timely made for its taxable_year that begins on a sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 explains when an s election will be effective generally if an s election is made within the first two and one half months of a corporation's taxable_year then that corporation will be treated as an s_corporation for the year in which the election is made sec_1362 provides that 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 following the year in which the s election is made plr-110937-99 sec_1362 provides that if no sec_1362 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 sec_1362 shall not apply applying the relevant law to the facts submitted and representations made we rule that company's sec_1362 election will be treated as timely made for its taxable_year that begins on a however this ruling is contingent on company filing form_2553 election by a small_business_corporation with an effective date of a with the appropriate service_center within days from the date of this ruling a copy of this letter should be attached to the form_2553 except as specifically set forth above we express no opinion concerning the federal tax consequences of the foregoing facts specifically we express no opinion on whether company otherwise qualifies as an s_corporation this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours william p o’shea chief branch office of the assistant chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes


t c memo united_states tax_court b gordon laforge petitioner v commissioner of internal revenue respondent docket no 7997-12l filed date joshua b beisker for petitioner rachel l schiffman for respondent memorandum findings_of_fact and opinion vasquez judge pursuant to sec_6330 petitioner seeks review of respondent’s determination to proceed with collection by levy of his unpaid unless otherwise indicated all section references are to the internal_revenue_code in effect at all relevant times and all rule references are to the tax_court rules_of_practice and procedure and federal_income_tax liabilities the issue for decision is whether respondent abused his discretion in sustaining the proposed levy action for and findings_of_fact some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference at the time petitioner filed his petition he was a resident of new jersey on date the internal_revenue_service irs mailed petitioner letter final notice_of_intent_to_levy and notice of your right to a hearing with respect to his outstanding income_tax liabilities for and on date the irs mailed petitioner two letter sec_1058 one relating to petitioner’s outstanding income_tax liabilities for and and one relating to his outstanding income_tax liabilities for and on date the irs received petitioner’s form request for a collection_due_process or equivalent_hearing first form relating to taxable years and on the first form petitioner checked the boxes for an installment_agreement and an offer-in-compromise oic on date petitioner submitted a second form second form relating to taxable years and on the second form petitioner also checked the boxes for an installment_agreement and an oic on date settlement officer carl mcadams irs office of appeals appeals mailed petitioner a letter informing him that appeals had received his request for a collection_due_process cdp hearing settlement officer mcadams scheduled a telephone conference for date the letter informed petitioner that he could request a face-to-face hearing within days from the date of the letter ie by date in the letter settlement officer mcadams stated that he could consider collection alternatives such as an installment_agreement or an oic only if petitioner provided a completed form 433-a collection information statement for wage earners and self-employed individuals including all required attachments ie earnings statements bills or statements for monthly recurring expenses for three months before the date of the form 433-a and statements for checking and savings accounts proof of estimated_tax payments for and signed federal_income_tax returns for and which had not been filed settlement officer mcadams instructed petitioner to submit a completed form 433-a and the listed items within days ie by date and informed petitioner that he could not consider collection alternatives without this information on date petitioner’s representative douglas r eisenberg faxed settlement officer mcadams a letter requesting a face-to-face conference at the time of this request petitioner had not submitted the form 433-a or the information settlement officer mcadams had requested petitioner failed to provide the requested information by the date deadline respondent denied petitioner’s request for a face-to-face hearing on date settlement officer mcadams contacted mr eisenberg at the scheduled time for the telephone cdp hearing settlement officer mcadams informed mr eisenberg that he could not consider petitioner’s request for a cdp hearing for taxable years and because petitioner had not submitted a timely request as to those years settlement officer mcadams informed mr eisenberg that petitioner’s cdp hearing requests for and were timely settlement officer mcadams informed mr eisenberg that he had not received the documents requested in his letter dated date mr eisenberg stated that he had mailed the tax returns for through and a form 433-a to settlement officer mcadams on date settlement officer mcadams informed mr eisenberg that if the form 433-a was not received or was incomplete he would make a determination based on the administrative file on date settlement officer mcadams received a letter from mr eisenberg enclosing a form 433-a tax returns for and a credit card statement for one month a utility bill for one month and a writ of wage execution the letter stated that the only outstanding item was the proof of estimated_tax payments for which needed to be discussed on date respondent mailed petitioner a notice_of_determination concerning collection action s under sec_6320 and or sustaining the proposed levy settlement officer mcadams determined that petitioner had submitted an incomplete form 433-a and had failed to provide proof of hi sec_2011 estimated_tax payments the writ of wage execution entered date from the superior court of new jersey was in favor of a judgment creditor for dollar_figure each month dollar_figure was garnished from petitioner’s wages i applicable law opinion sec_6330 provides that the secretary shall furnish a taxpayer with written notice of his right to a hearing before any property is levied upon sec_6330 further provides that the taxpayer may request administrative review of the matter in the form of a hearing within a 30-day period sec_6330 and b pursuant to sec_6330 a taxpayer may raise at the sec_6330 hearing any relevant issue with regard to the commissioner’s collection activities including spousal defenses challenges to the appropriateness of the commissioner’s intended collection action and alternative means of collection 114_tc_604 114_tc_176 petitioner does not dispute the underlying tax_liabilities for and which are at issue nor those for and which are not where as here a taxpayer’s underlying tax_liability is not in the court lacks jurisdiction over the taxable years and because petitioner failed to timely request a cdp hearing with respect to those years as discussed above a taxpayer must request a cdp hearing within days of receiving the notice_of_intent_to_levy sec_6330 and b once the secretary issues a notice_of_intent_to_levy and notice of right to a sec_6330 hearing a subsequent notice more than days later that the irs continued dispute the court reviews appeals’ determination for abuse_of_discretion see sego v commissioner t c pincite goza v commissioner t c pincite to establish abuse_of_discretion the taxpayer must show that the decision complained of is arbitrary capricious or without sound basis in fact or law 129_tc_107 citing sego v commissioner t c pincite and 112_tc_19 see 348_fedappx_806 3d cir aff’g tcmemo_2008_117 125_tc_301 aff’d 469_f3d_27 1st cir in reviewing for abuse_of_discretion we generally consider only the arguments issues and other matters that were raised at the cdp hearing or otherwise brought to the attention of appeals giamelli v commissioner t c pincite 118_tc_488 see also sec_301_6330-1 q a-f3 proced admin regs but see 131_tc_197 continued intends to levy on property of the taxpayer for the same tax and tax period as in the initial notice does not entitle the taxpayer to a sec_6330 hearing sec_301 b q a-b2 proced admin regs thus petitioner needed to request a cdp hearing within days of the notice dated date not the subsequent notice dated date ii the parties’ arguments petitioner argues that settlement officer mcadams abused his discretion by refusing to consider his request for an installment_agreement petitioner further argues that settlement officer mcadams failed to seek answers to unresolved questions in order to make the efficient collection_of_taxes no more intrusive than necessary neglected and ignored significant relevant factors petitioner provided him gave weight to irrelevant factors and relied on improper facts that were contrary to the evidence petitioner presented to him a installment_agreement petitioner argues that settlement officer mcadams denied his request for an installment_agreement because settlement officer mcadams incorrectly determined that he was a member of his son’s limited_liability_company and therefore should have reported self-employment_income or schedule_k-1 income on the form 433-a respondent argues that settlement officer mcadams could not evaluate whether petitioner was entitled to an installment_agreement because petitioner failed to submit the documentation that settlement officer mcadams had requested respondent further argues that whether petitioner was a member of his son’s limited_liability_company did not affect settlement officer mcadams’ determination we agree with respondent form 433-a requires taxpayers to include documentation to support their claimed income and expenses see revproc_2003_71 sec_4 2003_2_cb_517 stating that the offer should include all information necessary to verify the grounds for compromise the supporting documentation includes copies of earnings statements checking account statements and bills or statements for monthly recurring expenses see form 433-a taxpayers are required to provide copies of the above items for the three months before the date that the form 433-a is submitted id petitioner failed to attach the required_documentation to his form 433-a he failed to attach copies of his bank account statements and loan statements for the three preceding months petitioner submitted a bank statement for his checking account for only one month which shows no activity petitioner did not submit statements of his wife’s bank account into which his wages were deposited his form 433-a shows no self-employment_income only wages however his form sec_1040 for through show that he earned most of his income from self-employment petitioner also failed to submit proof of hi sec_2011 estimated_tax payments and failed to explain his income accurately therefore it was not an abuse_of_discretion for settlement officer mcadams to deny petitioner an installment_agreement and to sustain the proposed collection action on the basis of petitioner’s failure to submit the requested financial information 414_f3d_144 1st cir holding that the commissioner did not abuse his discretion where the taxpayer submitted some but not all of the requested information to appeals cavazos v commissioner tcmemo_2008_257 holding that it is not an abuse_of_discretion for an appeals officer to reject collection alternatives and sustain the proposed collection action on the basis of the taxpayer’s failure to submit requested financial information b followup meeting petitioner argues that settlement officer mcadams abused his discretion when he did not contact petitioner or mr eisenberg after he reviewed the form 433-a and supporting documentation to discuss petitioner’s form 433-a and the supporting documents submitted however no statutory or regulatory provision requires that taxpayers be afforded an unlimited opportunity to supplement the administrative record maselli v commissioner tcmemo_2010_19 citing roman v commissioner t c memo sec_6330 requires only that a taxpayer be given a reasonable chance to be heard before the issuance of a notice_of_determination id settlement officer mcadams reviewed the untimely form 433-a and supporting documentation petitioner submitted there is no requirement that settlement officer mcadams allow petitioner to provide supplemental documents see id further settlement officer mcadams is not required to provide any followup meeting with petitioner see id settlement officer mcadams afforded petitioner an opportunity to be heard at the cdp hearing before the issuance of the notice_of_determination accordingly settlement officer mcadams did not abuse his discretion when he did not contact petitioner or mr eisenberg for a followup meeting c face-to-face hearing petitioner argues that settlement officer mcadams abused his discretion in denying his request for a face-to-face cdp hearing before making a determination this court has held that a face-to-face hearing is not required under sec_6330 115_tc_329 williamson v commissioner tcmemo_2009_188 stockton v commissioner tcmemo_2009_186 leineweber v commissioner tcmemo_2004_17 we have also held that an appeals officer’s denial of a face-to-face hearing does not constitute an abuse_of_discretion when a taxpayer refuses to provide requested financial information see moline v commissioner tcmemo_2009_110 aff’d 363_fedappx_675 10th cir summers v commissioner tcmemo_2006_219 petitioner failed to submit his form 433-a and the supporting documentation that settlement officer mcadams had requested within days of the date of settlement officer mcadams’ request and before the time of the hearing accordingly settlement officer mcadams did not abuse his discretion in determining petitioner was not entitled to a face-to-face hearing iii conclusion petitioner has not shown that appeals’ determination to sustain the proposed levy action was arbitrary capricious or without sound basis in fact or law accordingly we hold that respondent did not abuse his discretion in sustaining the proposed levy action respondent’s determination to proceed with collection is sustained in reaching our holding we have considered all arguments made and to the extent not mentioned we consider them irrelevant moot or without merit to reflect the foregoing decision will be entered for respondent


t c memo united_states tax_court duncan bass petitioner v commissioner of internal revenue respondent docket no filed date duncan bass pro_se tammie a geier for respondent memorandum findings_of_fact and opinion ashford judge respondent determined a deficiency of dollar_figure in petitioner’s federal_income_tax for the taxable_year the issue for decision is whether petitioner is entitled to deduct certain expenses he reported on his schedule c profit or loss from business we resolve this issue in favor of respondent findings_of_fact some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference petitioner resided in north carolina at the time the petition was filed with the court i petitioner and his for-profit and nonprofit activities during in addition to being a w-2 wage earner for three different employers petitioner owned and operated bass co landscaping an unincorporated business bass co landscaping provided landscaping and janitorial services during petitioner owned three vehicles a dodge a ford and a suzuki he used the dodge in connection with bass co landscaping he did not however contemporaneously keep a diary a mileage log trip sheets or similar records to document the business use of this vehicle during petitioner also owned and operated lend-a-hand inc a nonprofit north carolina corporation that he incorporated on date 1unless otherwise indicated all section references are to the internal_revenue_code in effect for the year at issue and all rule references are to the tax_court rules_of_practice and procedure lend-a-hand collects clothing and school supplies and donates these items to disadvantaged individuals since at least petitioner bass co landscaping and lend-a-hand have maintained a single bank account at summit credit_union ii petitioner’s tax reporting and the notice_of_deficiency petitioner prepared and filed timely with the assistance of a paid preparer a form_1040 u s individual_income_tax_return for return on the return petitioner reported wages totaling dollar_figure from his three employers he also reported a dollar_figure business loss from bass co landscaping which he detailed on a schedule c attached to the return on the schedule c petitioner reported gross_receipts of dollar_figure and total expenses of dollar_figure the expenses consisted of dollar_figure for car and truck expenses for driving the dodge big_number miles dollar_figure for depreciation and sec_179 expenses dollar_figure for other interest dollar_figure for rent or lease of other business property dollar_figure for supplies dollar_figure for meals and entertainment and dollar_figure for other expenses which included dollar_figure for power tools dollar_figure for uniforms dollar_figure for lend-a-hand and dollar_figure for a cell phone the amount for uniforms represented laundering expenses for bass co landscaping uniforms while the amount for lend-a-hand represented cash payment by bass co landscaping to lend-a-hand for advertising on lend-a-hand’s tax deductible donation acknowledgment form and rental of a storage unit at a self- storage_facility following an examination of the return respondent determined that petitioner’s claimed schedule c deductions for car and truck expenses of dollar_figure and other expenses of dollar_figure should be disallowed for lack of substantiation the notice_of_deficiency issued to petitioner on date reflects that determination petitioner timely petitioned this court for redetermination of the deficiency opinion in general the commissioner’s determination set forth in a notice_of_deficiency is presumed correct and the taxpayer bears the burden of proving otherwise rule a 290_us_111 tax deductions are a matter of legislative grace and the taxpayer bears the burden of proving entitlement to any deduction claimed 89_tc_816 this burden requires the taxpayer to demonstrate that the claimed deductions are allowable pursuant to some statutory provision and to substantiate the expenses giving rise to the claimed deductions by maintaining and producing adequate_records that enable the commissioner to determine the taxpayer’s correct liability sec_6001 116_tc_438 65_tc_87 aff’d per curiam 540_f2d_821 5th cir petitioner does not contend that the burden_of_proof should shift to respondent under sec_7491 nor has he established that the requirements for shifting the burden_of_proof have been met accordingly the burden_of_proof remains on petitioner see sec_7491 sec_162 allows a taxpayer to deduct all ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying_on_a_trade_or_business sec_162 sec_1_162-1 income_tax regs a business_expense is ordinary if it is normal usual or customary in the taxpayer’s trade_or_business see 308_us_488 an expense is necessary if it is appropriate and helpful to the taxpayer’s business but it need not be absolutely essential 383_us_687 quoting welch v helvering u s pincite a taxpayer may not deduct a personal living or family expense unless the internal_revenue_code expressly provides otherwise sec_262 whether an expense is deductible under sec_162 is a question of fact to be decided on the basis of all the relevant facts and circumstances 97_tc_613 citing 320_us_467 under the cohan_rule if a taxpayer establishes that an expense is deductible but is unable to substantiate the precise amount the court may estimate the amount of the deductible expense bearing heavily against the taxpayer whose inexactitude is of his or her own making see 39_f2d_540 2d cir see also 85_tc_731 in order for the court to estimate the amount of a deductible expense the taxpayer must establish some basis upon which an estimate may be made 939_f2d_874 9th cir aff’g in part rev’g in part tcmemo_1989_390 vanicek v commissioner t c pincite otherwise an allowance would amount to unguided largesse norgaard v commissioner f 2d pincite quoting 245_f2d_559 5th cir the cohan_rule however is superseded--that is estimates are not permitted--for certain expenses specified in sec_274 such as listed_property including passenger_vehicle expenses sec_274 sec_280f sec_1_274-5t temporary income_tax regs fed reg date flush language see 122_tc_305 instead 2a taxpayer may deduct passenger_vehicle expenses by using either actual cost or the standard mileage rate provided he substantiates the amount of business mileage and the time and purpose of each use see sec_1_274-5 income_tax regs revproc_2010_51 2010_51_irb_883 these types of expenses are subject_to strict substantiation rules 50_tc_823 aff’d per curiam 412_f2d_201 2d cir sec_1_274-5t temporary income_tax regs supra these strict substantiation rules generally require the taxpayer to substantiate with adequate_records or by sufficient evidence corroborating the taxpayer’s own statement the amount of the expense the time and place the expense was incurred and the business_purpose of the expense balyan v commissioner tcmemo_2017_140 at sec_1_274-5t temporary income_tax regs fed reg date for listed_property expenses in addition to the time such expenses were incurred and their business_purpose the taxpayer must establish the amount of business use and the total use of such property balyan v commissioner at sec_1_274-5t temporary income_tax regs fed reg date substantiation by adequate_records requires the taxpayer to maintain an account book diary log statement of expense trip sheets or similar record prepared contemporaneously with the expenditure and documentary_evidence such as receipts or paid bills which together prove each element of an expenditure balyan v commissioner at sec_1_274-5 income_tax regs sec_1_274-5t temporary income_tax regs fed reg date on the schedule c attached to the return petitioner claimed a deduction for the following expenses totaling dollar_figure car and truck expenses depreciation and sec_179 expenses other interest rent or lease of other business property supplies meals and entertainment and other expenses consisting of expenses for power tools uniforms lend-a-hand and a cell phone of these expenses respondent during the examination of the return allowed deductions for depreciation and sec_179 expenses other interest rent or lease of other business property meals and entertainment and supplies the remaining deductions for car and truck expenses and other expenses respondent disallowed in full contrary to what petitioner appears to believe the car and truck expenses are subject_to the strict substantiation rules of sec_274 and thus they cannot be estimated it is undisputed that petitioner did not contemporaneously maintain 3at trial petitioner asserted that his car and truck expenses were exempt from the strict substantiation rules of sec_274 appearing to rely on a internal_revenue_service revenue_ruling establishing guidelines for determining when certain modified pickup trucks or vans will be recognized as qualified nonpersonal use vehicles and therefore exempt from the sec_274 strict substantiation rules see revrul_86_97 1986_2_cb_42 see also sec_1 continued a diary a mileage log trip sheets or similar records of his use of the dodge in connection with bass co landscaping during neither did he retain receipts or otherwise produce any documentary_evidence relating to each job that bass co landscaping was hired to do in or establish the total business miles driven in the dodge during instead petitioner offered general and uncorroborated testimony along with three handwritten mileage diagrams two invoices from two different tire and automotive repairs shops reflecting among other things the odometer reading of the dodge a state of north carolina vehicle emissions and safety receipt dated date with a handwritten notation on it by petitioner that this receipt shows the mileage of the dodge at the end of and a state of north carolina vehicle registration card for the dodge with a handwritten notation on it by petitioner that the vehicle was down in dec and couldn’t be driven or inspected such evidence does not have the high degree of probative value to elevate it to the level of credibility of a contemporaneous record sec_1_274-5t temporary income_tax regs fed reg date accordingly we conclude that continued k income_tax regs however petitioner’s assertion is without merit as the record is devoid of any evidence that the dodge he used in connection with bass co landscaping during had even been modified let alone modified within the meaning of this revenue_ruling or the appurtenant regulation petitioner has not established for that he is entitled to a deduction for any amount of car and truck expenses under sec_274 with respect to the other expenses we similarly conclude on the basis of the record that petitioner is not entitled to deductions for these expenses in any amount for petitioner offered only general and uncorroborated testimony to substantiate the expenses for power tools laundering bass co landscaping uniforms a cell phone and cash payments to lend-a-hand for advertising and rental of a storage unit it is undisputed that he did not maintain any receipts pertaining to the expenses for power tools and uniforms the documentary_evidence he produced--a statement payment stub dated date from verizon wireless reflecting an amount due of dollar_figure a payment receipt for dollar_figure from verizon wireless dated date a statement handwritten by petitioner dated date that he used his cell phone in his business receipts handwritten by petitioner from bass co landscaping to lend-a-hand and a bank record dated date from an unknown account of dollar_figure paid to afm storage --is woefully inadequate under sec_162 standards the documentary_evidence pertaining to lend-a-hand along with the fact that petitioner bass co landscaping and lend-a-hand maintained a single bank account in is particularly unavailing because it shows as petitioner even acknowledges that he is attempting to take a deduction for paying himself and thus on the basis of the record before us the court also is unable to make an estimate of deductible other expenses for under the cohan_rule in sum petitioner has not established for that the car and truck expenses and the other expenses were paid_or_incurred or that they were ordinary and necessary we sustain respondent’s determination that petitioner is not entitled to schedule c deductions for car and truck expenses of dollar_figure and other expenses of dollar_figure to reflect the foregoing decision will be entered for respondent