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-152015-05 date date --------------------- ----------------------- --------------------------- legend legend x -------------------------------------------------- country d dear ------------- correspondence written on behalf of x requesting an extension of time under ' and ' of the procedure and administration regulations to elect to be treated as a partnership for federal tax purposes this letter responds to the letter dated date and related facts the information submitted states that x was incorporated under the laws of country on d x intended to file a form_8832 entity classification election to be treated as a partnership for federal tax purposes effective d however the election was not timely filed law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under ' b or an eligible_entity can elect its classification for federal tax purposes elections are necessary only when an plr-152015-05 eligible_entity does not want to be classified under the default classification or when an eligible_entity chooses to change its classification sec_301_7701-3 provides that except for certain existing entities described in sec_301_7701-3 unless a foreign eligible_entity elects otherwise the entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single member that does not have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under ' b by filing form_8832 with the appropriate service_center under ' c iii this election will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified the date specified on form_8832 cannot be more than days prior to the date on which the election is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose deadline is prescribed by a regulation published in the federal_register commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-1 through provide the standards the conclusion based solely on the facts submitted and representations made we conclude that x has satisfied the requirements of and and therefore it is granted an extension of time of sixty days from the date of this letter to file a form_8832 to elect to be treated as a partnership for federal tax purposes effective d a copy of this letter should be attached to the election a copy is enclosed for that purpose plr-152015-05 except as specifically set forth above we express no opinion concerning the federal tax consequences of the facts described above under any other provision of the internal_revenue_code this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being mailed to your authorized representative sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for ' purposes cc


t c memo united_states tax_court charles crellin douglass petitioner v commissioner of internal revenue respondent docket no filed date charles crellin douglass pro_se nancy graml for respondent memorandum opinion chiechi judge this matter is before us on respondent's motion to dismiss this case for lack of jurisdiction respon- dent's motion over petitioner's taxable_year because the petition was not timely filed and taxable_year because respondent did not issue a notice_of_deficiency for that year to petitioner we conclude that this court has no jurisdic- tion over either or background petitioner resided in houston texas at the time he filed the petition in this case on date in that petition petitioner disputed a deficiency an addition_to_tax under sec_1 a and a penalty under sec_6662 that were determined by respondent in a notice_of_deficiency issued to him for notice he also disputed a deficiency and a penalty that he alleged were determined in a notice_of_deficiency issued to him for the record in this case establishes and the parties con- cede the following facts on date petitioner filed for bankruptcy petitioner's bankruptcy case in the u s bankruptcy court for the southern district of texas houston division bankruptcy court on date respondent mailed to petitioner the notice that notice stated in pertinent part even though you are in bankruptcy you may want to contest this deficiency in the united_states tax_court under bankruptcy code sec_362 however the filing of a petition with the tax_court is automati- cally stayed because of your bankruptcy case when the automatic_stay is in effect you must ask the bank- ruptcy court under bankruptcy code sec_362 to lift the stay so you can file a petition with the tax_court you have days from the date of this letter days if the letter is addressed to you outside the united_states plus any additional period all section references are to the internal_revenue_code in effect at relevant times provided by sec_6213 of the internal_revenue_code irc generally the period that the automatic_stay is in effect plus days to file a petition with the tax_court asking for a redetermination of the deficiency in total disregard of the foregoing statements in the notice on date while petitioner was in bankruptcy he filed a petition in this court with respect to the notice and that case was assigned docket no on date this court dismissed the case at docket no for lack of jurisdiction because the petition in that case was filed in violation of the automatic_stay imposed by u s c sec_362 on date the bankruptcy court entered an order in petitioner's bankruptcy case discharging petitioner discharge order on date petitioner filed with the bankruptcy court a motion to vacate the discharge order which is still pending before that court on or about date petitioner filed his federal_income_tax return return for in which he reported tax due of dollar_figure that he did not pay the internal_revenue_service service assessed that amount of tax due by notice dated date the service requested petitioner to pay the tax due for plus interest and a penalty by final notice_of_intent_to_levy dated date the service again re- quested full payment of the tax interest and penalty for petitioner's taxable_year and also requested full payment of the taxes interest and penalties for other taxable years of petitioner including the record also establishes although petitioner disputes that the service received petitioner's return for on date respondent represents in respondent's motion and petitioner concedes and or does not dispute that respondent did not issue to petitioner a notice_of_deficiency for and that counsel for respondent notified the service's revenue_officer to cease collection of any_tax liabilities of petitioner for his taxable years and pending a ruling by this court on respon- dent's motion discussion with respect to petitioner's taxable_year although the notice was timely mailed to petitioner on date u s c sec_362 imposed an automatic_stay on proceedings in this and any other court during the pendency of petitioner's bankruptcy case that he commenced on date on date the date on which the bankruptcy court discharged petitioner that automatic_stay was lifted even though petitioner thereafter filed a motion to vacate the dis- charge order see 86_tc_1314 petitioner contends that the service received his return on date even if that contention were accurate it would have no effect on our conclusion regarding petitioner's taxable_year consequently the running of the 90-day period prescribed by sec_6213 for filing a petition in this court with respect to the notice was suspended for the period during which the automatic_stay was in effect namely from date to date and for days thereafter see sec_6213 f accordingly petitioner had a total of days from date or until date within which to file timely a petition in this court with respect to the notice see id petitioner filed his petition in this case on date we conclude that that petition was not timely filed and that this court has no jurisdiction over petitioner's taxable_year see sec_6212 and sec_6213 with respect to petitioner's taxable_year respondent represents in respondent's motion and petitioner concedes that respondent did not issue to petitioner a notice_of_deficiency for that year accordingly we conclude that this court has no jurisdiction over petitioner's taxable_year see sec_6212 and sec_6213 to reflect the foregoing an appropriate order granting respondent's motion as supplemented and dismiss- ing this case for lack of jurisdiction will be entered


internal_revenue_service department of the treasury number release date uil nos washington dc person to contact telephone number refer reply to cc fip 2-plr-119198-01 date date legend applicant parent_corporation a corporation b date date this letter responds to a ruling_request submitted on behalf of applicant on date with respect to the proper treatment of amortizable_bond_premium following a reorganization to which sec_368 sec_361 and sec_381 of the internal_revenue_code apply facts applicant is a subsidiary_corporation that joins in the filing of consolidated federal_income_tax returns with parent applicant acquires debt instruments at a premium and has amortizable_bond_premium within the meaning of sec_171 on debt instruments premium bonds that are described in sec_171 the following representations have been made by applicant and parent together the taxpayer as of date all of applicant’s premium bonds were taxable bonds within the meaning of sec_171 all of applicant’s premium bonds were originally issued after date further all of applicant’s premium bonds were mortgage- backed securities mbs including regular interests in real_estate mortgage investment conduits remic regular interests and collateralized mortgage obligations cmos none of applicant’s premium bonds were mortgage pass-thru certificates of the kind described in revrul_84_10 1984_1_cb_156 based on the represented date of transfer the request was timely filed within the meaning of sec_1_381_c_4_-1 of the income_tax regulations plr-119198-01 on date parent acquired_corporation a by means of a merger that qualifies as a reorganization to which sec_368 sec_361 and sec_381 apply in connection with this acquisition corporation b a subsidiary of corporation a was merged with and into applicant in a transaction that also qualifies as a reorganization to which sec_368 sec_361 and sec_381 apply the date of transfer with respect to this transaction was date taxpayer further represents that applicant is the acquiring_corporation with respect to the assets transferred by corporation b on date prior to date applicant and corporation b had each made an election to amortize bond_premium under former sec_1_171-3 pursuant to its election applicant amortized bond_premium using a straight-line method pursuant to its election corporation b which as of date also held only taxable premium bonds of the kind held by applicant used a different method from that used by applicant to account for its amortizable_bond_premium as of date applicant’s premium bond holdings exceeded those of corporation b applicable law if a transfer is in connection with a reorganization described in sec_368 a corporation that acquires the assets of another corporation in a transfer to which sec_361 applies is required to succeed to and take into account as of the close of the day of that transfer the items described in sec_381 of the transferor_corporation see sec_381 sec_1_381_a_-1 and sec_1_381_a_-1 under sec_1_381_a_-1 the acquiring_corporation is that corporation which ultimately acquires the assets transferred by the transferor_corporation in a transaction to which sec_381 applies under sec_1_381_b_-1 the date of transfer is defined as that day on which are transferred all those properties of the transferor_corporation which are to be transferred pursuant to the reorganization pursuant to sec_381 the acquiring_corporation is required to use the method_of_accounting used by the transferor_corporation on the date of transfer unless different methods were used by the transferor_corporation and the acquiring_corporation if different methods were used the acquiring_corporation must use the method or combination of methods_of_accounting adopted pursuant to regulations prescribed by the secretary see sec_1_381_c_4_-1 it is assumed in the absence of any information to the contrary that prior to date neither applicant nor corporation b were required by closing_agreement to use their respective methods_of_accounting for amortizing bond_premium plr-119198-01 sec_1_381_c_4_-1 provides special conditions for the continuation of methods_of_accounting following a sec_381 transaction however where only a single method_of_accounting may be used by a taxpayer for a particular item regardless of the number of separate and distinct trades_or_businesses operated by that taxpayer the acquiring_corporation shall adopt the principal method_of_accounting under sec_1 c - c iv unless the method_of_accounting must be determined in accordance with sec_1_381_c_4_-1 pursuant to sec_1_381_c_4_-1 the acquiring_corporation is required to use the principal method_of_accounting as determined under sec_1_381_c_4_-1 provided that it clearly reflects the income of the acquiring_corporation and its use is not inconsistent with the provisions of any applicable closing_agreement pursuant to sec_1 c -1 d i if the principal method_of_accounting does not clearly reflect income and consequently can not be used by the acquiring_corporation the commissioner shall determine the appropriate method_of_accounting to be used under sec_1_381_c_4_-1 the term method_of_accounting has the same meaning as that provided under sec_446 and the regulations thereunder the amount of any adjustments necessary to reflect a required change in method_of_accounting under these provisions the manner in which such adjustments are to be taken into account and the tax attributable thereto shall be determined and computed under sec_481 and the regulations thereunder subject_to the rules provided in sec_1_381_c_4_-1 and d see sec_1_381_c_4_-1 special methods_of_accounting for particular items of income and expense are provided in the code see sec_1_446-1 sec_171 provides special rules with respect to amortizable_bond_premium that must be used by a taxpayer to account for amortizable_bond_premium pursuant to sec_1_381_c_4_-1 if a single method_of_accounting must be used by a taxpayer with respect to a particular item the principal method_of_accounting for such item shall be determined by comparing the aggregate amount of the item and related accounts for the parties to the sec_381 transaction the method_of_accounting of the party having the greatest aggregate amount of such item and related accounts shall be the principal method_of_accounting for that item no method_of_accounting is acceptable unless however in the opinion of the commissioner that method clearly reflects income see sec_1_446-1 for purposes of sec_171 a bond means any bond debenture note or certificate or other evidence_of_indebtedness but does not include any such obligation which to the holder constitutes stock_in_trade or would otherwise be included in inventory if on hand at the close of the taxable_year or is held primarily_for_sale_to_customers in the ordinary course of business see sec_171 plr-119198-01 the amount of amortizable_bond_premium for a taxable_year is determined in accordance with sec_171 and pursuant to sec_171 is generally treated as an offset to interest payments in general under sec_171 bond_premium is amortized based on the bond’s yield_to_maturity which is determined by using the taxpayer’s basis in the obligation upon acquisition and compounding at the close of each accrual_period in the case of bonds described in sec_1272 rules similar to those in sec_1272 should be used to amortize any bond_premium on these bonds see h_r conf_rep no 99th cong 2d sess pt ii pincite c b vol pincite however as explained in footnote of this letter for purposes of applying the rules in sec_1272 to amortize bond_premium on these bonds a prepayment assumption of zero should be used regulations have been issued under sec_171 see sec_1_171-1 through however these regulations do not apply to certain bonds including regular interests in a remic qualified mortgages held by a remic and certain other debt instruments or pools of debt instruments with payments subject_to acceleration as described in sec_1272 see sec_1_171-1 analysis and conclusion prior to date both applicant and corporation b had elections in place under which they each amortized bond_premium on premium bonds as represented by taxpayer the merger of corporation b with and into applicant was accomplished in a transaction that qualifies as a reorganization to which sec_368 sec_361 and sec_381 apply consequently the rules with respect to the carryover of the parties’ respective methods_of_accounting for amortizable_bond_premium are governed by sec_381 and the regulations thereunder amortizable_bond_premium is an item that must be accounted for by a holder using a single method_of_accounting thus following the acquisition of corporation b by merger into applicant amortizable_bond_premium on all premium bonds held by applicant after date must be accounted for using a single method_of_accounting under sec_1_381_c_4_-1 applicant’s straight-line method would otherwise be the principal method_of_accounting with respect to this item sec_171 however requires the use of a constant_yield_method a method_of_accounting with respect to amortizable_bond_premium on such bonds that does not satisfy the statutory requirements of sec_171 and e will not clearly reflect income regulations have been promulgated under sec_171 that provide for a constant_yield_method of accounting for amortizable_bond_premium as so promulgated sec_1_171-1 through do not apply to certain bonds including regular interests in a remic qualified mortgages held by a remic and certain other debt instruments or pools of debt instruments with payments subject_to acceleration as described in plr-119198-01 because the applicant’s straight-line method does not satisfy the statutory requirements of sec_171 and e it does not clearly reflect income as required by sec_446 consequently applicant may not continue to use the straight-line method with respect to amortizing bond_premium see sec_1_381_c_4_-1 instead the commissioner is required to determine the appropriate method_of_accounting for amortizable_bond_premium to be used by applicant following date see sec_1 c -1 d i pursuant to the exercise of the commissioner’s authority in sec_1 c -1 d i applicant is required to change its method_of_accounting for amortizable_bond_premium to the proposed method as described in this letter under the proposed method applicant will a amortize bond_premium on a premium bond using a constant_yield_method in accordance with sec_171 b make the determinations required under sec_171 and b in accordance with the bond’s yield_to_maturity as prescribed by sec_171 c recover amortizable_bond_premium by way of offset against qualified_stated_interest payments from the bond in accordance with sec_171 d under sec_171 use the following formula for calculating amortizable_bond_premium on its premium bonds premium for period aap - p - aap in this formula aap refers to the adjusted acquisition price of the bond at the beginning of accrual_period and p payments other than payments of qualified_stated_interest made during equals the present_value of all accrual_period remaining payments to be made on the bond this present_value is determined by using the bond’s yield to the holder calculated as of the date the holder acquires the premium bond in determining the expected remaining payments and the yield of a premium bond assume no refers to the amount of on the bond aap sec_1272 see sec_1_171-1 applicant’s premium bonds are described in sec_1_171-1 therefore sec_1_171-1 through do not apply directly to applicant’s premium bonds aap for the first accrual_period is generally the holder’s purchase_price plr-119198-01 prepayments on the bond in effect the prepayment assumption will be zero for purposes of amortizing the bond_premium e account for the corresponding reduction in the basis of a premium bond in accordance with sec_1016 applicant is required to take into account any increase or decrease in tax resulting from the change in method authorized in this letter for both itself and corporation b as required by sec_1_381_c_4_-1 the adjustments necessary to reflect such change and the resulting increase or decrease in tax shall be determined and computed in the same manner as if on date both applicant and corporation b had initiated a change in method_of_accounting id accordingly we conclude that applicant must recompute the amount of the tax adjustment required to be taken into account under the rules required by sec_1 c - d iii after giving effect to the method authorized in this letter for amortizing bond_premium and that such adjustment is required to be taken into account in full in accordance therewith in the year of transfer except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent temporary or final regulations pertaining to one or more of the issues addressed in this ruling have not yet been adopted therefore this ruling will be modified or revoked by the adoption of temporary or final regulations or any other guidance to the extent the guidance is inconsistent with any conclusion in the letter_ruling see section dollar_figure of revproc_2001_1 2001_1_irb_1 however when the criteria in section dollar_figure of revproc_2001_1 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the authorized representative a bond that is prepayable is a bond subject_to a call and therefore subject_to the rules in sec_171 for callable bonds for example bond_premium on a callable bond is determined and amortized by reference to an earlier_call_date only if the use of the call date rather than the bond’s stated maturity_date would result in a slower recovery_of premium see sec_171 generally in the case of mortgage backed securities such as the premium bonds at issue here the use of a prepayment assumption other than zero to compute accruals of bond_premium would be inconsistent with the statutory rules in sec_171 for callable bonds plr-119198-01 a copy of this letter must be attached to any income_tax return to which it is relevant sincerely yours william e coppersmith chief branch office of associate chief_counsel financial institutions products


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 plr-111655-13 date september legend --------------------------------- ---------------------------- --------------------------------------- ---------------------------- --------------------------------- --------------------------- -------------------------------- ---------------------------- ------------------------------------------- ---------------------------- ----------------------------------- ---------------------------- ----------------------------------------- ---------------------------- ------------------------------------- ---------------------------- ---------- ---------------------------- y1 y2 y3 y4 y5 y6 y7 y8 country date dear ----------------- plr-111655-13 this responds to a letter dated date and subsequent correspondence submitted on behalf of y1 y2 y3 y4 y5 y6 y7 and y8 requesting an extension of time under sec_301_9100-3 of the procedure and administration to file entity classification elections to be treated as partnerships for federal tax purposes the information submitted states that y1 y2 y3 y4 y5 y6 y7 and y8 represent that they are foreign entities eligible to elect to be treated as partnerships for federal tax purposes y1 y2 y3 y4 y5 y6 y7 and y8 further represent that all required u s tax and information returns of each affected person as defined in sec_4 of rev_proc were filed timely or within months of the due_date of the respective return excluding extensions in accordance with their intended classification however y1 y2 y3 y4 y5 y6 y7 and y8 failed to timely file valid form_8832 entity classification elections sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with at least two members can elect to be classified as either an association or a partnership an eligible_entity with a single owner can elect to be classified as an association or disregarded as an entity separate from its owner sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes unless the entity elects otherwise a foreign eligible_entity is treated as an association if all members have limited_liability a foreign eligible_entity with a single owner may elect to be treated as a disregarded_entity pursuant to the rules under sec_301_7701-3 a foreign eligible_entity with two or more members is treated as a partnership if at least one member does not have limited_liability a foreign eligible_entity with two or more members may elect to be treated as a partnership pursuant to the rules under sec_301_7701-3 sec_301_7701-3 provides that an eligible_entity may make an entity classification election by filing form_8832 with the appropriate service_center under sec_301_7701-3 this election will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified the effective date specified on form_8832 cannot be more than days prior to the date on which the election is filed 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 six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register plr-111655-13 sec_301_9100-1 through provide the standards by which the commissioner will determine whether to grant an extension of time to make an election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 describes the conditions under which the commissioner will grant requests for relief that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result y1 y2 y3 y4 y5 y6 y7 and y8 are each granted an extension of time of days from the date of this letter to elect to be treated as a partnership for federal tax purposes effective date by filing a valid form_8832 with the appropriate service_center this ruling is contingent on y1 y2 y3 y4 y5 y6 y7 and y8 filing within days of this letter all required returns and amended income_tax returns consistent with the relief granted to the extent appropriate these returns must include but are not limited to form_8865 information_return of u s persons with respect to certain foreign_partnerships except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination plr-111655-13 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 bradford r poston senior counsel branch passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


department of the treasury internal_revenue_service washington d c date cc dom fs proc number release date uilc internal_revenue_service national_office field_service_advice memorandum for patrick e whelan assistant district_counsel northeast region new jersey cc ner njd new from deborah a butler assistant chief_counsel field service cc dom fs subject request for refund of deficiency_interest this field_service_advice responds to your memorandum dated date field_service_advice is not binding on examination or appeals and is not a final case determination this document is not to be cited as precedent legend x x’s representative dollar_figuree dollar_figuref year year year year dollar_figurea dollar_figureb dollar_figurec dollar_figured issue at what date does interest commence to run on an underpayment_of_tax for a particular year where x reported an overpayment_of_tax on its return and elected to have the overpayment credited against its estimated_tax liability for the succeeding year but the service subsequently determined a deficiency in tax conclusion to the extent x’s deficiency results from the use of a credit elect to satisfy estimated_tax liabilities deficiency_interest will be assessed as of the dates the excessive credit is applied to the succeeding year’s estimated_taxes interest will be computed as of the original due_date of the succeeding year’s income_tax return if the excessive credit was not needed to satisfy specific installments of estimated_tax facts x timely filed its tax returns for the years ended december year and december year on the extended due dates of september year and september year respectively the year and year returns reflected overpayments of dollar_figurea and dollar_figureb respectively which x elected to apply to the corresponding subsequent tax year’s estimated_taxes since x did not designate the quarterly installment to which the overpayment should be applied the service applied the reported overpayment to the first quarter pursuant to revrul_84_58 1984_1_cb_254 on audit the service determined net deficiencies for year in the amount of dollar_figurec greater than the dollar_figurea reported as overpayment on the return and dollar_figured less than the reported return overpayment for year in determining when deficiency_interest would begin to run on the amount of x’s year underpayment equal to the credit elect the district concludes x did not need to use any of the credit elect to satisfy estimated_tax liabilities for year with respect to estimated_tax payments in year only dollar_figuree of the excessive credit elect for year 2-that part of the credit to which x ultimately was not entitled--was used to satisfy estimated_tax liabilities for the third quarter in discussing the credit elect x used to satisfy its year estimated_tax liabilities this field_service_advice addresses only the excessive credit taken by x thus with a purported overpayment of dollar_figureb in year which x elected for use against estimated_tax liabilities in year and a subsequently determined year deficiency of dollar_figured which was less than the reported overpayment x originally overpaid its tax for year x’s use of the credit elect to which it was entitled is not at issue here and is not discussed although clearly x used that surplus in making estimated_tax payments before continued next pg all other installments of x’s estimated tax-the first second and fourth installments- -were fully paid without the using the excessive credit from year law and analysis revrul_88_98 1988_2_cb_356 holds that when a taxpayer claims a credit elect on a return filed either on the original due_date or on extension and the credit is applied in full against an installment of the succeeding year's estimated_tax interest on a subsequently determined deficiency for the earlier year runs from the due_date of that installment on the part of the deficiency equal to or less than the credit elect revrul_88_98 follows 588_f2d_342 2d cir in which the court interpreted e sec_6601 to mean that interest on a deficiency can only be charged when the tax is both due and unpaid the date the overpayment becomes a payment on account of the succeeding year's estimated_tax determines when the prior_year's_tax became unpaid for purposes of sec_6601 and thus when deficiency_interest begins to run prior to that date the government has had the use of the funds with respect to the prior_year's_tax in 36_fedclaims_680 acq aod cc-1997-008 date the taxpayer elected to credit an overpayment shown on its tax_return to the succeeding year's estimated_tax liability but did not attach a statement to its return indicating the installment to which the service should apply the credit a deficiency was determined for the taxpayer's tax_year and interest was assessed from the due_date of the first installment in accordance with revrul_88_98 however the taxpayer had made estimated_tax payments sufficient to avoid the addition_to_tax imposed by sec_6655 for for the first and second installments the court concluded the service's application of taxpayer's overpayment to the first installment did not change the fact that the government had the use of taxpayer's overpayment from the due_date of the first installment may to the date taxpayer filed its tax_return october since the overpayment was not needed to satisfy any installment of estimated_tax due during that period in light of the may department stores decision the service has reconsidered the manner in which deficiency_interest is computed under sec_6601 when the taxpayer makes an election to apply an overpayment to the succeeding year's estimated_taxes when such election is made the credit is applied to unpaid installments of estimated_tax due on or after the date the overpayment arose in the order in which they are required to be paid to avoid an addition_to_tax for failure to pay estimated income_tax under sec_6654 and sec_6655 the service will assess making use of the excessive credit that created its year deficiency here only dollar_figuree of the excessive credit was used to pay x’s third quarter estimated_tax liabilities code sec_6601 provides i f any amount of tax is not paid on or before the last date prescribed for payment interest on such amount shall be paid for the period from such last date to the date paid interest on a subsequently determined deficiency from the date the credit is applied to the succeeding year’s estimated_taxes in all situations the estimated_tax rules in effect for the tax_year in which the credit is used will determine the amount of estimated_taxes due and thus the amount of the credit needed to satisfy the quarterly installments of estimated_tax the unused balance of the credit is deemed effective as a payment of the succeeding year’s income_tax liabilities as of the unextended due_date of the return where the credit is not needed to satisfy any installment of estimated_tax as is the case with the entire year credit elect and dollar_figuref of the excessive credit from year that amount should be treated as a payment of the succeeding year’s income_tax sec_6513 provides that if any overpayment of income_tax is claimed as a credit against estimated_tax for the succeeding tax_year such amount shall be considered as a payment of income_tax for the succeeding taxable_year whether or not claimed as a credit in the return of estimated_tax for such succeeding taxable_year and no claim for credit or refund shall be allowed for the taxable_year in which the overpayment arises see also sec_6513 income_tax paid before the date prescribed for payment considered paid on the due_date the date prescribed for payment of tax is the time fixed for filing the return determined without regard to any extension of time for filing the return sec_6151 further it is on this date that the credit is treated as a payment for purposes of computing interest on any overpayment of income taxes with respect to the succeeding year under sec_6611 and d thus we conclude that the statute requires that an overpayment which the taxpayer elects to credit against estimated_tax for the succeeding year which is not needed to satisfy estimated_taxes should be treated as a payment against the subsequent year’s income_tax as of the due_date of the return by ___________________ george e bowden technical assistant cc dom fs


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 fip b02 plr-158576-06 date date --------------------------------- ---------------------------------------- ------------------------------------------ ------------------------------------------- legend taxpayer ---------------------------------------------------------------------- corporation a corporation b ---------------------------------------------------------------------- corporation c ---------------------------------------------------------------------- date properties corporation d date date dear ------------------- of taxpayer and corporation c specifically you have requested that taxpayer and corporation c be granted an extension of time under sec_301_9100-1 of the ---------------------------------------------------- ------------------------------------------------ ---------------------- ------------------------ -------------------------- this is in reply to a letter dated date requesting a ruling on behalf plr-158576-06 procedure and administration regulations to file form_8875 taxable_reit_subsidiary election so that taxpayer and corporation c may jointly elect for corporation c to be treated as a taxable_reit_subsidiary trs of taxpayer effective date facts taxpayer formerly known as corporation a is a domestic_corporation that made an election to be treated as a real_estate_investment_trust reit under subchapter_m of the internal_revenue_code effective for its taxable_year ended date taxpayer is a self-advised reit engaged in the triple-net leasing of properties as a result of its merger with corporation b on date taxpayer also conducts a financing business through corporation c or subsidiaries of corporation c taxpayer recently agreed to a proposed merger with corporation d under the terms of the proposed merger with corporation d taxpayer is required to conclusively establish that an election is in effect to treat corporation c as a trs effective date it is represented that corporation b and corporation c timely filed a valid joint election for corporation c to be treated as a trs of corporation b effective date because of its concern that the trs election would be treated as terminated by the reorganization on date taxpayer represents that it filed a joint trs election with corporation c that was effective as of date taxpayer further represents that it has consistently treated corporation c as a trs since date and that corporation c filed form_1120 for its tax_year on such basis corporation d taxpayer was requested to provide corporation d a copy of its trs election with corporation c taxpayer has been unable to locate a copy of the form_8875 to provide to corporation d taxpayer sought the assistance of the internal_revenue_service service to verify that the trs election had been made the service indicated that computer records show that a valid trs election had been made effective date for corporation c but the records did not indicate the identity of the parent the records also indicate that the election’s filing occurred before the merger of taxpayer and corporation b on a date that was exactly one year before the date on which taxpayer believes that it made the election therefore taxpayer has been prevented from conclusively establishing that an effective form_8875 was timely filed for corporation c to be treated as a trs of taxpayer relief under sec_301_9100-3 would not result in taxpayer or corporation c having a lower tax_liability in the aggregate for all years to which the election applies than each would have had if the election had been timely made taking into account the time_value_of_money neither taxpayer nor corporation c knowingly chose not to file the election neither taxpayer nor corporation c used hindsight in requesting relief finally taxpayer and corporation c make the following representations the granting of during the due diligence conducted in connection with its merger with in announcement 2001_1_cb_716 the internal_revenue_service plr-158576-06 taxpayer and corporation c represent that they are not seeking to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 taxpayer has submitted affidavits of its two of its vice-presidents attesting to and supporting the facts and representations underlying this ruling_request law and analysis sec_856 provides that a reit and a corporation other than a reit may jointly elect to treat such corporation as a taxable_reit_subsidiary to be eligible for treatment as a taxable_reit_subsidiary sec_856 provides that the reit must directly or indirectly own stock in the corporation and the reit and the corporation must jointly elect such treatment the election is irrevocable once made unless both the reit and the subsidiary consent to its revocation in addition the election and the revocation may be made without the consent of the secretary service announced the availability of form_8875 taxable_reit_subsidiary election according to the announcement this form is to be used for tax years beginning after for eligible entities to elect treatment as a taxable_reit_subsidiary the instructions to form_8875 provide that the subsidiary and the reit can make the election at any time during the tax_year the instructions further provide that the effective date of the election cannot be more than months and days prior to the date of filing the election or more than months after the date of filing the election if no date is specified on the form the election is effective on the date the form is filed with the service officers of both the reit and the taxable_reit_subsidiary must jointly sign the form which is filed with the irs service_center in ogden utah sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time to make a regulatory election defined in sec_301_9100-1 as an election whose due_date is prescribed by regulations or by a revenue_ruling a revenue_procedure a notice or an announcement published in the internal_revenue_bulletin or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i service generally will use to determine whether under the particular facts and circumstances of each situation the commissioner will grant an extension of time for regulatory elections that do not meet the requirements of ' sec_301_9100-3 provides that subject_to paragraphs b i through iii of ' when a taxpayer applies for relief under this section before the failure to make the regulatory election is discovered by the service the taxpayer will be deemed to have acted reasonably and in good_faith and ' c provides that the interests of the government are prejudiced if granting relief would result in the taxpayer having a sec_301_9100-3 through c i sets forth rules that the internal revenue plr-158576-06 lower tax_liability in the aggregate for all years to which the regulatory election applies than the taxpayer would have had if the election had been timely made taking into account the time_value_of_money based on the information submitted and representations made we conclude that taxpayer and corporation c have satisfied the requirements for granting a reasonable extension of time to elect under sec_856 to treat corporation c as a trs of taxpayer effective as of date accordingly taxpayer and corporation c are granted days from the date of this letter in which to file form_8875 to make the intended trs election this ruling is limited to the timeliness of the filing of the form_8875 this ruling s application is limited to the facts representations code sections and regulations cited herein no opinion is expressed with regard to whether taxpayer otherwise qualifies as a reit under subchapter_m of the code no opinion is expressed with regard to whether the tax_liability of either taxpayer or corporation c is not lower in the aggregate for all years to which the election applies than such tax_liability would have been if the election had been timely made taking into account the time_value_of_money upon audit of the federal_income_tax returns involved the director s office will determine such tax_liability for the years involved if the director s office determines that such tax_liability is lower that office will determine the federal_income_tax effect this ruling is directed only to the taxpayers who requested it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely william e coppersmith william e coppersmith chief branch office of associate chief_counsel financial institutions products