department of the treasury employer identification no person to contact employee id number contact phone number s tel fax form required to be filed tax years last day to file a petition with the united_states tax_court internal_revenue_service 4920dal eo mandatory review commerce street dallas tx number release date date date org address legend org organization name address address uil xx date certified mail dear this is a final adverse determination as to your exempt status under sec_501 of the internal_revenue_code irc it is determined that you are no longer recognized as exempt from federal_income_tax under sec_501 effective october 20xx for the following reason s you have not established you are operated exclusively for charitable educational scientific or religious purposes because you failed to comply with the irs’s requests for information to determine if your still qualify for tax exempt status under sec_501 contributions to your organization are not deductible under sec_170 you are required to file federal_income_tax returns on the form indicated above you should file these returns within days from the date of this letter unless a request for an extension of time is granted file the returns in accordance with their instructions and do not send them to this office processing of income_tax returns and assessment of any taxes due will not be delayed because you have filed a petition for declaratory_judgment under sec_7428 if you decide to contest this determination under the declaratory_judgment provisions of sec_7428 a petition to the united_states tax_court the united_states court of claims or the district_court of the united_states for the district of columbia must be filed within days from the date this determination_letter was mailed to you contact the clerk of the appropriate court for rules for filing petitions for declaratory_judgment to secure a petition form from the united_states tax_court write to the united_states tax_court second street n w washington d c you also have the right to contact the office_of_the_taxpayer_advocate however you should first contact the person whose name and telephone number are shown above since this person can access your tax information and can help you get answers you can call and ask for taxpayer_advocate assistance or you can contact your nearest advocate’s office in this case by calling or writing to taxpayer_advocate assistance cannot be used as a substitute for established irs procedures formal appeals processes etc the taxpayer_advocate is not able to reverse legal or technically correct_tax determinations nor extend the time fixed by law that you have to file a petition in court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling we will notify the appropriate state officials of this action as required by sec_6104 you should contact your state officials if you have any questions about how this determination may affect your state responsibilities and requirements if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely lois g lerner director exempt_organizations attachments publication tax_exempt_and_government_entities_division org address department of the treasury internal_revenue_service michigan ave 10th fl detroit mi attn adam standen eo date taxpayer_identification_number form tax_year s ended person to contact id number contact numbers telephone fax certified mail - return receipt requested dear we have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the internal_revenue_code code is necessary if you accept our findings take no further action we will issue a final revocation letter if you do not agree with our proposed revocation you must submit to us a written request for appeals_office consideration within days from the date of this letter to protest our decision your protest should include a statement of the facts the applicable law and arguments in support of your position an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in publication if we issue a determination_letter to you based on technical_advice no further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice letter catalog number 34809f if we do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the code you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at if you have any questions please call the contact person at the telephone number shown in the heading of this letter the most convenient time to call if we need to contact you if you write please provide a telephone number and thank you for your cooperation sincerely marsha a ramirez director eo examinations enclosures publication publication report of examination letter catalog number 34809f form_8 a name of taxpayer explanation of items department of the treasury - internal_revenue_service org schedule no or exhibit year period ended september 20xx legend org organization name xx date facts the above-named organization was granted exemption under sec_501 in july 19xx the organization has not filed form_990 since year ended september 20xx law sec_6033 states that every organization_exempt_from_taxation under sec_501 a shall file an annual return stating specifically the items of gross_income receipts and disbursements and such other information for the purpose of carrying out the internal revenue laws as the secretary may by forms or regulations prescribe and shall keep such records render under oath such statements make such other returns and comply with such rules and regulations as the secretary may from time to time prescribe revrul_59_95 cumulative bulletin page prescribes that failure to comply with the provisions of sec_6033 of the code may result in the termination of the exempt status of an organization on the grounds that the organization has not established that it is observing the conditions required for the continuation of its tax-exempt status government ’s position as indicated above the organization has not filed forms since year ended september 20xx forms for years ended september 20xx and september 20xx were requested in a written information_document_request as of this date we have not yet received the returns as indicated in sec_6033 every organization_exempt_from_taxation under sec_501 a shall file an annual return further as indicated in revrul_59_95 failure to comply with the provisions of sec_6033 of the code may result in the termination of the exempt status of an organization since the organization has not complied with sec_6033 by filing forms we are ptoposing revocation of its tax exemption under sec_501 taxpayer’s position the taxpayer did not respond to the 30-day report conclusion we ate proposing revocation of the organization’s tax exemption for failure_to_file forms form 886-a cev department of the treasury - internal_revenue_service page -1-


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi - plr-168601-01 date date x a d1 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 the information submitted states that x was incorporated on d1 a the president of x represents that x was intended to be an s_corporation effective d1 however no form_2553 election by a small_business_corporation was timely filed for x sec_1362 of the code provides that if -- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation for x effective d1 accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 effective d1 along with a copy of this letter with the appropriate service_center within days from the date of this letter then such election will be treated as timely made for d1 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 of the code plr-168601-01 -2- this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being forwarded to x’s authorized representative sincerely yours matthew lay senior technician reviewer branch associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


office_of_chief_counsel internal_revenue_service memorandum number release date cc eee eoet et1 krmorrison-lee postn-107316-19 uilc date may to marissa lenius senior attorney gulf coast area jacksonville office of division counsel tax exempt government entities cc tegedc gcdalj from melissa duce senior technician reviewer employment_tax branch office of associate chief_counsel employee_benefits exempt_organizations and employment_taxes cc eee eoet et2 subject information returns for mid-year change to sec_31_3504-1 agent this memorandum responds to your request for non-taxpayer specific legal advice regarding the information_return obligations of a common_law employer after entering into an agency relationship pursuant to sec_31_3504-1 of the treasury regulations this advice may not be used or cited as precedent issue which entity the common_law employer employer or the agent agent is responsible for issuing forms w-2 when a sec_31_3504-1 agency relationship begins mid-year conclusion each entity that paid wages during the calendar_year should issue forms w-2 reflecting the wages it paid law and analysis sec_3504 authorizes the secretary to promulgate regulations to designate an agent to perform such acts as are required of employers when the agent or other person has the control receipt custody or disposal of or pays the wages of an employee or group_of_employees sec_31_3504-1 of the treasury regulations provides postn-107316-19 in the event wages as defined in chapter or of the internal_revenue_code code or compensation as defined in chapter of the code of an employee or group_of_employees employed by one or more employers is paid_by a fiduciary agent or other person agent or if that agent has the control receipt custody or disposal of collectively pays wages or compensation the internal_revenue_service may subject_to the terms and conditions as it deems proper authorize that agent to perform the acts required of the employer or employers under those provisions of the code and the regulations that apply for purposes of the taxes imposed by the chapter or chapters with respect to wages or compensation paid_by the agent if the agent is authorized by the internal_revenue_service to perform such acts all provisions of law including penalties and of the regulations applicable to an employer with respect to such acts shall be applicable to the agent however each employer for whom the agent acts shall remain subject_to all provisions of law including penalties and of the regulations applicable to an employer with respect to such acts any application to authorize an agent to perform such acts signed by the agent and the employer shall be made on the form prescribed by the internal_revenue_service and shall be filed with the internal_revenue_service as prescribed in the instructions to the form and other applicable guidance this regulatory language clarifies that any acts required of the employer that are performed by the agent must relate to wages paid_by the agent revproc_2013_39 provides additional guidance on proper procedures for designating an agent under sec_31_3504-1 it provides that an employer uses form_2678 to authorize an agent under sec_31_3504-1 to perform acts required of an employer section dollar_figure of revproc_2013_39 provides that generally the agent furnishes and files one form_w-2 wage and tax statement for each employee the agent’s ein is entered in the spaces provided for the employer the name of the agent followed by agent for name of employer is entered in the space provided for the employer consistent with this instruction the general instructions for the forms w-2 and w-3 provide that an agent who has an approved form_2678 should enter its name ein and agent for employer on the form_w-2 it files and clarify that for information_return matching purposes forms w-2 with the agent’s information should only be issued with respect to wages for which the agent’s ein was reported on the corresponding form s or other relevant information_return s accordingly in situations in which both the employer and the agent paid wages to employees of the employer during the calendar_year each entity should issue a form_w-2 to each employee reporting the wages it paid to that employee example to illustrate assume an employer pays wages to its employees pays employment_taxes and files form sec_941 employer’s quarterly federal tax returns for the first three quarters of a calendar_year for the fourth quarter the employer executes and properly postn-107316-19 files a form_2678 employer payer appointment of agent authorizing a representative to act as an agent under sec_3504 of the internal_revenue_code and sec_31_3504-1 of the treasury regulations and appointing the agent to file form sec_941 for all employees the employer’s appointed agent agent then files an aggregate form_941 for the final quarter of the year along with an attached schedule r allocation schedule for aggregate form_941 filers properly reporting the employer’s ein and all other required information under sec_3504 and sec_31_3504-1 the employer in this scenario should issue forms w-2 with respect to the wages it paid during the first three quarters of the year with the employer’s ein and other identifying information in the relevant boxes and the agent should issue forms w-2 with respect to the wages it paid in the final quarter of the year with the agent’s name ein and agent for the employer included in the relevant boxes this writing may contain privileged information any unauthorized disclosure of this writing may undermine our ability to protect the privileged information if disclosure is determined to be necessary please contact this office for our views please call if you have any further questions


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-142994-08 date date internal_revenue_service number release date index number --------------------- -------------------------- --------------- --------------------- ---------- legend x ----------------------- ----------------------------------------------------------- y a b ----------------------------------------------------------- --------------- ----------------------------------------------------- --------------------------------- ------------------------------------------------------------ --------------------------- country year date ---------- ------ ------------------------- dear -------------- this letter responds to your request dated date on behalf of x seeking an extension under sec_301 of the procedure and administration regulations to file an election to treat x as an entity disregarded as separate from its owner for federal tax purposes plr-142994-08 facts based on the material submitted and the representations contained within we understand the relevant facts to be as follows y is a corporation formed in accordance with the laws of country as part of a restructuring that started in year x was formed to facilitate the transfer some of the interests in y a publicly traded corporation formed under the laws of country and historically owned by a to b however the form_8832 entity classification election inadvertently was not timely filed x represents that it was eligible to elect to be an entity disregarded as separate from its owner as of its formation on date law and analysis sec_301_7701-3 provides 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 a business_entity is an entity recognized for federal tax purposes that is not properly classified as a_trust under sec_301_7701-4 or otherwise subject_to special treatment under the code sec_301_7701-2 an eligible_entity with a single owner can elect either to be classified as an association and thus a corporation under sec_301 b or to be 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 generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if a foreign eligible_entity has one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 if a foreign eligible_entity has more than one owner it may elect to be treated as a partnership pursuant to the rules in sec_301_7701-3 sec_301 c provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date on which the form is filed to elect to be classified other than as provided in sec_301_7701-3 an eligible_entity must file form_8832 entity classification election with the designated service_center sec_301_7701-3 an election can be effective on the date specified on the form_8832 or on the date filed if no such date is specified the effective date specified on the form_8832 cannot be more than days prior to the date the election is filed sec_301_7701-3 sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an plr-142994-08 election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions for 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_9100-3 conclusion based solely on the facts submitted and representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly x is granted an extension of time of sixty days from the date of this letter to elect to be treated as an entity disregarded as separate from its owner for federal tax purposes effective date the election should be made by filing form_8832 with the appropriate service_center a copy of this letter should be attached to the election 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 s requesting it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter will be sent to the taxpayer’s representative sincerely curt g wilson curt g wilson associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ----------------------------------- ------------------------------ ----------------------------------------- ------------------------------------- - 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 b02 plr-108685-05 date date ------------ ---------------------- -------------------------------------- legend x ------------------------------------------ country date dear --- -------------- this responds to a letter dated date submitted on behalf of x requesting that the service grant x an extension of time under sec_301_9100-3 of the procedure and administration regulations to elect to be treated as a disregarded_entity under sec_301_7701-3 x represents that x is a foreign_entity eligible to elect to be treated as a disregarded_entity however the service has no record of a timely filed form_8832 entity classification election electing to treat x as a disregarded_entity effective date entity for federal_income_tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if the foreign eligible_entity has only one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 the information submitted states that x was formed under the laws of country sec_301_7701-3 provides guidance on the classification of a foreign sec_301_9100-1 through provide the standards the sec_301_9100-1 provides that the commissioner may grant a reasonable sec_301_7701-3 provides that an entity classification election must be filed plr-108685-05 on form_8832 and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form is filed extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i 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 commissioner will use to determine whether to grant an extension of time to make the election 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 granting relief will not prejudice the interests of the government conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center and elect to be treated as a disregarded_entity effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose federal tax consequences of the facts described above under any other provision of the code provides that it may not be used or cited as precedent except as specifically set forth above no opinion is expressed concerning the based solely on the information submitted and the representations made we this ruling is directed only to the taxpayer requesting it sec_6110 plr-108685-05 being sent to x’s authorized representatives pursuant to a power_of_attorney on file with this office a copy of this letter is sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


d pit9isvee internal_revenue_service department of the op e eo ty washington dc contact person telephone number in reference to date nov t999 dear sir or madam this is in reference to your letter of date requesting advance approval of your grant-making procedures under sec_4945 of the internal_revenue_code you are exempt under sec_501 of the code and have been classified as sec_509 a private_foundation within the meaning of your purpose is to foster human development spiritual intellectual physical and psychological and to enhance the work of people and organizations devoted to exemplary service in the community in furtherance of your purposes you propose to make grants to enable such recipients to complete an a prize or award subject_to the provisions of section to individuals undergraduate or graduate education at school or other educational_institution of a sec_4945 the code for having devoted a substantial part of such individual's time carrying on a purpose which is described in sec_170 b to achieve a specific objective produce a report or similar product literary artistic musical scientific teaching or other similar capacity skill or talent of the grantee the college graduate improve or enhance a his or her choice or of your scholarship grants will be made to students desiring to attend certain named universities expand your program to include other colleges and universities in future years you may a scholarship grant recipient must be a student of high academic ability as determined by past performance and admission ‘andards established by the recipient's educational_institution you rely primarily on the colleges and universities to make q ommendations regarding eligible students for scholarships wil nevertheless consider any applicant with a g p a of have shown adequate potential the vecipient aiid ibe must for r76 meeting the demands of the institution's curriculum with competence and with reasonable assurance of successful completion you will make your scholarship program known to students at various high schools or equivalent schools and post-secondary schools through the principals or other proper representatives of such schools and will make available to such students written applications to be completed by students eligible for scholarships and will make its determinations regarding the granting of scholarships your board will review the applications received in selecting individuals for non-scholarship grants you will rely heavily on the various charities with which you are involved to make recommendations regarding individuals who have devoted their lives to carrying out activities as described in sec_501 c your grantmaking to individuals who are involved in your major areas of interest which include integrated healing education opportunity youth development and overcoming societal barriers of the internal_revenue_code you will focus after individual charitable organizations all of which are qualified under sec_501 c of the internal_revenue_code make recommendations regarding individuals who are qualified to receive grants your board_of directors will review those recommendations and determine whether or not the individuals recommended by the charitable organizations are qualified and are agreeable to following your grantmaking policies and procedures to the extent reasonably possible you will pay all or a portion thereof to the scholarship funds directly to the recipient's educational_institution and such educational_institution will agree in writing to use the scholarship funds to defray the recipient's expenses or to pay the funds recipient only if the recipient is enrolled at such educational_institution and his or her standing at such educational_institution is consistent with the purposes and conditions of the scholarship reasonably met report of the recipient's courses taken and grades received in each academic period educational_institution attended by the recipient and must be obtained at least once a year in the case a recipient whose study at of courses but only the preparation of research papers or projects such as the writing of doctoral thesis you will require a brief report on the progress of least once a year an educational_institution does not involve the taking you will require the recipient to furnish you a in the event the foregoing conditions cannot be the report must be verified by the the paper or project at must be approved by the faculty such report a7 member supervising the recipient or by another appropriate_official of the educational_institution recipient's study at an educational_institution a final report will also be obtained upon completion of a in the event the reports required to be submitted indicate that all or any part of a scholarship is not being used in furtherance of the purposes of such scholarship you will investigate the facts while conducting your investigation you will withhold further payments to the extent possible until any delinquent reports have been submitted determine that any part of the scholarship has been used for improper purposes you will take all reasonable and appropriate steps to recover the scholarship funds and will withhold any further payments to the recipients in the event you you will retain records pertaining to all grants to individuals such records will include all information secured to evaluate the qualification of grantees the identification of grantees including any relationship of any grantee to you sufficient to make such grantee a disqualified_person with respect to you within the meaning of sec_4946 specification of the amount and purpose of each grant and any follow-up information you may obtain under your grantmaking policies and procedures you will emphasize grantmaking in areas involving programs and initiatives which promote an integrated approach to healing mind body heart and spirit scholarship programs for talented individuals leading to personal growth societal impact and a deeper understanding of the world and its diverse cultures programs focused on human development leadership and mentoring programs which help women and people of color overcome societal barriers and realize their full potential programs characterized by the synergy which results when people and organizations cooperate to address community needs grants to individuals to assist such individuals in carrying on any purpose which is described in sec_170 b of the internal_revenue_code you will use the following factors in your review of the potential benefit of the applications for grants proposed activities of the particular population to be served and to the community as a whole the capacity of the organization or individual to achieve the desired results the adequacy of the projected budget and time period for achieving the desired results with other organizations and individuals working in the same field costs from other sources the likelihood of future support for ongoing operating evidence of appropriate cooperation or coordination other factors which are deemed o7 relevant by you and are reasonably related to your charitable purposes recipients of grants are required to submit complete program and financial reports at least annually require more frequent interim reports a final report must be undertaking for which the grant was made made describing the grantee's accomplishment with respect to the grant and accounting for the funds received under the grant you may occasionally upon completion of the sec_4945 of the code provides for the imposition of taxes on each taxable_expenditure of a private_foundation sec_4945 of the code provides that the term ‘taxable expenditure private_foundation as or other similar purposes by such individual unless such grant satisfies the requirements of sec_4945 a grant to an individual for travel means any amount_paid or incurred by a study sec_4945 of the code provides that section shall not apply to an individual grant awarded on d objective and nondiscriminatory basis pursuant to is demonstrated to approved in advance by the secretary if the satisfaction of the secretary that the grant constitutes a scholarship or fellowship_grant which is subject_to the provisions of sec_117 a educational_institution described in sec_170 the code to be used for study at a procedure and is it an a ii of an sec_4945 of the code provides in part that the provisions of sec_4945 grant awarded on an objective and nondiscriminatory basis pursuant to grant is other similar product or improve or enhance a literary artistic musical scientific teaching or similar capacity skill to achieve a specific objective produce a report or a procedure approved in advance if or talent of the grantee will not apply to an individual the purpose of the sec_53_4945-4 of the foundation and similar excise_taxes regulations provides that in order to secure the advance approval required by sec_4945 a private_foundation must demonstrate to the satisfaction of the commissioner that grant procedures include an objective and non-discriminatory selection process to result in performance by grantees of grants were intended to finance and obtain reports to determine whether the grantees have performed the activities that the grants are intended to finance single procedure or set of procedures is required the activities that the these procedures are reasonably calculated the foundation plans to its no sec_53_4945-4 of the regulations provides that a private_foundation shall require reports on the use of funds and the progress made by the grantee toward achieving the purpose for which the grant was made revrul_77_380 1977_2_cb_419 holds that grants made by a private_foundation in recognition of past achievement with the funds being unrestricted and not earmarked for subsequent travel or study are not taxable_expenditures within the meaning of sec_4945 based upon the information submitted and assuming your program will be conducted as proposed with a view to providing objectivity and nondiscrimination in the awarding of scholarship grants we rule that your procedures for the awarding of scholarship grants comply with the requirements of sec_4945 g with these procedures will not constitute taxable_expenditures within the meaning of sec_4945 are eligible for the exclusion from income provided for in sec_117 actually used for qualified_tuition_and_related_expenses within the meaning of sec_117 of the code to the extent that such grants are thus expenditures made in accordance of the code of the code of the code and as such your procedures for selecting non-scholarship grant recipients as described above satisfy the requirements of sec_4945 of the code and the accompanying regulations the grants will be made to achieve a specific objective produce a report or similar product improve or enhance a literary artistic musical scientific teaching or similar capacity skill or talent or the grantee taxable_expenditures described in sec_4945 d these grants are not thus your awards for past achievement unlike your grants made to achieve specific objectives are not intended to finance any future activity of the recipient are no conditions or requirements to be met subsequent to the awards are not grants to receiving the awards individuals for travel study or similar purposes by such individuals made for purposes other than stated in sec_4945 are not subject_to advance approval accordingly your awards for past achievement are thus rul there in rev thus as this ruling is conditioned on the understanding that there is based is further conditioned on the premise that no grants will be will be it awarded to creators officers directors trustees or members of no material changes in the facts upon which it ifo the selection committee or for a purpose inconsistent with the purposes described in sec_170 b of the code please note that this ruling is only applicable to grants before you enter awarded under your program as outlined above into any other scholarship programs you should submit a request for advance approval of that program we are informing the ohio ep eo key district_office of this please keep a copy of this ruling with your permanent action records this ruling is directed only to the organization that requested it may not be used or cited as precedent sec_6110 of the code provides that it sincerely yours bevaty sack gerald v sack chief exempt_organizations technical branch


t c memo united_states tax_court leonard charles and kaye layne ekman petitioners v commissioner of internal revenue respondent docket no filed date paul croushore for petitioners james w ruger for respondent memorandum opinion couvillion special_trial_judge this case was heard pursuant to sec_7443a and rule sec_180 sec_181 and sec_182 respondent determined a deficiency of dollar_figure in petitioners' federal_income_tax for the issues for decision are unless otherwise indicated section references are to the internal_revenue_code in effect for the year at issue all rule references are to the tax_court rules_of_practice and procedure whether petitioners are entitled under sec_174 to a deduction for the cost of an automobile engine that was used in connection with a research or experimentation activity of leonard charles ekman petitioner if the automobile engine is not deductible as a research or experimentation expense whether the cost is deductible under sec_179 and if the cost of the automobile engine is not deductible under either sec_174 or sec_179 whether the engine is depreciable under sec_167 some of the facts were stipulated those facts with the annexed exhibits are so found and are incorporated herein by reference at the time the petition was filed petitioners husband and wife were legal residents of panama city florida although the issues in this case involve one item an automobile engine that was used in a research and experimental activity there are several other adjustments in the notice_of_deficiency as to which the parties reached a basis for settlement prior to trial on their income_tax return petitioners claimed schedule a itemized_deductions of dollar_figure in the notice_of_deficiency respondent disallowed these expenses as itemized_deductions but allowed schedule e expenses on rental property of dollar_figure and dollar_figure for depreciation petitioners agree to these adjustments on schedule c of their income_tax return relating to petitioners' research or experimental activity petitioners claimed expenses totaling dollar_figure that respondent totally disallowed respondent however allowed a deduction under schedule c in the amount of dollar_figure for expenses petitioners had continued petitioner is a graduate of the u s air force academy and retired after a career in the air force he possesses dual degrees from the air force academy in aeronautical engineering and political science he also has advanced degrees from other institutions of higher learning while petitioner was on active_duty in the air force he developed an interest in the porsche automobile which is manufactured in germany although porsche produced several types of engines petitioner was particularly interested in the porsche sec_4 engine from the evidence adduced at trial it appears that this engine was designed to run comfortably at speeds of to miles per hour however the engine was not designed for racing petitioner became interested in developing modifications to the engine that would increase the engine's horsepower so that the car would be adaptable for racing and still could be used as a regular street vehicle petitioner felt that there was a niche in the market for this type of vehicle although the manufacturer porsche was not interested in producing such an engine for the reason that porsche offered other types of engines for racing purposes the porsche sec_4 continued not claimed on their return in the written stipulation filed at trial with respect to the dollar_figure disallowed expenses respondent conceded that petitioners were entitled to a deduction for dollar_figure of these expenses leaving at issue dollar_figure representing the cost of the automobile engine referred to in the statement of issues engine is a v-8 engine while the other engines porsche produces are v-6 engines the engine enhancements petitioner envisioned for the sec_4 engine were modifications to the cam camshaft pistons and cylinders as well as modifications to the car's braking system and other components to complement the modifications without any modifications the porsche sec_4 engine generated approximately horsepower per liter whereas petitioner's objective was to increase the engine's horsepower to a range of to horsepower per liter for a total horsepower in excess of for a 5-liter engine petitioner began working on his concept around initially on a porsche sec_4 two-valve engine in late petitioner decided to intensify his efforts to develop the engine modifications after consultations with other mechanics who were familiar with the porsche engine it was suggested to petitioner that his concept would be more suitable for a four-valve porsche engine rather than the two-valve engine in date petitioner purchased a damaged porsche sec_4 four-valve engine on which he would make the modifications to enhance the engine later in petitioner enlisted other individuals to participate in the venture under the agreement with his partners the enhancement of the engine remained an activity of petitioner and his partners were to develop and produce the other parts and components that would complement the enhanced engine the damaged engine petitioner purchased cost dollar_figure petitioner made the necessary repairs to the engine and then made the necessary modifications to enhance the engine there is no dispute that petitioner reached his objective of increasing the engine's horsepower in arriving at that goal several other modifications were necessary along the way that petitioner apparently had not anticipated for example with the enhanced engine running at higher revolutions per minute petitioner had to make modifications to the engine's oil system these modifications were also successful in addition petitioner purchased two used porsche automobiles they provided the parts and the body into which the dollar_figure engine was placed after the engine enhancements had been completed the dollar_figure engine that petitioner modified was not intended to be sold but rather was intended to be used for purposes of making the modifications to see if such modifications would work the enhanced engine was not designed for nor was it intended to be a finished product but rather was used solely for purposes of making the modifications that if successful would be implemented on other sec_4 porsche engines and marketed respondent agrees that petitioner was engaged during in an activity that qualified as research or experimentation under sec_174 respondent after issuance of the notice_of_deficiency conceded petitioners' entitlement to a deduction of various expenses for research or experimentation on the subject engine dollar_figure for cam development dollar_figure for piston development dollar_figure for engine block development and dollar_figure for cylinder head development totaling dollar_figure respondent maintains that the dollar_figure paid_by petitioner for the damaged porsche sec_4 engine does not constitute a research or experimentation expense on the ground that the engine constituted the acquisition of another's patent model production or process under sec_1_174-2 income_tax regs and therefore the cost of the engine is not deductible respondent further contends that the engine was an asset used in connection with research or experimentation under sec_1_174-2 and income_tax regs and therefore could not be expensed but could only be depreciated however respondent further contends that no depreciation should be allowed because the engine was not placed_in_service during petitioners contend that the dollar_figure cost of the engine constitutes a research or experimentation expense that is fully deductible in under sec_174 or alternatively under sec_179 or as a final alternative that the cost of the engine may be depreciated under sec_167 deductions are a matter of legislative grace and the taxpayer must satisfy the specific statutory requirements claimed to reduce a tax_liability 292_us_435 the determinations of the commissioner in a notice_of_deficiency are presumed correct and the taxpayer has the burden of proving that the determinations are in error rule a 290_us_111 sec_174 permits a taxpayer to deduct currently research_and_experimental_expenditures that are paid_or_incurred during the taxable_year in connection with the taxpayer's trade_or_business the term research or experimental expenditures is defined in the regulations as expenditures incurred in connection with the taxpayer's trade_or_business which represent research_and_development costs in the experimental or laboratory sense the term includes generally all such costs incident to the development of an experimental or pilot_model a plant process or similar_property and the improvement of already existing property of the type mentioned sec_1_174-2 income_tax regs kollsman inv corp v commissioner tcmemo_1986_66 affd 870_f2d_89 2d cir sec_1_174-2 income_tax regs provides that the term research or experimental expenditures among other things does not include the costs of acquiring another's patent model production or process respondent asserts that this provision precludes petitioners from claiming the cost of the porsche sec_4 engine as a research or experimentation expense because the porsche engine was a patent or model of porsche the manufacturer the court finds it unnecessary to pass upon the merits of this argument sec_174 and sec_1_174-2 income_tax regs provide generally in pertinent part that expenditures_for the acquisition of property that is subject_to an allowance for depreciation under sec_167 are not deductible under sec_174 irrespective of the fact that the property may be used by the taxpayer in connection with research or experimentation however this portion of the regulations provides further that if any part of the cost or acquisition of depreciable_property is attributable to research or experimentation see subparagraphs and of this paragraph sec_1_174-2 income_tax regs subparagraph then provides that expenditures_for research or experimentation which result as an end product of the research or experimentation in depreciable_property to be used in the taxpayer's trade_or_business may subject_to the limitations of subparagraph be allowable as a current_expense deduction under sec_174 sec_1_174-2 income_tax regs the referenced subparagraph then provides that the deductions allowable in connection with the property are limited to amounts expended for research or experimentation and that amounts expended for research or experimentation do not include the costs of the component materials of the depreciable_property the costs of labor or other elements involved in its construction and installation or costs attributable to the acquisition of the property sec_1_174-2 income_tax regs an example in subparagraph is that of a taxpayer who undertakes to develop a new machine for use in his business the taxpayer expends a total of dollar_figure on the project of which dollar_figure represents the actual costs of material labor etc to construct the machine and dollar_figure represents research costs that are not attributable to the machine itself in this example the dollar_figure research costs are deductible but the dollar_figure costs are not deductible and must be charged to the asset account the machine in this case petitioner's payment of dollar_figure for the porsche engine represented the cost of an asset that was of a character subject_to an allowance for depreciation and that was used in connection with research or experimentation since the dollar_figure was for the acquisition of such an asset that amount is not deductible as a research or experimentation expense sec_1 b and income_tax regs all other expenses petitioner incurred in connection with the enhancement of the engine represented deductible research or experimentation expenses and indeed respondent has allowed those expenses as deductions for the dollar_figure acquisition_cost however the court sustains respondent's determination that no deduction is allowed under sec_174 petitioners contend alternatively that the dollar_figure cost of the porsche engine is deductible under sec_179 under sec_179 a taxpayer may elect to treat the cost of any sec_179 property as a current_expense in the year such property is placed_in_service sec_179 the aggregate cost that a taxpayer may deduct under sec_179 for the year may not exceed dollar_figure sec_179 provides that an election must a specify the items of sec_179 property to which the election applies and the portion of the cost of each of such items which is to be taken into account under subsection a and b be made on the taxpayer's return of the tax imposed by this chapter for the taxable_year petitioners made no election on their income_tax return for to expense the dollar_figure under sec_179 for the porsche sec_4 engine they are precluded from making that election at this time starr v commissioner tcmemo_1995_190 affd without published opinion 94_f3d_1146 9th cir petitioners next argue that if the subject engine's cost cannot be expensed under either sec_174 or sec_179 the cost years the dollar limitation has been increased for subsequent should be capitalized and petitioners should be entitled to a recovery for depreciation under sec_167 sec_167 provides in part for the allowance of a depreciation deduction with respect to property_used_in_the_trade_or_business the court disagrees with respondent's factual premise the engine was acquired by petitioner in date and the record supports a finding that the research_and_experimentation was a trade_or_business of petitioner and was conducted during the engine therefore was placed_in_service during petitioners therefore are entitled to a depreciation deduction for the cost of the engine for decision will be entered under rule


unifuen tse gist uditsdollar_figure -gl department of the treasury internal_revenue_service washington d c tax exempt and coven jun set ep t legend company a plan x dear this letter is in response to a request for a ruling letter submitted on your behalf by your authorized representatives on date as supplemented by correspondence dated date date date and date concerning the prepayment of an your authorized exempt loan upon termination of an employee_stock_ownership_plan esop representatives have submitted the following facts and representations in support of this request company a a c_corporation established plan x a portion of which is a leveraged_esop effective date for the benefit of its employees the esop portion of plan x consists of the company stock accounts as defined in section dollar_figure of plan x which is described below of participants and the plan x suspense_account which holds unallocated company a stock plan x is intended to be qualified under sec_401 of the internal_revenue_code code and to meet the requirements of sec_4975 of the code deferred arrangement as described in code sec_401 plan x provides that directed investments may be offered to participants but this offer has not been made there are no code sec_401 safe_harbor provisions in plan x no qualified nonelective contributions within the meaning of code sec_401 or qualified matching_contributions have ever been made to plan x plan x provides that only matching_contributions and discretionary contributions can be invested in company a stock no assets attributable to participants’ pre-tax contributions have ever been invested in company a stock plan x contains a cash or page using the proceeds of a loan intended to be an exempt shares of company a common_stock for approximately dollar_figure all of the shares purchased with the proceeds of the loan have in plan x purchased using the proceeds of a loan intended to be an exempt loan as described in code sec_4975 loan been allocated to participants’ accounts in plan x purchased company a common_stock for dollar_figure loan as described in code sec_4975 loan the pledge of a continuing security_interest in the company a shares that were purchased by plan x with the proceeds of the loan these shares were all placed in the plan x suspense_account as of date the plan x suspense_account and the accounts of plan x participants that plan x would continue beyond the repayment of the loan and the allocation to participants’ accounts of all of the company a shares held in the plan x suspense_account company a has made substantial and recurring contributions to plan x resulting in significant payment of the loan shares of company a common_stock were held in shares of company a common_stock were held in at the time of the loan company a contemplated the loan was secured_by shares of sec_1 of plan x provides that aggregate account means with respect to any participant the value of all accounts maintained on behalf of a participant whether attributable to employer or employee contributions the term account may refer to any or all of the following accounts company stock account other investments account participant’s account participant’s elective_deferral contribution account and participant’s rollover account section dollar_figure further states that a separate_accounting shall be maintained section dollar_figure of plan x states that company stock account means the account of a participant which is credited with the shares of company a purchased and paid for by the trust fund or contributed to the trust fund pursuant to sec_4 c as adjusted for distributions earnings losses_and_expenses attributable thereto to the extent held in the form of company a stock your authorized representative has represented that company a stock which has been released from the plan x suspense_account is held only in the company stock account section dollar_figure of plan x states that other investments account means the account of a participant which is credited with his share of the net gain_or_loss of plan x and employer contributions in other than company a stock and which is debited with payments made to pay for company a stock with respect to that portion of the other investments account attributable to elective_deferral contributions matching_contributions and discretionary contributions section dollar_figure also states that elective_deferral contributions shall not be used to pay for company a stock section dollar_figure of plan x states that participant’s account means the account established and maintained by the administrator for plan x for each participant with respect to his total interest in plan x resulting from company a’s matching_contributions and company a’s discretionary contributions section dollar_figure further states that a separate_accounting shall be maintained with respect to that portion of the participant’s account attributable to company a discretionary contributions made pursuant to plan x sec_4 a and company a matching_contributions made pursuant to sec_4 b page section dollar_figure of plan x provides that participant’s elective_deferral contribution account means the account established and maintained by the plan x administrator for each participant with respect to his total interest in plan x resulting from the participant’s elective_deferral contributions section dollar_figure further provides that a separate_accounting shall be maintained with respect to that portion of the participant’s elective_deferral contribution account attributable to elective_deferral contributions pursuant to sec_4 and any employer qualified non-elective contributions pursuant to sec_4 d your authorized representative has represented that payments on the loan are made with cash debited from that part of the participant’s other investments account which is for company a matching_contributions the stock which is then released from the plan x suspense_account is allocated to the participant’s company stock account nearly percent of the plan x participants are employed by one division in company a this division has faced and will continue to face significant challenges to its business from a large national competitor between and company a closed of its stores in this division and reduced employees in this division from approximately big_number to approximately as a result the number of plan x participants has been steadily decreasing over the last years company a anticipates that continued competition from its competitor will force it to close more stores in this division with a large reduction in the division’s employees as a result of these substantial business challenges company a proposes to terminate plan x in for financial and business reasons upon the termination of plan x company a will redeem the number of company a shares held in the plan x suspense_account that are equal in value as determined by plan x’s independent_appraiser on the date of such redemption to the then outstanding balance of the loan the trustees of plan x will simultaneously use the redemption proceeds to repay the then outstanding balance of the loan the remaining balance in plan x’s suspense_account which is estimated to be approximately big_number shares based upon plan x’s date appraisal report will then be allocated to company stock accounts of plan x participants on the basis of their account balances as of plan x’s termination_date your authorized representative has represented that this proposed surplus allocation passes the general test for nondiscrimination under sec_401 of the code when tested as employer contributions after receipt of a favorable determination_letter from the service on the termination of plan x the balances credited to participants’ company stock accounts in plan x will be distributed to them company a proposes to establish a new profit-sharing_plan intended to be qualified under code sec_401 which will include a cash_or_deferred_arrangement as described in sec_401 the k profit sharing plan’ all plan x participants will be eligible to participate in the k profit sharing plan on its effective date elective_deferrals and matching_contributions contained in the other investment account described in plan x sec_1 in the participant’s account described in plan x sec_1 and in the participant’s elective_deferral contribution account described in plan x section dollar_figure will be transferred from plan x to the k profit sharing plan in addition discretionary employer contributions contained in the participant’s account described in plan x section dollar_figure will be transferred from plan x to the k profit page sharing plan as will be the participant’s rollover account referenced in plan x sec_1 your authorized representative has represented that all transfers will be in compliance with code sec_414 your authorized representative has requested rulings to the effect of the following on your behalf the use of the proceeds from the proposed redemption by company a of company a stock equal in value to the then outstanding balance of the loan from the plan x suspense_account immediately followed by plan x’s full payment of the loan balance with redemption proceeds will not violate the exempt loan requirements under code sec_4975 or sec_54_4975-7 of the regulations and therefore will not constitute a prohibited_transaction under code sec_4975 the allocation to plan x participants’ company stock accounts of surplus shares of company a common_stock remaining in the plan x suspense_account following the repayment of the loan may be treated as earnings and not as annual_additions for purposes of code sec_415 sec_1_401_k_-1 of the regulations will not be violated when plan x participants immediately participate in the k profit sharing plan nor will it be violated by the transfer of the elective_deferrals and matching_contributions contained in plan x participants’ accounts as described above the distribution to plan x participants of their company stock accounts in plan x does not violate sec_1_401_k_-1 of the regulations with respect to your first requested ruling an esop is designed to invest primarily in employer_securities an esop must be part of a stock_bonus_plan qualified under sec_401 of the code or a stock_bonus_plan in a money purchase plan qualified under sec_401 a leveraged_esop borrows funds which it uses to purchase employer_securities usually from the employer the esop_loan or loans are generally from the employer or guaranteed by the employer the acquired employer_securities are held in a suspense_account pending allocation to the accounts of plan participants in accordance with the rules of sec_54_4975-11 of the excise_tax regulations regulations an esop generally uses employer contributions to the plan and cash dividends on employer stock held by the plan to repay the exempt loan under sec_4975 of the code an esop_loan generally is exempt from the prohibitions provided in sec_4975 and the excise_taxes imposed by sec_4975 and b only if the loan is primarily for the benefit of the participants and beneficiaries of the plan primary benefit requirement the surrounding facts and circumstances will be considered in determining whether an esop_loan satisfies the primary benefit requirement among the relevant facts and circumstances are whether the transaction promotes employee ownership of the employer stock whether contributions to the esop are recurring and substantial and the extent to which the method of sec_54_4975-7 of the regulations provides that all of page repayment of the loan benefits the employees all aspects of the loan transaction including the method of repayment will be scrutinized to determine whether the primary benefit requirement is satisfied sec_54_4975-7 of the regulations indicates that the employer has the primary responsibility for the repayment of an exempt loan through contributions to the plan sec_54_4975-7 - provides for the repayment of an exempt loan in the event of default however the exemption provided by sec_4975 of the code and described in the associated regulations will not fail to be met merely because the trustee sells the unallocated suspense_account shares and uses the proceeds to repay the exempt loan if the transaction satisfies the primary benefit requirement based on all the surrounding facts and circumstances sec_54_4975-7 of the regulations also provides that the only assets of an esop that may be given as collateral on an exempt loan are qualifying employer_securities of two classes those acquired with the proceeds of the loan and those that were used as collateral on a prior exempt loan repaid with the proceeds of the current exempt loan no person entitled to payment under the exempt loan shall have any right to assets of the esop other than i collateral given for the loan ii contributions other than contributions of employer_securities that are made under an esop to meet its obligations under the loan and iii earnings attributable to such collateral and the investment of such contributions at the time plan x was established sec_54_4975-7 of the regulations does not establish a per se prohibition against exempt loan prepayment by an esop however as noted above if an esop contemplates prepaying an exempt loan the funds used to prepay the loan must be limited as described in this regulation in this case company a has made consistent and substantial contributions to plan x for repayment of the loan more than one-half the shares purchased with the proceeds of the loan have been allocated to participants’ accounts and at the time the loan occurred company a intended that plan x would continue until the loan was repaid and all shares of common_stock held in the suspense_account were allocated to participants however company a decided to terminate plan x for financial and business reasons business competition has caused company a to substantially reduce the number of its employees and close many of its stores company a anticipates further reductions and closings upon the termination of plan x company a will redeem the number of company a shares held in the plan x suspense_account that are equal in value as determined by plan x’s independent_appraiser on the date of such redemption to the then outstanding balance of the loan the trustees of plan x will simultaneously use the redemption proceeds to repay the then outstanding balance of the loan accordingly with respect to your first requested ruling we conclude that the use of the proceeds from the proposed redemption by company a of company a stock equal in value to the then outstanding balance of the loan from the plan x suspense_account immediately followed by plan x’s full payment of the loan balance with redemption proceeds will not violate the exempt loan requirements under code sec_4975 or sec_54_4975-7 of the regulations and therefore will not constitute a prohibited_transaction under code sec_4975 page with respect to your second requested ruling sec_415 of the code provides that contributions and other additions under a defined_contribution_plan including an esop with respect to a participant for any taxable_year may not exceed the limits of subsection c sec_415 of the code states that contributions and other additions with respect to a participant exceed the limitation of this subsection if when expressed as an annual_addition to the participant’s account such annual_addition is greater than the lesser_of dollar_figure or of the participant’s_compensation sec_415 generally defines annual_addition as the sum for any year of employer contributions the employee contributions and forfeitures sec_1 g of the income_tax regulations regulations sets forth special rules for esops sec_1 g provides in part that for purposes of applying the limitations of sec_415 of the code and sec_1 g of the regulations to an esop to which an exempt loan has been made the amount of employer contributions which is considered an annual_addition for the limitation_year is calculated with respect to employer contributions of both principal and interest used to repay the exempt loan for that limitation_year sec_1 b i of the regulations provides in part that the commissioner may in appropriate cases considering all of the facts and circumstances treat transactions between the plan and the employer as giving rise to annual_additions in the present case the shares remaining in plan x’s suspense_account following the prepayment of the loan remain there because it was not necessary to redeem them to prepay the loan thus they reflect the extent of the appreciation in the value of the shares held in the suspense_account and are in effect earnings and are properly treated as such as part of the termination of plan x since the shares remaining in plan x’s suspense_account are treated as earnings they do not constitute annual_additions under sec_1 b i of the regulations upon their allocation to participants’ accounts in this situation accordingly we conclude with respect to your second requested ruling that the allocation to plan x participants’ company stock accounts of surplus shares of company a common_stock remaining in the plan x suspense_account following the repayment of the loan may be treated as earnings and not as annual_additions for purposes of code sec_415 with respect to your third and fourth requested rulings code sec_401 provides that profit- sharing and certain other types of plans will not violate sec_401 merely because they include a qualified_cash_or_deferred_arrangement as defined in sec_401 code sec_401 provides in pertinent part that amounts held by the trust which are attributable to employer contributions made pursuant to the employee’s election may not be distributable to participants or other beneficiaries earlier than an event described in paragraph or other stated events page code sec_401 states in pertinent part that an event described in this subparagraph is the termination of the plan without establishment or maintenance of another defined_contribution_plan sec_1_401_k_-1 of the regulations provides that a cash_or_deferred_arrangement satisfies this paragraph d only if amounts attributable to elective contributions may not be distributed before certain events and any distributions so permitted also satisfy the requirements of paragraphs d through of this section to the extent applicable sec_1 k - d iii provides that one of such events is for years beginning after date the termination of the plan sec_1_401_k_-1 of the regulations states in pertinent part that a distribution may not be made under sec_1_401_k_-1 if the employer establishes or maintains a successor plan it generally provides that a successor plan is any other defined_contribution_plan maintained by the same employer with respect to your third requested ruling amounts attributable to elective contributions are not being distributed to plan x participants such amounts are being transferred to the k profit sharing plan accordingly we conclude that sec_1_401_k_-1 of the regulations will not be violated when plan x participants immediately participate in the k profit sharing plan nor will it be violated by the transfer of the elective_deferrals and matching_contributions contained in plan x participants’ accounts as described above this ruling letter is also based on the assumptions that the cash or deferred with respect to your fourth requested ruling company stock accounts in plan x do not contain amounts attributable to elective contributions accordingly we conclude that the distribution to plan x participants of their company stock accounts in plan x does not violate sec_1_401_k_-1 of the regulations this ruling letter is based on the assumption that plan x is qualified under code sec_401 a at all times relevant to the transaction described herein and that it is an esop as described in sec_4975 arrangement contained in plan x is a cash_or_deferred_arrangement as described in sec_401 of the code and that no sec_404 deduction will be taken with regard to this transaction we note that the department of labor has jurisdiction with respect to the provisions of part of title i of the employee_retirement_income_security_act_of_1974 erisa including the requirement in sec_404 and sec_404 of erisa that fiduciaries discharge their duties for the exclusive purpose of providing benefits to participants and their beneficiaries and in a prudent manner therefore we express no opinion as to whether the subject transactions are consistent with such provisions this ruling letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited by others as precedent page 20ud500381 a copy of this ruling letter has been sent to each of your authorized representatives in accordance with a power_of_attorney on file with this office if you have any questions please contact please refer to se t ep ra t3 sincerely yours frauyv berw frances v sloan manager employee_plans technical group enclosures notice deleted copy of ruling letter cc


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-153488-12 date date legend taxpayer ------------------------ ----------------------------------------------------------------------- state a state b date properties country a --------------------- -------------- --------------------------- ------------------------------ ------------------- trs a ----------------------------------------------------------------------- ------------------------------------------- x ----- dear -------------- this is in reply to a letter dated date requesting a ruling on behalf of taxpayer you have requested a ruling under sec_856 regarding the qualification of income received from taxpayer’s subsidiary reit as defined below you have also requested a ruling concerning the treatment of stock in the subsidiary reit under sec_856 plr-153488-12 facts taxpayer a state a corporation is a publicly traded real_estate_investment_trust reit that elected to be taxed as a reit effective for its tax_year ended date taxpayer has intended to qualify as a reit at all times since taxpayer owns a geographically diverse portfolio of properties in country a taxpayer’s country a operations are conducted through various disregarded entities taxpayer’s non-reit qualifying operations are conducted through trs a taxpayer intends to restructure its properties holdings by forming two separate subsidiary reits subsidiary reits that will each hold properties and an interest in trs a each subsidiary reit will be organized as a state b corporation and will elect to be taxed as a reit with the reit election of be effective the first day that the subsidiary reit holds assets and or conducts operations taxpayer represents that each subsidiary reit will operate so that at all times it satisfies all of the requirements for qualification as a reit each subsidiary reit will be capitalized with common_stock and preferred_stock approximately x outside investors will hold one or more shares of the preferred_stock of each subsidiary reit in connection with the formation and capitalization of the subsidiary reits taxpayer will transfer to each subsidiary reit an interest in the trs a securities that it holds law analysis sec_856 the income test provides in relevant part that at least percent of a reit’s gross_income must be derived from specified sources that includes dividends or other distributions on and gain other than gain from prohibited_transactions from the sale_or_other_disposition of transferable shares in other reits which meet the requirements of sec_856 sec_856 the asset test provides that at the close of each quarter at least percent of a reit’s total assets must be represented by real_estate_assets cash and cash items including receivables and government securities the term real_estate_assets includes shares in other reits which meet the requirements for qualification as a reit see sec_856 sec_856 provides that not more than percent of the value of a reit’s total assets can be represented by securities that do not meet the asset test sec_856 further provides that not more than percent of the value of a reits total assets can be represented by securities of one or more taxable reit subsidiaries trss plr-153488-12 sec_856 provides that a corporation that is a qualified_reit_subsidiary qrs shall not be treated as a separate corporation and all assets liabilities and items of income deduction and credit of a qrs shall be treated as assets liabilities and such items as the case may be of the reit a qrs is any corporation other than a trs if percent of the stock of such corporation is held by the reit dividend income from shares of other reits is qualifying_income under the income test likewise shares of other reits are qualifying_assets under the asset test taxpayer has represented that each subsidiary reit will qualify as a reit therefore any dividend income received by taxpayer from each subsidiary reit will meet the income test and any shares of a subsidiary reit held by taxpayer will meet the asset test taxpayer does not hold ----- of the stock of either subsidiary reit therefore neither subsidiary reit qualifies as a qrs and sec_856 does not apply to treat the assets liabilities and credits of each subsidiary reit as those of taxpayer accordingly we rule that dividends received by taxpayer from each subsidiary reit will qualify as good income under sec_856 furthermore the stock of each subsidiary reit owned by taxpayer will qualify as a real_estate asset for purposes of sec_856 and taxpayer will not be considered to own any of the assets owned by the subsidiary reits except as specifically ruled upon above no opinion is expressed concerning any federal_income_tax consequences relating to the facts herein under any other provision of the code specifically we do not rule whether taxpayer and the subsidiary reits otherwise qualify as reits under part ii of subchapter_m of chapter of the code including whether those reits each satisfy the requirements of sec_856 and this ruling is directed only to the taxpayer requesting it taxpayer should attach a copy of this ruling to each tax_return to which it applies sec_6110 of the code provides that this ruling may not be used or cited as precedent plr-153488-12 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 jonathan d silver________________ jonathan d silver assistant to the branch 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 b03 plr-149941-06 date date -------------- ----------------------- --------------------------------------- ----------------------- ---------------------------------------------- ----------------------- ---------------------------------------------------- ----------------------- legend x a b c d country d1 dear ------------------------------------ correspondence submitted on behalf of x requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations for x to file an election under sec_301_7701-3 to be classified as an entity that is disregarded as separate from its owner for federal tax purposes effective d1 this responds to a letter dated date and subsequent ------------------------------------ ----------------------- ------------------------- ----------------- plr-149941-06 facts according to the information submitted x was formed as a limited_liability_company under the laws of country on d1 through tiers of wholly owned entities b c and d a owns of x x is not classified as a corporation under sec_301 b or x intended to elect under sec_301_7701-3 to be classified as a disregarded_entity for federal tax purposes as of d1 but the election was not timely filed with the appropriate service_center law and analysis sec_301_7701-3 provides 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 a single owner can elect to be classified as an association or to be 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 generally a foreign eligible_entity is treated as an association if all members have limited_liability unless the entity makes an election to be treated otherwise a foreign eligible_entity with a single owner having limited_liability may elect to be treated as a disregarded_entity pursuant to the rules of sec_301_7701-3 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 entity classification election and can be effective up to days prior to the date the form is filed or up to months after the date the form 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 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 or a revenue_ruling revenue_procedure notice or an announcement published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards that the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides rules for requesting extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 plr-149941-06 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 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 file form_8832 with the appropriate service_center to elect to be classified as an entity disregarded as separate from its owner for federal tax purposes effective d1 the election should be made by following the procedures set forth in form_8832 and a copy of this letter should be attached to the election a copy is enclosed for that purpose 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 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 s william p o'shea associate chief_counsel passthroughs special industries enclosures a copy of this letter a copy for sec_6110 purposes


internal_revenue_service department of the treasury washington dc number release date index number person to contact telephone number refer reply to cc psi - plr-113978-00 date date x d1 state y dear this letter responds to your and subsequent correspondence written on behalf of x requesting that x be granted an extension of time to file an election under sec_301_7701-3 of the procedure and administration regulations to be treated as a corporation for its taxable_year beginning d1 the information submitted states that x was organized on d1 as a domestic limited_liability_company under the laws of state with two members x did not file a form_8832 entity classification election within days of d1 sec_301_7701-3 provides guidance on the classification of domestic eligible entities for federal tax purposes generally a domestic eligible_entity with two or more members is classified as a partnership unless the entity elects otherwise while a domestic eligible_entity with a single owner is disregarded as a separate_entity unless the entity elects otherwise sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 by filing form_8832 entity classification election with the appropriate service_center under sec_301 c iii the election under sec_301_7701-3 will be effective on the date specified on the form_8832 or on the date filed if no such date is specified on the form the effective date specified on form_8832 cannot be more than days prior to the date on which the election is filed and cannot be more than months after the date on which the election is filed sec_301_9100-1 provides that the commissioner has ms pamela green boyer discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election sec_301_9100-1 defines a 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 sets forth 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 granting relief will not prejudice the interests of the government based on the information submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time for making the election to be classified as an association_taxable_as_a_corporation for federal tax purposes until days following the date of this letter a copy of this letter should be attached to the form_8832 and filed with the y service_center except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x sincerely yours paul f kugler associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


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 plr-144485-08 date date legend x --------------------------------------------------- ---------------------------------- d country ---------------------- ---------- dear ---------------- this is in response to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a disregarded_entity for federal tax purposes facts according to the information submitted x was formed under the laws of country x intended to be treated as a disregarded_entity for federal tax purposes effective d however x inadvertently failed to timely file form_8832 entity classification election to be treated as a disregarded_entity for federal tax purposes law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can plr-144485-08 elect its classification for federal tax purposes an eligible_entity with a single owner can elect to be classified as an association or to be 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 generally a foreign eligible_entity is treated as an association if all members have limited_liability unless the entity makes an election to be treated otherwise a foreign eligible_entity with a single owner having limited_liability may elect to be treated as a disregarded_entity pursuant to the rules of sec_301_7701-3 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date the form 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 internal_revenue_code except subtitles e g h and i section b defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards that the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides rules for requesting extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to make an election to be treated as a disregarded_entity for federal tax purposes effective d x must make the election by filing a properly executed form_8832 with the appropriate service_center a copy of this letter should be attached to the form 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 plr-144485-08 this ruling is directed only to the taxpayer requesting 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 representative sincerely curt g wilson curt g wilson associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


cca_2013102309230857 id uilc number release date from sent wednesday date am to cc bcc subject re levy question ---------- - a levy is only a provisional remedy that protects the government’s interest until a claim to the subject property is resolved the ro should advise the bank that there are only two defenses to its refusal to surrender property and that neither is implicated here the first is that the bank is not in possession of the taxpayer’s property which is not the case because you have indicated that there are funds in the taxpayer’s account the second is that at the time of service of the notice_of_levy the property was subject_to attachment or execution under judicial process which does not appear to be the case from the brief summary of facts you submitted see 472_us_713 the ro may also advise the bank that the bank will be held harmless if it honors the levy pursuant to i r s sec_6332 finally the ro should warn the bank that its failure to honor the levy may result in independent liability as well the imposition of the 50-percent penalty for failing to surrender property without reasonable_cause see sec_6332 the bottom line is that the sec_6334 levy exemptions do not constitute third-party defenses and the bank is required by statute to surrender all of the taxpayer’s property that was in its possession as of the date of levy but not until after the sec_6332 21-day waiting_period applicable to banks i would direct your attention to lesson of the gl-1 materials which can be found on the pa website as well as the training website i believe and which has a detailed discussion of the procedures for levying banks and the available defenses to levy as well as the sec_6334 exemptions from levy feel free to call me directly if you have any questions or further want to discuss regards --------------------------------------------------------------------------------------------------------------------------- ----------------------