department of the treasury internal_revenue_service washington d c contact person identification_number contact number employer_identification_number form required to be filed tax years tax_exempt_and_government_entities_division number release date date date uil dear this is our final_determination that you do not qualify for exemption from federal_income_tax as an organization described in internal_revenue_code sec_501 recently we sent you a letter in response to your application that proposed an adverse determination the letter explained the facts law and rationale and gave you days to file a protest since we did not receive a protest within the requisite days the proposed adverse determination is now final since you do not qualify for exemption as an organization described in code sec_501 donors may not deduct contributions to you under code sec_170 you must file federal_income_tax returns on the form and for the years listed above within days of this letter unless you request an extension of time to file we will make this letter and our proposed adverse determination_letter available for public inspection under code sec_6110 after deleting certain identifying information please read the enclosed notice notice of intention to disclose and review the two attached letters that show our proposed deletions if you disagree with our proposed deletions you should follow the instructions in notice further action if you agree with our deletions you do not need to take any in accordance with code sec_6104 we will notify the appropriate state officials of our determination by sending them a copy of this final letter and the proposed adverse letter you should contact your state officials if you have any questions about how this determination may affect your state responsibilities and requirements letter cg catalog number 47632s if you have any questions about this letter please contact the person whose name and telephone number are shown in the heading of this letter federal_income_tax status and responsibilities please contact irs customer service pincite-829-1040 or the irs customer service number for businesses the irs customer service number for people with hearing impairments is if you have any questions about your sincerely lois lerner director exempt_organizations letter cg catalog number 47632s department of the treasury internal_revenue_service washington d c contact person identification_number contact number fax number employer_identification_number vil tax_exempt_and_government_entities_division date date legend c applicant’s founder d name of program e for-profit company f state g state h ocean region l city and state j geographic area k for-profit grant company l museum n educational_institution w date x date y date z date dear we have considered your application_for recognition of exemption from federal_income_tax under internal_revenue_code sec_501 based on the information provided we have concluded that you do not qualify for exemption under code sec_501 the basis for our conclusion is set forth below this letter supersedes our previous letter dated date and considers your response to the proposed adverse letter and information supplied during the appeals process issue do you meet the qualifications for exemption under sec_501 of the internal_revenue_code no for the reasons described below facts you were originally incorporated in the state of f on w recognition of exemption under sec_501 of the internal_revenue_code was filed on x while the application was under consideration you dissolved this organization on y and incorporated pursuant to the nonprofit laws in the state of g on z the name of the g corporation was identical to the f corporation the application form_1023 was amended to reflect a new federal employer_identification_number the applicant verified that the narrative descriptions and operations described in the form_1023 remained the same a form_1023 application requesting article iii of your articles of incorporation states that you are organized and shall be operated for exclusively religious charitable scientific and educational_purposes within the meaning of sec_501 of the internal_revenue_code_of_1986 you are governed by a board_of directors the board includes seven individuals four of the seven are related family members listed as husband wife and two daughters the two daughters are non voting board members therefore of the five board members with voting rights three are not related all four related board members are also listed as the officers of the corporation the corporations officers are president treasurer secretary and the two daughters are jr vice presidents the form_1023 states that your purpose is to promote economic development and community improvement through organizations and individuals whose mission is related to reducing humanity’s dependence on fossil fuel your overarching goal is to demonstrate that marine transportation can be operated reliably and economically while free of fossil fuel you were formed initially to manage the d program the goal of the d program is to demonstrate that marine transportation can be operated reliably and economically while free of fossil fuel to achieve this goal you will accept grant funding assemble the required team of individuals and businesses manage the program and have full responsibility for the use and distribution of program funding the d program you are to manage is to be completed in three major phases phase one will a build and deliver at least one and possibly six 45’ boats with matching d package for commercial and or government_use in the h region will o operate a similar d package on an 85’ waterborne moored test platform in feasibility of attempting phase three of the project and will c provide the preliminary planning and engineering for phases two and three on a schedule to document the phase two will convert the 85’ test platform into the d driven 125’ operating craft install larger equipment and make the craft ready for service in phase three phase three will be a three year period of continuous operation of the 125’ test craft that will include supporting the operating crew hauling dead weight cargo all-weather operation and planned maintenance periods the goal is to experience the normal operating life cycle of a cargo carrying craft collect operational and maintenance data and demonstrate the reliability and feasibility of the d package as a credible means of propulsion for marine transportation the operational maintenance and environmental impact data from this phase will be made available to interested government agencies educational institutions and industry segments for future development your president and founder is c contracted with a for-profit company in f named k to obtain funding for the d program initially the d program was to be operated by c’s for-profit company e waterfront site in i and military vessels that are used in the bays and rivers and along the coast e is in the marine transportation business and primarily repairs commercial prior to your incorporation c entered into negotiations and e operates a shipyard on a list of potential grantors to c who were interested in the d project the potential k submitted a grantors required that grant recipients should have an irs letter of determination c then entered into a second agreement with k this agreement was for services to establish a nonprofit corporation and to facilitate the completion of the form_1023 application request for recognition of exemption the form_1023 application explains that you have entered into this world of nonprofit_organizations for a very specific initial purpose and effort to demonstrate marine propulsion powered by an alternative form of energy the immediate beneficiaries of your activities will be individuals and businesses in the j area providers of goods and services associated with your projects and activities will realize direct economic benefit this will be an opportunity for new businesses and economic development if the projects are successful during the construction periods it will be necessary for businesses and individuals to train and improve their skills in the areas of aluminum boat building and alternative power which will include trade skills of welding ship fitting pipe fitting electrical power collection distribution and management electrical and electric alarms and controls and navigational electronics during operational periods data will be collected and transmitted for evaluation in developmental ways that will allow educational institutions to participate data will be shared with the public so that individuals and organizations can make independent determination of the value and future of fossil fuel free propulsion and other experimentation involving energy collection consumption and management environmental impact and operational economics can will be performed the expectation is that these results will be positive and when they are educational institutions and businesses and government research_and_development agencies will begin to incorporate the real time operational proof of the reliability and feasibility of the fossil fuel free concept into their programs you will begin to manage the d program when fully funded you plan to receive funds from various grant making organizations and foundations once funded you will identify the suppliers of goods and services enter into contractual agreements with individuals and organizations for services distribute funds monitor the progress of the projects and post results on your website the form_1023 application included a list of probable providers of goods and services for all three phases of the d program e is one of the potential service suppliers in the j area who may receive distributions from you for goods and services you have not entered into any agreements for goods or services however any transactions between you and any of your officers or directors must follow the adopted conflict of interest policy this policy is to be followed when contemplating any transactions or compensation arrangements with a director officer or interested person the application also reports that officers directors and trustees will be compensated when funds are available the budgets estimated that officers and directors would receive compensation at approximately of total revenue policies to decide compensation has been determined to ensure they are negotiated at arms length salaries have not been set but the in addition to the d program you will in the future manage other programs to promote economic development through organizations and individuals whose mission is related to reducing humanity's dependence on fossil fuel you were formed to accomplish the d program initially and to make projects possible that so far have not been attractive to for-profit organizations because of the effort-risk-reward ratios the projected percentage of time and funds used for your initial activities are estimated as follows e e e e e d program- purchase of goods and services to execute project direct educational program- working with educational institutions selecting distributing and following up on contributions to charities requesting and reviewing possible future projects business management and support of time and of funds of time and of funds of time and of fund sec_5 of time and of fund sec_25 of time and of funds the founder explained that you do not intend to be the originator of new thought or design that would have rights of ownership you have no intention of holding or sharing any patent or copy rights that might result from their projects a producer of solar collectors may be encouraged to build a better collector as a result of the research and opportunities provided through you and the d program if a better collector is the result then the manufacturer is the owner and beneficiary of rights of ownership you will have served one of its purposes supporting the improvement of technology to come closer to fossil fuel independence law sec_501 of the code provides for exemption from federal_income_tax for organizations that are organized and operated exclusively for charitable educational religious or scientific purposes no part of the income of which inures to the benefit of private individuals sec_1_501_c_3_-1 of the income_tax regulations states that an organization is not operated exclusively for one or more exempt_purpose unless it serves a public rather than a private interest who created it it must not be operated for the benefit of designated individuals or the persons sec_1_501_c_3_-1 of the regulations states that the term ‘charitable’ is used in sec_501 of the code in its generally accepted legal sense such term includes relieving the poor and distressed or the underprivileged combating community deterioration lessening neighborhood tensions and eliminating prejudice and discrimination sec_1_501_c_3_-1 scientific defined i a ‘scientific’ organization must be organized and operated in the public interest research when taken alone is a word with various meanings it is not synonymous with scientific and the nature of particular research depends upon the purpose which it serves sec_1_501_c_3_-1 of the regulations further provides that scientific research does not include activities of a type ordinarily carried on as an incident to commercial or industrial operations as for example the ordinary testing or inspection of materials or products or the designing or construction of equipment buildings etc revrul_65_1 1965_1_cb_226 describes the operations of an organization formed to foster the development and design of labor saving agricultural machinery including the development of new labor saving methods and ideas the organization conducted studies to determine the need for mechanization of planting cultivation and harvesting which were generally performed manually by agricultural laborers if an opportunity for successful machine utilization appeared to be possible the organization determined whether work on such a machine was being undertaken by any public or private_institution appropriate public or private agency to develop the necessary machinery if the prototype of the machine performed well the organization sought a patent in its name and licensed a manufacturer to build the device on an exclusive or non-exclusive basis any royalties received by the organization are then used to develop additional machines for other projects if not the organization made a grant to an the revenue_ruling reasoned that the development of machinery was equivalent to the designing or construction of equipment’ that is incident to a commercial operation and does not constitute scientific research within the meaning of reg c -1 d ii revrul_72_369 1972_2_cb_245 describing an organization formed to provide managerial and consulting services at cost to unrelated exempt_organizations the ruling held that the organizations did not qualify for exemption under sec_501 of the code the ruling states that an organization is not exempt merely because its operations are not conducted for the purposes of producing a profit providing managerial and consulting services of a regular basis for a fee is a trade_or_business ordinarily carried on for profit revrul_74_587 1974_2_cb_162 held that an organization that devoted its resources to programs to stimulate economic development in economically depressed high-density urban areas inhabited mainly by low-income minority or other disadvantaged groups qualified for exemption under sec_501 the organization made loans and purchased equity interests in businesses unable to obtain funds from conventional sources because of financial risks associated with their location and or because of being owned by members of a minority or other disadvantage group the organization established that its investments were not undertaken for profit or gain but to advance its charitable goals funds for its program were obtained from foundation grants and public contributions revrul_78_426 1978_2_cb_175 describes a nonprofit organization whose activities include the inspection testing and safety certification of cargo shipping containers and research development and reporting of information in the field of containerization it is not operating exclusively for the purpose of testing for public safety or scientific purposes the containers are tested against voluntary standards issued by a federal_agency the testing and certification serve the private interest of the container manufacturers and shipping by facilitating their international operations they only serve the public interest incidentally the testing and research activities are of a type ordinarily carried on as a commercial industrial operation the organization fails to qualify for exemption under sec_501 as it is not operated exclusively for the purpose of testing for public safety or for scientific purposes in 326_us_279 the supreme court determined that while some activities of the organization were educational a substantial purpose of the organization was to promote business and thus the organization was not operating exclusively for educational_purposes in 186_f2d_68 2d cir the court denied exemption under the predecessor to sec_501 of the code because the organization’s purposes is primarily to benefit its members economically and only incidentally to further larger public welfare in iit research institute v united_states cl_ct cl_ct a u s claims_court reviewed the activities of an organization exempt under sec_501 of the code the organization contracted with a variety of industry members to perform research for them the court defined the term scientific to include the process by which knowledge is systematized or classified through the use of observation experimentation or reasoning the court found that the organization was not involved in the commercialization of the products or process developed as a result of its research iit research institute only developed a project to the point where the research principles were established at this point the sponsors would make the principles available to different customers usually in the form of newly developed products or equipment the court found significance in the fact that iit research institute did not engage in any consumer or market research or ordinary testing of the type which is carried on incident to commercial operations the court therefore found that the organization's activities were research and not ordinary testing carried on as an incident to commercial or industrial operations application of law your initial and primary activity is to manage a program known as the d program the goal of the d program is to demonstrate that marine transportation can be operated reliably and economically by solar power to achieve this goal at least one prototype vessel must be constructed and operated in the public eye the application_for exemption explains that you will begin managing the d program when fully funded you will then contract with individuals and organizations that provide goods or services to them the application also claims that you will further economic development and the immediate beneficiaries will be individuals and businesses in the j area to be recognized as exempt an organization must demonstrate that it is both organized and operated exclusively for one or more purposes as defined under sec_501 of the code exempt economic development organizations that fund for-profit businesses qualify for exemption if the benefits to a charitable_class out weigh the private benefit to businesses the organization described in revrul_74_587 supra qualified as an exempt economic development_corporation because their programs helped to stimulate the economy of an economically depressed area you indicated that immediate beneficiaries of your activities will be individuals and businesses in the j area there is no evidence to show that stimulating the j economy would benefit a charitable_class or further charity in the manner described in sec_1_501_c_3_-1 in addition the founder’s own for-profit business e could be one of those beneficiaries the financial benefits to e would also constitute private benefit to your founder as a result under sec_1 c -d ii of the regulations you do not meet the requirements of sec_501 of the code see consumer-farmer milk cooperative v commissioner supra further your managerial and consulting services that are conducted to achieve the goals of the d program are considered activities associated with a trade_or_business ordinarily carried on for profit see revrul_72_369 supra you will begin activities when fully funded and can pay their expenses including compensation to the officers for managing the d program the business of managing the d program constitutes a substantial amount of your activities you are similar to better business bureau v united_states supra in that while some of the activities are educational your substantial purpose was to promote business you also anticipate raising funds and managing future projects that so far have not been attractive to for-profit organizations because of the effort-risk-reward ratios future projects the d program had difficulty attracting investors the costs associated with the d program were a risk to the marine industry especially if a ship capable of transporting cargo were not produced you were formed with the assistance from a company hired to apply for charitable grants this shows that one of the purposes you were formed was to reduce the risks to for-profit companies who would otherwise budget expenses for research_and_development costs even if the d program was not successful the providers of goods and services in the j area would realize direct economic benefit through you your management activities and funding services furthers the private benefit of the service providers in the j area providing funding and management to future projects further demonstrates that you are performing commercial services in a manner that is similar to the organization in revrul_72_369 similar to these sec_1_501_c_3_-1 of the regulations provides that scientific research does not include activities of a type ordinarily carried on as an incident to commercial or industrial operations in managing the d program you are involved in testing and demonstrating the feasibility of solar powered marine transportation these activities are similar to the organization described in rev_rul supra in that the testing and research activities are of a type ordinarily carried on as a commercial manufacturers operation also facilitating the design or construction of solar powered boats where the manufacturers retain the patents rights and benefits that might result facilitates a trade_or_business see revrul_65_1 supra unlike iit research institute v united_states supra your activities to maintain and monitor the test craft are incidental to commercial or industrial operations applicant's position you explained that your mission is to advance science and education in the public sector using a process that will demonstrate the possibility of replacing fossil fuel with other forms of energy to support marine transportation initially the effort will be focused on collection of solar_energy for the d program you will use scientific research to develop a body of knowledge to share with the public in an effort to demonstrate that there is at least one alternative to fossil fuel that is operationally practical system reliable and economically feasible you will gather collect and analyze the data from each phase of the d program the data will be maintained in an event diary and a data log the data collected will be published and made available to the public the public including manufacturers may improve upon the process and retain rights to any improvement of technology you have no intention of holding or sharing any patent or copy rights that result from their projects in addition to sharing the results with the public you will approach high schools and colleges with offers to provide opportunities for educational experiences the d program would encourage further scientific research and education you will assist teachers in developing science projects and supporting curriculum that identifies alternate energy uses from fossil fuels universities and technological institutions will be involved to work towards making alternative_energy sources feasible you will also erect and maintain floating platforms for public use a solar powered boat will be built and provided free of charge to non-profit public organizations and government agencies such as l and n while these agencies utilize the platforms for their work you will collect and evaluate the data to determine the economic feasibility and reliability of alternate energy technologies for marine transportation these activities show that you operate for the benefit of the general_public and furthers educational and scientific purposes your activities will also require additional skilled and semi skilled labor to construct monitor and maintain the floating platforms a larger work force will benefit the public with less unemployment and more revenue flowing into the local economies the public good would out weigh any benefits to private companies used in the d program if successful new jobs and education would not be limited to the j area you will also improve environmental quality by facilitating projects that encourage the use of alternative_energy sources this would also contribute towards lessening our dependency on foreign oil service response to applicant’s position as the regulations indicate conducting scientific research is not sufficient to qualify an organization for sec_501 status the scientific research must be in the public interest as described in sec_1_501_c_3_-1 the goal of the d program is to demonstrate that a solar powered boat can be used as a cargo carrying craft each phase of the d program will increase the size of the test craft the data collected and shared with the public will report the operational maintenance and environmental impact of the craft the desired outcome from the d program is that the public demonstration and data published will prove that this technology is feasible and reliable for commercial and or government_use in the h region building companies already producing these boats by forming your organization as a non profit company the financial risk has been shifted from the ship building industry in the j area therefore you are serving the private interests of the for-profit marine transportation businesses if successful the public demonstration of the test craft serves to benefit the ship in the j area your founder is also in the marine transportation business and has a company in this same area therefore any private benefit to the founder even if indirectly through the e company would disqualify you from qualifying for exemption under sec_501 of the code sec_1_501_c_3_-1 of the regulations states that an organization is not serving public interests if it is operated for the benefit of designated individuals or the persons who created it applicant’s response to proposed adverse letter in the written response to the proposed adverse letter you stated that you are requesting exemption under sec_501 as a charitable_organization engaged in advancing education science and industrial development through the pursuit of environmental conservation and protection the basis for protest was presented as paragraphs and views summarized in part below you are organized and will be operated for the purposes of being useful to individuals and providing benefit to the general_public by protecting the environment through the exploration of possible alternatives to fossil fuel you will advance education and science while working to identify feasible applications of the sciences of energy conversion and environmental protection which will result in conserving fossil fuel and preserving air and water quality you advance industrial development in the context of scientific research directed toward benefiting the public which will most likely occur in the communities of for-profit and non-profit organizations that provide the services and supplies necessary to complete various research projects conducted by you you benefit the public by improving natural and social environmental conditions through shared information you advance education science and industrial development for the benefit of the general_public not the creator’s financial benefit you are a charitable_organization for the purposes of protecting the environment and producing advances in education and science with associated advancements in industrial development all project results will have value that is directed toward a charitable benefit to the general_public you disagreed with the application of the following tax law as follows a revenue_ruling i ii ili iv you are not requesting exemption as a scientific_organization but as an organization that advances science you do not develop machinery that will save labor you have no financial interest in promoting beyond education any outcome that may result from a particular project you will have no financial interest in or claim to any patents or licenses that may result from a particular project b revenue_ruling i ii you are not requesting exemption as an organization testing for public safety or scientific purposes you will not test equipment for the benefit of public safety ili your projects will not work toward the promotion of any existing or future products your purpose of the applied research_and_experimentation is to demonstrate to the general_public that some maybe more than one approach to energy conversion is feasible and reliable the pubic is then responsible to express their desire personal and collective to use the new source in their daily lives c iit research institute v united_states i ii to the extent that the case is described in the law section of reference a it seems to support some of your activities to the extent that the case is used in the application of the law section of reference a presents a connection with you that is incorrect d better business bureau v united_states i ii ili iv v vi vii it occurs is a consequence of efforts to enhance you are not an educational_organization but an organization that advances education you are not requesting exemption exclusively for educational_purposes you do not intentionally promote business advancement of education is more than an incidental activity business promotion if the natural and social environment by sharing information with the general_public and it will be driven by public interest not by you business promotion and job creation are not synonyms you are about job creation and directing benefit toward the public by attracting new or encouraging existing industry in the community to search for energy conversion solutions you have a primary focus and an intentional organizational structure to protect the environment to preserve natural_resources fossil fuel and to conserve natural_resources air and water e consumer-farmer milk cooperative inc v commissioner i ii iii iv you are not a cooperative and have no membership you do not operate incidentally for educational_purposes you are not organized for the economic benefit of your creator or interested individuals this is stated in your articles of incorporation and bylaws you are organized and operated for charitable purposes which include the preservation conservation of the natural environment and the advancement of education science and industrial development f revrul_72_369 i ii iii iv you are not requesting exemption as a charitable_organization engaged in improving any aspect of an existing organization you do not provide managerial or consulting services the services you provide are not normally carried on by any ordinary business whether for profit or not the services you provide are directed toward interested individuals and the general_public in an effort to enhance awareness of the need for protecting the environment preserving and conserving natural_resources and encouraging public support of pursuing alternative forms of energy g revrul_74_587 i ii iii iv you are not an economic development_corporation you do not fund for-profit organizations you purchase specific goods and services to support and further your purposes you will not loan funds for practical development regardless of the potential risk and you will not hold any equity_interest directly or indirectly in any business or organization that interacts with you you stated your purpose is to protect the environment and to produce advances in education and science with associated advancements in industrial development you cited the following four substitute revenue rulings to support your position a b revrul_79_018 1979_1_cb_194 holds that an organization that provides specially designed housing to elderly persons at the lowest feasible cost and maintains in residence those tenants who subsequently become unable to pay its monthly fees is an organization operated exclusively for charitable purposes within the meaning of sec_501 of the code the organization described in this revenue_ruling was formed under the sponsorship of community leaders to meet a community need for an elderly housing facility you stated you are compared to the organization in rev_rul because you will provide your services by advancing education and science through demonstration on scale platforms and then providing the results knowledge and use to the public revrul_76_204 1976_1_cb_152 the purpose of environmental conservancy a preserving the or purchase ecologically significant undeveloped land and either maintaining the land itself with limited public access or transferring the land to a government conservation agency by outright gift or being reimbursed by the agency for its cost qualifies for exemption under sec_501 of the code natural environment by acquiring organization formed for nonprofit gift by you stated you are compared to the organization described in revrul_76_204 because you will provide services by advancing education science and industrial development through the environment by conserving the natural resource fossil fuel and preserving the quality of the precious resources air and water demonstrations that when successful protect will c revrul_76_37 1976_1_cb_149 construction trades training center sale of homes a nonprofit organization that purchases building lots furnishes funds to a public vocational training center for use in its on-the-job home construction training program sells the completed homes to the general_public at fair_market_value and uses the income from home sales to finance new projects and obtain vocational training equipment for the public school system qualifies for exemption under sec_501 of the code the income from the sale of the homes is not unrelated_business_income you stated you are compared to the organization in revrul_76_37 because you do not provide instructors for the program but your activities contribute importantly to the overall program of the center and promote education d revrul_71_506 1971_2_cb_233 an engineering society formed to engage in scientific research in the areas of heating ventilating and air conditioning for the benefit of the general_public qualifies for exemption under sec_501 of the code you stated that you are similar to the organization in revrul_71_506 because the results of your research are shared with the general_public and made available to all who are interested you disagreed that the earnings from your work inures to the founder and your position is that you are not operating in a commercial or for-profit manner you provided the following eight revenue rulings as examples of non-profit organizations qualifying for tax exemption even though very similar specific issues seem to exist for example the creator is a board member the organization may conduct transactions that require close scrutiny as ‘arms length’ the creator owns a substantial portion of stock in an associated business typically commercial work is conducted but in a non-commercial way a portion of the non-profits work supports commercial or private interests a b c revrul_86_49 1986_1_cb_243 the purpose of the organization in this case is to educate and otherwise benefit the public by restoring and preserving historically or architecturally significant properties through the acquisition occasional restoration and disposition of such properties at fair_market_value on arm's length terms the continued preservation of such properties after their sale by the organization is guaranteed by means of restrictive covenants that are reasonably suited to preserving the historic or architectural character of the structures and community involved revrul_76_91 1976_1_cb_150 proprietary hospital acquired by nonprofit corporation the purchase in a transaction not at arm's length of all of the assets of a profit-making hospital by a nonprofit_hospital corporation at a price that includes the value of intangible assets determined by the capitalization of excess earnings formula does not result in the inurement of the hospital's net_earnings to the benefit of any private_shareholder_or_individual or serve a private interest precluding exemption under sec_501 of the code revrul_76_158 1976_1_cb_354 private_foundation control of corporation a private_foundation owning percent of voting_stock of a corporation and having a foundation_manager personally owning the remaining percent but not holding a position of authority in the corporation by virtue of being foundation_manager does not control the corporation for purposes of the self- the dealing provisions of sec_4941 of the code revrul_76_443 1976_2_cb_149 a nonprofit organization that makes facilities and equipment available to the public to produce noncommercial educational or cultural television programs for communication to the public via public and educational channels of a commercial cable television company qualifies for exemption under code sec_501 revrul_73_045 1973_1_cb_220 a nonprofit organization created to foster the development in a community of an appreciation for drama and musical arts by sponsoring professional presentations qualifies for exemption under sec_501 of the code revrul_71_413 1971_2_cb_229 a nonprofit organization acting as a clearinghouse and course coordinator by bringing together instructors and interested students in a community for purposes of instruction is exempt under sec_501 of the code 1970_1_cb_127 a nonprofit organization assisting local governments of a metropolitan area by conducting research to develop solutions for common regional problems but not advocating any legislative action to implement its findings qualifies for exemption under sec_501 of the code 1965_1_cb_231 an organization was formed for the primary purpose of developing and disseminating a body of new knowledge relating to the social sciences the organization's professional research staff consists of persons qualified by education and experience to perform scientific research in these fields activities of the organization consist of the performance of scientific research under the contracts with governmental agencies and the conduct of seminar courses attended by qualified members of the public results of the organization's research activities are communicated to the public through seminar courses lectures and public discussions and through publications distributed free to depositary libraries held the organization qualifies for exemption from federal_income_tax as an educational and scientific_organization described in sec_501 of the internal_revenue_code of you stated that the proposed denial of exemption has misunderstood your goals and purposes you claim that your purposes are charitable within the meaning of the regulations and code sections previously cited the proposed denial has misunderstood your goals and purposes and you are disadvantaged for the unfortunate interaction with an organization that was later to be investigated for possible unfair and illegal dealings with its clients customers and the government as well as the connection of the founder to dealings of the organization your conclusion is that you qualify as a charitable_organization because you will advance education science and industrial development for the benefit of individuals and the use of the general_public by developing and utilizing various research programs and projects as instruments through which the science of energy conversion will be explored to aid the environment by conserving the natural resource fossil fuel and preserving the quality of the natural_resources air and water you also stated using the four substitute revenue rulings in their entirety and the eight revenue rulings in part we can see more clearly and objectively that we are organized and will be operated in a manner that meets the code and regulations for a charitable_organization service’s response to applicant’s protest to proposed adverse letter your activities remain the same but we disagree with the application of tax law organizations that are organized and operated exclusively for charitable religious educational or scientific purposes can qualify for exemption under sec_501 provided no part of the income inures to the benefit of private individuals you disagreed with revrul_65_1 since you are not requesting exemption as a scientific_organization but as an organization that advances science you have no financial interest or claim to any patents that may result from the development of new machinery however the companies who participate with you in the development of new machinery will retain the patents and licenses that may result from a particular project therefore you are promoting the advancement of products that benefit private companies similar to revrul_65_1 the designing or construction of equipment that benefits private individuals is consistent with a commercial operation and does not constitute scientific research nor qualify for exemption you disagreed with revrul_78_426 since you are not testing for pubic safety or scientific purposes this revenue_ruling described an organization whose activities test and certify cargo shipping containers that serve the private interest of the container manufacturers you are similar to revrul_78_426 because your testing and research activities also serve to benefit the commercial operations of the participating companies it research institute v united_states also defined the term scientific and found significance that iit research institute did not engage in any consumer or market research or ordinary testing of the type which is carried on incident to commercial operations we feel that your public testing of the solar powered boats is carried on as more than an incidental part of commercial operations and does not meet the definition of scientific purposes that can qualify for exemption under sec_501 you claim that you are not similar to the court case better business bureau v united_states we believe that you are similar to this court case because a substantial purpose of your organization is to promote business and not to operate exclusively for educational_purposes consumer-farmer milk cooperative inc v commissioner of internal revenue although you are not a cooperative your activities economically benefit the businesses that participate in your commercial operations you disagreed that you are providing managerial or consulting services similar to the organization described in revrul_72_369 we disagree because you have developed the d program and will manage this program in three major phases the management of the d program is for a fee and will begin upon receipt of public funding you disagreed with revrul_74_587 since you are not an economic development_corporation however you also claim that your organization helps create jobs as described in this revenue_ruling an organization with programs that help stimulate the economy can be charitable within the meaning of sec_501 provided the area where the programs take place is economically depressed there is no evidence that the area where you operate will promote jobs that benefit a charitable_class similar to the organization described in revrul_74_587 you provided the following four substitute revenue rulings to support your position revrul_79_18 explains how housing for the elderly can qualify for exemption we disagree that your activities benefit a charitable_class similar to the organization described in this revenue_ruling you do not have provisions for those that cannot pay for your services you compared your organization to revrul_76_204 since this organization was formed for the purpose of preserving the natural environment we agree that cargo ships operated by solar_energy would aid in the preservation of the natural environment however the manner in which your d program will operate will result in more than incidental private benefit to the businesses that participate we disagree that you are similar to the organization described in revrul_76_37 because you are not organized and operated exclusively for the purpose of training and educating students the students who participate in your programs may receive some educational benefit however this educational benefit is incidental since the for-profit businesses who participate in the d program retain patent rights to any inventions developed this constitutes a substantial business_purpose like the organization in revrul_71_506 you will post the testing results on your website and share the results with the public however you are unlike the organization described in this revenue_ruling because the patents and copyrights resulting from your research are retained by the businesses who participate in your programs you cited eight additional revenue rulings that involve organizations formed and operated by their creators the circumstances in each of these rulings show that the organizations were not providing substantial private benefit or inurement you stated that you will operate under a conflict of interest policy and that you will work with for-profit businesses that may include the founder’s own company even if a conflict of interest policy is used to select companies to participate in the d program the selected companies would still benefit from the commercial operations of developing and building solar powered cargo ships the research conducted by you would have to be funded and performed by the for-profit companies if and your research activities the benefits to the commercial companies show that you are not operating exclusively for exempt purposes any benefit to the founders own company even if selected under the conflict of interest policy would constitute inurement since you are operating for a substantial business_purpose it were not for you applicant’s position provided during the appeals process during the appeals process you reiterated that you expect to achieve charitable purposes by conducting projects that offer a fossil fuel substitute each project is anticipated to further charitable purposes as follows e e e e of the time devoted to a typical project will further economic development by creating new jobs and the purchasing of new materials and components of the time on a typical project will give to students and researchers of science the opportunity to plan and execute experiments on systems outside of the traditional laboratory in real time and with natural obstacles as well as some uncontrollable variables thus furthering the advancement of science and education of each project's time will also advance education by giving students and researchers in science and engineering disciplines the opportunity to document the events occurring during the experiments and to record the data on your website which is accessible by the general_public of atypical project’s time utilizes existing resources from the industrial and commercial community to create the structure that in various ways supports the project and makes it possible existing resources are those that would be used one way or another and probably would not contribute to any new economic development the structure supports the project physically and organizationally and could possibly be applicable to a range of projects you disagreed that the typical project is an activity incident to commercial or industrial operations because e e e e you will normally assemble products manufactured by others in a manner that will be suggested by students researchers and engineers in their attempt to do something in a different way for the purpose of testing learning and researching about its qualities of feasibility reliability and practicality as an alternative_energy source you will not apply for any patents or hold any license authority on anything resulting from the experimentation and study you will not sell anything resulting from the experimentation and study you will make all resulting data available to the general_public and maintain a library of archived data for future use by students and researchers service response to applicant’s arguments to appeals the primary purpose for your formation was to secure grants for the d program which was to be conducted by the for-profit company e owned by your founder c purpose of the d program was to create a new way to conduct marine transportation which would substantially benefit e and thereby e’s owner and your founder c this is evidenced by the events that led to your creation c as the owner of e entered into negotiations with the for- profit grant company named k in order to receive grant funding for the d program k supplied c with a list of potential grantors but also informed c that the potential grantors required the grant recipient to have an irs determination_letter c then entered into a second agreement with k to form you and facilitate the completion of your application_for exemption it is evident that the we acknowledge that you have made changes since your original formation most notably that the d program will now be conducted by you and that c is now a minority stock holder of e however the facts still show that for-profit companies in the j area will participate in the d program and that e may be one of those companies therefore your activities will provide substantial private benefit to the participating for-profit companies including e even though c is now a minority stock holder any private benefit received by e will in turn inure to the benefit of c since c is your president and founder this benefit constitutes inurement which is strictly prohibited under sec_501 of the code e and c are not the only parties who will receive substantial private benefit from your activities the d program is a research_and_development activity the results of which will be used to further the business purposes of the for-profit shipping companies in your area even if e is not a participating company other unrelated participating for-profit companies will substantially benefit grant funding received by you will be used to conduct the d program the results will then be used by the participating for-profit companies to further their business endeavors if it were not for your activities conducted with grant funding the participating for-profit shipping companies would have to expend their own funds to receive the same results therefore your activities provide substantial private benefit to all participating for-profit companies in the j area to clarify your activities you verified that your initial and primary project is to manage and solicit funds for the d program you also clarified that any idea that offers a fossil fuel substitute is a candidate for future projects these projects you manage involve the assembly of products manufactured by for-profit companies the for-profit companies will retain the patent rights for any products invented therefore your testing and publishing the results of the d program and other future projects will demonstrate the results of the assembled product this testing and public demonstration also helps promote the products produced by the for-profit companies who own the manufacturing rights to the products used in the projects the assembly testing and promotion of products substantially benefit the participating for-profit companies you also indicated that of a project's time will further economic development by creating new jobs and the purchasing of new materials and components the d program will benefit for- profit companies in the j area the j area is not considered economically depressed or blighted and furthering for-profit businesses in the j area will not further a charitable purpose finally you do not have an on-going job training program or a direct jobs program instead any jobs that are created will be done so through the for-profit manufacturers that are also benefitting as a result of your activities conclusion you have confirmed that your activities remain the same your initial and primary activity is to manage and solicit funds for the d program this activity provides substantial private benefit to the for-profit businesses in your area including e which is partially owned by your founder c this shows that you are not organized and operated exclusively for charitable scientific or educational_purposes as defined in sec_501 of the internal_revenue_code accordingly you do not qualify for exemption under sec_501 of the code you have the right to file a protest if you believe this determination is incorrect to protest you must submit a statement of your views and fully explain your reasoning you must submit the statement signed by one of your officers within days from the date of this letter we will consider your statement and decide if the information affects our determination if your statement does not provide a basis to reconsider our determination we will forward your case to our appeals_office you can find more information about the role of the appeals_office in publication exempt_organization appeal procedures for unagreed issues an attorney certified_public_accountant or an individual enrolled to practice before the internal_revenue_service may represent you during the appeal process if you want representation during the appeal process you must file a proper power_of_attorney form_2848 power_of_attorney and declaration of representative if you have not already done so you can find more information about representation in publication practice_before_the_irs and power_of_attorney all forms and publications mentioned in this letter can be found at www irs gov forms and publications if you do not file a protest within days you will not be able to file a suit for declaratory_judgment in court because the internal_revenue_service irs will consider the failure to appeal as a failure to exhaust available administrative remedies code sec_7428 provides in part that a declaratory_judgment or decree shall not be issued in any proceeding unless the tax_court the united_states court of federal claims or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted all of the administrative remedies available to it within the irs if lf you do not intend to protest this determination you do not need to take any further action we do not hear from you within days we will issue a final adverse determination_letter that letter will provide information about filing tax returns and other matters please send your protest statement form_2848 and any supporting documents to the applicable address mail to deliver to internal_revenue_service eo determinations quality assurance room p o box cincinnati oh internal_revenue_service eo determinations quality assurance main street room cincinnati oh if you fax you may fax your statement using the fax number shown in the heading of this letter your statement please call the person identified in the heading of this letter to confirm that he or she received your fax if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely lois lerner director exempt_organizations enclosure publication


t c summary opinion united_states tax_court david h kilson jr petitioner v commissioner of internal revenue respondent docket no 13498-01s filed date david h kilson jr pro_se jeffrey c venzie for respondent powell special_trial_judge this case was heard pursuant to the provisions of section of the internal_revenue_code in effect at the time the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure respondent determined a deficiency and additions to tax in petitioner’s federal_income_tax as follows year deficiency sec_6651 sec_6651 sec_6654 additions to tax1 dollar_figure dollar_figure dollar_figure dollar_figure the following figures are rounded to the nearest dollar after concessions the issues are whether petitioner is liable for the addition_to_tax under sec_6651 for failure_to_file a federal_income_tax return and liable for the addition_to_tax under sec_6654 for an underpayment of estimated_tax petitioner resided in philadelphia pennsylvania at the time the petition was filed background from until petitioner was employed as a wagon master for visionquest national ltd and visionquest lodgemakers petitioner’s duties included supervising troubled youths on the wagon train a group of wagons pulled by mules that travels in many states along the east coast in petitioner’s mother became ill and had surgery in july of petitioner’s mother died petitioner temporarily left the wagon train to attend the funeral petitioner’s father in a stipulation of settled issues the parties agreed to a reduced deficiency of dollar_figure and respondent conceded the addition_to_tax under sec_6651 as a result of the reduced deficiency the additions to tax under sec_6651 and sec_6654 were reduced to dollar_figure and dollar_figure respectively was also ill according to petitioner he was distraught over his mother’s death petitioner did not file a federal_income_tax return for the tax_year while on the wagon train however petitioner did file returns for and discussion addition_to_tax under sec_6651 for failure_to_file if a federal_income_tax return is not timely filed an addition_to_tax will be assessed unless it is shown that such failure is due to reasonable_cause and not due to willful neglect sec_6651 a delay is due to reasonable_cause if the taxpayer exercised ordinary business care and prudence and was nevertheless unable to file the return within the prescribed time sec_301_6651-1 proced admin regs see also 469_us_241 petitioner argues that he failed to timely file his return because of the emotional distress of my mother’s death my father’s ongoing illness and stressful job resulting in petitioner has not argued that either sec_7491 or c applies to this case additionally the record does not indicate that respondent’s examination commenced after date because sec_7491 applies only to court proceedings arising from examinations commencing after date internal_revenue_service restructuring reform act of publaw_105_206 sec 112_stat_726 we conclude that neither sec_7491 nor c applies here to place the burden_of_proof and or production upon respondent see eddie cordes inc v commissioner tcmemo_2002_125 n peacock v commissioner tcmemo_2002_122 hardship although we sympathize with petitioner over his father’s ill health and the loss of his mother a death in the family some months before the filing_date generally does not constitute reasonable_cause for failing to file tax returns see hastings v commissioner tcmemo_1999_167 radde v commissioner tcmemo_1997_490 additionally the ability to continue performing daily business operations negates grief as a reasonable_cause see dickerson v commissioner tcmemo_1990_577 fambrough v commissioner tcmemo_1990_104 despite petitioner’s grief he continued his employment as wagon master on the wagon train also petitioner filed returns for and irrespective of the logistical difficulties he faced while traveling on the wagon train we find that petitioner did not have reasonable_cause for the failure_to_file his return and respondent’s determination as to the addition_to_tax under sec_6651 is sustained addition_to_tax under sec_6654 for failure to pay estimated_tax sec_6654 provides for an addition_to_tax in the case of any underpayment of estimated_tax by an individual this addition_to_tax is mandatory unless petitioner shows that one of the statutorily provided exceptions applies see sec_6654 75_tc_1 there is no exception for reasonable_cause or lack of willful neglect 33_tc_1071 petitioner underpaid the estimated_tax for and has not shown that any of the statutory exceptions are applicable respondent’s determination as to the addition_to_tax under sec_6654 is sustained reviewed and adopted as the report of the small_tax_case division decision will be entered under rule federal income taxes of dollar_figure were withheld from petitioner’s wages in and constitute estimated_tax payments sec_6654


t c summary opinion united_states tax_court michael patrick and lydia brewer petitioners v commissioner of internal revenue respondent docket no 5381-04s filed date michael patrick brewer and lydia brewer pro sese ric hulshoff for respondent panuthos chief special_trial_judge this case was heard pursuant to the provisions of sec_6330 and sec_7463 in effect at the time the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority unless otherwise indicated all section references are to the internal_revenue_code as amended all rule references are to the tax_court rules_of_practice and procedure this collection review case is before the court on respondent’s motion for summary_judgment respondent issued petitioner a notice_of_determination concerning collection action s under sec_6320 and or notice_of_determination for unpaid federal income taxes and related liabilities for and the notice_of_determination relates to a notice_of_federal_tax_lien filed on date for the above years in the approximate amount of dollar_figure the issue for decision is whether in the context of respondent’s motion for summary_judgment respondent’s determination to proceed with the filing of a federal_tax_lien was an abuse_of_discretion background petitioners resided in tucson arizona at the time the petition was filed petitioners filed and federal_income_tax returns the respective amounts of payments and credits relating to the returns in issue were less than the tax_liabilities reported accordingly there is a balance due and owing with respect to each of the years in issue petitioner michael brewer hereinafter petitioner is a u s marine corps veteran he suffers from post traumatic stress disorder from his military service in vietnam the department of veterans affairs has concluded that he is 100-percent service disabled in date petitioners submitted an offer_in_compromise oic to respondent according to petitioner the oic forms were revised by respondent and petitioners submitted a new or revised oic in date by letter dated date the irs advised petitioners that the oic was still awaiting assignment to an appropriate irs representative the offer was apparently rejected by respondent on date the record does not contain copies of the oic or a rejection of the oic respondent’s case activity record indicates that the oic was rejected for failure to submit required financial information on date respondent filed a notice_of_federal_tax_lien with respect to the tax_liabilities for the taxable years and and on date respondent issued to petitioners a notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 the notice reflects a balance owed of dollar_figure for said years petitioners timely requested a hearing on form request for a collection_due_process_hearing with the irs office of appeals petitioners explained in the request there are two reasons one is that i knew i would soon be disabled and never able to pay second mrs holmes in phoenix told us we went to the uncollectable status we are requesting a hearing for the following reasons knowing that i was going to be awarded a disability by the va we attempted to effecutuate an offer_in_compromise on three separate occasions the first one was requested in we were told by a variety of local cpa’s that the irs was not staffed properly to administrate the oic program we informed the taxpayer_advocate office in phoenix of the forth coming disability rating and that we would appreciate an answer it took years to get a response one mrs holmes stated to me that we were placed in uncollectible status and that there would be no liens so it appears we were misguided ms holmes also stated quite succinctly that given the mountain of offers they are processing your amount owed is not even worth setting up for payment plans that is a quote and it was recorded with acknowledgment i am now disabled permanent and total as a result of fighting for the system that we all represent since the rating i have developed additional medical problems total knee replacement and shingles my dear irs officials i made a due diligent attempt to pay you and begged to process my offer sooner time is of the essence concept apparently has no play when it comes to the irs i believe i need professional assistance at this hearing so i have requested the accounting firm of moran quick cpa’s to represent me the accountants name is mark debenedetti cpa by letter dated date an irs appeals officer scheduled a conference with petitioners the letter also suggested that petitioners complete form 433-a collection information statement for individuals with supporting documentation reflecting financial information the appeals officer advised that such information was required to consider currently not collectible cnc status on the same date as the scheduled conference petitioner asked if he could record the conference the appeals officer indicated that petitioner could not record if the conference was conducted on that day since the appeals officer had received insufficient notice of the request to record a telephone hearing was conducted by the appeals officer with petitioner and his representative mark debenedetti petitioners and mr debonedetti did not submit any additional financial information to the appeals officer petitioner advised the appeals officer that he had been told by a representative of the taxpayer_advocate_service that the joint tax_liability would be placed in cnc status and that as a result no notice_of_federal_tax_lien would be filed irs records do not reflect that petitioners’ account was ever placed in cnc status the appeals officer explained to petitioner and mr debenedetti that the notice_of_federal_tax_lien would remain in place even if petitioners were placed in cnc status the appeals officer also advised petitioner that petitioners could submit another oic respondent issued the aforementioned notice_of_determination on date discussion summary_judgment is intended to expedite litigation and avoid unnecessary and expensive trials fla peach corp v commissioner 90_tc_678 summary_judgment may be granted with respect to all or any part of the legal issues in controversy if the pleadings answers to interrogatories depositions admissions and any other acceptable materials together with the affidavits if any show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law rule b 98_tc_518 affd 17_f3d_965 7th cir 85_tc_527 this court has jurisdiction under sec_6330 to review the commissioner’s administrative determinations sec_6330 where as here the validity of the underlying tax_liability is not at issue we review the determination for abuse_of_discretion 114_tc_604 114_tc_176 under sec_6330 a taxpayer is entitled to a hearing in which he or she may raise any relevant issue relating to the unpaid tax or notice of lien filing including spousal defenses challenges to the commissioner’s intended collection action and alternative means of collection such as an offer_in_compromise sec_6330 and c in this case petitioners submitted an oic which was rejected by respondent there is no information concerning the contents of the oic or the rejection thereof given this circumstance we cannot conclude that the rejection of the oic was an abuse_of_discretion by respondent van vlaenderen v commissioner tcmemo_2003_346 crisan v commissioner tcmemo_2003_318 while petitioners wanted their tax_liabilities placed in cnc status and irs procedures indicate that such status is a collection alternative in response to a levy action see administration internal_revenue_manual cch sec_5 at big_number we note that there is no levy in this case in addition it is clear that respondent asked petitioners on more than one petitioners complain that the appeals officer improperly prohibited a recording of the appeals hearing sec_7521 provides that upon advance request of the taxpayer an irs officer_or_employee shall permit the taxpayer to make an audio recording 121_tc_8 petitioners do not appear to dispute respondent’s assertion that petitioners did not comply with the statute and irs guidelines requiring advance notice of intent to record see notice_89_51 1989_1_cb_691 given that the hearing occurred and that petitioners do not assert that they raised collection alternatives that were not considered by or were not reflected in the case activity records of the appeals officer we do not consider the issue of recording to be relevant to our consideration petitioners simply have not claimed or shown any prejudice in the failure to permit recording see frey v commissioner tcmemo_2004_87 durrenberger v commissioner tcmemo_2004_44 brashear v commissioner tcmemo_2003_196 kemper v commissioner tcmemo_2003_195 occasion to complete the proper financial forms for consideration of cnc status and petitioners failed to do so we are satisfied that respondent has otherwise satisfied the requirements of sec_6320 and sec_6330 on the basis of this record we conclude as a matter of law that respondent did not abuse his discretion and we sustain respondent’s determination that the filing of a notice_of_federal_tax_lien was appropriate reviewed and adopted as the report of the small_tax_case division to give effect to the foregoing an appropriate order and decision will be entered for respondent while we sympathize with petitioners’ situation particularly issues relating to health and disability we note that this is a lien action in contrast to a levy action respondent advised that he was seeking to protect the irs position as against other creditors in the filing of a notice_of_federal_tax_lien should respondent seek to levy on petitioners’ assets petitioners will have an opportunity to seek alternatives to such collection action as one alternative petitioners may seek cnc status in response to a levy action administration internal_revenue_manual cch sec_5 at big_number


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-112137-08 date september x a b c legend ------------------- ---------------------------------------------- ----------------------- ------------------------- ------------------------------ --------------------- country ----------- country --------- d1 d2 --------------------- --------------------- dear ------------ this letter responds to a letter dated date and subsequent correspondence written on behalf of x requesting a ruling under sec_301_9100-3 of the procedure and administration regulations facts x was formed under the laws of country x represents that it is a foreign_entity eligible to elect to be classified as a disregarded_entity for federal tax purposes x plr-112137-08 was a wholly-owned subsidiary of a a country corporation b a country corporation acquired a through a subsidiary entity c on d1 upon b’s acquisition of a it was intended that x would be treated as a disregarded_entity effective d2 however due to inadvertence a form_8832 entity classification election to treat x as a disregarded_entity effective d2 was not timely filed law and analysis sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 an eligible_entity with at least two members can elect to be classified as either an association and thus a corporation under sec_301_7701-2 or a partnership and an eligible_entity with a single owner can elect to be classified as an entity separate from its owner sec_301_7701-3 provides in part that except as provided in sec_301_7701-3 unless the entity elects otherwise a foreign eligible_entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides in part that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 entity classification election with the service_center designated on form_8832 sec_301_7701-3 provides that an election under sec_301_7701-3 will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed if an election specifies an effective date more than days prior to the date on which the election is filed it will be effective days prior to the date it was filed sec_301_9100-1 provides that the commissioner may 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 or a statutory election but not 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_9100-2 provides the standards the commissioner will use to determine whether to grant an automatic_extension of time for making certain elections plr-112137-08 sec_301_9100-3 provides the guidelines for granting extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301 a provides that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that x has satisfied the requirements of sec_301 and sec_301_9100-3 as a result x is granted an extension of sixty days from the date of this letter to file a properly executed form_8832 with the appropriate service_center to elect to be classified as a disregarded_entity effective d2 a copy of this letter should be attached to the form_8832 except as specifically set forth above we express no opinion concerning the federal tax consequences of the above described facts under any other provision of the internal_revenue_code in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely s william p o’shea associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc