internal_revenue_service number release date index number -------------------------- ----------------------------- ------------------------------ ---------------------------------------------------- --- ----------------------------- - department of the treasury washington dc person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi b07 - plr-128130-03 date date taxpayer parent subsidiary a subsidiary b company a b c d date date ------------- ------------------- ----------------------------------------- -------------------------------- --------------------------------------- ------------------------------------------------------- ----------- ------------------------------------- -------------------------- ------------- --------------------------- legend dear ---------- taxpayer by its authorized representative requesting rulings under sec_29 of the internal_revenue_code this letter responds to a letter dated date submitted on behalf of the prior ruling stated that taxpayer has entered into an agreement to taxpayer is a limited_liability_company that is classified as a partnership for on date taxpayer received plr the prior letter_ruling which the facts as represented by taxpayer and taxpayer’s authorized representative are as follows ruled on issues similar to those addressed by this letter taxpayer seeks a confirmation of the rulings in the prior letter_ruling in light of the completion of the relocation of a synthetic_fuel facility facility that produces solid synthetic_fuel from coal product the use of an alternative chemical change agent and certain changes to the production process in the facility all as described in the ruling_request federal tax purposes all of the interests in which presently are owned by subsidiary a and subsidiary b parent is a publicly traded corporation and the parent of an affiliated_group_of_corporations that includes subsidiary a and subsidiary b purchase all of the interests in the company a limited_liability_company whose sole asset is the facility it was represented that the company is disregarded as a separate_entity from taxpayer for federal tax purposes c entered into on date the construction_contract did not limit the amount of damages that either party could seek against the other party in the event of the other party’s default under the contract b obtained an opinion of counsel that the construction_contract constituted a binding written contract under applicable state laws prior to date and at all times thereafter through completion of the contract equipment that can be readily disassembled and moved to another site to take advantage of a supply of coal or for other business reasons pursuant to the purchase agreement the facility was relocated to a site described in the ruling_request in connection with the relocation the facility was refurbished and certain parts were replaced at the site certain site work and preparation was undertaken to accommodate the relocation of the facility a new binder system complete with associated storage delivery electrical and instrumentation components was integrated in order to accommodate the use of new chemical change agents in addition certain coal and material handling equipment was installed to facilitate the delivery of fuel produced in the facility to the electric power generating station located at the site replaced on a periodic basis as part of the regular maintenance and upkeep of the facility the frequency of this maintenance depends on the coal feedstock used the the facility was constructed pursuant to a construction_contract between b and the prior letter_ruling also stated that the facility was designed and built with the prior letter_ruling further stated that it is anticipated that certain parts will be total hours of operation and the volume of production however all essential components will be retained and no new essential components will be incorporated into the facility since the prior ruling was issued taxpayer has used other chemical change agents in the production of synthetic_fuel at the facility as described in taxpayer’s letter_ruling request the facility and the process implemented in the facility including the alternative chemical reagent used to produce the synthetic_fuel meet the requirements of revproc_2001_34 2001_22_irb_1293 used at the facility and the product produced at the facility including the changed reagents and has submitted a report in which the expert concludes that significant chemical changes take place with the application of the process to the coal this letter_ruling are as follows the rulings issued in the prior letter_ruling which you wish to be reconfirmed in a recognized expert in coal combustion chemistry performed tests on the coal the contract for construction of the facility constitutes a abinding written contract in effect before date within the meaning of sec_29 taxpayer with the use of the enumerated process will produce a aqualified fuel within the meaning of sec_29 the production of the qualified_fuel from the facility will be attributable solely to taxpayer entitling taxpayer to the sec_29 credit for the production of the qualified_fuel from the facility that is sold to an unrelated_person if the facility was aplaced in service prior to date within the meaning of sec_29 relocation of the facility after date or replacement of parts of the facility after that date will not result in a new placed_in_service_date for the facility for purposes of sec_29 provided the fair_market_value of the original property is more than percent of the facility s total fair_market_value at the time of the relocation or replacement the sec_29 credit attributable to taxpayer may be allocated to the members of taxpayer in accordance with the members interest in taxpayer when the credit arises for the sec_29 credit a member s interest in taxpayer is determined based on a valid allocation of the receipts from the sale of the sec_29 qualified_fuel and a termination of taxpayer under sec_708 will not preclude the reconstituted partnership from claiming the sec_29 credit on the production and sale of synthetic_fuel to unrelated persons to qualify for the sec_29 credit a facility must be placed_in_service before july the changes in facts since the issuance of the prior letter_ruling are the completion of the relocation of the facility the use of an alternative chemical change agent and certain changes to the production process in the facility all as described in the ruling_request the above rulings are not affected by these changed facts pursuant to a binding written contract in effect before date while sec_29 does not define aplaced in service the term has been defined for purposes of the deduction for depreciation and the investment_tax_credit property is aplaced in service in the taxable_year the property is placed in a condition or state of readiness and availability for a specifically assigned function treasury regulation a -11 e i and d ii aplaced in service has consistently been construed as having the same meaning for purposes of the deduction for depreciation and the investment_tax_credit see revrul_76_256 1976_2_cb_46 including one of multiple facilities located at the same site may be relocated without affecting the availability of the credit if all essential components of the facility are retained and the production capacity of the relocated facility is not significantly increased at the new location revproc_2001_30 2001_19_irb_1163 provides that a facility revrul_94_31 1994_1_cb_16 concerns sec_45 which provides a credit for electricity produced from certain renewable resources including wind the credit is based on the amount of electricity produced_by_the_taxpayer at a qualified_facility during the 10-year period beginning on the date the facility was originally placed_in_service and sold by the taxpayer to an unrelated_person during the taxable_year revrul_94_31 holds that for purposes of sec_45 a facility qualifies as originally placed_in_service even though it contains some used_property provided the fair_market_value of the used_property is not more than twenty percent of the facility’s total value the cost of the new property included in the facility plus the value of the used_property revrul_94_31 concerns a factual context similar to the present situation consistent with the holding in revrul_94_31 the relocation of the facility to a different location after date or replacement of parts of the facility after that date will not result in a new placed_in_service_date for the facility for purposes of sec_29 provided the fair_market_value of the property used at the original facility is more than twenty percent of the facility’s total fair_market_value at the time of relocation or replacement the cost of the new equipment included in the facility plus the value of the property used at the original facility revrul_94_31 describes a windfarm that consists of an array of wind turbines towers pads transformers roadways fencing on-site power collection systems and monitoring and meteorological equipment notwithstanding that the windfarm consisted of all of these items the ruling concludes that the facility for purposes of sec_45 is confined to the property on the windfarm necessary for the production of electricity from wind_energy emphasis added the present situation is similar to revproc_94_31 thus for purposes of determining a facility’s total fair_market_value at the time of relocation or replacement a facility consists of the process equipment directly necessary for the production of the qualified_fuel starting at the immediate input of the coal and chemical reagents to the pug mills or mixers including any coal hoppers and reagent tanks directly feeding the pug mills or mixers through the output from the roll briquetters or other forming equipment including output hoppers if any hence each facility’s total fair_market_value includes the process equipment such as pugmills or mixers the roll briquetters or other forming equipment the equipment necessary to interconnect such equipment the electrical instrumentation control systems and auxiliaries related to such equipment including the structures that house such electrical instrumentation and control systems the foundation platform s for the above-referenced equipment and an appropriate allocation of the engineering project management overhead and other costs assignable to the relocation of such equipment and construction a facility’s total fair_market_value does not include costs associated with the purchase and installation of equipment that supports the operation of the facility but is not directly necessary for the production of qualified_fuel such as coal beneficiation or preparation equipment eg crushers screens dryers or scales other material handling or conveying equipment eg stacking tubes transfer towers storage bunkers mobile equipment or conveyors certain site improvements eg fencing lighting earthwork or paving separate office and bathhouse trailers for facility personnel and buildings if a building for purposes of sec_168 and other administrative assets sampling and quality control are necessary for operational control of a production facility however a particular type of sampling equipment generally is not necessary for the production of qualified_fuel thus the costs of sampling equipment are excluded from the facility’s total fair_market_value unless the particular sampling equipment is necessary for operational control of the facility preponderance of the test results we agree that the fuel to be produced in the facility using the described process on the coal will result in a significant chemical change in coal transforming the coal feedstock into a solid synthetic_fuel based on the information submitted and representations made including the accordingly based on the information submitted and the representations made we conclude as follows the contract for construction of the facility constitutes a abinding written contract in effect before date within the meaning of sec_29 taxpayer with the use of the enumerated process will produce a aqualified fuel within the meaning of sec_29 the production of the qualified_fuel from the facility will be attributable solely to taxpayer entitling taxpayer to the sec_29 credit for the production of the qualified_fuel from the facility that is sold to an unrelated_person if the facility was aplaced in service prior to date within the meaning of sec_29 relocation of the facility after date or replacement of parts of the facility after that date will not result in a new placed_in_service_date for the facility for purposes of sec_29 provided the fair_market_value of the original property is more than percent of the facility s total fair_market_value at the time of the relocation or replacement the sec_29 credit attributable to taxpayer may be allocated to the members of taxpayer in accordance with the members interests in taxpayer when the credit arises for the sec_29 credit a member s interest in taxpayer is determined based on a valid allocation of the receipts from the sale of the sec_29 qualified_fuel and a termination of taxpayer under sec_708 will not preclude the reconstituted partnership from claiming the sec_29 credit on the production and sale of synthetic_fuel to unrelated persons the conclusions drawn and rulings given in this letter are subject_to the requirements that taxpayer i maintain sampling and quality control procedures that conform to astm or other appropriate industry guidelines at the facility or facilities that are the subject of this letter ii obtain regular reports from independent laboratories that have analyzed the fuel produced in such facility or facilities to verify that the coal used to produce the fuel undergoes a significant chemical change and iii maintain records and data underlying the reports that taxpayers obtain from independent laboratories including raw ftir data and processed ftir data sufficient to document the selection of absorption peaks and integration points in accordance with the power_of_attorney on file with this office a copy of this except as specifically ruled upon above we express no opinion concerning the federal_income_tax consequences of the transaction described above this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent temporary or final regulations pertaining to one or more of the issues addressed in this ruling have not yet been adopted therefore this ruling may be modified or revoked by the adoption of temporary or final regulations to the extent the regulations are inconsistent with any conclusion in this ruling see section dollar_figure of revproc_2003_1 2003_1_irb_1 however when the criteria of section dollar_figure of revproc_2003_1 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances letter is being sent to taxpayer and to a second authorized representative enclosure cc s joseph h makurath senior technician reviewer branch office of associate chief_counsel passthroughs and special industries copy for sec_6110 purposes sincerely


internal_revenue_service number release date index number ----------------------- ------------------------------------------------ -------------------- --------------------------- in re ---------------------- --------------------------- --------------------------------- legend taxpayer 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 b09 plr-115581-04 date date ----------------------------------------------------------------------------------------------- ------------------------- ------------ ------------------ ------- ------- -------------------- -------------------------- -------------------------- -------------------------- -------------------- ---------------------------- ---------------------- year year husband wife child child child child child property --------------------------- state date agreement ------------------------------------------------------------------------ date date addendum ------------------------------------------------------------------------------------------ property ---------------------------- dear ----------------- correspondence submitted on behalf of taxpayer requesting a ruling regarding the applicability of sec_2702 of the internal_revenue_code in year and year dates prior to date husband wife and five of their six children child child child child and child purchased property located in state for fair_market_value from an unrelated party wife acquired a life this is in response to your letter dated date and subsequent ------------------- ------------- the information submitted and representations made are summarized as follows plr-115581-04 interest husband acquired a life interest that would become effective upon the death of wife child acquired a one-third common undivided_interest in the remainder and children through each acquired a one-sixth common undivided_interest in the remainder it is represented that husband wife and their five children each paid the actuarial value of their respective interest from their own resources and that none of the five children used any funds acquired from their parents to acquire their interests taxpayer did not participate in the initial acquisition of property because he was a minor on date husband wife and children through executed an agreement in connection with the property acquisition the agreement provides generally for the parties’ respective rights duties and obligations in the acquisition ownership and disposition of property article of the agreement provides that wife the primary life_tenant and husband the secondary life_tenant shall pay toward the purchase of property including associated closing costs an amount equal to the actuarial value of their respective rights to the use of and the income from property wife shall have a legal_life_estate for her natural life and upon her death unless husband predeceases her husband shall have a legal_life_estate for his natural life shall contribute to the purchase of property including associated closing costs the actuarially determined value of their respective remainder interests in such property article of the agreement provides that the parties to the agreement intend that no gift be made and agree that they shall take whatever actions are necessary to insure that no gift is in fact made it is the express intent of the parties that they shall pay fair_market_value for their respective interests in property if it is at any time determined by a court of law that the actuarial interest or value used herein represents less than fair and adequate_consideration with respect to each such interest then a re-computation shall be made and the parties which have not paid fair value shall re-contribute to the other parties the difference with interest thereon at the rate of percent per annum of prior to the expiration of the respective life tenancies the proceeds into which the property is converted shall be impressed with a_trust and the life tenants or the survivor shall be the trustees after the payment of income taxes the remaining proceeds shall be held by the trustees invested and reinvested and the trustees shall pay to the life tenants at least annually all income but not principal earned by the trust assets upon the death of both life tenants the trust shall terminate and the trust assets shall be immediately paid to the remaindermen in accordance with their respective interests article of the agreement provides that children through the remaindermen article of the agreement provides in part that if property should be disposed the addendum modifies the agreement by adding a new article which article of the agreement provides that the parties agree that child may article of the agreement provides in part that the sale of property shall on date taxpayer attained the age of majority and received his one-sixth plr-115581-04 require the consent of the life tenants and the remaindermen transfer to taxpayer upon his attainment of age a one-sixth interest in the remainder estate being one-half of child 1’s interest without the consent of any party to this agreement provided that such transferee agrees to be bound by the terms of the agreement interest by conveyance from child on date husband wife taxpayer and children through executed an addendum to the agreement husband wife taxpayer and children through are collectively referred to as the family members provides that in the event the parties agree to collectively acquire any subsequent real_property as life tenants and remaindermen the newly acquired property shall be subject_to the same terms and conditions as between the life tenants and remaindermen as set forth in the agreement substantial improvements are made to any of the properties that are the subject of the agreement the life tenants and the remaindermen shall contribute toward the cost thereof the actuarial interest that they shall have therein notwithstanding the foregoing by agreement of the parties any such improvements may be made by wife or by husband upon the death of wife in which event such improvements shall belong to the party who paid for such improvements and may be thereafter severed and removed from the real_property remainderman upon such transfer by his sister child and that taxpayer agrees to be bound by all of the terms and conditions of the agreement as amended agreement additional property located in state in the same manner of holding title as they employed for property all of the properties so acquired other than property are referred to as property and remaindermen after date and that the current agreement has not been modified or amended after date subsequent to the initial acquisition of property the family members acquired the parties represent that they have not acquired any property as life tenants the addendum also adds a new article which provides that in the event the agreement and addendum are collectively referred to as the current the addendum also provides that taxpayer is added as a one-sixth taxpayer has requested the following rulings the proceeds of a sale or other conveyance of property and the principal the proceeds of a sale or other conveyance of all or a portion of property subject_to the receipt of a favorable ruling from the service the family members plr-115581-04 propose to sell property for fair_market_value to an unrelated party the family members intend to continue to own property however a decision to sell property could be made in the future upon any disposition of property the proceeds would be placed in trust pursuant to the provisions of the current agreement proceeds of any investments or reinvestments thereof that are held in trust pursuant to the provisions of the current agreement will continue to be treated as a transfer occurring prior to date for purposes of applying the provisions of chapter_14 of the code and therefore chapter_14 will not apply thereto and the principal proceeds of any investments or reinvestments thereof that are held in trust pursuant to the provisions of the current agreement will continue to be treated as a transfer occurring prior to date for purposes of applying the provisions of chapter_14 of the code and therefore chapter_14 will not apply thereto and acquired pursuant to a transfer occurring prior to date reconciliation act of and are effective for transfers occurring after date whether a transfer of an interest in trust to or for the benefit of a member of the transferor’s family is a gift and the value of such transfer the value of any interest in such trust retained by the transferor or any applicable_family_member shall be determined as provided in sec_2702 qualified_interest shall be treated as being zero the value of any retained interests which is a qualified_interest shall be determined under sec_7520 date the agreement and addendum relating to the acquisition of property and property were also executed prior to date neither the sale_or_other_disposition of property or property nor the deposit of the proceeds of such sale or disposition in trust pursuant to the current agreement will involve any transfer of value among the family members in addition the family members will have substantially identical interests both before and after the proposed transaction after the sale of property property will continue to be treated as property sec_2702 provides that the value of any retained_interest which is not a sec_2702 provides generally that solely for purposes of determining the provisions of chapter_14 of the code were added by the revenue in this case property and property were both acquired prior to the rulings contained in this letter are based upon information and based on the facts submitted and representations made we conclude that the plr-115581-04 proceeds of a sale or other conveyance of property and or all or a portion of property and the principal proceeds of any investments or reinvestments that are held in trust pursuant to the provisions of the current agreement will be treated as a transfer or transfers occurring prior to date for purposes of applying the provisions of chapter_14 of the code and therefore chapter_14 will not apply thereto further after the sale of property property will continue to be treated as property acquired pursuant to a transfer occurring prior to date representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party if there is a change in material fact or law local or federal before the transactions considered in this ruling take effect the ruling will have no force or effect while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically no opinion is expressed or implied with respect to the income estate or gift_tax consequences of any aspect of any transaction discussed in this letter the code provides that it may not be used or cited as precedent being sent to taxpayer this ruling is directed only to the taxpayer requesting it sec_6110 of pursuant to the power_of_attorney on file with this office a copy of this letter is except as expressly provided herein no opinion is expressed or implied sincerely stephanie n bland acting senior technician reviewer branch office of associate chief_counsel passthroughs special industries enclosure copy for sec_6110 purposes


internal_revenue_service department of the treasury number release date index numbers washington dc person to contact telephone number refer reply to cc psi b09 plr-114251-01 date date legend decedent date spouse son daughter trust a_trust b_trust c date y z trust trust dear this is in response to your authorized representative’s letter dated date and subsequent correspondence requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to make an allocation of generation-skipping_transfer gst_exemption the facts and representations submitted are summarized as follows decedent died on date survived by spouse son and daughter decedent’s will provided for the establishment of three trusts trust a_trust b and trust c decedent’s federal plr-114251-01 estate_tax_return was not timely filed but rather was filed on or about date on schedule m of decedent’s estate_tax_return an election under sec_2056 was made to treat trust a as qualified_terminable_interest_property qtip a reverse_qtip_election was also made for trust a and the executor attempted to allocate decedent’s dollar_figure gst_exemption to trust a no generation-skipping transfers have been made from trust a_trust b or trust c shortly after date you submitted a private_letter_ruling request you have requested an extension of time under sec_2642 and sec_301_9100-3 to make allocations of decedent’s gst_exemption as follows specifically you propose to allocate dollar_figurey to trust a dollar_figurez to trust b and dollar_figurez to trust c you also propose to sever trust a pursuant to sec_2642 and create trust and trust trust a will be divided on a fractional basis and trust will receive a fractional share of the total of all trust assets equal to the applicable_fraction of the single trust trust a immediately before the severance you also request a ruling that as a result of the proposed qualified_severance of trust a into trust and trust pursuant to sec_2642 trust will have an inclusion_ratio of zero and trust will have an inclusion_ratio of one sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2056 provides that for purposes of the tax imposed by sec_2001 the value of the taxable_estate shall except as limited by sec_2056 be determined by deducting from the value of the gross_estate an amount equal to the value of any interest in property that passes or has passed_from_the_decedent to the surviving_spouse but only to the extent that such interest is included in determining the value of the gross_estate sec_2056 provides the general_rule that no deduction shall be allowed for an interest passing to the surviving_spouse if on the lapse of time on the occurrence of an event or contingency or on the failure of an event or contingency to occur the interest will terminate or fail sec_2056 provides that in the case of qualified_terminable_interest_property the entire property shall be treated as passing to the surviving_spouse for purposes of sec_2056 and no part of the property shall be treated as passing to any person other than the surviving_spouse for purposes of sec_2056 sec_2056 defines qualified_terminable_interest_property as property that passes from the decedent in which the surviving_spouse has a qualifying_income_interest_for_life and to which an election under sec_2056 applies sec_2056 provides that the surviving_spouse has a qualifying_income_interest_for_life if the surviving_spouse is entitled to all the income from the plr-114251-01 property payable annually or at more frequent intervals or has a usufruct interest for life in the property and no person has a power to appoint any part of the property to any person other than the surviving_spouse sec_2056 provides that an election under this paragraph with respect to any property shall be made by the executor on the return of tax imposed by sec_2001 such an election once made shall be irrevocable sec_20_2056_b_-7 of the estate_tax regulations provides that the election referred to in sec_2056 and v is made on the return of tax imposed by sec_2001 or sec_2101 for purposes of this paragraph the term return of tax imposed by sec_2001 means the last estate_tax_return filed by the executor on or before the due_date of the return including extensions or if a timely return is not filed the first estate_tax_return filed by the executor after the due_date sec_2652 provides that for purposes of chapter gst except as provided in sec_2652 or sec_2653 the term transferor means a in the case of any property subject_to the tax imposed by chapter the decedent and b in the case of any property subject_to the tax imposed by chapter the donor an individual shall be treated as transferring any property with respect to which such individual is the transferor sec_2652 provides that in the case of any trust with respect to which a deduction is allowed to the decedent under sec_2056 by reason of sec_2056 and any trust with respect to which a deduction to the donor spouse is allowed under sec_2523 by reason of sec_2523 the estate of the decedent or the donor spouse as the case may be may elect to treat all of the property in such trust for purposes of this chapter as if the election to be treated as qualified_terminable_interest_property had not been made sec_26_2652-2 provides that an election to treat property as if the qtip_election had not been made reverse_qtip_election is made on the return on which the qtip_election is made sec_2601 imposes a tax on every generation-skipping_transfer gst a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2631 provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure adjusted for inflation under sec_2631 which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that any allocation under sec_2631 once made is irrevocable sec_2632 provides that any allocation by an individual of his or her gst_exemption under sec_2631 may be made at any time on or before the date prescribed plr-114251-01 for filing the estate_tax_return for such individual’s estate determined with regard to extensions regardless of whether such a return is required to be filed sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides in part that except as otherwise provided in sec_26_2632-1 an allocation of a decedent’s unused gst_exemption by the executor of the decedent’s estate is made on the appropriate united_states estate and generation-skipping_transfer_tax return form_706 or form 706na filed on or before the date prescribed for filing the return by sec_6075 including any extensions actually granted the due_date an allocation of gst_exemption with respect to property included in the gross_estate of a decedent is effective as of the date of death sec_2642 provides generally that if a_trust is severed in a qualified_severance the trusts resulting from such severance shall be treated as separate trusts thereafter for purposes of this chapter sec_2642 provides generally that for purposes of sec_2642 the term qualified_severance means the division of a single trust and the creation by any means available under the governing instrument or under local law of two or more trusts if the single trust was divided on a fractional basis and the terms of the new trusts in the aggregate provide for the same succession of interests of beneficiaries as are provided in the original trust sec_2642 provides that if a_trust has an inclusion_ratio of greater than zero and less than a severance is a qualified_severance only if the single trust is divided into two trusts one of which receives a fractional share of the total value of all trust assets equal to the applicable_fraction of the single trust immediately before the severance in such case the trust receiving such fractional share shall have an inclusion_ratio of zero and the other trust shall have an inclusion_ratio of sec_2642 provides that the term qualified_severance includes any other severance permitted under regulations prescribed by the secretary sec_2642 provides that a severance pursuant to this paragraph may be made at any time the secretary shall prescribe by forms or regulations the manner in which the qualified_severance shall be reported to the secretary sec_2642 provides that if property is transferred as a result of the death of the transferor the value of such property for purposes of sec_2642 shall be its value as finally determined for purposes of chapter except that if the requirements prescribed by the secretary respecting allocation of post-death changes in value are not met the value of such property shall be determined as of the time of the distribution concerned sec_2642 provides that any allocation to property transferred as a result of the death of the transferor shall be effective on and after the date of the death of the transferor plr-114251-01 sec_2642 provides generally that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 or and an election under sec_2632 or c such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of this paragraph sec_2642 provides that in determining whether to grant relief under this paragraph the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant for purposes of determining whether to grant relief under this paragraph the time for making the allocation or election shall be treated as if not expressly prescribed by statute sec_301_9100-1 provides that the commissioner has 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 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_9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute under sec_301_9100-1 a regulatory election includes an election whose due_date is prescribed by a notice published in the internal_revenue_bulletin in accordance with sec_2642 the time for allocating the gst_exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust as a gst_trust are to be treated as if not expressly prescribed by statute accordingly taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 see notice_2001_50 2001_34_irb_189 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government pursuant to b b i the qtip_election can be made on the first estate_tax_return filed by the executor after the due_date if a timely return is not filed the reverse_qtip_election is made on the return on which the qtip_election is made under sec_26_2652-2 in the present situation the qtip and reverse qtip elections were made on the late return filed on or about date and were effective sec_2632 provides that an individual’s gst_exemption may be allocated at any time before the date prescribed plr-114251-01 for the filing of the estate_tax_return for the individual’s estate because decedent’s federal estate_tax_return was not timely filed the executor’s attempted allocation of all the gst_exemption to trust a was ineffective based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied therefore the executor of decedent’s estate is granted an extension of time of days from the date of this letter to allocate dollar_figurey to trust a dollar_figurez to trust b and dollar_figurez to trust c the allocation will be effective as of date the date of the decedent’s death and the value of the property for purposes of determining the amount of gst_exemption to be allocated to the trusts shall be its value as finally determined for purposes of chapter this election should be made on a supplemental form_706 united_states estate and generation-skipping_transfer_tax return and filed with the cincinnati service_center a copy of this letter should be attached to the supplemental form_706 a copy is enclosed for this purpose provided the amount of gst_exemption allocated to trust b and trust c is equal to the value of each trust for federal estate_tax purposes trust b and trust c will each have an inclusion_ratio of zero also provided that the proposed qualified_severance of trust a satisfies all requirements of sec_2642 ie trust a is divided on a fractional basis in accordance with the applicable_fraction and the terms of trust and trust in the aggregate provide for the same succession of interests of beneficiaries as are provided in the original trust trust will have an inclusion_ratio of zero and trust will have an inclusion_ratio of one the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as specifically ruled herein we express or imply no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code in addition we express or imply no opinion regarding whether the proposed severance of trust a will satisfy the requirements of a qualified_severance under sec_2642 this ruling is directed only to the taxpayer s requesting it sec_6110 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 is being sent to your authorized representative plr-114251-01 sincerely paul f kugler associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes