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 corp b03 - plr-139416-03 date date ----------------------------- ------------------------------------- distributing -------------------------------------------------------------------------- --------------------------------------------------------------------- controlled ----------------------------- -------------------------------------------------------------------------- --------------------------------------------------------------------- a -------------------------------------------------------------------- b -------------------------------------------------------------------- c business d ------------------------------------------------------------------------------------------------------------------ business e ------------------------------------------------------------------------------------------------------------ state x q r ---------------------------------- ------------------ ---------- ------------------------------------------------------------------------ ------------------------------------------------------------------------ --------- -------- -- ---- ------------ --------------- --------------- ------------------------------------------------ we respond to your request dated date for rulings on the federal plr-139416-03 s t u dollar_figurev date plans dear -------------------- income_tax consequences of a proposed transaction the information submitted for consideration is summarized below distributing is an accrual_method state x subchapter_s_corporation distributing is engaged directly in business d which has been conducted for more than five years distributing has outstanding r shares of voting common_stock that are owned in equal amounts by a and by b distributing treated as a disregarded_entity under sec_1_1361-4 of the income_tax regulations controlled is directly engaged in business e which it has conducted for more than five years controlled has outstanding q shares of voting common_stock all of which are held by distributing business d and business e had gross_receipts and operating_expenses representative of the active_conduct_of_a_trade_or_business for each of the past five years business d distributing hired a key_employee c with the talent and experience to expand the operations of business d and improve the profitability of distributing distributing’s profitability was greatly improved last year now in order to ensure that c remains in the employ of distributing and business d and to provide c with a strong incentive to develop business d so that a can hand over the management of last year in order to meet increased competition and declining earnings in its the taxpayer has supplied financial information that indicates that each of controlled is a wholly owned qualified_subchapter_s_subsidiary q sub of plr-139416-03 distributing to c and concentrate his efforts on managing business e for controlled the following transaction has been proposed i ii all of the outstanding_stock of controlled will be distributed in equal parts to a and to b distributing will then sell to c approximately s shares of its authorized but unissued stock which after the sale would constitute about t percent of distributing’s total outstanding_stock c will pay distributing for the stock with a note secured_by the stock accruing interest and requiring annual payments amortizing principal and interest over u years this equity stake would ensure c a position on distributing’s board_of directors iii after the distribution controlled will elect to be an s_corporation pursuant to sec_1362 of the internal_revenue_code for its first taxable_year the taxpayers have made the following representations in connection with the proposed transaction a b c d no part of the consideration to be distributed by distributing will be received by a shareholder as a creditor employee or in any capacity other than that of a shareholder of the corporation the five years of financial information submitted on behalf of distributing and controlled are representative of the corporations’ present operations and with regard to such corporations there have been no substantial operational changes since the date of the last financial statements submitted following the transaction distributing and controlled each will continue the active_conduct of its business independently and with its separate employees the distribution of the stock of controlled is carried out for the corporate business purposes of providing a substantial equity_interest in distributing to c and for risk reduction the distribution of the stock of controlled is motivated in whole or substantial part by these corporate business purposes e controlled will elect to be an s_corporation pursuant to sec_1362 effective immediately after the distribution there is no plan or intent to revoke or plr-139416-03 otherwise terminate the s_corporation_election of either distributing or controlled f g h i j k there is no plan or intention by the shareholders of distributing to sell exchange transfer by gift or otherwise dispose_of any of their stock in either distributing or controlled after the transaction there is no plan or intention by either distributing or controlled directly or through any subsidiary_corporation to purchase any of their respective outstanding_stock after the transaction other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 there is no plan or intention to liquidate either distributing or controlled to merge either corporation with any other corporation or to sell or otherwise dispose_of the assets of either corporation after the transaction except in the ordinary course of business no existing liabilities will be assumed in the transaction and the total adjusted bases and the fair_market_value of the assets deemed transferred to controlled by distributing each equals or exceeds any liabilities to which the transferred assets are subject no existing liabilities will be assumed in the transaction and the liabilities to which the transferred assets are subject were incurred in the ordinary course of business and are associated with the assets being transferred no intercorporate debt will exist between distributing and controlled at the time of or subsequent to the distribution of the controlled stock except an intercorporate debt consisting of promissory notes of controlled payable to distributing with an approximate total balance of dollar_figurev incurred by controlled on date to buy out the remaining former shareholders of controlled other than distributing l with the exception of the provisional continuation of plans no continuing transactions between distributing and controlled are anticipated but if there are any such transactions payments made in connection with all continuing transactions if any between distributing and controlled will be for fair_market_value based on terms and conditions arrived at by the parties bargaining at arm’s length m no two parties to the transaction are investment companies as defined in sec_368 and iv plr-139416-03 n o p follows the distribution of controlled stock is not part of a plan or series of related transactions within the meaning of sec_355 pursuant to which one or more persons will acquire directly or indirectly stock possessing percent or more of the total combined voting power of all classes of stock entitled to vote of either distributing or controlled or stock possessing percent or more of the total value of all classes of stock of either distributing or controlled no distributing shareholder or shareholders will hold immediately after the distribution disqualified_stock within the meaning of sec_355 which constitutes a 50-percent_or_greater_interest in distributing or controlled the income_tax_liability for the taxable_year in which investment_credit_property including any building to which sec_47 applies is transferred will be adjusted pursuant to sec_50 or a or sec_47 as in effect before amendment by pub_l_no title 104_stat_1388 if applicable to reflect an early disposition of the property based solely on the information and the representations made we hold as the distribution of all of the controlled stock to a and to b will cause the termination of the qsub election of controlled because controlled will cease to be a wholly owned subsidiary of distributing an s_corporation as a result controlled will be treated as a new corporation acquiring all of its assets and assuming all of its liabilities immediately before the termination from distributing in exchange for stock of controlled sec_1_1361-5 the deemed exchange of distributing’s business e assets subject_to liabilities for controlled stock resulting from the termination of the qsub election as set forth above followed by the distribution of all of the controlled stock to a and to b will be treated as a reorganization within the meaning of sec_368 distributing and controlled each will be a_party_to_a_reorganization within the meaning of sec_368 distributing will not recognize any gain_or_loss on the transfer of the business e assets subject_to liabilities to controlled in exchange for controlled common_stock and the assumption by controlled of the liabilities associated with the transferred assets sec_361 and sec_357 plr-139416-03 controlled will not recognize any gain_or_loss on the receipt of the business e assets subject_to liabilities in exchange for the controlled common_stock sec_1032 the basis of each asset received by controlled from distributing will be equal to the basis of such asset in the hands of distributing immediately prior to the transaction sec_362 the holding_period of each asset received by controlled from distributing will include the period during which such asset was held by distributing sec_1223 no gain_or_loss will be recognized by distributing on the distribution of the controlled stock to a and to b sec_361 no gain_or_loss will be recognized by and no amount will be included in the income of a or b upon the receipt of the controlled stock sec_355 the aggregate basis of the distributing stock and the controlled stock in the hands of a and of b immediately after the distribution will be the same as the basis of the distributing stock in the hands of a and of b immediately prior to the distribution sec_358 and sec_1_358-1 such aggregate basis will be allocated between the distributing stock and the controlled stock in proportion to the relative fair_market_value of each corporation’s stock in accordance with sec_1_358-2 sec_358 the holding_period of the controlled stock received by a and by b will include the holding_period of the distributing stock with respect to which the distribution will be made provided that the distributing stock is held as a capital_asset on the date of the distribution sec_1223 as provided in sec_312 proper allocation of earnings_and_profits between distributing and controlled will be made under sec_1_312-10 provided that controlled meets the requirements of sec_1361 and provided that distributing immediately distributes the stock of controlled distributing’s momentary ownership of the stock of controlled will not cause controlled to have an ineligible shareholder for any portion of its first taxable_year under sec_1361 and controlled is eligible to make a timely election without the consent of distributing to be an s_corporation for its first taxable_year transaction under other provisions of the code and regulations or about the tax no opinion is expressed or implied about the tax treatment of the proposed this ruling is directed only to the taxpayer requesting it sec_6110 of plr-139416-03 treatment of any conditions existing at the time of or effects resulting from the proposed transaction that are not specifically covered by the above rulings the code provided that it may not be used or cited as precedent returns of the taxpayers involved for the taxable_year in which the transaction covered by this letter is consummated been sent to the taxpayers’ authorized representative pursuant to the powers of attorney on file in this office a copy of this letter has it is important that a copy of this letter be attached to the federal_income_tax sincerely filiz a serbes filiz a serbes chief branch office of the associate chief_counsel corporate


internal_revenue_service number release date index number ----------------------------------------------------------- ---------------------------------- -------------------- ---------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------- id no ------------- telephone number --------------------- refer reply to cc psi plr-130770-09 date date legend company ----------------------------------------------------------- ------------------------------------------------------------------ date1 date2 date3 date4 state ---------------- -------------------------- -------------- ------------------------- ------------ trust ----------------------------------------------------------------------------------------------------------- ----------------------------------------------------------- -------------------------------------------------------------------------------- a ------------------------------------------------------------- --------------------------- dear ---------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of company requesting a ruling under sec_1362 of the internal_revenue_code facts plr-130770-09 company is a state corporation that elected to be an s_corporation effective date1 on date2 stock in company was transferred to trust prior to the transfer trust was an eligible s_corporation shareholder because it was a_trust under sec_1361 after the transfer trust ceased to be a_trust under sec_1361 and consequently company’s s_corporation_election terminated on date2 on date3 company learned that its s_corporation_election had terminated on date2 since date2 company has treated trust as a qualified_subchapter_s_trust qsst under sec_1361 and a the income_beneficiary of trust has reported a’s allocable share of company’s income consistent with the treatment of trust as a qsst trust however did not qualify as a qsst under sec_1361 because a failed to file a qsst election and trust could distribute income and corpus to a’s dependents a does not have any dependents and distributions from trust have only been made to a on date4 a state court approved a modification to trust so that now during a’s life trust may only distribute income and corpus to a company represents that there was no intent to terminate company’s s_corporation_election and that the termination was inadvertent and not motivated by tax_avoidance or retroactive tax planning company and its shareholders have treated company as an s_corporation since date1 in addition company and its shareholders agree to make any adjustments consistent with the treatment of company as an s_corporation as may be required by the secretary law and analysis sec_1361 provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 defines a small_business_corporation as a domestic_corporation which is not an ineligible_corporation and which does not a have more than shareholders b have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual c have a nonresident_alien as a shareholder and d have more than one class of stock sec_1361 provides that for purposes of sec_1361 a_trust all of which is treated under subpart e of part i of subchapter_j of chapter of the internal_revenue_code as owned by an individual who is a citizen or resident_of_the_united_states may be a shareholder sec_1361 provides that in the case of a qsst with respect to which a beneficiary makes an election under d -- a the trust is treated as a_trust described in sec_1361 and b for purposes of sec_678 the beneficiary of the plr-130770-09 trust is treated as the owner of that portion of the trust which consists of stock in an s_corporation with respect to which the election under sec_1361 is made sec_1361 provides that a beneficiary of a qsst or his legal_representative may elect to have sec_1361 apply sec_1_1361-1 of the income_tax regulations provides that the current income_beneficiary of the trust must make the election under sec_1361 by signing and filing with the service_center with which the corporation files its income_tax return the applicable form or statement including the information listed in sec_1_1361-1 sec_1362 provides that except as provided in sec_1362 a small_business_corporation may elect to be an s_corporation sec_1362 provides that an election under sec_1362 shall be terminated whenever at any time on or after the first day of the first taxable_year for which the corporation is an s_corporation such corporation ceases to be a small_business_corporation sec_1362 provides in part that if an election under sec_1362 by any corporation was terminated under sec_1362 or the secretary determines that the circumstances resulting in such termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in such termination steps were taken so that the corporation for which the termination occurred is a small_business_corporation and the corporation for which the termination occurred and each person who was a shareholder of the corporation at any time during the period specified pursuant to sec_1362 agrees to make the adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in the termination the corporation shall be treated as an s_corporation during the period specified by the secretary conclusion based solely on the facts submitted and representations made we conclude that company’s s_corporation_election terminated on date2 when stock in company was transferred to trust an ineligible s_corporation shareholder we also conclude that this termination of company's s_corporation_election was inadvertent within the meaning of sec_1362 accordingly under sec_1362 company will be treated as continuing to be an s_corporation from date2 and thereafter provided that company’s s_corporation_election was valid and was not otherwise terminated under sec_1362 and provided that a files a plr-130770-09 qsst election for trust with an effective date of date2 with the appropriate service_center within days from the date of this letter a copy of this letter should be attached to the qsst election during the termination period and thereafter trust will be treated as a qsst described in sec_1361 assuming the trust otherwise qualifies as a qsst and a will be treated as the owner of company stock held by trust accordingly all of company’s shareholders in determining their respective income_tax liabilities during the termination period and thereafter must include their pro_rata share of the separately_stated items of income including tax-exempt_income loss deduction or credit and non-separately computed items of income or loss of company under sec_1366 make any adjustments to basis under sec_1367 and take into account any distributions made by company under sec_1368 if trust company or company’s shareholders fail to treat company as described above this ruling shall be null and void except as specifically set forth above we express or imply no opinion concerning the federal tax consequences of the facts described above under any other provision of the code specifically we express no opinion on whether company is otherwise eligible to be an s_corporation or whether trust qualifies as a qsst this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office we are sending a copy of this letter to company's authorized representative sincerely s mary beth carchia senior technician reviewer branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division release number release date date date uil code - contact person identification_number contact number employer_identification_number form required to be filed tax years 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 f you disagree with our proposed deletions you should follow the instructions in notice if you agree with our deletions you do not need to take any further action letter cg catalog number 47632s 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 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 about your 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 sincerely lois lerner director exempt_organizations enclosure notice redacted proposed adverse determination_letter redacted final adverse determination_letter letter cg catalog number 47632s department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division date date contact person identification_number contact number fax number employer_identification_number uil nos dollar_figure dollar_figure dollar_figure legend b individual c individual d individual f business h business j business m date o date p state r state s dollar amount t dollar amount u dollar amount dear we have considered your application_for recognition of exemption from federal_income_tax under sec_501 of the internal_revenue_code code’ as an organization described in sec_501 based on the information submitted we have concluded that you do not qualify for exemption under that section the basis for our conclusion is set forth below issues are you formed to obtain grants primarily benefitting b through f yes for the reasons given below are private interests being served prohibiting you from qualifying for exemption under sec_501 of the code yes based on the reasons stated below facts individuals b c and d are listed as your governing members b owns and operates f as a sole_proprietor f is a for profit jewelry business run from b’s home c and d were selected as board members by b as being friends who live nearby b hired h a professional fundraising company based in r to seek private grants for f signed a contract with h on date m to provide the following services b foundation research grant application preparation and packaging grant proposal writing consultation to direct the client toward the best avenue to reach grant funding goals although you have three board members b was the only individual to sign this contract as part of the grant writing process h promised to aid f in securing approximately dollar_figure if a minimum of dollar_figure none of the grant requests sent out by h were ever provided to you or b in grant funding the fee charged for this was s dollars the contract also states is not raised approximately t dollars of the fee will be waived b was contacted by a representative of j a for profit company based in r and told a foundation was willing to provide a grant of approximately dollar_figure that b had a tax-exempt corporation through which to give approximately of grant proceeds to local charities therefore upon receipt of the grant around dollar_figure or would be wired to your bank account to be donated back to the community b signed a contract with j to provide the following services for a fee of u dollars to f on the condition home state non-profit corporation non-profit corporate kit irs form_1023 again although you have three board members b was the only individual to sign this contract the representative of j told b that receiving the grant money for f hinged upon receiving tax-exemption as it was a stipulation of the donor and was the only way to receive grant funding also until tax-exemption was received no names of those providing the grant funding would be released b was also told that after tax-exemption was received b would be able to work directly with the donor foundation and would no longer need the services of j a business plan for the grant proposal was provided on f’s letterhead this proposal showed that the grant funding would be used for supplies outside labor photography marketing consulting advertising it consulting tools trade_show fees and expenses travel and website development consistent with the needs of a jewelry business the grant proposal contained more than dollar_figure stated that b is struggling to operate f and would love to do more advertising and hire employees receiving grant funding would allow these goals to be accomplished in expenses directly related to f you also per j’s contracted services you were incorporated on date o in state p your articles of incorporation state your specific purpose is to provide distribution of funds to local schools to assist with book and equipment purchases and to help with benefits for schools you will also provide donations to the local humane society your activities are essentially the same as the above listed purposes you plan to make donations to support local schools and animal services although you did not submit actual budgets you indicated your intentions were to split the received from the potential grant funds between two entities this would entail an approximate donation of dollar_figure funds would be used for f you further documented your intentions by stating you needed to set up a c due to the potential donors stipulation the only reason for donating to your local community through the c was to fulfill the potential donors stipulation the c was the only way you would receive funds for your business to two designated charities the remainder of the grant you indicated since you filed form_1023 both h and j seem to have closed down you did not have the information about the potential donor and you do not expect to receive the initial grant described above you explained that you simply wanted to receive grant money for your jewelry business f and you were happy to donate a portion of it back into the community you also explained that you plan to apply for more grants in the future do expect to apply again it was very encouraging that got at least one donor to commit with the rising costs of my materials am struggling to keep my business going would love to do more advertising and i'd love to be able o hire some help a grant would be such as blessing law sec_501 of the code provides in part for the exemption from federal_income_tax of corporations organized and operated exclusively for charitable scientific or educational_purposes provided no part of the organization's net_earnings inures to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 of the income_tax regulations provides that an organization will be regarded as ‘operated exclusively’ for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose sec_1_501_c_3_-1 of the income_tax regulations provides that an organization is not operated exclusively for one or more exempt purposes if its net_earnings inure in whole or in part to the benefit of private shareholders or individuals sec_1_501_c_3_-1 of the regulations provides that an organization is not organized or operated exclusively for one or more exempt purposes unless it serves a public rather than a private interest thus to meet the requirement of this subsection it is necessary for an organization to establish that it is not organized or operated for the benefit of private interests such as designated individuals the creator or his family shareholders of the organization or persons controlled directly or indirectly by such private interests in 326_us_279 the supreme court of the united_states interpreted the requirement in sec_501 that an organization be operated exclusively by indicating that in order to fail within the claimed exemption an organization must be devoted to exempt purposes exclusively this plainly means that the presence of a single non-exempt purpose if substantial in nature will destroy the exemption regardless of the number and importance of truly exempt purposes in 765_f2d_1387 9th cir cert_denied 497_us_1005 the court held that when a for-profit organization benefits substantially from the manner in which the activities of a related_organization are carried on the organization is not operated exclusively for exempt purposes within the meaning of sec_501 even if it furthers other exempt purposes in international postgraduate medical foundation v commissioner tcmemo_1989_36 the tax_court considered the qualification for exemption under sec_501 of the code of a nonprofit corporation that conducted continuing medical education tours the court found that a substantial purpose of the petitioner was benefiting the for-profit travel agency it concluded that when a for-profit organization benefits substantially from the manner in which the activities of a related_organization are carried on the latter organization is not operated exclusively for exempt purposes within the meaning of sec_501 even if it furthers other exempt purposes in kj's fund raisers inc v commissioner 74_tcm_669 the court held that a nonprofit organization which sold lottery tickets on the premises of a for-profit business had a substantial non-exempt purpose to enhance the profits of the for-profit business the owners of the for-profit business formed the nonprofit organization purportedly to raise funds for distribution to charitable causes the nonprofit's lottery tickets were sold during the regular business hours by the owners and employees of the for-profit business the owners of the for-profit initially controlled the board and later indicated that it would vest control in unrelated parties the nonprofit opined that the organization would fold without the original founders of the organization as officers in finding that the nonprofit had a substantial nonexempt purpose the court reasoned that the owners of the for-profit were in a position to control the nonprofit additionally the court found that the publicity received by the for-profit was a significant benefit application of law based on our analysis you do not satisfy the operational requirements of the code and regulations to be recognized as exempt under sec_501 of the code your operations will result in impermissible private benefit to insiders moreover you have not shown that you are formed exclusively for an exempt_purpose under sec_501 of the code the facts show you were formed to receive a grant to further f’s business operations this results in impermissible private benefit to b through f which precludes you from exemption under sec_501 you do not meet the operational_test under sec_1_501_c_3_-1 of the regulations and are not operated exclusively for one or more exempt purposes’ as set forth in sec_1_501_c_3_-1 of the regulations because your net_earnings inure in whole or in part to the benefit of f and f’s owner b you were created to secure grants for f f will receive of these grant funds as a result b is receiving a substantial benefit in the form of funds flowing to f you were formed not for c purposes but instead as a requirement for f to receive grant funding this leads to inurement of earnings accruing to b through f which precludes exemption under c you are not operating exclusively for exempt purposes per sec_1_501_c_3_-1 of the regulations as you serve private rather than public interests f would not qualify to receive a grant to support its operations without your approval as a c while you do plan to provide grants to charitable organizations it is clear your primary purpose is to help f qualify for grant funding as f is retaining of any funds received thus f and f’s owner b benefit substantially from your creation by conducting activities that serve private interests you are not operated for an exclusively exempt_purpose you are like the organization in 326_us_279 in that you are not operated exclusively for exempt purposes as described above you substantially further the private interests of your board member b and b’s jewelry business f of all funding you receive only will be used towards charitable purposes the remainder will go to f like the organization in the court case this single nonexempt purpose destroys your claim for exemption under sec_501 of the code you are similar to the corporation described in international postgraduate medical foundation v commissioner and church by mail inc v commissioner supra because f and by extension b benefit substantially from your formation you stated funds would not be released to f without your approval of your application which demonstrates you were created as a c entity with the intention to help f receive grant funding in fact you state you were formed simply to receive grant funding for your for-profit jewelry business your purposes are consistent with the organization described in kj's fund raisers inc b who has control_over your operations as a director and your founder will also simultaneously be managing f you were formed by b to facilitate the flow of funding to f the decision by b to create you to secure grant funding for f shows that the private interests of b are being served conclusion you do not meet the operational requirements to be recognized under sec_501 of the code your primary purpose is to secure grants used to further the private interests of b and through f this constitutes a substantial non exempt activity and provides private benefit and inurement to b accordingly you do not qualify for exemption as an organization described in 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 types of information that should be included in your appeal can be found on page of publication under the heading regional_office appeal item must be accompanied by the following declaration the statement of facts under penalties of perjury declare that have examined the statement of facts presented in this appeal and in any accompanying schedules and statements and to the best of my knowledge and belief they are true correct and complete the declaration must be signed by an officer or trustee of the organization who has personal knowledge of the facts your appeal will be considered incomplete without this statement if an organization’s representative submits the appeal a substitute declaration must be included stating that the representative prepared the appeal and accompanying documents and whether the representative knows personally that the statements of facts contained in the appeal and accompanying documents are true and correct 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 you do not intend to protest this determination you do not need to take any further action determination_letter that letter will provide information about filing tax returns and other matters if we do not hear from you within days we will issue a final adverse 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 you may fax your statement using the fax number shown in the heading of this letter you fax your statement please call the person identified in the heading of this letter to confirm that he or she received your fax if if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely lois g lerner director exempt_organizations enclosure publication


department of the treasury internal_revenue_service washington d c date cc el gl br2 kazuba gl-608348-98 uilc number release date memorandum for district_counsel gulf coast district from subject kathryn a zuba chief branch general litigation proofs of claim in mississippi bankruptcy cases by way of a general litigation transmittal_memorandum dated date your office asked for our review of your date memorandum to district_director regarding proofs of claim in mississippi bankruptcy cases for the following reasons we recommend your memorandum be revised this document is not to be cited as precedent your memorandum reflects that your office became aware that in mississippi the service was using the last day of the tax_year as the date income_tax claims and refunds arise for purposes of filing proofs of claim and making setoffs of tax refunds you stated that in louisiana the service was using the date income taxes became payable ie the date the return is due as the date income_tax claims and refunds arise you stated the practice in louisiana was based on the fifth circuit_court of appeals holding in in re ripley 926_f2d_440 5th cir because mississippi like louisiana is within the jurisdiction of the fifth circuit you directed that in the future the date the taxes become payable should be used as the date for determining whether an income_tax claim refund is a pre-petition or post-petition claim refund we do not find ripley controlling on the issues you have addressed the issue in ripley was whether taxes became payable under of the bankruptcy code when the taxpayers were required to file their return or when estimated installment payments were due f 2d pincite in pertinent part provides that a proof_of_claim may be filed by any entity that holds a claim against the debtor for taxes that become payable to a governmental_unit while the case in pending u s c a section found in chapter of bankruptcy code is applicable only in chapter cases and is an exception to the general_rule that gl-608348-98 bankruptcy proceedings do not affect post-petition claims see f 2d pincite section provides a mechanism through which certain post-petition claims including claims of governmental units for taxes that become payable post-petition can be paid through a chapter plan id this provision does not provide guidance as to the general pre-petition versus post-petition nature of a tax claim it has long been our position that income_tax liabilities arise on the last day of the tax_year for purposes of determining whether a particular tax is a pre-petition or post-petition claim this position is reflected in the recently published bankruptcy handbook see i r m b we recognize however that the three circuit_court cases which have addressed the pre-petition post-petition issue have held that petition year tax_liabilities should be apportioned into pre-petition and post-petition claims usually through a proration based on the number of days proceeding and following the petition date in re pacific-atlantic trading company 64_f3d_1292 9th cir in re l j o’neil shoe company 64_f3d_1146 8th cir in re hillsborough holdings corp 116_f3d_1391 11th cir accordingly we have advised counsel to follow these authorities within their respective jurisdictions it is important to note that these cases involve only corporate tax_liabilities it is our position that outside these jurisdictions and even within these jurisdictions in cases of individual chapter and chapter debtors who have not elected to split the tax_year pursuant to sec_1398 or chapter debtors the service should continue to assert the position that tax_liabilities arise on the last day of the tax_year because the fifth circuit is not one of these jurisdictions we advise that the service continue to assert this position in that circuit we also recognize that exceptions may be warranted for example in a large case it may be necessary for the service to make a protective filing of a proof_of_claim which includes as a pre-petition claim an estimate of the pre-petition portion of petition year tax_liability such a filing may be necessary to prevent the claim from being disallowed as untimely in the event the bankruptcy court were to follow the line of above referenced cases holding that the pre-petition portion of a petition year tax_liability is a pre-petition claim and not a post-petition administrative expense your memorandum also raises the issue of when a tax claim or refund arises for purposes of setoff pursuant to sec_553 of the bankruptcy code as you may be aware it is also our position that pursuant to the mutuality requirement for sec_553 setoff both the claim of the service against the debtor and the debt owing by the service to the debtor must arise before the commencement of the case consistent with our position regarding the date used for filing proofs of claim it is our position that for purposes of determining whether tax_liabilities and tax refunds are pre- gl-608348-98 petition or post-petition in nature pursuant to the mutuality requirement for setoff the last day of the tax_year should be the date used in conclusion the advice contained in the memorandum you asked us to review is not consistent with our position we recommend that your advice be revised to reflect our position that tax claims arise on the last day of the tax_year for purposes of filing proofs of claim and making setoffs if you have any further questions please call the attorney assigned to this matter in branch at


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi b1-plr-104048-03 date march legend x d1 state dear this responds to the letter dated date and related correspondence submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts x was incorporated on d1 under the laws of the state x intended to be treated as an s_corporation for federal tax purposes effective d1 but the s election was not timely filed law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective if an s election is made within the first two and one-half months of a corporation’s taxable_year then the corporation will be treated as an s_corporation for the year in which the election plr-104048-03 is made if the election is made after the first two and one-half months of a corporation’s taxable_year then the corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if no election is made pursuant to sec_1362 or if made the election is made after the date prescribed for making such an election and the secretary determines there was reasonable_cause for the failure to timely make the election then the secretary may treat such an election as timely made for such taxable_year and effective as of the first day of that tax_year x did not file a timely election to be treated as an s_corporation under sec_1362 effective d1 x has however established reasonable_cause for not making a timely election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and representations made and provided that x otherwise qualifies as a subchapter_s_corporation we conclude that x will be recognized as an s_corporation effective d1 within days from the date of this letter x should submit a properly completed form_2553 with a copy of this letter attached to the relevant service_center except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being mailed to x sincerely dianna k miosi chief branch associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service director exempt_organizations rulings and agreements department of the treasury p o box - room x000t cincinnati ohie number release date date date legend b c employer_identification_number person to contact - id contact telephone numbers uil dollar_figure dear we have considered your request for advance approval of your grant-making programs under sec_4945 g of the internal_revenue_code dated date our records indicate that b was recognized as exempt from federal_income_tax under sec_501 c of the code and that it is classified as a private_foundation as defined in sec_50 a ‘your letter indicates that b will be awarding scholarships of varying amounts to students who are residents or citizens of the country of c and who have been accepted to an accredited university or college for undergraduate or graduate studies in the united_states the educational_institution or to the scholarship recipient for payment of tuition related expenses books supplies and room and board in order to be eligible for a scholarship grant a candidate must scholarships will be paid directly to i submit a request for a grant that is accompanied by his or her academic transcript a list of his or her extracurricular activities and work experience sat or act or other standardized test scores and two references from teachers or instructors who have taught the candidate in an academic course in the two preceding years prior to the request demonstrate academic excellence and has been admitted to an elite school an elite school is defined in the scholarship grant procedures as a university college or undergraduate or graduate educational_institution which is ranked in the top schools in such school’s respective category by u s news and world report or otherwise deemed by the trustee in his discretion to be an elite educational_institution located in the united_states demonstrate financial need by submitting a copy of the application_for financial aid submitted to the elite school or providing other financial records or evidence of financial need and demonstrate a high level of motivation strong character and great potential for academic success ‘the availability of scholarships through this program will be made known to a select group of schools inc the selection committee consists of the trustee of b the trustee will personally interview each candidate to evaluate the candidate’s motivation character ability and potential for academic success the trustee will determine the selection of the recipient of the awards the amount of the award s and if the awards are to be received on a continuous or rolling basis no scholarship grant may be awarded to any individual who is related to the trustee or to a substantial_contributor to the trust or persons related to such substantial contributors including but not limited to those persons who would be disqualified_person with respect to the trust as defined in sec_4946 of the internal_revenue_code in any way which would cause the trustee or such disqualified_person to derive a private benefit directly or indirectly if such individual is selected to receive the grant at the end of each academic year the grant recipient must provide to the trust a report of the courses taken and grades received in each academic period of such year the report must be certified or verified by the educational_institution attended by the grant recipient in addition the grant recipient must provide to the trust a report of the use of the grant funds not paid directly by the trust to the educational_institution or other service providers including invoices and receipts for all payments and expenditures made by the grant recipient upon completion of a grant recipient’s study at an educational_institution the grant recipient must provide a final report of his academic study to the trust if a report submitted by a grant recipient indicates that all or any part of a grant is not being used in furtherance of the purposes of such grant the trustee must withhold further payments and investigate the use of such funds improper purposes the trustee shall if the results of an investigation indicate that the grant has been used for a b take all reasonable and appropriate steps either to recover the grant funds or to insure the restoration of the diverted funds and the dedication of other grant funds held by the grant recipient to the expenses being defrayed by the grant and withhold any further payments to the grant recipient until the trust has received the grant recipient's assurances that future diversion will not occur and required the grant recipient to take extraordinary precautions to prevent future diversions from occurring the organization agrees to retain all records concerning each candidate and grant recipient including but not limited to the application materials submitted by each candidate and the reports provided by each grant recipient sec_4945 and b of the code impose certain excise_taxes on taxable_expenditures made by a private_foundation sec_4945 of the code provides that the term taxable_expenditure means any amount_paid or incurred by a private_foundation as a grant to an individual for travel study or other similar purposes by such individual unless such grant satisfies the requirements of subsection g sec_4945 of the code provides that sec_4945 shall not apply to individual grants awarded on an objective and nondiscriminatory basis pursuant to a procedure approved in advance if it is demonstrated thet the grant constitutes a scholarship or fellowship_grant which is subject_to the provisions of sec_117 and is to be used for study at an educational_organization described in sec_170 a ii the grant constitutes a prize or award which is subject_to the provisions of sec_74 if the recipient of such prize or award is selected from the general_public or the purpose of the grant is to achieve a specific objective produce a report or similar product or improve ot enhance a literacy artistic musical scientific teaching ot other similar capacity skill or talent of the grantee sec_53_4945-4 of the regulations provides that to secure approval a private_foundation must demonstrate that its grant procedure includes an objective and nondiscriminatory selection process ii iii such procedure is reasonably calculated to result in performance by grantees of the acti that the grants are intended to finance and the foundation plans to obtain reports to determine whether the grantees performed activities that the grants are intended to finance based on the information submitted and assuming your scholarship program will be conducted as proposed with objectivity and nondiscrimination in awarding grants we determined that your procedures in awarding scholarship grants comply with the requirements of sec_4945 of the code and that scholarships granted according to these procedures will not be taxable_expenditures within the meaning of sec_4945 in addition we have determined that awards made under your procedures are excludable from the gross_income of the recipients subject_to the limitations provided by sec_117 of the code ‘this determination is conditioned on the understanding that there will be no material_change in the facts upon which it is based it is further conditioned on the premise that no grants will be awarded to foundation managers or members of the selection committee or for a purpose that is inconsistent with the purpose described in sec_170 of the code the approval of your grant-making procedures is a one-time approval of your system standards and procedures that will result in grants which meet the requitements of sec_4945 of the code ‘this determination only covers the grant programs described above thus approval shall apply to succeeding grant programs only as long as the standards and procedures under which they are conducted do not differ materially from those described in your request ‘any funds you distribute to individuals must be made on a true charitable basis in furtherance of the purposes for which you are organized therefore you should maintain adequate_records and case histories so that any or all grant distributions can be substantiated upon request by the intemal revenue service this determination is directed only to the organization that requested it sec_6110g of the code provides that it may not be used or cited as a precedent you must report any future changes in your grant making procedures please keep a copy of this letter in your permanent records we have sent a copy of this letter to your representative as indicated in your power of attomey if you have any questions please contact the person whose name and telephone number are shown above sincerely yours robert choi director of exempt_organizations rulings and agreements


internal_revenue_service department of the treasury number release date index number u i l no washington dc person to contact telephone number refer reply to cc psi b3 plr-112140-00 date date legend company state shareholders a dear this letter responds to a letter dated date requesting a ruling on behalf of company under sec_1362 of the internal_revenue_code the information submitted discloses that company was incorporated on a in state company has four shareholders shareholders it is represented that company has intended to be an s_corporation since its incorporation however company discovered that its s election had not been timely filed company requests a ruling that its sec_1362 election will be treated as timely made for its taxable_year that begins on a sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 explains when an s election will be effective generally if an s election is made within the first two and one half months of a corporation's taxable_year then that corporation will be treated as an s_corporation for the year in which the election is made sec_1362 provides that if an s election is made after the first plr-112140-00 two and one half months of a corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year following the year in which the s election is made sec_1362 provides that if no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year and sec_1362 shall not apply applying the relevant law to the facts submitted and representations made we rule that company's sec_1362 election will be treated as timely made for its taxable_year that begins on a however this ruling is contingent on company filing form_2553 election by a small_business_corporation with an effective date of a with the appropriate service_center within days from the date of this ruling a copy of this letter should be attached to the form_2553 except as specifically set forth above we express no opinion concerning the federal tax consequences of the foregoing facts specifically we express no opinion on whether company otherwise qualifies as an s_corporation 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 pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer’s 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 yours robert honigman acting assistant to the chief branch office of the associate chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes


internal_revenue_service p o box cincinnati oh release number release date date date department of the treasury employer_identification_number contact person - id number contact telephone number legend uil trust testator geographic location trustee c organization of selection committee college f college college x state application deadline date of g request dear we have considered your request for advance approval of your grant-making program under sec_4945 of the internal_revenue_code dated x our records indicate that x was recognized as exempt from federal_income_tax under sec_501 of the code and that it is classified as a private_foundation as defined in sec_509 your letter indicates that x was created from the will of y to provide funds held in trust by b and to operate a scholarship program the purpose of x is to furnish scholarships to worthy young residents of the area of z to assist in defraying the expenses of attending one of the colleges specified below the geographical restriction of the area of z does not represent a specific geographic location but is intended for the purpose of affording a preference to applicants from that community rather than as an absolute limitation of that residential area the trustees of c located in z have the final discretion in this regard and the residence area of applicants may be construed to include other areas of the county outside of the area of z the trustees of c located in z and there successors have been appointed as the scholarship committee to select the recipients of the scholarships awarded by this trust the recipients of the scholarships shall be young people of the area of z who are of good character and who have demonstrated by their high school scholarship achievements that they are capable of completing a college education such persons may be of any race creed or religion the scholarship committee shall have the sole and complete discretion as to the selection of the recipients the amount of the scholarship to be awarded per year and the number of years they also have complete and sole discretion as to the termination of any scholarship previously granted and their decision in this respect shall be final the financial position of the applicants or that of their parents shall also be considered and an applicant without funds available for a college education shall have preference over an applicant who has sufficient funds b upon the request of the scholarship committee shall advise the scholarship committee of the amount of net_income available for use in the scholarship program b shall also furnish to the committee semi-annually a statement of the said trust showing all receipts disbursements and statement of current_assets the scholarships to be awarded from this trust shall be limited to persons who will enroll in or are already enrolled in d f g or their successors or any other college or university in the state of h the scholarship committee publicizes the scholarship program once a year in its newsletter and other printed materials and the city where the scholarship committee’s organization is located also publicizes the scholarship program in its newsletter to be considered for a scholarship applicants meeting the qualifications listed above must submit an application with a current resume two character references and a disclosure of family financial_assets and liabilities to the office of the organization whose trustees have been appointed as the scholarship committee no later than j each year scholarships may be renewed at the discretion of the trustees of c whenever the scholarship committee shall select a person or persons to receive a scholarship from this trust then the name or names of such persons the amount of the award and the name of the college or university selected shall be certified to b and b shall thereupon pay to the college or university the amount of the scholarship on behalf of the recipient no scholarships may be awarded to any individual who is related by blood adoption or marriage to any member of the selection committee or any disqualified_person of the trust as defined in irc code sec_4946 as a first cousin or nearer relative also a selection committee member may not benefit directly or indirectly from selecting certain scholarship recipients over other potential scholarship recipients scholarships are renewable annually at the discretion of the selection committee the trustee will maintain case histories showing recipients of scholarships including names addresses purposes of awards amount of each award manner of selection and relationship if any to officers trustees or donors of funds to the trust sec_4945 and b of the code impose certain excise_taxes on taxable_expenditures made by a private_foundation sec_4945 of the code provides that the term taxable_expenditure means any amount_paid or incurred by a private_foundation as a grant to an individual for travel study or other similar purposes by such individual unless such grant satisfies the requirements of subsection g sec_4945 of the code provides that sec_4945 shall not apply to individual grants awarded on an objective and nondiscriminatory basis pursuant to a procedure approved in advance if it is demonstrated that the grant constitutes a scholarship or fellowship_grant which is subject_to the provisions of sec_117 and is to be used for study at an educational_organization described in sec_170 the grant constitutes a prize or award which is subject_to the provisions of sec_74 if the recipient of such prize or award is selected from the general_public or the purpose of the grant is to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar capacity skill or talent of the grantee sec_53_4945-4 of the regulations provides that to secure approval a private_foundation must demonstrate that i its grant procedure includes an objective and nondiscriminatory selection process such procedure is reasonably calculated to result in performance by grantees of the activities that the grants are intended to finance and iii the foundation plans to obtain reports to determine whether the grantees performed activities that the grants are intended to finance based on the information submitted and assuming your award programs will be conducted as proposed with a view to provide objectivity and nondiscrimination in making the awards we have determined that your procedures for granting the awards comply with the requirements contained in sec_4945 of the code and that awards granted in accordance with such procedures will not constitute taxable_expenditures within the meaning of sec_4945 in addition we have determined that awards made under your procedures are excludable from the gross_income of the recipients subject_to the limitations provided by sec_117 of the code this determination is conditioned on the understanding that there will be no material_change in the facts upon which it is based it is further conditioned on the premise that no grants will be awarded to foundation managers or members of the selection committee or for a purpose that is inconsistent with the purpose described in sec_170 of the code the approval of your award program procedures herein constitutes a one-time approval of your system standards and procedures designed to result in awards which meet the requirements of sec_4945 of the code this determination only covers the grant programs described above thus approval shall apply to subsequent award programs only as long as the standards and procedures under which they are conducted do not differ materially from those described in your request any funds you distribute to individuals must be made on a true charitable basis in furtherance of the purposes for which you are organized therefore you should maintain adequate_records and case histories so that any or all award distributions can be substantiated upon request by the internal_revenue_service this determination is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as a precedent you must report any future changes in your grant making procedures please keep a copy of this letter in your permanent records we have sent a copy of this letter to your representative as indicated in your power_of_attorney if you have any questions please contact the person whose name and telephone number are shown above sincerely yours robert choi director exempt_organizations rulings and agreements


internal_revenue_service director exempt_organizations rulings and agreements department of the treasury p o box - room cincinnati ohio number release date employer_identification_number person to contact contact telephone numbers uil date date legend ‘oundation choo city country e secondary school f city country econdary school ity country x dollar_figureamount dear we have considered your request for advance approval of your grant-making programs under sec_4945 g of the internal_revenue_code dated date our records indicate that the b was recognized as exempt from federal_income_tax under sec_501 of the code and that it is classified as a private_foundation as defined in sec_509 ‘your letter indicates that the b will initially be awarding scholarships in the amount of x to graduates of the c located in d in order to be eligible for consideration an applicant must be a graduate of or graduating from the c and intend to pursue education or training beyond the primary school level the foundation does not expect to develop solicitation or announcement materials or a formal application none of the c graduates come from families with sufficient financial resources to pay the expenses associated with education beyond the primary school level all graduates of the c will automatically be considered for scholarship awards the foundation may expand the scope of the program so that all handicapped children in d with liroited financial means and who show promise will be eligible to participate all c students and graduates will be made aware of the scholarship program by school faculty scholarship awards will be for one academic year with payment directly to the post-primary educational or training institution payable in installments at the beginning of each academtic period recipients will have the opportunity to renew their scholarships for the succeeding academic year renewal or payment of the second installment will be conditioned upon satisfactory academic performance in the preceding academic period and registration as a student in the upcoming period it is expected that male scholarship recipients will attend e near f and female scholarship recipients will attend g in h the foundation will maintain contact with each scholarship recipient requiring the recipient to failure to reroain in contact with the provide academic transcripts as academic periods are completed foundation failure to supply the required information or unsatisfactory academic performance will disqualify the recipient from receiving a second installment if the recipient does not for any reason other than illness or hardship complete the academic period for which the award was granted the recipient will be required to repay the full amount of the scholarship disbursed the foundation expects to utilize the c as its agent in administering the scholarship program supervising the scholarship recipients obtaining academic records and the like the c will provide periodic reports to the foundation concerning the scholarship recipients and their progress as well as copies of all supporting documentation the selection committee will be compiled of i individuals holding offices of the c and ii the treasurer of the b ‘the members of the selection committee and their relatives and relatives of the trustees and other officers of the b are not eligible to apply for scholarships awarded by the foundation the organization agrees to maintain records which include the following toformation used to evaluate the qualification of potential grantees identification of the grantees including any relationship of any grantee to the private_foundation the amount and purpose of each grant and all grantee reports and other follow-up data obtained in administering the private foundation’s grant program a b sec_4945 and b of the code impose certain excise_taxes on taxable_expenditures made by a private_foundation sec_4945 of the code provides that the term taxable_expenditure means any amount_paid or incurred by a private_foundation as a grant to an individual for travel study or other similar purposes by such individual unless such grant satisfies the requirements of subsection g sec_4945 of the code provides that sec_4945 shall not apply to individual grants awarded on an objective and nondisctiminatory basis pursuant to a procedure approved in advance if it is demonstrated that the grant constitutes a scholarship or fellowship_grant which is subject_to the provisions of sec_117 and is to be used for study at an educational_organization described in sec_170 lma ii sec_74 if the recipient of such prize or award is selected from the general_public or the grant constitutes a prize or award which is subject_to the provisions of the purpose of the grant is to achieve a specific objective produce a report or similar produet or improve or enhance a literary artistic musical scientific teaching or other similar capacity skill or talent of the grantee sec_53_4945-4 of the regulations provides that to secure approval a private_foundation must demonstrate that gi its grant procedure includes an objective and nondiscriminatory selection process such procedure is reasonably calculated to result in performance by grantees of the activities that the grants are intended to finance and iii ‘the foundation plans to obtain reports to determine whether the grantees performed activities that the grants are intended to finance based on the information submitted and assuming your scholarship program will be conducted as proposed with objectivity and nondiscrimination in awarding grants we determined that your procedures in awarding scholarship grants comply with the requirements of sec_4945 of the code and that scholarships granted according to these procedures will not be taxable_expenditures within the meaning of sec_4945 in addition we have determined that awards made under your procedures are excludable from the gross_income of the recipients subject_to the limitations provided by sec_117 of the code this determination is conditioned on the understanding that there will be no material_change in the facts upon which it is based it is further conditioned on the premise that no grants will be awarded to foundation managers or members of the selection committee or for a purpose that is inconsistent with the purpose described in sec_170 b of the code the approval of your grant-making procedures is a one-time approval of your system standards and procedures that will result in grants which meet the requirements of sec_4945 of the code this determination only covers the grant programs described above thus approval shall apply to succeeding grant programs only as long as the standards and procedures under which they are conducted do not differ materially from those described in your request any funds you distribute to individuals must be made on a true charitable basis in furtherance of the purposes for which you are organized therefore you should maintain adequate_records and case histories so that any or all grant distributions can be substantiated upon request by the internal_revenue_service this determination is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as a precedent ‘you must report any future changes in your grant making procedures please keep a copy of this letter in your permanent records we have sent a copy of this letter to your representative as indicated in your power of attomey if you have any questions please contact the person whose name and telephone number are shown above sincerely yours robert choi director of exempt_organizations rulings and agreements


date cor-115817-00 internal_revenue_service number info release date uil the honorable ron packard u s house of representatives washington d c dear mr packard thank you for your letter of date signed by you and a number of your colleagues encouraging the internal_revenue_service to immediately readjust the business standard mileage rate to reflect the recent increase in gasoline prices you note that the increased cost has particularly burdened self-employed taxpayers who use automobiles for business purposes gasoline prices we realize increased gasoline prices are an economic burden however the cost of gasoline is only one part of the business standard mileage rate which includes fixed and operating automobile costs these costs include depreciation or lease payments maintenance and repairs insurance and license and registration fees in addition to gasoline and oil less than one-third of the cents per mile rate comes from the cost of gasoline and oil thus an immediate adjustment in the rate taking into account the recent increase in gasoline prices might not be significant setting the business standard mileage rate the rate is a national average amount determined by an annual study performed by an independent_contractor who is an expert in the cost analysis of business use of automobiles the contractor uses recent data from each state on the component costs of operating the most popular automobiles the contractor then combines this data to achieve a national composite cents-per-mile rate advantages of using the business standard mileage rate reducing a taxpayer’s record-keeping burden is the principal advantage of using the rate gasoline prices rise and fall during the year but taxpayers may continue to use the same rate without having to keep records of actual expenses although rising gasoline prices can be a disadvantage for taxpayers who use the rate falling prices can work to their advantage for example although gasoline prices fell in for all of and through date taxpayers were able to use the rate that reflected the earlier higher prices taxpayer’s options to deduct the ordinary and necessary expenses of using an automobile for business purposes a taxpayer must substantiate the cost date place and business_purpose of each use of the automobile by adequate_records for the cost the taxpayer has two options cid substantiate actual cost by keeping records or by other_sufficient_evidence cid use the business standard mileage rate using the rate gives approximate not actual costs taxpayers can deduct the actual business_expenses of using a personally-owned automobile and this may be advantageous when automobile costs are rising publication travel entertainment gift and car expenses contains further information on how taxpayers should substantiate expenses i have enclosed the relevant pages from that publication i am sending a similar letter to your colleagues i hope this information is helpful please call me at or robert a berkovsky at if you have any questions sincerely charles o rossotti enclosure


internal_revenue_service department of the treasury number release date index number 468a washington dc person to contact telephone number refer reply to cc psi 6-plr-118169-03 date date in re revised schedule of ruling amounts legend plant taxpayer commission a commission b commission c commission d a b c d e f g h i j k l m n o p q r plr-118169-03 s t u v w x y z aa dear this letter responds to the request of taxpayer dated and supplemental information as submitted by taxpayer for a revised schedule of ruling amounts relating to plant's qualified nuclear decommissioning fund fund in accordance with sec_1_468a-3 of the income_tax regulations taxpayer is requesting a new schedule of ruling amounts pursuant to sec_1_468a-3 which requires a new schedule of ruling amounts ten years after the issuance of the most recent schedule of ruling amounts taxpayer previously received a schedule of ruling amounts pertaining to plant on a information was submitted pursuant to sec_1_468a-3 taxpayer owns an undivided b percent of the plant the license for the plant expires on c commission a commission b commission c and commission d have regulatory jurisdiction over the rates charged by taxpayer with respect to plant a portion of taxpayer’s wholesale operations consist of sales to the joint owners of d taxpayer and its affiliated corporations file a consolidated tax_return and are under the audit jurisdiction of the industry director natural_resources and construction lm nrc the jurisdictional percentages allocable to commissions a b c and d are x y z and aa respectively commission a in e effective f authorized nuclear decommissioning costs to be included in cost of service for ratemaking purposes for the plant in the amount of g commission b in h effective i authorized nuclear decommissioning costs to be included in cost of service for ratemaking purposes for the plant in the amount of j commission c in k effective l authorized nuclear decommissioning costs to be included in cost of service for ratemaking purposes for the plant in the amount of m commission d through a series of interconnection agreements of various dates authorized nuclear decommissioning costs to be included in cost of service for ratemaking purposes the commissions use the same assumptions estimates and factors in plr-118169-03 determining decommissioning costs therefore the total estimated cost of decommissioning is n for each of the commissions this base cost escalated using an estimated inflation rate of o results in an estimated future cost of p the level_funding limitation period and the funding_period are q through r the assumed after-tax rate of return to be earned by the assets of the fund is o the rate of escalation to determine the future cost of decommissioning the plant is o the proposed method of decommissioning the plant is prompt removal dismantling taxpayer has determined the estimated period for which the fund is to be in effect is s years t through u and the estimated_useful_life of the plant is v years t through r therefore the qualifying percentage is w sec_468a of the code provides that a taxpayer may elect to deduct the amount of payments made to a qualified decommissioning fund however sec_468a limits the amount_paid into such fund for any taxable_year to the lesser_of the amount of nuclear decommissioning costs allocable to this fund which is included in the taxpayer's cost of service for ratemaking purposes for the tax_year or the ruling_amount applicable to this year sec_468a of the code provides that no deduction shall be allowed for any payment to the nuclear decommissioning fund unless the taxpayer requests and receives from the secretary a schedule of ruling amounts the ruling_amount for any_tax year is defined under sec_468a as the amount which the secretary determines to be necessary to fund that portion of nuclear decommissioning costs which bears the same ratio to the total nuclear decommissioning costs with respect to the nuclear power plant as the period for which the nuclear decommissioning fund is in effect bears to the estimated_useful_life of the plant this term is further defined to include the amount necessary to prevent excessive funding of nuclear decommissioning costs or funding of these costs at a rate more rapid than level_funding taking into account such discount rates as the secretary deems appropriate sec_468a of the code provides that a taxpayer shall be deemed to have made a payment to the nuclear decommissioning fund on the last day of a taxable_year if the payment is made on account of such taxable_year and is made within ½ months after the close of the tax_year sec_1_468a-1 of the regulations provides that an eligible_taxpayer may elect to deduct nuclear decommissioning costs under sec_468a of the code an eligible_taxpayer as defined under sec_1_468a-1 of the regulations is a taxpayer that has a qualifying interest in among other things a direct ownership_interest including an interest as a tenant in common or joint tenant sec_1_468a-2 of the regulations provides that the maximum amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year shall not exceed the lesser_of i the cost of service amount applicable to the plr-118169-03 nuclear decommissioning fund for such tax_year or ii the ruling_amount applicable to the nuclear decommissioning fund for such tax_year if the amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year exceeds the limitation of paragraph b the excess is not deductible by the electing taxpayer in addition under sec_1_468a-5 there are rules which provide that the internal_revenue_service may disqualify a nuclear decommissioning fund if the amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year exceeds the limitation of paragraph b sec_1_468a-3 of the regulations provides that in general a schedule of ruling amounts for a nuclear decommissioning fund is a ruling specifying annual payments that over the tax years remaining in the funding_period as of the date the schedule first applies will result in a projected balance of the nuclear decommissioning fund as of the last day of the funding_period equal to and in no event more than the amount of decommissioning costs allocable to the fund sec_1_468a-3 of the regulations provides that to the extent consistent with the principles and provisions of this section each schedule of ruling amounts shall be based on the reasonable assumptions and determinations used by the applicable public_utility commission in establishing or approving the amount of decommissioning costs to be included in the cost of service for ratemaking purposes under sec_1_468a-3 the internal_revenue_service shall provide a schedule of ruling amounts identical to the schedule proposed by the taxpayer but no such schedule shall be provided by the service unless the taxpayer's proposed schedule is consistent with the principles and provisions of that section sec_1_468a-3 of the regulations provides that in general the amount for any_tax year in the level_funding limitation period shall not be less than the ruling_amount for any earlier tax_year under sec_1_468a-3 the level_funding limitation period begins on the first day of the first tax_year for which a deductible payment is made to the nuclear decommissioning fund and ends on the last day on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes sec_1_468a-3 of the regulations provides that the amount of decommissioning costs allocable to a nuclear decommissioning fund is the taxpayer's share of the total estimated cost of decommissioning the nuclear power plant multiplied by the qualifying percentage sec_1_468a-3 of the regulations provides that in general the total estimated cost of decommissioning a nuclear power plant is the reasonably estimated cost of decommissioning used by the applicable public_utility commission in establishing or approving the amount of these costs to be included in cost of service for ratemaking purposes plr-118169-03 sec_1_468a-3 of the regulations provides that a taxpayer's share of the total estimated cost of decommissioning a nuclear power plant equals the total estimated cost of decommissioning such plant multiplied by the taxpayer's qualifying interest in the plant under sec_1_468a-3 the qualifying percentage for any nuclear decommissioning fund is equal to a fraction the numerator of which is the number of tax years in the estimated period for which the nuclear decommissioning fund is to be in effect and the denominator of which is the number of tax years in the estimated_useful_life of the applicable plant sec_1_468a-3 of the regulations provides that the estimated period for which a nuclear decommissioning fund is to be in effect begins on the later of the first day of the first taxable_year for which a deductible payment is made to the nuclear decommissioning fund or deemed made or the first day of the taxable_year that includes the date that the nuclear power plant begins commercial operations as determined by the applicable public_utility commission at the time the plant was first included in the taxpayer's rate base and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes according to sec_1_468a-3 the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes is determined under the ratemaking assumptions used by the applicable public_utility commission in establishing or approving rates during the first ratemaking proceeding in which the nuclear power plant was included in the taxpayer's rate base sec_1_468a-3 of the regulations provides that the estimated_useful_life of a nuclear power plant begins on the first day of the taxable_year that includes the date that the plant begins commercial operations as determined by the applicable public_utility commission at the time the plant was first included in the taxpayer's rate base and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes according to sec_1_468a-3 the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes is determined under the ratemaking assumptions used by the applicable public_utility commission in establishing or approving rates during the first ratemaking proceeding in which the nuclear power plant was included in the taxpayer's rate base sec_1_468a-3 of the regulations provides that the internal_revenue_service shall not provide a taxpayer with a schedule of ruling amounts for any nuclear decommissioning fund unless the public_utility commission that establishes or approves the rates for electric energy generated by the plant has determined the amount of decommissioning costs to be included in the taxpayer's cost of service for ratemaking purposes and has disclosed the after-tax rate of return and any other assumptions and determinations used in establishing or approving the amount plr-118169-03 sections a and c of the energy policy act of act eliminated for taxable years beginning after date the investment restrictions contained in sec_468a sections b and c of the act revised sec_468a by lowering the tax_rate applicable to a nuclear decommissioning fund for taxable years beginning after date section dollar_figure of revproc_92_54 1992_2_cb_393 provides that if a public_utility commission places a nuclear power plant in a taxpayer’s rate base within a reasonable period of time after the date the plant begins sustained and substantial generation of electricity for sale to customers the date of inclusion in rate base will be deemed to be the commercial operations date a reasonable period of time is one that ends on the last day of the second calendar_year after the calendar_year in which the nuclear power plant begins sustained and substantial generation of electricity for sale to customers we have examined the representations and the data submitted by the taxpayer in relation to the requirements set forth in the code and the regulations based solely upon these representations of the facts we reach the following conclusions for the period covered by this schedule of ruling amounts taxpayer has a qualifying interest in the plant and is therefore an eligible_taxpayer under sec_1_468a-1 of the regulations commission a commission b commission c and commission d have determined the decommissioning costs to be included in taxpayer's cost of service for ratemaking purposes as required by sec_1_468a-3 of the regulations taxpayer has proposed a schedule of ruling amounts which meets the requirements of sec_1_468a-3 and of the regulations the annual payments specified in the proposed schedule of ruling amounts are based on the reasonable assumptions and determinations used by the commissions and will result in a projected fund balance at the end of the funding_period equal to or less than the amount of decommissioning costs allocable to the fund taxpayer has determined under sec_1_468a-3 of the regulations that the qualifying percentage is w the maximum amount of cash payments made or deemed made to the fund during any_tax year is restricted to the lesser amount of the cost of service amount applicable to the fund or the ruling_amount applicable to the fund as set forth under sec_1_468a-2 of the regulations based solely on the determinations above we conclude that the taxpayer's proposed schedule of ruling amounts in regard to the commissions satisfies the plr-118169-03 requirements of sec_468a of the code accordingly the schedule of ruling amounts requested by the taxpayer under sec_468a is approved as follows approved schedule of ruling amounts taxable years through commissions a b c and d year comm a comm b comm c comm d total approval of the schedule of ruling amounts is contingent on there being no change in the facts and circumstances known or assumed at the time the current ruling is issued the approved schedule of ruling amounts is being limited to a five-year period as a result of the statutory changes made by the act the elimination of the investment restrictions and the reduction of the tax_rate applicable to income earned by the fund may result in a greater after-tax of return than was estimated prior to the enactment of the act by the commissions this increased after-tax rate of return would over the life of the fund result in a balance in the fund on the last day of the funding_period that would exceed the amount of decommissioning costs allocable to the fund in order to prevent the excess accumulation in the fund this schedule of ruling amounts is limited to a five year period approval of a revised schedule of ruling amounts may be approved after a determination by the applicable public_utility commissions of an after- tax_rate of return that accounts for the reduced_tax_rate and unrestricted investments except as specifically determined above no opinion is expressed or implied concerning the federal_income_tax consequences of the transaction described above the approved schedule of ruling amounts is relevant only to those payments made to the fund payments allocable to any funds other than the fund cannot qualify for purposes of the deduction under the provisions of sec_468a of the code payments made to such fund can qualify only to the extent that they do not exceed the lesser_of the decommissioning costs applicable to such fund or the ruling amounts applicable to this fund in the tax_year this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides it may not be used or cited as precedent in accordance with the power_of_attorney we are sending a copy of this letter to the taxpayer’s authorized representative we are also sending a copy of this letter_ruling to the industry director natural_resources and construction lm nrc pursuant to sec_1_468a-7 of the regulations a copy of this letter must be attached with the required election statement plr-118169-03 to the taxpayer's federal_income_tax return for each tax_year in which the taxpayer claims a deduction for payments made to the fund sincerely yours peter c friedman senior technician reviewer branch office of associate chief_counsel passthroughs and special industries


co lee cee ee internat revenue service colz20046 washington d c tax exempt and division oct i se t epa tal re taxpayer dear this letter constitutes notice that approval has been granted for your request for a 5-year automatic_extension for amortizing the unfunded liabilities as of date for the above-named plan which are described in sec_431 b and b of the internal_revenue_code code and sec_304 and sec_304 b of the employee_retirement_income_security_act_of_1974 erisa this extension is effective with the plan_year beginning date this extension applies to the eligible amortization charge bases as identified in your application submission established as of date the extension of the amortization periods of the unfunded liabilities of the plan was granted in accordance with sec_431 of the code section __ d a of the code requires the secretary to extend the period of time required to amortize any unfunded_liability of a plan for a period of time not in excess of years if the plan submits an application meeting the criteria stated in sec_431 the plan has submitted the required information to meet the criteria in sec_431 b including a certification from the plan's actuary that i absent the extension under subparagraph a the- plan would have an accumulated_funding_deficiency in the current pian year or any of the succeeding plan years ii the plan_sponsor has adopted a plan to improve the plan's funding status i es iii the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended and iv the notice required under paragraph 3a has been provided we have sent a copy of this letter to the to the authorized representative pursuant to a power_of_attorney on file in this office and to your this ruling is directed only to the taxpayer that requested it sec_61 kx3 of the internal_revenue_code provides that it may not be used or cited by others as precedent if you require further assistance in this matter please contact sincerely yours i gga david m ziegler manager ep actuarial group


office_of_chief_counsel internal_revenue_service memorandum number release date cc tege eoeg et1 postn-165078-04 uilc date date to director submission processing cincinnati oh attn entity unit from office of division counsel associate chief_counsel tax exempt government entities ------------------------------------------------- subject railroad_retirement_tax_act status in accordance with the coordination procedure established between the service and the railroad retirement board rrb the rrb has provided us with its opinion that the following business is not a covered employer under the jurisdiction of the railroad retirement act and the railroad unemployment insurance act -------------------------------------------------- ------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------- -------------------------------------------------------------------- ------------------------------------------------ we have reviewed the opinion of the rrb and based upon the information submitted to us by the rrb we also conclude that the ------------------------------------------------------------- --------------------------------------------------------------------------------------------------------is not a covered employer under the jurisdiction of the railroad_retirement_tax_act please take the appropriate action regarding this business _____________________________ janine cook-