internal_revenue_service number release date index number ------------------------------------ --------------------------------------- ------------------------- re ------------------------------- -------------------- department of the treasury washington dc person to contact --------------------- id no ------------- telephone number --------------------- refer reply to cc psi b04 - plr-123016-10 date date legend legend donor spouse child child date date year year year year year year year trust trust law firm accounting firm dear ----------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ----------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ---------------- this letter responds to the letter dated date and subsequent correspondence submitted by your authorized representative requesting an extension of time under sec_2642 of the internal_revenue_code and sec_301_9100-3 of the plr-123016-10 procedure and administration regulations to elect out of the automatic allocation of generation-skipping_transfer gst tax under sec_2632 the facts and representations submitted are summarized as follows on date donor created trust an irrevocable_trust for the benefit of donor’s spouse spouse child child and the issue of child and child in addition trust provided each beneficiary with withdrawal rights in years donor transferred cash to trust and informed law firm of these transfers on date donor created trust an irrevocable_trust for the benefit of donor’s spouse child child and the issue of child and child in addition trust provided each beneficiary with withdrawal rights in years and donor transferred cash to trust and informed law firm of these transfers donor relied on law firm and accounting firm to coordinate preparation and review of his form sec_709 united_states gift and generation-skipping_transfer_tax returns to report his transfers to trust and trust and to assist donor in filing those form sec_709 donor filed a year form_709 to report his year transfer to trust in preparing the year form_709 accounting firm failed to make a proper written election out of the automatic allocation of the gst_exemption under sec_2632 for the entire amount of donor’s year transfers to trust law firm failed to inform accounting firm about donor’s transfers to trust in years and donor’s transfers to trust in years and accounting firm did not prepare form sec_709 to report those transfers donor requests an extension of time under sec_301_9100-3 to elect out of the automatic allocation of the gst_exemption under sec_2632 for the entire amount of the years transfers to trust law and analysis sec_2601 imposes a tax on every generation-skipping_transfer gst made by a transferor to a skip_person a generation-skipping_transfer is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2602 provides that the amount of the gst tax is determined by multiplying the taxable_amount by the applicable_rate sec_2641 provides that the term applicable_rate means with respect to any gst the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer under sec_2642 the inclusion_ratio with respect to any property transferred in a generation-skipping_transfer is generally defined as the excess if any of over the applicable_fraction the applicable_fraction as defined in sec_2642 is a fraction plr-123016-10 the numerator of which is the amount of gst_exemption allocated to the trust or to property transferred in a direct_skip and the denominator of which is the value of the property transferred to the trust or involved in the direct_skip sec_2631 as in effect for years provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 as in effect for years provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption amount which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable sec_2632 provides that any allocation by an individual of his or her gst_exemption under sec_2631 may be made at any time on or before the date prescribed for filing the estate_tax_return for such individual's estate determined with regard to extensions regardless of whether such a return is required to be filed sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides that an allocation of gst_exemption to property transferred during the transferor's lifetime is made on form_709 sec_2632 provides that if any individual makes an indirect_skip during such individual's lifetime any unused portion of such individual's gst_exemption shall be allocated to the property transferred to the extent necessary to make the inclusion_ratio for such property zero if the amount of the indirect_skip exceeds such unused portion the entire unused portion shall be allocated to the property transferred sec_2632 provides that for purposes of this subsection the term indirect_skip means any transfer of property other than a direct_skip subject_to the tax imposed by chapter made to a gst_trust as determined in sec_2632 sec_2632 provides that an individual may elect to have the automatic allocation rules of sec_2632 not apply to an indirect_skip or any or all transfers made by such individual to a particular trust sec_2632 provides that the election may be made on a timely filed gift_tax_return for the calendar_year for which the election is to become effective sec_26_2632-1 provides that in the case of an indirect_skip made after date to which sec_2642 relating to transfers subject_to the estate_tax_inclusion_period etip does not apply the transferor's unused gst_exemption is automatically allocated to the property transferred but not in excess of the fair_market_value of the property on the date of the transfer this automatic allocation is effective plr-123016-10 whether or not a form_709 is filed reporting the transfer and is effective as of the date of the transfer to which it relates an automatic allocation is irrevocable after the due_date of the form_709 for the calendar_year in which the transfer is made sec_2642 provides that except as provided in sec_2642 if the allocation of the gst_exemption to any transfers of property is made on a gift_tax_return filed on or before the date prescribed by sec_6075 for such transfer the value of such property for purposes of determining the inclusion_ratio shall be its value as finally determined for purposes of chapter within the meaning of sec_2001 sec_2642 provides that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 or and an election under sec_2632 or c such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of this paragraph sec_2642 provides that in determining whether to grant relief under sec_2642 the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant for purposes of determining whether to grant relief the time for making the allocation or election shall be treated as if not expressly prescribed by statute notice_2001_50 2001_2_cb_189 provides that under sec_2642 the time for allocating the gst_exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust as a gst_trust are to be treated as if not expressly prescribed by statute the notice further provides that taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute in accordance with sec_2642 and notice_2001_50 taxpayers may seek an extension of time to make an allocation described in plr-123016-10 sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government under sec_301_9100-3 a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election based on the facts submitted and representations made we conclude that the requirements of sec_301_9100-3 are satisfied therefore donor is granted an extension of time of days from the date of this letter to elect out of the automatic allocation of the gst_exemption under sec_2632 for the entire amount of the years transfers to trust donor’s gst_exemption is automatically allocated under sec_2632 to the entire amount of his transfers to trust in years and the elections should be made on supplemental form_709 for the year transfer to trust and on original form sec_709 for the years transfers to trust and filed with the internal_revenue_service cincinnati service center-stop cincinnati ohio a copy of this letter should be attached to each of the supplemental form sec_709 the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as specifically ruled herein we express no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code see sec_26_2632-1 example regarding the identity of the transferor in the case of the lapse of a withdrawal power the rulings in this letter pertaining to the federal estate and or generation-skipping_transfer_tax apply only to the extent that the relevant sections of the internal_revenue_code are in effect during the period at issue this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent plr-123016-10 in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely associate chief_counsel passthroughs and special industries by ____________________________ lorraine e gardner senior counsel branch office of associate chief_counsel passthroughs and special industries enclosures copy for sec_6110 purposes copy of this letter cc


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi plr-114125-00 date date company properties shareholders state m n a b c d e dear this letter responds to your letter dated date as well as subsequent correspondence submitted on behalf of company you requested a ruling that the rental income received by company from the properties is not passive_investment_income within the meaning of sec_1362 of the internal_revenue_code company represents the following facts facts plr-114125-00 company was incorporated under the laws of state on a and elected under sec_1362 to be an s_corporation effective b it has accumulated_earnings_and_profits company owns and operates residential and commercial rental real_estate the properties m and n company’s officers and sole employees devote all their working time to company’s rental business through its officer-employees as well as an agent whose duties are minimal and various independent contractors company provides various services to the properties in its real_estate leasing and management business these services include regular property monitoring and inspection cleaning and maintenance of common areas and common or public facilities maintenance and repair of building structural_components eg roofs supporting sidewalls and foundations maintenance and repair of building systems eg plumbing electrical and hvac maintenance of building exteriors eg lighting signage awnings and paint provision of utilities maintenance of fire alarms sprinklers and security systems assistance with tenant improvements trash removal and scavenger service landscaping and grounds maintenance pest control and 24-hour staff availability in addition to the services provided to tenants company handles the usual leasing and administrative functions involved in managing real_estate company received or accrued approximately c in rents and paid_or_incurred approximately d in relevant expenses for e on the properties law and analysis except as provided in sec_1362 sec_1362 provides that a small_business_corporation may elect in accordance with the provisions of sec_1362 to be an s_corporation sec_1362 provides that an election under sec_1362 terminates whenever the corporation i has accumulated_earnings_and_profits at the close of each of three consecutive tax years and ii has gross_receipts for each of such tax years more than percent of which are passive_investment_income except as otherwise provided in sec_1362 sec_1362 provides that the term passive_investment_income means gross_receipts derived from royalties rents dividends interest annuities and sales or exchanges of stock_or_securities sec_1_1362-2 of the income_tax regulations provides that rents means amounts received for_the_use_of or the right to use property whether real or personal of the corporation plr-114125-00 sec_1_1362-2 provides that rents does not include rents derived in the active trade_or_business of renting property rents received by a corporation are derived in an active trade_or_business of renting property only if based on all the facts and circumstances the corporation provides significant services or incurs substantial costs in the rental business generally significant services are not rendered and substantial costs are not incurred in connection with net leases whether significant services are performed or substantial costs are incurred in the rental business is determined based upon all the facts and circumstances including the number of persons employed to provide the services and the types and amounts of costs and expenses_incurred other than depreciation based solely on the facts as represented by company in this ruling_request we conclude that the rents company receives from the properties are not passive_investment_income under sec_1362 the ruling in this letter is based on information and representations submitted by company 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_ruling it is subject_to verification on examination except for the specific ruling above no opinion is expressed or implied concerning the federal_income_tax consequences of the facts of this case under any other provision of the code specifically no opinion is expressed regarding company's status as an s_corporation further the passive_investment_income rules of sec_1362 are completely independent of the passive_activity rules of sec_469 unless an exception under sec_469 applies the rental_activity remains passive for purposes of sec_469 under a power_of_attorney on file with this office we are sending the original of this letter to you and a copy to company this ruling is directed only to the taxpayer who requested it according to sec_6110 this ruling may not be used or cited as precedent sincerely mary beth collins assistant to the chief branch office of associate chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division mar 2a2014 uil re legend plan prior plan company prior company date date date date date date date amount amount amount amount dear this letter is in response to your request for a ruling dated was submitted by your authorized representative regarding whether returning the i which plan's surplus assets after satisfaction of all benefit liabilities upon termination of the plan to the company violates sec_401 a of the internal_revenue_code code and if the return of such assets constitutes an employer_reversion that is subject_to the excise_tax on reversions of qualified_plan assets to an employer under sec_4980 of the code the following facts and representations have been submitted the company is engaged in the mining business on date the company purchased certain assets and assumed certain liabilities from the prior company in connection with this transaction assets and liabilities of the prior plan were spun-off and transferred to the plan the company is not related to the prior company the plan is a single-employer defined benefit pension_plan benefit accruals to the plan ceased effective date the company terminated the plan effective date on date the company filed form_5310 application_for determination for terminating plan with the internal_revenue_service service requesting a determination_letter regarding the qualification of the plan on its termination the service issued a favorable determination_letter to the plan on date on date the company filed form_500 standard termination notice single employer plan termination with the pension_benefit_guaranty_corporation pbgc during the 60-day period following the filing of the notice the pbgc did not object to the notice for a standard termination it was the company's intention to contribute up to the amount necessary to ensure that there were sufficient assets in the plan to effect a standard termination the company measured the assets and liabilities in the plan and decided that amount was needed to fully fund the plan on date the company contributed amount which was slightly less than amount to the plan the company intended to make additional contributions to the extent required following receipt of the outstanding investment_proceeds the company later discovered that when measuring the plan assets it inadvertently failed to include a money market account in its analysis the balance of this money market account was amount if this account had been included in the plan assets the company would have contributed amount less on date as a result not only did the company not have to make any additional_contribution but the plan now has a surplus in assets after all the benefit liabilities in the plan were satisfied amount remained in the plan trust based on the above facts and representations you through your authorized representatives request the following rulings that the return to the company of amount will not violate sec_401 a of the code and that the return to the company of amount will not constitute an employer_reversion that is subject_to the excise_tax on reversions of qualified_plan assets to an employer under sec_4980 of the code plan provisions sec_4 of the plan document return of contributions provides that under the following circumstances the contribution may be returned to the company a mistake of fact the trustee shall return to the company any contribution made under a mistake of fact the amount that may be returned shall not exceed the excess of the amount contributed reduced to reflect any loss or depreciation attributable thereto over the amount that would have been contributed had a mistake of fact not occurred any contribution made under a mistake of fact shall be returned within one year after the date of payment b condition of deductibility the trustee shall return to the company any contribution that is not deductible for federal_income_tax purposes the amount that shall be returned shall be the excess of the amount contributed reduced to reflect any loss or depreciation attributable thereto over the amount that would have been contributed had there not occurred a mistake in determining the deduction any contribution conditioned on its deductibility shall be returned within one year after it is disallowed as a deduction sec_11 of the plan document termination of plan provides that the plan_sponsor may terminate the plan at any time by action of its governing body upon termination or partial_termination of the plan by the plan_sponsor the accrued_benefit of all affected participants in the trust fund shall become fully vested and shall be distributed among them and their beneficiaries sec_11 of the plan document distribution on termination provides that the benefit to be provided by the allocations required by the employee_retirement_income_security_act_of_1974 erisa section shall be fully vested and nonforfeitable as of the date of such termination of the plan for distribution to the persons entitled thereto if any assets remain after such distribution they shall revert to the company law sec_401 a of the code generally prohibits prior to the satisfaction of all liabilities with respect to employees and beneficiaries under the trust the diversion of trust assets for purposes other than for the exclusive benefit of the employees or beneficiaries for whom an employer maintains a qualified_pension plan sec_1 a -2 of the income_tax regulations regulations provides that sec_1_401-2 a regulation promulgated prior to erisa provides rules under sec_401 a of the code and that regulation is applicable unless otherwise provided sec_1_401-2 of the regulations provides rules under sec_401 a of the code for the impossibility of diversion under the trust instrument regulation sec_1 b provides that the intent and purpose in sec_401 a of the code of the phrase prior to the satisfaction of all liabilities with respect to employees and their beneficiaries under the trust is to permit the employer to reserve the right to recover at the termination of the trust and only at such termination any balance remaining in the trust which is due to erroneous actuarial computations during the previous life of the trust a balance due to an erroneous actuarial computation is the surplus arising because actual requirements differ from the expected requirements even though the latter were based upon previous actuarial valuations of liabilities or determinations of costs of providing pension benefits under the plan and were made by a person competent to make such determinations in accordance with reasonable assumptions and correct procedures related to the method of funding sec_403 of erisa as amended for which there is no parallel provision of the code provides that a contribution which is made by an employer by a mistake of fact may be returned to the employer within one year after payment of the contribution revrul_91_4 1991_1_cb_57 provides that a pension_plan qualified within the meaning of sec_401 of the code may contain a provision authorizing return of employer contributions made because of a mistake of fact as provided in sec_403 of erisa sec_4980 of the code provides for a tax of percent on the amount of any reversion of plan assets to the employer from a qualified_plan sec_4980 of the code provides that the tax imposed by sec_4980 shall be paid_by the employer maintaining the plan sec_4980 of the code defines the term employer_reversion to mean the amount of cash and the fair_market_value of other_property received directly or indirectly by an employer from the qualified_plan sec_4980 of the code provides in pertinent part that the term employer_reversion shall not include i except as provided in regulations any amount distributed to or on behalf of any employee or his beneficiaries if such amount could have been so distributed before termination of such plan without violating sec_401 of the code or ii any distribution to the employer allowable under sec_401 a of the code in the case of a plan other than a multiemployer_plan by reason of mistake of fact or in the case of any plan by reason of the failure of the plan to initially qualify or the failure of the contributions to be deductible analysis the company made a contribution of amount to the plan in order to effect the standard termination of the plan in determining amount the company inadvertently failed to take into account a money market account in measuring the plan assets that is the company used an incorrect asset value in calculating the contribution as a result the company contributed more than needed to the plan therefore the company's error in determining the amount of plan assets was the cause of the company's contributing amount to the plan and also was the cause of the plan having a surplus asset of amolint after satisfaction of all liabilities with respect to employees and their beneficiaries under the trust such a mistake constitutes a mistake of fact as contemplated in sec_403 of erisa and sec_4980 of code revrul_91_4 1991_1_cb_57 provides that a plan qualified within the meaning of sec_401 a of the code may contain a provision authorizing return of employer contributions made because of a mistake of fact as provided in sec_403 of erisa as noted above the plan contains such a provision ruling thus with respect to your ruling requests we conclude as follows that the excess_contribution made to the plan based on the incorrect asset value was made because of a mistake of fact therefore amount would be considered the result of a mistake of fact and accordingly may be returned to the company in accordance with sec_4 of the plan and sec_403 of erisa within one year the excess_contribution was made and sec_4980 of the code provides that the term employer_reversion does not include in the case of a plan other than a multiemployer_plan an amount distributed to the employer by reason of mistake of fact accordingly amount is described in sec_4980 of the code and thus the return of amount to the company does not constitute an employer_reversion under sec_4980 of the code this letter_ruling is based on the assumption that the plan was and is qualified within the meaning of sec_401 a of the code at all times relevant thereto it also assumes the correctness of all representations made with respect thereto this ruling is directed only to the company that requested it sec_611 o k of the code provides that it may not be used or cited by others as precedent we have sent a copy of this letter to your authorized representative pursuant to a power_of_attorney on file in this office if you have any questions regarding this matter please contact id at sincerely yours david m ziegler manager employee_plans actuarial group cc


internal_revenue_service number release date release date index number ------------------------------------ ---------------------- ---------------------------- ------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ------------- telephone number --------------------- refer reply to cc psi b02 plr-102515-12 date july x a ----------------------------------------------------------------------------------------------------- ------------------------ ----------------------------------------------------------------------------------------------------- ----------------------- state ------------------- date date date date ---------------------- ---------------------- -------------------------- -------------------------- dear ----------------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code the information submitted states that x was formed under the laws of state on date and elected to be treated as an s_corporation effective date as of date eligible s_corporation shareholders owned all of the stock of x on date however one of x’s shareholders contributed their stock in x to a a partnership which is an ineligible s_corporation shareholder under sec_1361 x represents that upon discovery of its plr-102515-12 error it promptly took remedial action effective date a transferred all of its x shares to an eligible s_corporation shareholder x represents that the transfer of x stock to a an ineligible shareholder was not motivated by avoidance or retrospective tax planning x and its shareholders have continued to treat x as an s_corporation at all times x and its shareholders agree to make any adjustments consistent with the treatment of x as an s_corporation that the secretary may require sec_1361 defines an s_corporation as a small_business_corporation for which an election under sec_1362 is in effect for the taxable_year sec_1361 provides that a small_business_corporation means a domestic_corporation that is not an ineligible_corporation and that does not 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 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 a corporation is an s_corporation such corporation ceases to be a small_business_corporation a termination of an s_corporation_election under sec_1362 is effective on and after the date of cessation sec_1362 provides 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 event resulting in the ineffectiveness steps were taken a so that the corporation is a small_business_corporation or b to acquire the required shareholder consents and the corporation and each person who was a shareholder of the corporation at any time during the period specified pursuant to sec_1362 agrees to make such 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 such ineffectiveness the corporation shall be treated as an s_corporation during the period specified by the secretary based solely on the information submitted and the representations made we conclude that x’s s_corporation_election terminated on date when x stock was transferred to a an ineligible shareholder we also conclude that this termination was inadvertent within the meaning of sec_1362 and that under the provisions of sec_1362 x will be treated as an s_corporation from date and thereafter provided that x’s s election was valid and was not otherwise terminated plr-102515-12 except as specifically ruled upon above we express no opinion concerning the federal tax consequences of the facts described above under any other provision of the code specifically no opinion is expressed on whether x was otherwise eligible to be treated as an s_corporation this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely bradford r poston senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ---------------------------------------------------- ------------------------------------ -------------------------------------------- -------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ------------------ telephone number --------------------- refer reply to cc psi b02 plr-117128-13 date june x ------------------------------------ ------------------------ legend state ------------- date -------------- date ---------------------- dear ------------------ this is in response to a letter dated date submitted on behalf of x by x’s authorized representative requesting that the service grant x an extension of time under sec_301_9100-1 of the procedure and administration regulations to elect to be treated as an association_taxable_as_a_corporation for federal tax purposes according to the information submitted x was formed in state in date x represents that it is an entity eligible to elect its classification under sec_301_7701-3 x intended to elect to be treated as an association effective as of date but did not timely file form_8832 entity classification election sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the election filing_date or more than months after the election filing_date plr-117128-13 sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards by which the commissioner will determine whether to grant an extension of time to make an election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 describes the conditions under which the commissioner will grant requests for relief that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government based solely on the facts submitted and representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly x is granted an extension of days from the date of this letter to elect to be classified as an association_taxable_as_a_corporation for federal tax purposes effective date the election should be made by filing form_8832 with the appropriate service_center a copy of this letter should be attached to the election this ruling is contingent on x filing within days of this letter all required original and amended income_tax and information returns consistent with the requested relief in this letter a copy of this letter should be attached to any such returns 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 of the internal_revenue_code provides that it may not be used or cited as precedent plr-117128-13 in accordance with the power_of_attorney on file with this office a copy of this letter will be sent to x's authorized representative sincerely associate chief_counsel passthroughs special industries by _______________________________ melissa liquerman branch chief branch office of the associate chief_counsel passthroughs special industries


t c memo united_states tax_court joseph j and lillian a gajda petitioners v commissioner of internal revenue respondent docket no filed date leonard l leighton for petitioners elizabeth a owen for respondent memorandum opinion parr judge this case is before us on respondent's motion for summary_judgment under rule respondent determined a all section references are to the internal_revenue_code in effect for the taxable_year in issue and all rule references are to the tax_court rules_of_practice and procedure unless continued deficiency in petitioners' federal_income_tax of dollar_figure for the taxable_year the term petitioner refers to joseph j gajda the issue for decision is whether petitioner may exclude from gross_income under sec_104 amounts received from his employer upon termination of his employment on the ground that such amounts represented damages received on account of personal injury at the time the petition in this case was filed petitioners resided in round rock texas a motion for summary_judgment is appropriate if the pleadings answers to interrogatories depositions admissions and any other acceptable materials together with the affidavits if any show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law rule b 98_tc_518 affd 17_f3d_965 7th cir the moving party bears the burden of proving that there is no genuine issue of material fact and factual inferences are viewed in the light most favorable to the nonmoving party 369_us_654 95_tc_594 the opposing party cannot rest upon mere allegations or denials but must set forth specific facts showing continued otherwise indicated all dollar amounts are rounded to the nearest dollar unless otherwise indicated there is a genuine issue for trial rule d the existence of any reasonable doubt as to the facts will result in denial of the motion for summary_judgment 63_tc_18 the facts presented below are stated solely for purposes of deciding respondent's motion for summary_judgment background prior to and during a portion of petitioner was employed by international business machines corp ibm at the time petitioner ceased his employment with ibm he was over years old at some time during petitioner became eligible to participate in the ibm modified and extended individual transition option program ito ii program the ito ii program allows ibm employees to resign or retire early receiving lump- sum payments and other_benefits petitioner was required to sign a general release and covenant not to sue the release as a condition for the sums and benefits including the lump-sum payment pursuant to the ito ii program the release is broadly petitioners' counsel has failed to provide respondent with a copy of the release signed by petitioner respondent attached to his memorandum of authorities submitted to this court a copy of the release used by ibm in the ito ii program petitioner did not contest the submission of the release in petitioner's response to respondent's motion for summary_judgment in fact petitioner refers to the release as if it is the release petitioner signed thus we treat it as such written and covers any and all possible and potential claims in contract or in tort arising from employment or termination of employment pertinent sections of the release read as follows in exchange for the sums and benefits which you will receive pursuant to the terms of the ito ii program name of individual hereinafter you agrees to release ibm from all claims demands actions or liabilities you may have against ibm of whatever kind including but not limited to those which are related to your employment with ibm or the termination of that employment you also agree that this release covers but is not limited to claims arising from the age discrimination in employment act of as amended title vii of the civil rights act of as amended and any other federal or state law dealing with discrimination in employment on the basis of sex race national origin religion disability or age you also agree that this release includes claims based on theories of contract or tort whether based on common_law or otherwise this release does not include your vested rights if any in the ibm retirement_plan which survive unaffected by this release in the event of rehire by ibm or any of its subsidiaries as a regular employee you understand that ibm reserves the right to require repayment of a prorated portion of the ito ii program payment the amount of repayment will be based on the number of weeks off the ibm payroll compared with the number of weeks' salary used to calculate your payment at some time during petitioner signed the release at the time of signing the release petitioner had no legal claims for unlawful employment practices pending against ibm nor had he lodged any informal complaints against the company petitioner however thought that he was forced by ibm to leave the company and therefore had a claim against ibm for age discrimination and emotional distress in exchange for signing the release and participating in the ito ii program petitioner received a dollar_figure lump-sum payment the payment or ito payment the payment was based on years_of_service and rate of pay for the year petitioner received a form_w-2 from ibm showing wages tips and other compensation as dollar_figure on date petitioners filed a joint federal_income_tax return petitioners reported the dollar_figure as wages subtracted the dollar_figure ito payment therefrom and attached a disclosure statement to their return asserting that the ito payment is excludable from gross_income pursuant to sec_104 as a payment received in exchange for the release and settlement of tortlike rights respondent determined that the ito payment was fully taxable severance_pay discussion except as otherwise provided gross_income includes income from all sources sec_61 348_us_426 while sec_61 is to be broadly construed statutory exclusions from income are narrowly construed 515_us_323 on date petitioners filed an amended_return on which they excluded the dollar_figure from gross_income 100_tc_124 affd without published opinion 25_f3d_1048 6th cir under sec_104 gross_income does not include the amount of any damages received whether by suit or agreement and whether as lump sums or as periodic_payments on account of personal injuries or sickness sec_1_104-1 income_tax regs provides c damages received on account of personal injuries or sickness -- the term damages received whether by suit or agreement means an amount received through prosecution of a legal suit or action based upon tort or tort type rights or through a settlement agreement entered into in lieu of such prosecution thus an amount may be excluded from gross_income only when it was received both through prosecution or settlement of an action based upon tort or tortlike rights and on account of personal injuries or sickness commissioner v schleier supra 48_f3d_894 5th cir 105_tc_396 where damages are received pursuant to a settlement agreement the nature of the claim that was the actual basis for settlement controls whether such damages are excludable under sec_104 504_us_229 866_f2d_709 4th cir affg 89_tc_632 102_tc_116 affd in part and revd in part 70_f3d_34 5th cir t he critical question is in lieu of what was the settlement amount_paid bagley v commissioner supra pincite determination of the nature of the claim is factual id 98_tc_1 the first requirement is the existence of a claim based upon tort or tort type rights commissioner v schleier supra pincite the claim must be bona_fide but not necessarily valid ie sustainable sodoma v commissioner tcmemo_1996_275 citing 35_f3d_93 2d cir robinson v commissioner supra pincite stocks v commissioner supra pincite in this connection we note that we have held that claims for potential future personal injuries do not qualify for exclusion under sec_104 43_tc_77 35_tc_646 affd 304_f2d_574 9th cir such holdings imply that there must be an existing claim petitioner asserts that ibm was engaging in systematic discrimination against employees over the age of that he was forced to leave the company because of his age that as a result he has been diagnosed as having a major depression for which he is presently under psychiatric care and that age discrimination was the primary concern of ibm in requiring petitioner to sign the release therefore petitioner contends that ibm accepted his ito ii program participation request and subsequent release in lieu of litigation respondent argues pursuant to commissioner v schleier supra that even if petitioner could establish an underlying cause of action for age discrimination a payment made pursuant to the age discrimination in employment act of is not excludable from income under sec_104 age discrimination in employment act of adea publaw_90_202 81_stat_602 current version pincite u s c secs petitioner however has not limited his arguments to claims brought against ibm under the adea rather petitioner asserts that he released ibm from liability for potential tort claims which would include both a claim for age discrimination under the adea and a common_law cause of action for emotional distress to support his position petitioner relies on commissioner v schleier supra pincite n for the proposition that intangible harms of discrimination can constitute personal injury and that compensation_for such harms may be excludable under sec_104 viewing the facts in the light most favorable to petitioner it can be argued that petitioner had a potential tortlike claim for infliction of emotional distress thus we assume for purposes of this motion only that petitioners have met the first prong of excludability under sec_104 we now turn to the language of the release itself the release in this case is the same as that in brennan v commissioner tcmemo_1997_317 and in webb v commissioner tcmemo_1996_50 and essentially the same as that in sodoma v commissioner supra by its terms petitioner released ibm from liability for both contract and tort claims the release however does not specifically indicate that the lump-sum payment received by petitioner was paid to settle a potential personal injury claim against ibm we note that where the settlement agreement lacks express language stating what the settlement amount was paid to settle then the most important factor is the intent of the payor 349_f2d_610 10th cir affg tcmemo_1964_33 stocks v commissioner supra pincite respondent argues that petitioner's failure to lodge any informal or legal tortlike claim against ibm prior to and at the time of signing the release establishes that there was no bona_fide dispute between petitioner and ibm that could provide the basis for settlement to prevail under sec_104 petitioner is not required to have asserted a legal claim against ibm prior to signing the release however the absence of any knowledge of the claim on the part of the employer-payor obviously has a negative impact in determining the requisite intent of the payment brennan v commissioner supra sodoma v commissioner supra see also keel v commissioner tcmemo_1997_278 foster v commissioner tcmemo_1996_26 respondent further argues that ibm did not make the payment on account of a personal injury the release form is a standard document used by ibm for all of its employees who participate in the ito ii program moreover the amount of the dollar_figure lump-sum payment was calculated on the number of years_of_service and petitioner's salary finally the release states that if petitioner were rehired by ibm he could be required to repay some portion of the lump-sum payment based on the number of weeks off the ibm payroll compared with the number of weeks' salary used to calculate the lump-sum payment as in brennan v commissioner supra sodoma v commissioner supra and webb v commissioner supra the lump-sum payment herein appears to have been severance_pay rather than a payment for personal injury severance_pay just like the pay it replaces is taxable_income finally we note that petitioner has not alleged or come forward with any evidence of the specific amounts of the payments allocable to claims of tort or tortlike damages for personal injuries the release makes no allocation and petitioner has not set forth any facts upon which he would rely to prove an allocation indeed the fact that the dollar_figure was based on years_of_service and rate of pay points in the direction of its having been severance_pay rather than a payment for personal injury see brennan v commissioner supra which involved the same payor and the same plan as involved herein in sum viewing the facts in a light most favorable to petitioner we conclude that respondent has made a prima facie case to support a motion for summary_judgment and that petitioner has failed to come forward with countervailing assertions having sufficient specificity to cause us to hold that there is any material issue of fact which requires a trial accordingly we hold that respondent's motion for summary_judgment will be granted to reflect the foregoing an appropriate order and decision will be entered granting respondent's motion for summary_judgment


t c summary opinion united_states tax_court aaron d brown and leslie p brown petitioners v commissioner of internal revenue respondent docket no 4460-07s filed date aaron d brown and leslie p brown pro sese ric d hulshoff for respondent dean special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case unless otherwise indicated subsequent section references are to the internal_revenue_code code as amended and all rule references are to the tax_court rules_of_practice and procedure respondent determined deficiencies in petitioners’ federal income taxes of dollar_figure for and dollar_figure for the only issue for decision is whether petitioners are entitled to deductions for simplified_employee_pension sep contributions for and background the stipulation of facts and the exhibits received into evidence are incorporated herein by reference at the time the petition was filed petitioners resided in arizona petitioner aaron d brown mr brown is president and a shareholder of aaron brown mortgage inc corporation the corporation has elected to be taxed as an s_corporation petitioners are the only employees of the corporation petitioner leslie p brown mrs brown reported wages from the corporation of dollar_figure for each of and mr brown reported wages from the corporation of dollar_figure for each of and the corporation established an sep account with the vanguard group on date a form 5305-sep simplified_employee_pension - individual_retirement_accounts contribution agreement agreement was signed by mr brown as president of the corporation article i - eligibility requirements provides that 1resolution of this issue will determine the amount of petitioners’ allowable deductions on schedule a itemized_deductions the employer agrees to make yearly discretionary contributions to the individual_retirement_account ira of all employees who are years or older and have worked for the employer at least one- half year out of the last years the instructions on the form caution the employer all eligible employees must be allowed to participate in the sep in april of the corporation made a dollar_figure sep contribution to an ira for for mr brown on their form sec_1040 u s individual_income_tax_return for and petitioners deducted dollar_figure from their gross_income representing the contributions made by the corporation to the vanguard sep plan for mr brown petitioners also deducted dollar_figure from gross_income for and for ira contributions made by mrs brown respondent examined the returns and disallowed the sep deductions in both years because petitioners had not established that you are entitled to this deduction discussion the commissioner’s deficiency determinations are presumed correct and taxpayers generally have the burden of proving that the determinations are incorrect rule a 290_us_111 under certain 2the corporation chose terms on the form agreement that are less restrictive than the statutory requirements see sec_408 circumstances however sec_7491 may shift the burden to the commissioner with respect to any factual issue affecting the liability for tax because there is no factual issue in dispute sec_7491 is inapplicable and the burden_of_proof does not shift to respondent an sep is an individual_retirement_account or annuity ira to which an employer makes a contribution sec_401 the employer may deduct sep contributions for the taxable_year if they are made no later than the due_date of the return for the taxable_year sec_404 the arrangement will qualify as an sep for a taxable_year only if certain requirements are met the employer must contribute to the sep of each employee who a has attained the age of b has performed service for the employer for at least of the immediately preceding years and c has received at least dollar_figure in compensation from the employer for the year sec_408 respondent argues that the corporation was the proper entity to have claimed the deduction if at all and not petitioners petitioners’ claiming the deduction instead of the corporation is not what causes the deficiency however see sec_1366 respondent argues further that the deduction is improper because no sep contribution was made for the only other employee 3certain types of employees are excluded from these requirements see sec_410 c of the corporation mrs brown the contribution does not meet the requirements of sec_408 according to respondent petitioners argued at trial that they have been caught by a mere technicality the court disagrees with petitioners’ contention that the failure of the corporation to contribute to an ira in favor of an employee mrs brown was a mere technicality the requirement aimed at fairness and equitable treatment for employees is one of the few basic provisions of the sep regime even if the provision could fairly be characterized as a technicality it is one that was brought to the attention of the president of the corporation mr brown more than once in the agreement mr brown as president signed and agreed to the provisions contained in the agreement including the requirement that each employee receive from the corporation a contribution to his or her ira petitioners’ contention in their petition is that the sec_318 rules of attribution treat the contribution to mr brown’s ira as a contribution to mrs brown’s ira the problem with this position is that sec_318 constructive_ownership of stock as the title implies addresses stock ownership not ira or sep contributions for example an individual shall be considered as owning the stock owned directly or indirectly by or for his spouse sec_318 in addition sec_318 applies to those provisions of this subchapter to which the rules contained in this section are expressly made applicable sec_318 sec_318 lists the provisions to which the rules contained in subsection a apply sec_408 is not one of the provisions listed in sec_318 and is not in the same subchapter of the code as sec_318 for the reasons stated respondent’s determination is sustained to reflect the foregoing decision will be entered for respondent


t c no united_states tax_court albert lemishow petitioner v commissioner of internal revenue respondent docket no filed date p is liable for the accuracy-related_penalty on that portion of the underpayment attributable to the negligent omission of dollar_figure of the total unreported income in determining the amount to which the penalty is applied r first calculated the total underpayment r then calculated the underpayment excluding the negligent income r then imposed the penalty on the difference p calculated the underpayment_of_tax attributable to negligence by adding the dollar_figure to the reported income and applying the penalty to that amount held r's method of computing the penalty is sustained j dudley b kimball for petitioner mark l hulse and laurence d ziegler for respondent this supplements 110_tc_110 supplemental opinion tannenwald judge this case is again before us because of differing computations for entry of decision under rule submitted to implement our earlier opinion 110_tc_110 in that opinion we held that none of the dollar_figure withdrawn from petitioner's individual_retirement_accounts and keogh_plans during constituted qualified rollovers and thus the total amount of the withdrawals was includable in income we also held that the accuracy-related_penalty the penalty under sec_6662 did not apply to the underpayment_of_tax attributable to dollar_figure of the unreported income which petitioner reinvested in an unsuccessful rollover attempt but that the penalty did apply to that portion of the underpayment attributable to the dollar_figure which petitioner did not reinvest the penalty is an amount equal to percent of the portion of the underpayment which is attributable to in the instant case negligence sec_6662 and b in determining the amount of the penalty respondent first calculated the total underpayment respondent then calculated the underpayment based unless otherwise indicated all section references are to the internal_revenue_code in effect for the taxable_year at issue and all rule references are to the tax_court rules_of_practice and procedure on excluding the negligent income ie the dollar_figure respondent then imposed the 20-percent penalty on the difference the difference representing the underpayment attributable to negligence petitioner calculated the underpayment_of_tax attributable to negligence as the excess of tax based on income of dollar_figure plus the reported income over the tax shown on his return it is only because of the different tax_rates at different levels of taxable_income that respondent's method results in a higher penalty than the method petitioner advocates sec_1_6664-3 income_tax regs provides the rules for determining the order in which adjustments to a return are taken into account for the purpose of computing the penalties imposed under sec_6662 and sec_6663 the adjustments to the return are made in the following order those with respect to which no penalties have been imposed those with respect to which a penalty has been imposed at a percent rate ie a penalty for negligence or disregard of rules or regulations substantial_understatement_of_income_tax or substantial_valuation_misstatement under sec_6662 through b respectively since this case only involves two adjustments one with respect to which no penalty applies and one to which a penalty does apply the underpayment excluding the negligent income is the same as the underpayment that results from adding the nonnegligent income to that shown on the return in this case respondent's computation results in an accuracy-related_penalty of dollar_figure and petitioner's in dollar_figure those with respect to which a penalty has been imposed at a percent rate ie a penalty for gross_valuation_misstatement under sec_6662 and h those with respect to which a penalty has been imposed at a percent rate ie a penalty for fraud under sec_6663 sec_1_6664-3 income_tax regs respondent's computation of the penalty is in accordance with these rules and the implementing examples petitioner offers an alternative computation which he claims complies with the statute in reviewing a regulation we consider two questions as set forth by the supreme court first always is the question whether congress has directly spoken to the precise question at issue if the intent of congress is clear that is the end of the matter for the court as well as the agency must give effect to the unambiguously expressed intent of congress if the statute is silent or ambiguous with respect to the specific issue the question for the court is whether the agency's answer is based on a permissible construction of the statute 467_us_837 fn refs omitted these principles were very recently reaffirmed by the supreme court in atlantic mut ins co v commissioner u s 118_sct_1413 date with the additional admonition the task that confronts us is to decide not whether the treasury regulation represents the best interpretation of the statute but whether it represents a reasonable one see 499_us_554 accordingly the questions in terms of the instant case are whether the code clearly provides how to compute the portion of the underpayment which is attributable to negligence and if not whether sec_1_6664-3 income_tax regs is a permissible construction of sec_6662 and b and a in united_states v craddock ___ f 3d ___ 10th cir date the commissioner determined an addition_to_tax for substantial_understatement of tax under sec_6661 for the taxable_year the taxpayer had disclosed one of the unreported income items in the return sec_6661 imposed a 25-percent addition_to_tax on the amount of any underpayment attributable to a substantial_understatement but sec_6661 provided that the amount of the understatement be reduced by that portion of the understatement which is attributable to items which the taxpayer disclosed the commissioner computed the addition_to_tax in accordance with sec_1 income_tax regs comparing the total_tax required with that calculated as if the disclosed item had been reported on the return to determine the amount of the understatement the taxpayer argued as does petitioner herein that the understatement should be computed by calculating the tax sec_6661 was repealed in and the substantial_understatement_penalty was placed along with the negligence_penalty at issue herein in a new sec_6662 omnibus budget reconciliation act of publaw_101_239 sec a c 103_stat_2106 owed on an amount arrived at by excluding the disclosed item and adding to the reported income those items to which the addition_to_tax would apply the court_of_appeals for the tenth circuit applied the test outlined in chevron u s a inc v natural_resources defense council inc supra found sec_6661 ambiguous as to how to compute the portion of the understatement which is attributable to disclosed items and upheld the regulation as a reasonable construction of sec_6661 we are satisfied that the ordering principles in sec_1_6664-3 income_tax regs are a reasonable interpretation of how to compute the portion of the underpayment which is attributable to negligence decision will be entered in accordance with respondent's rule computation


internal_revenue_service number release date index number ----------------- -------------------------- -------------------------------------- -------------- -------------------------------- ------------------------------------- department of the treasury washington dc person to contact ------------------ id------------------ telephone number --------------------- refer reply to cc fip b02 plr-120290-10 date date legend trust ------------------------ fund --------------------------------------------------- --------------------------------------- ------------------------------------ ---------------------------------------------------------- -------------------- ---------------------- company sub state country dear -------------- this is in response to a letter dated date requesting a ruling that income earned by fund from an investment in its wholly owned subsidiary that qualifies as a controlled_foreign_corporation cfc constitutes qualifying_income under sec_851 of the internal_revenue_code fund is a series of trust a business_trust organized under the laws of state facts plr-120290-10 trust is registered with the securities_and_exchange_commission as an open- end management company under the investment_company act of u s c 80a- et seq the act fund will file an election to be treated as a regulated_investment_company ric under sec_851 of the code fund will form a wholly owned subsidiary sub under the laws of country a non-united states jurisdiction under country’s laws sub will be formed as a company a company provides limited_liability for its shareholders sub will file an election on form to be taxed as a corporation pursuant to sec_301_7701-3 of the procedure and administration regulations fund represents that although sub will not be registered as an investment_company under the act it will comply with the requirements of section f of the act investment_company act release no and related sec guidance pertaining to asset coverage with respect to transactions in commodity futures and other transactions in derivatives fund will invest a portion of its assets in sub subject_to the asset diversification limitations set forth in sec_851 of the code sub is expected to invest in commodities and commodity-related instruments but may also invest in other_securities debt or cash it is expected that all of sub’s income will be subpart_f_income as described below fund may however also receive income from sub that is not subpart_f_income law sec_851 of the code provides that a corporation is not considered a ric for any taxable_year unless it meets an income test under this test at least percent of its gross_income must be derived from certain sources under sec_851 qualifying_income includes - dividends interest payments_with_respect_to_securities_loans as defined in sec_512 and gains from the sale_or_other_disposition of stock_or_securities as defined in sec_2 of the act or foreign_currencies or other income including but not limited to gains from options futures or forward contracts derived with respect to its business of investing in such stock securities or currencies sec_2 of the act defines the term security as - plr-120290-10 any note stock treasury_stock security future bond debenture evidence_of_indebtedness certificate of interest or participation in any profit-sharing agreement collateral-trust certificate preorganization certificate or subscription transferable share investment contract voting-trust certificate certificate of deposit for a security fractional undivided_interest in oil gas or other mineral rights any put call straddle option or privilege on any security including a certificate of deposit or on any group or index of securities including any interest therein or based on the value thereof or any put call straddle option or privilege entered into on a national securities exchange relating to foreign_currency or in general any interest or instrument commonly known as a security or any certificate of interest or participation in temporary or interim certificate for receipt for guarantee of or warrant or right to subscribe to or purchase any of the foregoing in addition the flush language of sec_851 of the code provides that for purposes of sec_851 there shall be treated as dividends amounts included in gross_income under sec_951 or sec_1293 for the taxable_year to the extent that under sec_959 or sec_1293 as the case may be there is a distribution out of the earnings_and_profits of the taxable_year which are attributable to the amounts so included sec_957 of the code defines a cfc as any foreign_corporation in which more than percent of the total combined voting power of all classes of stock entitled to vote or the total value of the stock is owned by united_states_shareholders on any day during the corporation’s taxable_year a united_states_shareholder is defined in sec_951 as a united_states_person who owns percent or more of the total voting power of a foreign_corporation sec_951 of the code provides that if a foreign_corporation is a cfc for an uninterrupted period of days or more during any taxable_year every person who is a united_states_shareholder of the corporation and who owns stock in it on the last day of the taxable_year in which the corporation is a cfc shall include in gross_income the sum of the shareholder’s pro_rata share of the cfc’s subpart_f_income for the taxable_year sec_952 of the code defines subpart_f_income to include foreign_base_company_income determined under sec_954 under sec_954 foreign_base_company_income includes foreign_personal_holding_company_income determined under sec_954 sec_954 defines foreign_personal_holding_company_income to include dividends interest royalties rents and annuities gains in excess of losses from transactions in commodities including futures forward and similar transactions but excluding certain hedging_transactions and certain active business gains and losses and subject_to certain exceptions net_income from notional_principal_contracts plr-120290-10 sub’s investments may generate foreign_personal_holding_company_income under sec_954 which is subpart_f_income fund would therefore include in income sub’s subpart_f_income for the taxable_year in accordance with sec_951 analysis and conclusion fund has represented that it will own percent of the voting power of the stock of sub fund is a united_states_person based upon fund’s representations sub will qualify as a cfc under sec_857 based on the facts as represented we rule that subpart_f_income of sub that is attributable to fund is income derived with respect to fund’s business of investing in the stock of sub and thus constitutes qualifying_income under sec_851 this ruling is directed only to the taxpayer who requested it and is limited to the facts as represented by the taxpayer sec_6110 provides that this letter may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely david b silber david b silber chief branch office of associate chief_counsel financial institutions and products


internal_revenue_service department of the treasury washington dc person to contact telephone number refer reply to cc tege eb qp2-plr-165295-02 date date number release date index number legend x ein plan dear this is in response to your letter of and subsequent correspondence requesting a ruling with respect to the plan which x intends to be an eligible_deferred_compensation_plan under sec_457 of the internal_revenue_code_of_1986 x is represented to be an eligible_employer within the meaning of sec_457 membership in the plan is available to employees of x the term employee means any common_law_employee who receives a w-2 of x who is eligible to contribute at least dollar_figure annually under the plan an employee may elect to defer compensation that would have been received for services rendered to x in any taxable_year until death severance_from_employment with x or until the occurrence of an unforeseeable_emergency the plan does not provide that a loan may be made from assets held by the plan to any participant or beneficiary under the plan each employee may become a participant in the plan following execution of a salary reduction and participation_agreement agreement which establishes the amount of the deferral no portion of the compensation of an employee shall be deferred for any calendar month or portion of a calendar month unless the employee enters into the agreement prior to the beginning of the month the plan provides for a maximum amount that may be deferred by a participant in any taxable_year and also provides for a catch-up computation for amounts deferred for one or more of the participant’s last three taxable years ending before he or she attains normal_retirement_age under the plan in plr-165295-02 addition the plan also provides for the age plus catch-up_contributions described in sec_414 the amounts that may be deferred under the annual maximum limitation and the catch-up provisions are within the limitations of sec_457 with certain limitations a participant may elect the manner in which his or her deferred amounts will be distributed the plan provides that the manner and time of benefit payout must meet the distribution_requirements of sec_401 and sec_457 of the code the plan provides that amounts of compensation deferred thereunder are to be transferred to and invested in a_trust described in sec_457 and or in an annuity_contract described in sec_457 for the exclusive benefit of the participants and their beneficiaries all amounts deferred under the plan must be transferred to the trust and or annuity_contract within an administratively reasonable_time period the annuity_contract is represented to meet the requirements of sec_401 and thus will be treated as a_trust pursuant to sec_457 the rights of any participant or beneficiary to payments pursuant to the plan are generally nonassignable and not subject_to pledge transfer or encumbrance sec_457 of the code provides rules for the deferral of compensation by an individual participating in an eligible_deferred_compensation_plan as defined in sec_457 sec_457 of the code provides that in the case of a participant in an eligible governmental deferred_compensation plan any amount of compensation deferred under the plan and any income attributable to the amounts so deferred shall be includible in gross_income only for the taxable_year in which such compensation or other income is paid to the participant or beneficiary sec_457 of the code prescribes that an eligible_deferred_compensation_plan must meet the distribution_requirements of sec_457 sec_457 of the code provides that for a sec_457 plan to be an eligible_plan the plan must have distribution_requirements providing that under the plan amounts will not be made available to participants or beneficiaries earlier than i the calendar_year in which the participant attains age ½ ii when the participant has a severance_from_employment with the employer or iii when the participant is faced with an unforeseeable_emergency as determined under treasury regulations sec_457 of the code provides that a plan maintained by an eligible governmental employer shall not be treated as an eligible_deferred_compensation_plan unless all assets and rights purchased with such deferred_compensation amounts and all income attributable to such amounts property or rights of the plan are held in trust for the exclusive benefit of participants and their beneficiaries sec_457 provides that a_trust described in sec_457 shall be treated as an organization exempt from tax under sec_501 sec_457 states that custodial accounts and contracts described in sec_401 shall be treated as trusts under rules similar to the rules under sec_401 plr-165295-02 based upon the provisions of the plan summarized above we conclude as follows the plan is an eligible_state_deferred_compensation_plan within the meaning of sec_457 of the code and the regulations thereunder the amounts of compensation deferred under the plan including any income attributable to the deferred_compensation will be includible in gross_income only for the taxable_year or years in which such amounts are paid to a participant or a participant’s beneficiary in accordance with the terms of the plan except as specifically ruled upon above no opinion is expressed as to the federal_income_tax consequences of the plan under any other provision of the code if the plan is significantly modified the ruling will not necessarily remain applicable this ruling is directed only to x and applies only to the plan and trust submitted on date as revised by amendments submitted on date may and date sec_6110 of the code provides that it may not be used or cited as precedent temporary or final regulations pertaining to one or more of the issues addressed in this ruling have not yet been adopted therefore this ruling may be modified or revoked if the adopted temporary or final regulations are inconsistent with any conclusions in the ruling see section dollar_figure of revproc_2003_1 2003_1_irb_1 however when the criteria in section dollar_figure of revproc_2003_1 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely yours robert d patchell chief qualified_plans branch office of the division counsel associate chief_counsel tax exempt and government entities enclosure copy of letter copy for sec_6110 purposes cc


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi 1-plr-118033-00 date date legend x y country d1 this letter responds to a letter dated date together with subsequent correspondence submitted on behalf of x requesting a time extension under sec_301_9100-3 of the procedure and administration regulations facts according to the information submitted x was validly formed under country law on d1 x and x’s parent y intended to elect to disregard x as an entity separate from y however form_8832 entity classification election was not timely filed law and analysis sec_301_7701-3 provides that unless a foreign eligible_entity elects otherwise the entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owners if it has a single owner that does not have limited_liability sec_301_7701-3 provides that for purposes of b i a member of a foreign eligible_entity has limited_liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member plr-118033-00 sec_301_7701-3 allows an entity to elect to change its classification by filing form_8832 entity classification election with the service_center designated on that form sec_301_7701-3 provides that all such elections become effective on the date specified by the entity on form_8832 or on the date filed if no effective date is specified the specified effective date must not be earlier than days prior to the filing_date of form_8832 nor later than twelve months after that filing_date sec_301_9100-1 gives the commissioner discretion to grant reasonable extensions of time to make regulatory elections under the rules of sec_301_9100-2 and sec_301_9100-3 under sec_301_9100-1 a regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register or a notice published in the internal_revenue_bulletin sec_301_9100-3 sets forth the standards which the commissioner uses to determine whether to grant a discretionary time extension these standards indicate that the commissioner should grant relief when the taxpayer provides evidence proving to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that x has satisfied the requirements of sec_301_9100-1 and sec_301_9100-3 as a result x is granted an extension of time for making the election to be treated as a an entity disregarded from it owner for federal tax purposes effective d1 until days following the date of this letter x should make the election by filing form_8832 a copy of this letter should be attached to that form except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer s paul f kugler enclosures associate chief_counsel passthroughs and special industries sincerely copy of this letter copy for sec_6110 purposes


o f f i c e o f c h i e f c o u n se l department of the treasury i n t e r n a l r e v e n u e s e r v i c e washington d c date number release date conex-123097-11 uil the honorable richard g lugar united_states senate washington dc attention ----------------------- dear senator lugar this letter responds to your letter dated date on behalf of your constituent ---- ------------------ -------------- asked whether the internal_revenue_service irs would adjust the standard mileage rate to reflect recent increases in the price of gasoline on date we announced an increase in the standard mileage rate see announcement which will appear in internal_revenue_bulletin no on date the business standard mileage rate for miles traveled between date and date increases from cents per mile to cents per mile the medical and moving standard mileage rate for the same period increases from cents per mile to cents per mile i hope this information is helpful as requested i am replying in duplicate and returning your enclosure if we can be of further assistance please contact me at ----- ------------ ------ or -------------------------- identification_number ------------- at ----- ------------- enclosures george j blaine associate chief_counsel income_tax and accounting sincerely