t c summary opinion united_states tax_court danvis s and sheryl s smith petitioners v commissioner of internal revenue respondent docket no 9210-00s filed date danvis s smith pro_se sara j barkley for respondent dinan special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed the decision to be entered is should not subsequent effect for not reviewable by any other court and this opinion be cited as authority unless otherwise indicated section references are to the internal_revenue_code in the years in issue - respondent determined deficiencies in petitioners’ federal income taxes of dollar_figure and dollar_figure and accuracy-related_penalties of dollar_figure and dollar_figure respectively for the taxable years and the issues for decision are whether petitioners are entitled to charitable_contribution deductions in and whether petitioners are entitled to certain miscellaneous_itemized_deductions in and and business_expense deductions in and whether petitioners are liable for accuracy-related_penalties under sec_6662 for and some of the facts have been stipulated and are so found the stipulations of fact and the attached exhibits are incorporated herein by this reference petitioners resided in highlands ranch colorado on the date the petition was filed in this case charitable_contribution deductions during the years in issue petitioner husband petitioner was the director of alpha ministries petitioners provided nearly all of the funds used by alpha ministries and nearly all of these funds were in turn used to pay for expenses of ‘petitioners concede respondent’s determination that they received dollar_figure in unreported interest_income in respondent determined that petitioners were entitled to unclaimed deductions in of dollar_figure for investment_interest expense and dollar_figure for business office expense petitioners primarily in the form of a housing allowance ’ petitioner upon receiving paychecks from unrelated employment would sign the back of the paychecks over to alpha ministries prior to depositing them into a checking account bearing the designation alpha ministries the account into which the funds were deposited was owned and controlled by petitioners and petitioners alone had authority to use the funds therein petitioners filed joint federal_income_tax returns for the years in issue on these returns petitioners claimed deductions of dollar_figure in and dollar_figure in for charitable_contributions purportedly made to alpha ministries in the statutory_notice_of_deficiency respondent disallowed these deductions in full petitioners relying on uncorroborated summary documents entered into evidence argue that alpha ministries had the following income and expenses for each of the years in issue income cash donations by petitioners dollar_figure dollar_figure cash donations by other individuals interest on deposit sec_12 big_number big_number disbursements petitioner’s housing allowance dollar_figure dollar_figure petitioner’s health care allowance -q- petitioner’s auto travel allowance petitioner’s books and materials -q- loan to petitioner big_number --o- supplies postage fees and copie sec_34 -0- big_number big_number although we do not accept these figures as actual amounts of income and expenses of alpha ministries we accept them as an admission by petitioners that any funds received by or designated for use by alpha ministries were used almost exclusively for the personal benefit of petitioners - as a general_rule personal_living_and_family_expenses are nondeductible sec_262 subject_to limitations not relevant here sec_170 allows a deduction for charitable_contributions made during the taxable_year to certain types of organizations for a contribution to be deductible it must be made to an organization no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual sec_170 c the facts in the case before us are substantially_similar to the facts in a prior case before this court 81_tc_272 in miedaner the taxpayers established and subsequently operated an entity known as the church of physical theology they had established a separate checking account for the church but used funds from this account for a variety of personal expenses primarily for living allowances for each of the taxpayers in sustaining the commissioner’s disallowance of deductions claimed by the taxpayers for amounts purportedly contributed to the church this court stated the church was essentially inseparable from the personal interests of terrel and penelope and we agree with respondent’s observation that petitioners literally bathed themselves in personal benefits their contributions funded their living allowances the church account was simply a magic wand whereby personal expenses were converted into tax deductions where contributions go to --- - pay personal expenses they are neither charitable nor deductible id pincite assuming arguendo that petitioners made any contributions in this case petitioners by their own admission used any contributed funds funneled through alpha ministries almost exclusively for their own housing and for other expenses benefitting only petitioners thus in accordance with sec_170 c and miedaner v commissioner supra petitioners are not entitled to the claimed charitable_contribution deductions see also 81_tc_806 affd without published opinion 767_f2d_931 9th cir no charitable_contributions were made where taxpayer retained control of the funds and derived personal benefits therefrom itemized and business deductions during and petitioner’s primary employment was as a faculty_member of apollo group inc of phoenix arizona petitioner’s duties included class preparation keeping records of grades and attendance communicating with the school administration conducting tests and grading papers and tests in connection with this employment petitioners claimed miscellaneous_itemized_deductions with respect to the following unreimbursed employee business_expenses in each respective year vehicle expense dollar_figure dollar_figure parking fees tolls and transportation other expenses business auto loan interest office rent big_number postage and express office supplies grading services big_number unspecified big_number less reimbursements by employer total adjusted for rounding errors big_number big_number respondent disallowed the deductions with respect to expenses of dollar_figure in and dollar_figure in for taxable_year petitioner filed a schedule c profit or loss from business for a sole_proprietorship known as smith table pads the schedule listed the principal business of the proprietorship as distributor of custom fitted table pads and teaching on the schedule petitioners claimed deductions for among others the following interest_expense of dollar_figure rent expense of dollar_figure travel expense of dollar_figure and meal and entertainment expense of dollar_figure respondent disallowed each of these deductions in full except with respect to interest_expense of dollar_figure during both of the years in issue petitioners resided in residences owned by petitioners in their own names in petitioner organized a corporation under colorado law known as smith corporation the articles of incorporation -respondent’s additional adjustment to the total of the miscellaneous_itemized_deductions which was based on a change in petitioners’ adjusted_gross_income is computational and will be resolved by the court’s holding on the issues in this case were stamped received by the colorado secretary of state on date the corporation never received an employer_identification_number from the internal_revenue_service and never filed federal income or employment_tax returns petitioner the sole shareholder intended to use this corporation for a number of separate activities first the corporation was meant to establish a vending machine route second petitioner hoped the corporation would take over his table pad business mthird petitioner thought that he could pay the corporation to provide grading services needed for his apollo group employment services which he in turn would personally provide finally petitioner thought that he could pay the corporation rent for use of his residence in grading papers and other activities while petitioner and his wife personally owned the residence with respect to the latter two activities petitioner claimed deductions on the return for alleged payments to the corporation which had been incorporated on or about december of that year petitioner never transferred any funds to the corporation or to an account designated for corporate use a taxpayer may deduct the ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying_on_a_trade_or_business including the trade_or_business of being an employee sec_162 54_tc_374 a taxpayer however generally must keep records --- - sufficient to establish the amounts of the items reported on his federal_income_tax return sec_6001 sec_1 6001-l1 a e income_tax regs in the event that a taxpayer establishes that a deductible expense has been paid but is unable to substantiate the precise amount we generally may estimate the amount of the deductible expense bearing heavily against the taxpayer whose inexactitude in substantiating the amount of the expense is of his own making 39_f2d_540 2d cir we cannot estimate a deductible expense however unless the taxpayer presents evidence sufficient to provide some basis upon which an estimate may be made 85_tc_731 furthermore sec_274 supersedes the cohan doctrine and prohibits estimating certain expenses 50_tc_823 affd 412_f2d_201 2d cir that section provides that unless the taxpayer complies with certain strict substantiation rules no deduction is allowable for traveling expenses for entertainment_expenses for expenses for gifts or with respect to listed_property listed_property includes passenger automobiles and other_property used as a means of transportation sec_280f to meet the strict substantiation requirements the taxpayer must substantiate the amount time place and business --- - purpose of the expenses sec_274 sec_1_274-5t temporary income_tax regs fed reg date petitioners have failed to substantiate any of the schedule c deductions or the employee_business_expense deductions disallowed by respondent petitioners have failed to provide evidence that the expenses were incurred such as receipts and they have failed to sufficiently explain the underlying business purposes for example petitioners claim to have traveled to hawaii in connection with the business of the sole_proprietorship however overlooking whether petitioners in fact traveled to hawaii primarily to sell table pads they provided no receipts for the travel and their daily planner indicates that their primary business-related activity was making phone calls-- calls which presumably could have been made from colorado petitioners assert that a flood destroyed many of the records which would have provided substantiation even if this were the case however petitioners have not adequately attempted to reconstruct any destroyed records by such means as obtaining copies of bank or credit card records finally petitioners have not provided the court with any basis upon which to estimate expenses with respect to those for which estimates may be made sec_7491 does not shift the burden_of_proof to respondent here because petitioners have failed to produce any credible_evidence with respect to the disallowed deductions - we sustain respondent’s disallowance of each of the deductions at issue accuracy-related_penalties respondent determined that petitioners are liable for accuracy-related_penalties under sec_6662 for both years in issue with respect to the underpayments resulting from the total_amounts of the deficiencies respondent has the burden of production with respect to the penalties but the burden_of_proof remains on petitioners sec_7491 116_tc_438 sec_6662 imposes a 20-percent penalty on the portion of an underpayment attributable to any one of various factors one of which is negligence or disregard of rules or regulations sec_6662 negligence includes any failure to make a reasonable attempt to comply with the provisions of the internal_revenue_code including any failure to keep adequate books_and_records or to substantiate items properly sec_6662 sec_1_6662-3 income_tax regs sec_6664 provides that the penalty under sec_6662 shall not apply to any portion of an underpayment if it is shown that there was -the rent expense claimed by petitioners as both employee_business_expense and schedule c business_expense was connected to petitioner’s use of his own residence although petitioners do not directly address the home_office provisions of sec_280a we note that petitioners have not shown that any portion of their residence was exclusively used on a regular basis for business purposes sec_280a reasonable_cause for the taxpayer’s position and that the taxpayer acted in good_faith with respect to that portion the determination of whether a taxpayer acted with reasonable_cause and in good_faith is made on a case-by-case basis taking into account all the pertinent facts and circumstances sec_1_6664-4 b income_tax regs the most important factor is the extent of the taxpayer’s effort to assess his proper tax_liability for the year id petitioners claimed deductions for payments which were never made and they failed to properly substantiate various other deductions claimed on their returns furthermore petitioners used alpha ministries and smith corporation---entities which were essentially alter egos of petitioner--to eliminate nearly all federal tax_liability on their wage and salary income in each of the years in issue the use of these entities in this manner is not evidence of a reasonable attempt to comply with federal tax law and does not reflect reasonable_cause and good_faith for petitioners’ actions we find that petitioners were negligent and hold that they are liable for the accuracy-related_penalties determined by respondent reviewed and adopted as the report of the small_tax_case division to reflect the foregoing decision will be entered for respondent


department of the treasury employer_identification_number contact person - id number contact telephone number uil internal_revenue_service p o box cincinnati oh release number release date date date date legend c vendor d county dear you asked for advance approval of your scholarship grant procedures under internal_revenue_code sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax you requested approval of your scholarship program to fund the education of certain qualifying students our determination we approved your procedures for awarding scholarships based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding scholarships meet the requirements of code sec_4945 as a result expenditures you make under these procedures won't be taxable also awards made under these procedures are scholarship or fellowship grants and are not taxable to the recipients if they use them for qualified_tuition_and_related_expenses subject_to the limitations provide in code sec_117 description of your request you were recognized as exempt from federal_income_tax under sec_501 c of the code and are classified as a private_foundation as defined in sec_509 you will operate a grant making program to award scholarships to eligible students in residents of d county preference will be given to those of high school college and or professional school age catalog number 58263t letter the number and amount of scholarships you award each year will vary depending on the amount of funds you have available and will be distributed based on the financial need of the applicants c will manage the selection of recipients and distribution of funds c has staff employees who visit all of the high schools and youth-serving nonprofit agencies in d county they conduct presentations on financial aid and scholarships they also distribute fliers to the schools c will maintain records of the award recipients on your behalf eligibility for your scholarships are limited to young men and women who reside in d county who wish to obtain an education for which they have insufficient funds applicant must an beau-s citizen or permanent u s resident green card have attended at least four of the six secondary grade years at a d county school and graduate or receive a ged from the high school and be planning to attend full-time at a title iv approved college or vocational school in addition e e e students who attends private boarding schools in d must show proof that the family’s permanent address is located within d county homeschooled students must have an affidavit of approval on file with the d county office of education and have continually resided in d county during the eligibility period and students who have been a ward of d county court youth in foster care after the age of can contact c to check their eligibility status all applicants must be planning to attend full-time at a title iv approved college university vocational school graduate school or medical remain in good academic standing and be making timely progress towards a degree or vocational certificate the criteria for scholarship selection are financial need motivation and potential financial need is verified by providing a copy of the free application_for federal student aid fafsa student aid report fafsa - sar c assists students studying in standard academic programs on a traditional academic calendar student aid is not offered summer sessions research special projects part-time studies distance learning or executive mba-type programs please note online courses will be accepted as long as they are taken from the same approved institution and do not exceed more than half of the required minimum full-time units c solicits reviews and evaluates the academic achievement and financial need of graduating seniors and makes recommendations to you all scholarships are awarded on an objective and non-discriminatory basis no scholarship may be awarded to any disqualified_person as defined in code sec_4946 letter catalog number 58263t students may re-apply for a new scholarship but must submit the unofficial transcript or grade report showing units and cumulative gpa and a copy of free application_for federal student aid report you pay the scholarship funds directly to the c who will pay the university college the recipient attends for the benefit of the recipient c provides a letter to each university college specifying that the university college’s acceptance of the funds constitutes the university college’s agreement to i ii refund any unused portion of the scholarship if a scholarship recipient fails to meet any term or condition of the scholarship and notify the trustee if the scholarship recipient fails to meet any term or condition of the scholarship if the university school will not agree to such terms the c will obtain the needed reports and grade transcripts from the scholarship recipient you will investigate diversions of funds from their intended purposes and take all reasonable and appropriate steps to recover diverted funds basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure e e e e the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant the grant is a scholarship or fellowship subject_to the provisions of code sec_117 the grant is to be used for study at an educational_organization described in code sec_170 other conditions that apply to this determination e e e this determination only covers the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don't differ significantly from those described in your original request this determination applies only to you it may not be cited as a precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes to your program to the cincinnati office of exempt_organizations at internal_revenue_service exempt_organizations determinations letter catalog number 58263t p o box cincinnati oh e e e you cannot award grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives all funds distributed to individuals must be made on a charitable basis and further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 you should keep adequate_records and case histories so that you can substantiate your grant distributions with the irs if necessary please keep a copy of this letter in your records if you have questions please contact the person listed at the top of this letter sincerely director exempt_organizations letter catalog number 58263t


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc dom p si br 1-plr-114227-99 date date legend x state d1 this letter responds to your letter dated date submitted on behalf of x requesting a time extension under sec_301_9100-3 of the procedure and administration regulations for x to elect to be treated as a corporation for federal tax purposes facts x was validly formed as a corporation under state law on d1 x converted under state law into a state limited_partnership for federal tax purposes x intended to continue as a c_corporation however x did not timely file a form_8832 entity classification election law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that an eligible_entity with a single owner will be disregarded as an entity separate from its owner unless it elects otherwise 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 the 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 extension of time 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 government conclusion 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 an association_taxable_as_a_corporation 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 your authorized representative sincerely paul f kugler assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court jeff burger productions llc banana moon trust j c chisum trustee tax_matters_partner petitioner v commissioner of internal revenue respondent docket no filed date jimmy c chisum for petitioner richard a rappazzo for respondent memorandum opinion chiechi judge this case is before the court on respondent's motion to dismiss for lack of jurisdiction respondent’s motion we shall grant respondent’s motion background for purposes of respondent’s motion the parties do not dispute the following factual allegations that are part of the record at all relevant times jeff burger productions llc jeff burger productions was a limited_liability_company that is taxed as a partnership because it did not make an election to be taxed as a corporation jeff burger productions filed part-- nership income_tax returns forms returns for taxable years and in those returns it was indicated that there were two partners members of jeff burger productions ie banana moon trust and purple passion trust consequently the provisions of sec_6221 through apply ’ respondent issued a notice of final partnership administra- tive adjustment which was addressed as follows jeff burger tax_matters_partner jeff burger productions llc east tonto rim drive sedona az j c chisum mr chisum timely mailed to the court a petition purportedly filed on behalf of jeff burger productions mr chisum identified himself in the petition as trustee of banana moon trust mr chisum further represented in the peti- ‘a111 section references are to the internal_revenue_code in effect for the years at issue all rule references are to the tax_court rules_of_practice and procedure tion jeff laws jeff dent that banana moon trust is the tax_matters_partner tmp for burger productions banana moon trust was formed under the of the state of arizona upon commencement of the examination of the returns filed by burger productions for taxable years and respon- requested complete copies of the trust documents relating to banana moon trust the purported tmp for jeff burger productions as well as other information petitioner refused to provide respondent with the trust documents and other information re- quested respondent’s motion contends in pertinent part there is absolutely no evidence from which the court can adduce that mr chisum is the current trustee of banana moon trust petitioner has provided no evidence that the appointment of mr chisum as trustee was valid or authorized under the terms of the trust inden- ture petitioner has failed to demon- strate that mr chisum was legally appointed as trustee of banana moon trust and therefore is authorized to act on behalf of banana moon trust as tmp and bring the instant case before this court see t c rule c the capacity of mr chisum to act under arizona law and bring the instant suit in this court likewise has not been established petitioner filed a response to respondent’s motion in which it asks the court to deny that motion that response asserts in pertinent part the respondent’s objection goes to the manage- ment of the trust its internal affairs concerns about its administration the declaration of rights and the determinations of matters involving the trustee as the respondent concedes that these are arizona trusts sic this issue falls within the exclusive jurisdiction of the superior court here in the state of arizona see a r s at this point this court is without jurisdiction to determine whether x mr chisum is the duly authorized trustee the petitioner need not remind the court of the conse- guences of taking any_action over which subject matter is completely lacking any objection the respondent or respondent’s counsel has in this area must be taken up in the supe- rior court here in arizona assuming of course the respondent or respondent’s counsel has standing the irony is of course if respondent or respondent’s counsel does take the matter up with the superior court where the respondent will have the burden_of_proof and if the superior court finds that the trusts are sic valid then the respondent will be barred by res_judicata from asserting the sham trust claim that forms the basis for his deficiency determination tn essence the factual claims raised by the motion to dismiss are inextricably intertwined with the facts going to the merits of the commissioner’s sham trust claim at issue in this case if the trusts are sic valid then mr chisum under arizona law will be presumed to be the duly authorized trustee whether it is as a trustee of a resulting trust con- structive trust or expressed sic trust therefore the only course available to this court is to defer consideration of the jurisdictional claims to the trial on the merits 990_f2d_451 x n 1l 9th cir 940_f2d_1291 9th cir see also 824_f2d_799 9th cir a district_court may hear evidence and make findings_of_fact necessary to rule on the subject matter jurisdiction guestion prior to trial if the jurisdictional facts are not intertwined with the merits emphasis added the court held a hearing on respondent’s motion at that hearing mr chisum appeared as trustee for banana moon trust the purported tmp of jeff burger productions petitioner prof- fered no evidence and presented no new arguments at that hearing respondent introduced into evidence at the hearing on respon- dent’s motion documents that appear to be the governing trust documents for banana moon trust the purported tmp of jeff burger productions which respondent’s examining agent obtained from an unrelated third-party financial_institution those governing trust documents state that they are executed under the laws of the constitution for the united_states of america and the constitution for the state of nevada those documents identify the original trustee of banana moon trust as sugartree llc the governing trust documents relating to banana moon trust further provide in pertinent part the anglo-saxon common_law irrevocable pure trust for asset protection purposes also known as an asset_protection_trust created by this contract and indenture on thi sec_30th day of september is authorized to exist and function by and through its board_of trustees hereinafter referred to as the board pursuant to all of the conditions contained herein with certain assets to be administered by the trustee for the benefit of the holders of capital units hereinafter referred to as beneficiaries represented by certificates of beneficial_interest in accordance with the unalienable anglo-saxon common_law rights at the hearing the court informed mr chisum that its allowing him to appear at the hearing as the alleged trustee of banana moon trust the purported tmp of jeff burger productions did not mean that the court agreed that he in fact was a duly appointed and authorized trustee of banana moon trust afforded to man this trust shall be originally domiciled in the state of nevada and shall be interpreted and construed under the constitution of the united_states and the laws of the state of nevada the domicile and thereby the controlling interpretational laws under which the trust shall be construed may be changed to any other state or nation as shall be deemed prudent wise necessary or appropriate by the board_of trus-- tees the creator shall appoint a fiduciary to serve as protector of the beneficiaries the protec-- tor shall be an independent third party with no obliga- tions to any other party to this trust the protector shall have the power to remove any trustee who violates any term or condition of this trust agreement or is in breach of any anglo-saxon common_law trustee duty and shall have the power to appoint a successor trustee to fill any vacancy which occurs for any reason the board_of trustees shall have except as modified by the terms of this indenture and the minutes of the board interpreting the same all of the powers of trustees under the anglo-saxon common_law as well as those specified under the laws of the state of nevada the trustee may be replaced in any of the following manners a resignation the trustee may resign with or without cause at any time by sending a notice of his intention to do so to the trust principle sic office by certified mail however such resignation shall not be effective unless and until such time as a successor trustee has accepted the appointment to assume the duties and responsibilities of trustee on the expira- tion date of the outgoing trustee or thirty days after receipt of the resignation whichever occurs first b removal upon complaint for proper cause by any agent or person appointed by the trust the protector shall appoint a committee of arbitrators hereinafter referred to as the committee to investi- gate the complaint the committee shall have the power upon meeting investigation and a two-thirds majority vote to remove the trustee for the following specific reasons constituting proper cause a insol- vency b negligence c incompetence or d failure to perform fiduciary duties under the terms of the contract cc incapacitation in the event the trustee is unavailable to participate in the process of his removal or the selection of a successor trustee the protector shall have the authority to execute an affi- davit under oath setting forth the unavailability of the trustee d court appointment in the event it becomes necessary to litigate the removal of a trustee and or appointment of a successor trustee the trust by and through its beneficiaries may apply to a court of competent jurisdiction for the appointment of a successor trustee discussion rule provides in pertinent part c capacity the capacity of a fiduciary or other representative to litigate in the court shall be determined in accordance with the law of the juris-- diction from which such person's authority is derived the governing trust documents pertaining to banana moon trust the purported tmp of jeff burger productions suggest that banana moon trust was organized as a_trust under the laws of the state of nevada however in petitioner’s response to respon- dent’s motion and at the hearing on that motion mr chisum asserted that the administration of banana moon trust is governed by the laws of the state of arizona and that the exclusive jur- isdiction in determining the validity of the trustee is in the superior court of the state of arizona assuming arguendo as petitioner claims that banana moon trust the purported tmp of jeff burger productions is a_trust the administration of which is subject_to the laws of the state of arizona under arizona law see rule c a trustee has the power to commence litigation on behalf of a_trust see ariz rev stat ann sec c west in the instant case petitioner has the burden of proving that this court has jurisdiction see 65_tc_346 27_tc_837 by establishing affirmatively ‘assuming arguendo as the governing trust documents per- taining to banana moon trust suggest that banana moon trust the purported tmp of jeff burger productions is a_trust the admin- istration of which is subject_to the laws of the state of nevada under nevada law see rule c a trustee has the power to commence litigation on behalf of a_trust if the trust instrument so provides see nev rev stat ann sec_163 and michie the governing trust documents pertaining to banana moon trust state in pertinent part that the board_of trustees of banana moon trust was to have all of the powers of trustees under the anglo-saxon common_law as well as those specified under the laws of the state of nevada all facts giving rise to our jurisdiction see 35_tc_177 15_bta_645 in order to meet that burden petitioner must provide evidence establishing that mr chisum has authority to act on behalf of banana moon trust the purported tmp of jeff burger productions see national comm to secure justice in the rosen- berg case v commissioner supra pincite 22_bta_686 we reject petitioner’s position that under arizona law the validity of the purported appointment of mr chisum as the trustee of banana moon trust falls within the exclusive jurisdiction of the courts of the state of arizona on the record before us we find that petitioner has failed to establish that mr chisum is authorized to act on behalf of banana moon trust the purported tmp of jeff burger productions ’ we have considered all of the contentions and arguments of petitioner that are not discussed herein and we find them to be without merit and or irrelevant to reflect the foregoing an order of dismissal for lack of jurisdiction granting respon- dent’s motion will be entered


department of the treasury internal_revenue_service washington d c number release date date cc el gl br1 gl-604191-99 uilc memorandum for delaware-maryland associate district_counsel from alan c levine chief branch general litigation subject debtor gl-604191-99 this responds to your request for advice dated date this document is not to be cited as precedent legend debtor date a date b date c date d date e date f date g year a year b issue whether the internal_revenue_service the service could revoke a release of notices of federal_tax_lien such that the liens are reinstated and reattach to the prepetition property of the above-named debtor in a chapter bankruptcy case where following the release abatements were made of the underlying tax assessments conclusion the abatements made in this case were made pursuant to the authority of sec_6404 accordingly the tax_liability may only be reestablished on the books of gl-604191-99 the service through the statutory and regulatory procedures for making a new assessment because the taxes at issue were discharged in bankruptcy however new assessments would be prohibited by the discharge injunction without valid assessments the release of liens in this case cannot be revoked and the liens cannot be reinstated facts the facts as you have provided them are as follows the debtor filed a chapter bankruptcy petition on the debtor filed an adversary proceeding to determine whether certain tax_liabilities were dischargeable on date b an agreed order was entered that provided in part that the debtor’s income_tax liabilities for the year a and year b tax years were dischargeable but that the service’s tax_liens for those years remained attached to any prepetition exempt or abandoned property of the debtor following the entry of the agreed order the service took the following actions date c the lien was released date d the liabilities for year a and year b were abated date e the abated assessments were reinstated date f the release of lien was revoked date g a new lien was filed the history notes maintained by special procedures clearly state that the periods at issue are dischargeable but that the tax_lien remains attached to any exempt or abandoned prepetition property apparently the technician who carried out the abatement and lien release did not understand the implications of such actions given the law as restated in the agreed order law and analysis bankruptcy code sec_522 provides that exempt_property is generally not liable for a prepetition debt except where such debt is secured_by a properly filed tax_lien accordingly where a notice_of_federal_tax_lien is on file before the petition is filed it may be possible to collect the dischargeable tax_liabilities from prepetition assets that were exempted or abandoned in the bankruptcy see in re 901_f2d_744 9th cir in the present case however the lien from which this in rem post-discharge collection authority is derived was released and the associated assessments were abated you opine that the service employee who took these actions misunderstood the legal authority to take further collection action with respect to the discharged liabilities the assessments were subsequently reinstated and the release of the lien was revoked pursuant to the authority of sec_6325 you now question whether by taking these actions the service has revived its ability in this case to effectuate post-discharge collection from the debtor’s exempt_property gl-604191-99 as you note the authority to revoke a release of lien under sec_6325 presupposes the existence of a valid assessment to support the reinstated lien accordingly the validity of the revocation of release in the present case is contingent upon whether or not the abated assessments could be reinstated in a prior memorandum from this office dated date a copy of which is attached we concluded that where the service reduces the assessed balance on tax modules for discharged taxes to zero such as was done in the present case such action generally constitutes an abatement pursuant to the authority of sec_6404 sec_6404 provides that t he secretary is authorized to abate the unpaid portion of the assessment of any_tax or any liability in respect thereof if the secretary determines under uniform rules prescribed by the secretary that the administration and collection costs involved would not warrant collection of the amount due the date memorandum further provides this office’s position that once an abatement has been made pursuant to the authority of sec_6404 the taxpayer’s liability may only be reestablished on the books of the service by making a new assessment in cases of taxes discharged in bankruptcy however such as in the present case the making of a new assessment is prohibited by the discharge injunction courts have recognized that an attempted abatement made due to employee error is not a valid abatement such that the assessment may be revived or reinstated without the necessity for a new assessment in in re 99_f3d_740 5th cir the court noted that as a general_rule if the service decides to reimpose a validly abated assessment it must make a new assessment within the relevant statutory period under the facts of bugge the tax was abated in full because the revenue_officer erroneously thought that the tax had been double counted in the computer and requested abatement of the duplicative tax the court held therefore that no valid abatement occurred because abatement was not authorized under sec_6404 in concluding that the purported abatement was ineffective the court in bugge emphasized that there was no statutory authority to make an abatement this was a purely accidental and unintended processing error the court also distinguished the facts of bugge from cases in which an error in judgment was made and there was a conscious decision to abate the tax_liability id pincite see also range v united_states u s t c big_number s d tex court in dicta limited bugge to its facts citing its holding as based upon lack of statutory authority 311_fsupp_1184 s d n y abated assessment can be reinstated if abatement was ordinary clerical or bookkeeping error distinction made where the abatement is based upon a substantive reconsideration of the tax_liability gl-604191-99 we do not consider the bugge opinion to provide support for an argument that the assessments in the present case may be reinstated we do not think that the technician’s error in abating the assessments constitutes the type of error contemplated by bugge primarily as previously discussed the abatement was made pursuant to the statutory authority in sec_6404 furthermore this was not an accidental or unintended error but a conscious decision to abate the taxes albeit one based upon bad judgment and a misunderstanding of the law the fact that the agreed order entered by the court expressly provides that the liens for year a and year b remained attached to certain prepetition property does not provide separate authority for reinstatement of the assessments as you note this provision merely restates the law we consider the bugge opinion to be a narrow opinion which should be limited to its facts accordingly we conclude that the abatements made in this case should not have been reinstated the release of the liens for the year a and year b tax years should not have been revoked thus there is no authority for the service to take post-discharge collection action against the debtor’s prepetition property in this case if you have any further questions please call the attorney assigned to this case who may be reached pincite-3610 attachment memorandum dated date


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 b1 plr-150490-07 date date legend x ------------------------------------ ------------------------ country ---------------------------- date --------------------------- date ---------------------- dear ------------- this letter responds to a letter dated date submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an entity classification election under sec_301_7701-3 the information submitted states that x was formed on date under the laws of country x represents that x is a foreign_entity eligible to elect to be treated as a disregarded_entity x intended to be treated as a disregarded_entity effective date however x failed to file a timely form_8832 entity classification election electing to treat x as a disregarded_entity effective date sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes a business_entity is any entity recognized for federal tax purposes that is not properly classified as a_trust under sec_301_7701-4 or otherwise subject_to special treatment under the internal_revenue_code plr-150490-07 sec_301_7701-3 provides that except as provided in sec_301 b unless the entity elects otherwise a foreign eligible_entity is a a partnership if it has two or more members and at least one member does not have limited_liability or b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides that to elect to be classified other than as provided in sec_301_7701-3 an eligible_entity must file form_8832 with the designated service_center sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form is filed 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 months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center and elect to be treated as a disregarded_entity effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose except as specifically set forth above no opinion is expressed concerning the plr-150490-07 federal tax consequences of the facts described above under any other provision of the code this ruling is directed only to the taxpayer requesting it sec_6110 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 william p o’shea william p o'shea associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court s m trust no margarette s mcmahan trustee petitioner v commissioner of internal revenue respondent docket no 12279-07l filed date margarette s mcmahan trustee for petitioner gordon p sanz for respondent memorandum findings_of_fact and opinion goeke judge this case is before the court on petitioner’s motion to vacate order of dismissal for lack of jurisdiction on date respondent filed a motion to dismiss for lack of jurisdiction on the grounds that no notice_of_determination under sec_6320 or section was sent to petitioner for the tax years and that would confer jurisdiction on this court petitioner filed an opposition to the motion on date the court entered an order of dismissal and decision granting respondent’s motion to dismiss for lack of jurisdiction finding that because petitioner received no sec_6320 hearing and respondent did not make a determination pursuant to sec_6330 the court lacked jurisdiction to review the federal tax_liens in this case for the reasons stated herein we will deny petitioner’s motion findings_of_fact at the time this petition was filed petitioner was a_trust with an address in goliad texas on date respondent filed a notice_of_federal_tax_lien nftl against assets held in the name of petitioner as nominee transferee and or alter ego of james k deceased and margarette s mcmahan the mcmahans the nftl listed unpaid balances of dollar_figure dollar_figure and dollar_figure as income_tax liabilities of the mcmahans for tax years ending and respectively 1unless otherwise indicated section references are to the internal_revenue_code and all rule references are to the tax_court rules_of_practice and procedure petitioner sought reconsideration from the internal revenue service’s irs collection_appeals_program on date the collection_appeals_program issued a closing letter which stated that following a review of petitioner’s case it was determined that the area director was correct that the nftls should be filed in addition the letter served as notification that the matter was closed in the appeals_office on date petitioner filed with this court a petition challenging the lien determinations with respect to income_tax the mcmahans owed for and opinion this court is a court of limited jurisdiction and we may exercise judgment only to the extent authorized by congress 85_tc_527 sec_6321 provides that all property and rights to property of a taxpayer become subject_to a lien when demand for payment of taxes has been made and the taxpayer fails to pay those taxes sec_6320 provides that the secretary shall furnish the taxpayer with a written notice within business days after the nftl is filed this written notice informs the taxpayer of the right to request an administrative hearing on the matter the taxpayer then may seek judicial review of the determination made after the hearing see 115_tc_35 114_tc_176 upon the appeals office’s issuance of a determination_letter the taxpayer who seeks judicial review may appeal to this court within days of the determination sec_6320 requires that the administrative hearing be conducted pursuant to sec_6330 d other than paragraph b thereof and e in order to invoke judicial review of a sec_6320 determination a taxpayer must be the person liable for the tax under sec_6321 and must have received from the irs a valid notice_of_determination based on a sec_6320 hearing see 114_tc_492 see also rule b regulations promulgated under sec_6320 state that known nominees of or persons holding property of the taxpayer are not entitled to a collection_due_process or equivalent_hearing sec_301_6320-1 q a-b5 proced admin regs individuals not entitled to a sec_6320 review are entitled to other forms of review including reconsideration by the irs office collecting the tax assistance from the national_taxpayer_advocate or an administrative hearing before the appeals_office under the collection_appeals_program id any determination resulting from these reviews however is not subject_to judicial review id the taxpayer for whom a nominee transferee or alter ego is holding property is entitled to a hearing under sec_6320 sec_301_6320-1 example proced admin regs failure to provide a taxpayer with notice of the filing of an nftl will serve as a basis for dismissal kennedy v commissioner tcmemo_2008_33 respondent argues that petitioner is a nominee transferee and or alter ego of margarette mcmahan and has not received a determination sufficient to invoke this court’s jurisdiction petitioner argues that under state law both petitioner and ms mcmahan are one and the same and that if we treat petitioner and ms mcmahan as one under state law then there is no alter ego or nominee and ms mcmahan as the taxpayer liable for the tax due is entitled to a sec_6320 hearing neither petitioner nor respondent has stated whether a notice was sent to ms mcmahan as the individual liable for the taxes that gave rise to the nftl although a dismissal for lack of jurisdiction may be based on failure to provide notice of the filing of an nftl kennedy v commissioner supra we decline to address petitioner’s arguments the issue of whether ms mcmahan is entitled to a sec_6320 hearing is not properly before this court as it is not relevant to the issue of whether we have jurisdiction to hear petitioner’s appeal of the collection appeals program’s closing letter we lack jurisdiction to review the filing of the nftl because petitioner as ms mcmahan’s nominee transferee and or alter ego has not received a determination based on a sec_6320 hearing sufficient to invoke judicial review see 123_tc_1 affd 412_f3d_819 7th cir 117_tc_122 offiler v commissioner supra accordingly we will deny petitioner’s motion to vacate our order of dismissal for lack of jurisdiction to reflect the foregoing an appropriate order will be issued


internal_revenue_service number release date index number ------------------- ----------------------------------------------- ---------------------------------------- ---------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ------------- telephone number --------------------- refer reply to cc psi b03 plr-147236-08 date date legend x y ----------------------------------------------------------------------------------------------------- ----------------------- --------------------------------------------------- state ------------- date -------------------------- dear ------------- we received your letter dated date submitted on behalf of x requesting a ruling under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations that x be granted an extension of time to file an election to be treated as an association_taxable_as_a_corporation under sec_301_7701-3 this letter responds to your request facts x was formed on date as a state limited_liability_company x is wholly-owned by y y intended that x be treated as an association_taxable_as_a_corporation for federal tax purposes effective date however x inadvertently failed to timely file a form_8832 entity classification election law and analysis plr-147236-08 sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 an eligible_entity with a single owner can elect to be classified as an association and thus a corporation under sec_301_7701-2 or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that except as provided in sec_301_7701-3 unless the entity elects otherwise a domestic eligible_entity is i a partnership if it has two or more members or ii disregarded as an entity separate from its owner if it has a single owner sec_301_7701-3 provides in part that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 with the service_center designated on form_8832 sec_301_7701-3 provides that an election made under sec_301_7701-3 will be effective on the date specified by the entity on form_8832 or on the date filed if no date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed if an election specifies an effective date more than days prior to the date on which the election is filed it will be effective days prior to the date it was filed sec_301_9100-1 provides that the commissioner 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 six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion plr-147236-08 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 accordingly x is granted an extension of time of sixty days from the date of this letter to elect to be treated as an association_taxable_as_a_corporation for federal tax purposes effective date the election should be made by filing a properly executed form_8832 with the appropriate service_center a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 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 your authorized representatives 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 sincerely s curtis g wilson associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


number release date id office uilc cca-531744-11 -------------- from ----------------- sent friday date pm to ---------------------- cc ---------------------------- subject ----------------------- we have reviewed your letter to the chapter standing trustee and the standing trustee’s response to that letter and advise as follows your analysis is correct there is no authority to disclose the debtor’s return_information to the standing chapter trustee absent the debtor’s consent counsel’s position is that the standing chapter trustee does not have a material interest in the debtor’s return or return_information under sec_6103 or the statement in the bankruptcy plan to which the trustee looks as disclosure authority does not suffice to disclose the debtor’s returns to the standing chapter trustee that statement is ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ --------------------------------------------- the debtor’s consent must conform with sec_6103 and the regulations issued thereunder in sec_301_6103_c_-1 the form_8821 conforms with the requirements of sec_6103 and sec_301_6103_c_-1 the instructions to form_8821 specifically state that consents for future tax periods may only be for periods that end no later than years after the date the tax_information_authorization is received by the irs by its own terms the consent is not open ended if the bankruptcy period ends before the end of the 3-year period there is no problem with the form_8821 being outstanding since the form_8821 is not self- effectuating disclosure of the debtor’s returns made in accordance with the form_8821 requires some action on the part of the person to whom the consent is provided if the bankruptcy period extends beyond the 3-year period provided by the form_8821 then a new form_8821 would be required it is possible for a consent to be prepared specifically for this disclosure however that consent must conform with sec_6103 and the regulations issued thereunder in treas reg c -1 it may be possible for the bankruptcy plan to provide a sec_6103 consent as a separate page at the plan pertaining solely to the disclosure of the debtor’s returns that separate consent would need to be signed by the debtor note that there is a typo in your date letter you refer to an unauthorized disclosure under section rather than sec_7431 if you have any questions please do not hesitate to call


internal_revenue_service number release date index number ----------------------------- ----------------------------- ------------------------------------------------ ------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ------------- telephone number --------------------- refer reply to cc psi b03 plr-112162-08 date september x a b c legend ----------------------------- ----------------------- ---------------------------------------------- ----------------------- ------------------------- ------------------------------ --------------------- country ---------------------- country --------- --------------------- --------------------- d1 d2 dear ---- this letter responds to a letter dated date and subsequent correspondence written on behalf of x requesting a ruling under sec_301_9100-3 of the procedure and administration regulations facts plr-112162-08 x was formed under the laws of country x represents that it is a foreign_entity eligible to elect to be classified as a disregarded_entity for federal tax purposes x was a wholly-owned subsidiary of a a country corporation b a country corporation acquired a through a subsidiary entity c on d1 upon b’s acquisition of a it was intended that x would be treated as a disregarded_entity effective d2 however due to inadvertence a form_8832 entity classification election to treat x as a disregarded_entity effective d2 was not timely filed law and analysis sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 an eligible_entity with at least two members can elect to be classified as either an association and thus a corporation under sec_301_7701-2 or a partnership and an eligible_entity with a single owner can elect to be classified as an entity separate from its owner sec_301_7701-3 provides in part that except as provided in sec_301_7701-3 unless the entity elects otherwise a foreign eligible_entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides in part that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 entity classification election with the service_center designated on form_8832 sec_301_7701-3 provides that an election under sec_301_7701-3 will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed if an election specifies an effective date more than days prior to the date on which the election is filed it will be effective days prior to the date it was filed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but not more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i plr-112162-08 sec_301_9100-2 provides the standards the commissioner will use to determine whether to grant an automatic_extension of time for making certain elections sec_301_9100-3 provides the guidelines for granting extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301 a provides that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that x has satisfied the requirements of sec_301 and sec_301_9100-3 as a result x is granted an extension of sixty days from the date of this letter to file a properly executed form_8832 with the appropriate service_center to elect to be classified as a disregarded_entity effective d2 a copy of this letter should be attached to the form_8832 except as specifically set forth above we express no opinion concerning the federal tax consequences of the above described facts under any other provision of the internal_revenue_code in accordance with a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely s william p o’shea associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


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 w a s h i n g t o n d c date cc tege eoeg et2 conex-112386-10 o f f i c e o f t h e c h i e f c o u n s e l number info release date uil the honorable kent conrad united_states senator federal building room east rosser avenue bismarck north dakota attention ------------------ dear senator conrad i am responding to your letter dated date you asked about the tax treatment of payments made to temporary foreign workers who assist in farming operations in the united_states according to your letter a north dakota agricultural producer hires workers with h-2a visas to assist in livestock and grain farming operations foreign agricultural workers temporarily admitted into the united_states on h-2a visas are always exempt from united_states social_security and medicare taxes whether they are resident aliens or nonresident_aliens sec_3121 of the internal_revenue_code the code in addition payments made to h-2a alien agricultural workers are not subject_to income_tax_withholding sec_3401 of the code however the employer must report payments made to h2-a alien agricultural workers on form misc both in the case of resident aliens and nonresident_alien payees if the amount_paid during the calendar_year equals or exceeds dollar_figure sec_6041 and sec_6041a of the code revrul_56_679 c b tax_treaties with canada mexico and other countries may affect the taxation of payments made to foreign agricultural workers temporarily present in the united_states under h-2a visas in general the treaty articles on independent personal service or dependent_personal_services would be the operable articles you also asked whether h-2a agricultural workers must file federal and state_income_tax returns unfortunately we are unable to address the income_tax return filing_requirements of the various states as these matters are outside of our jurisdiction however for federal_income_tax purposes nonresident_aliens whose total annual wages are less than the personal_exemption amount currently dollar_figure and who have no other u s source income are not required to report their wages on a federal_income_tax conex-112386-10 return nonresident_aliens whose total annual wages are more than the personal_exemption amount must report their wages on a federal_income_tax return even though part or all their wages may be exempt under an income_tax treaty finally resident aliens must file federal_income_tax returns if their total worldwide income equals or exceeds the filing requirement amounts published annually in the instructions for form_1040 u s individual_income_tax_return i hope this information is helpful if you need further information please call me at ------- ------------- or --------------------at -------------------- sincerely nancy j marks division counsel associate chief_counsel tax exempt government entities


t c memo united_states tax_court john arthur raeber petitioner v commissioner of internal revenue respondent docket no filed date john arthur raeber pro_se audra m dineen and matthew a mendizabal for respondent memorandum findings_of_fact and opinion vasquez judge respondent determined deficiencies in petitioner’s federal_income_tax and accuracy-related_penalties as follows deficiency year dollar_figure big_number penalty sec_6662 dollar_figure dollar_figure the issues for decision are whether petitioner is entitled to deductions for business_expenses of dollar_figure and dollar_figure claimed on schedules c profit or loss from business for and respectively and whether petitioner is liable for accuracy-related_penalties under sec_6662 a for and findings_of_fact some of the facts have been stipulated and are so found the stipulations of facts and the attached exhibits are incorporated herein by this reference petitioner resided in california at the time he filed his petition in and petitioner worked as a self-employed consultant to various architects throughout the world he operated his consulting business as a sole_proprietorship and reported his income and expenses from the business on a schedule c petitioner timely filed form sec_1040 u s individual_income_tax_return for and and attached schedules c on which unless otherwise indicated all section references are to the internal_revenue_code code in effect for the years in issue and all rule references are to the tax_court rules_of_practice and procedure respondent’s determinations with respect to the reduction of petitioner’s personal_exemption deductions and with respect to the increase in petitioner’s self-employment taxes are automatic adjustments that will be resolved by our decision of the primary issue he reported gross_income of dollar_figure and dollar_figure respectively and business_expenses of dollar_figure and dollar_figure respectively respondent audited petitioner’s and returns and requested that petitioner substantiate all of his schedule c business_expenses petitioner refused to substantiate any of his claimed business_expenses arguing that the substantiation requirement violates his fifth_amendment rights under the u s constitution respondent then issued petitioner a notice_of_deficiency disallowing petitioner’s deductions for business_expenses claimed on his schedules c at trial petitioner told the court that he had no knowledge of any pending criminal investigation respondent’s counsel informed the court that she too was unaware of any pending criminal investigation of petitioner opinion i deficiency determinations a burden_of_proof as a general_rule taxpayers bear the burden of proving the commissioner’s deficiency determinations incorrect rule a petitioner reported the following business_expenses on his schedule c for meals and entertainment of dollar_figure business use of home of dollar_figure contract labor of dollar_figure and various other expenses of dollar_figure petitioner reported the following business_expenses on his schedule c for meals and entertainment of dollar_figure business use of home of dollar_figure contract labor of dollar_figure and various other expenses of dollar_figure 290_us_111 to shift the burden_of_proof to the commissioner with respect to a factual issue relevant to the liability for tax taxpayers must inter alia maintain all records required by the code and regulations and cooperate with reasonable requests by the secretary for witnesses information documents meetings and interviews sec_7491 petitioner neither claims nor shows that he satisfies the requirements of sec_7491 to shift the burden_of_proof to respondent accordingly petitioner bears the burden_of_proof b schedule c deductions deductions are a matter of legislative grace and taxpayers have the burden of showing that they are entitled to any deduction claimed rule a 292_us_435 taxpayers are required to maintain records that are sufficient to enable the commissioner to determine their correct_tax liability sec_6001 sec_1_6001-1 income_tax regs additionally taxpayers bear the burden of substantiating the amount and purpose of the item claimed as a deduction 65_tc_87 affd per curiam 540_f2d_821 5th cir petitioner argues that reporting his expenses on his and schedules c and signing his returns under penalty of perjury constitute sufficient substantiation we have long held that signing a return under penalty of perjury is not sufficient to substantiate its accuracy 71_tc_633 62_tc_834 holding that a taxpayer does not satisfy his burden to substantiate claimed business_expenses by merely signing his return under penalty of perjury and testifying to its accuracy without producing additional evidence whitaker v commissioner tcmemo_2010_209 petitioner failed to introduce any other evidence to substantiate his claimed business_expenses asserting instead his fifth_amendment privilege_against self-incrimination the court is not aware of any pending or likely criminal investigation of petitioner the privilege_against self-incrimination does not apply where the possibility of criminal prosecution is remote or unlikely wilkinson v commissioner supra pincite petitioner’s baseless fifth_amendment claim cannot stand in the way of a determination of his civil tax_liability at trial the court warned petitioner that his fifth_amendment claim would not excuse him from his burden to substantiate his claimed business_expenses and offered petitioner an additional opportunity to introduce evidence to satisfy his burden however petitioner continued to assert his fifth_amendment privilege and offered no further evidence to substantiate his claimed business_expenses accordingly we sustain respondent’s disallowance of petitioner’s deductions for business_expenses claimed on his schedules c for and ii sec_6662 accuracy-related_penalties pursuant to sec_6662 taxpayers may be liable for a penalty of percent of the portion of an underpayment_of_tax attributable to a substantial_understatement_of_income_tax or negligence or disregard of rules or regulations see sec_6662 the term understatement means the excess of the amount of tax required to be shown on a return over the amount of tax imposed which is shown on the return reduced by any rebate within the meaning of sec_6211 sec_6662 generally an understatement is a substantial_understatement when it exceeds the greater of dollar_figure or percent of the amount of tax required to be shown on the return sec_6662 in addition sec_6662 defines negligence as any failure to make a reasonable attempt to comply with the provisions of the code and disregard means any careless reckless or intentional disregard the commissioner has the burden of production with respect to the sec_6662 accuracy-related_penalty sec_7491 to meet this burden the commissioner must produce sufficient evidence indicating that it is appropriate to impose the penalty see 116_tc_438 once the commissioner meets this burden of production the taxpayer must come forward with persuasive evidence that the commissioner’s determination is incorrect rule a see higbee v commissioner supra pincite whether applied because of a substantial_understatement_of_income_tax or negligence or disregard of rules or regulations the accuracy-related_penalty is not imposed with respect to any portion of the understatement as to which the taxpayer acted with reasonable_cause and in good_faith the taxpayer is responsible for putting forth evidence to show that he acted with reasonable_cause and in good_faith petitioner’s understatement exceeded the greater of dollar_figure or percent of the amounts of tax required to be shown on his and returns therefore we find that respondent satisfied his burden of production petitioner offered no evidence that he acted with reasonable_cause and in good_faith accordingly we hold that petitioner is liable for the sec_6662 accuracy-related_penalty for and in reaching all of our holdings herein we have considered all arguments made by the parties and to the extent not mentioned above we conclude they are irrelevant or without merit to reflect the foregoing decision will be entered for respondent