t c memo united_states tax_court nancy b doyle petitioner v commissioner of internal revenue respondent docket no 9137-o1l filed date steven l sablowsky for petitioner julia l wahl for respondent memorandum findings_of_fact and opinion ruwe judge the petition in this case was filed in response to a notice_of_determination concerning collection action s under sec_6320 and or the sole issue for decision is whether respondent erroneously denied petitioner’s - - request for relief from joint tax_liability pursuant to sec_6015 or f findings_of_fact some of the facts have been stipulated and are so found the stipulation of facts and the accompanying exhibits are incorporated herein by this reference at the time the petition was filed petitioner resided in pittsburgh pennsylvania the deficiencies and tax_court cases for the years through petitioner and her husband richard e doyle the doyles timely filed joint federal_income_tax returns on which they deducted expenses associated with various tax_shelters including horse breeding and racing tax_shelters respondent audited the doyles’ through tax returns and disallowed the claimed tax_shelter deductions respondent issued notices of deficiency to the doyles determining tax deficiencies and penalties in excess of dollar_figure the doyles timely filed petitions with this court seeking redetermination of deficiencies for the tax years through the cases docket nos and were tried in ‘except as indicated to the contrary all section references are to the internal_revenue_code as amended for example on their return the doyles claimed tax_shelter deductions of dollar_figure on gross_income of dollar_figure date and the court issued its opinion on date most of the issues in the cases were resolved adversely to the doyles the deficiencies ultimately determined and assessed were as follows year deficiency dollar_figure dollar_figure dollar_figure dollar_figure additionally respondent assessed more than dollar_figure of interest on the deficiencies in the doyles filed another petition with this court docket no seeking redetermination of an additional deficiency asserted by respondent on their return the sole issue in that case was whether the statute_of_limitations barred the additional_assessment the parties stipulated to be bound by the result ina related case docket no in which the court held that the period of limitations was still open see doyle v commissioner tcmemo_1997_396 affd without published opinion 202_f3d_253 3d cir accordingly on date the court entered a stipulated decision on 3see brown v commissioner tcmemo_1992_379 affd without published opinion sub nom konenkamp v commissioner 14_f3d_47 3d cir this decision was subsequently affirmed see doyle v commissioner tcmemo_1997_396 affd without published opinion 202_f3d_253 3d cir q4e- date respondent assessed dollar_figure in additional tax penalties and interest against the doyles post-tax--court-opinion financial transactions on date a deed was recorded transferring real_property owned by the doyles to their son and his wife for dollar_figure on date two checks drawn on the bank account of lavina maudice or nancy b doyle pnb account no the lavina petitioner bank account in the amount of dollar_figure were made payable to bridget fink and andrew fink petitioner’s daughter and son-in-law respectively on date a check drawn on a parkvale savings bank account no held in the names of bridget or andrew fink was made payable to the dreyfus family of funds in the amount of dollar_figure on date a parkvale savings bank account no was opened in the names of michele or denise doyle michele denise doyle bank account no the initial deposit to the account was dollar_figure in cash and a dollar_figure check from the lavina petitioner bank account on date an account at pnc savings bank account no was opened in the names of denise doyle or michele doyle michele denise doyle bank account no the initial -lavina maudice now deceased was petitioner’s aunt ‘michele and denise doyle are petitioner’s daughters - - deposit was dollar_figure dollar_figure of which came from a check signed by petitioner and drawn on the lavina petitioner bank account on date residential advisor’s inc check no made payable to petitioner and her husband in the amount of dollar_figure was deposited into the michele denise doyle bank account no on date petitioner and her husband encumbered their previously lien-free residence with a mortgage on date petitioner and her husband received the mortgage proceeds in the form of a check for dollar_figure on date petitioner and her husband used the mortgage proceeds to obtain dollar_figure in cash and the following cashier’s checks ’ check no amount payee dollar_figure nancy doyle dollar_figure nancy doyle dollar_figure richard doyle dollar_figure richard doyle dollar_figure richard doyle dollar_figure richard doyle dollar_figure richard doyle dollar_figure nancy doyle dollar_figure nancy doyle dollar_figure nancy doyle the above-listed checks were disposed of as follows check no was endorsed by petitioner and deposited on date into the michele denise doyle bank account no 'the doyles were charged a dollar_figure transaction fee for each cashier’s check - - check no was endorsed by petitioner and her daughter bridget fink and on date it was deposited into parkvale savings bank account no held in the name of her daughter bridget doyle fink i111 on date check nos and were deposited into the doyles’ joint checking account at great american federal account no within weeks of the deposit dollar_figure from this account was transferred to the doyles’ children and dollar_figure was withdrawn in cash of the dollar_figure dollar_figure was transferred to the doyles’ children on the day of deposit and consisted of three checks for dollar_figure each made payable to each of the following denise michele and meghan doyle petitioner signed all three checks iv check no was deposited into the lavina petitioner bank account petitioner then issued check no for dollar_figure from the lavina petitioner bank account to her daughter-in-law jill doyle on date that check was deposited into parkvale savings bank account no held in the names of richard p doyle or jill a doyle and v on date check no was endorsed by petitioner and cashed at great american federal from may to date petitioner and her husband took a vacation to england and italy which cost approximately dollar_figure - on date great american federal checking bank account no the great american federal checking account was opened in the names of petitioner’s daughters bridget or meghan doyle checks were drawn on this account from time to time to pay petitioner and her husband’s expenses the bank statements and canceled checks for this account were mailed to petitioner’s address where her daughter meghan doyle resided additionally checks made payable to the doyles were deposited into the great american federal checking account ’ on date the internal_revenue_service filed notices of federal tax_liens against the doyles for the tax_liabilities redetermined by this court between september and date petitioner and her husband took a vacation to italy at a cost of approximately dollar_figure on date petitioner’s husband liquidated an investment_interest in colonial properties inc the proceeds of the liquidation were received in the form of a check in the amount of dollar_figure dated date and made payable to spetitioner’s husband explained their use of the daughters’ bank accounts at a bankruptcy creditor’s meeting we had our daughter bridget or meghan write checks for our living_expenses x quite honestly the reason for this was because we were worried about putting money into our account and take the chance and jeopardizing the irs attaching that money on date petitioner and her husband gave respondent a collection statement which failed to disclose the great american federal checking account - - petitioner’s husband on date this check was endorsed and deposited into the michele denise doyle bank account no on date petitioner’s husband liquidated an investment_interest in colonial properties services inc the liguidation proceeds were received in the form of a check in the amount of dollar_figure on date this check was endorsed and deposited into the michele denise doyle bank account no on date petitioner and her husband completed and signed form 433-a collection statement for individuals on this form the doyles understated the value of their home they listed its value as dollar_figure even though in date they had obtained a dollar_figure mortgage on the property on date dollar_figure was deposited into the michele denise doyle bank account no dollar_figure of which was cash and the balance of which consisted of three checks from wellington power corp made payable to petitioner and one check from parker parsley partnership_distribution account made payable to petitioner and her husband on date dollar_figure of funds belonging to petitioner and her husband was deposited into the michele denise doyle bank account no the bankruptcy case on date petitioner and her husband filed a voluntary petition for liquidation under chapter of the u s bankruptcy code in the u s bankruptcy court for the western district of pennsylvania the bankruptcy case in the bankruptcy case respondent filed a dollar_figure proof_of_claim on date the bankruptcy court granted the doyles a discharge pursuant to u s c sec in this case petitioner initially contended that the income taxes at issue were discharged in the bankruptcy case petitioner conceded before trial that her joint_and_several income_tax liabilities for the years through were excepted from bankruptcy discharge pursuant to u s c sec a c payment of tax deficiencies the doyles have not made any voluntary payments on their assessed tax_liabilities during and respondent placed a continuing_levy on the wages of petitioner’s husband which resulted in the receipt of dollar_figure and dollar_figure respectively on date respondent applied a dollar_figure overpayment due the doyles to their tax_liability in addition respondent retained the following refunds due the doyles to offset their assessed tax_liabilities -- - year refund claimed and due sbig_number on date the doyles submitted an offer_in_compromise of their outstanding tax_liabilities respondent did not accept the offer_in_compromise on date respondent issued to petitioner his final notice_of_intent_to_levy and notice of your right to a hearing on date petitioner sent to respondent form_8857 request for innocent spouse relief and form request for collection_due_process_hearing with respect to the aforementioned tax_liabilities on january february and date hearings were held with the irs appeals_office to determine the appropriateness of the proposed levy action on date respondent issued a notice_of_determination sustaining the proposed levy action respondent determined that the tax_liabilities were not discharged in the bankruptcy case and that petitioner did not qualify for relief from joint_and_several_liability under sec_6015 petitioner’s background information petitioner has a high school education from until petitioner was a homemaker and stay-at-home mother during the years at issue petitioner had no business experience and no - li - earnings petitioner never reviewed the returns at issue before signing them the returns were prepared by the promoter of the tax_shelters petitioner was responsible for paying the family’s expenses she wrote the checks for all expenses at her husband’s direction petitioner wrote the checks for the tax_shelter investments petitioner and her husband are still married opinion pursuant to sec_6330 petitioner sought relief from respondent’s proposed collection action sec_6330 allows a taxpayer to raise appropriate spousal defenses petitioner contends that respondent improperly denied her relief from joint_and_several income_tax_liability under sec_6015 or f for the reasons stated infra we sustain respondent’s determination our jurisdiction is predicated upon sec_6330 d a see 115_tc_35 114_tc_604 114_tc_176 sec_6015 sec_6015 states five conjunctive requirements that a taxpayer must meet to qualify thereunder for relief from joint tax_liability sec_6015 c requires the spouse seeking relief to show that in signing the return she did not know and had no reason to know that there was an understatement petitioner has failed to satisfy this regquirement petitioner was aware of the existence of the tax_shelter investments she wrote the checks see 119_tc_306 118_tc_106 no evidence was presented that husband concealed or attempted to deceive electing wife concerning couple’s financial affairs there is no evidence that petitioner was denied access to the documents concerning the tax_shelters see jonson v commissioner supra pincite spouse had access to financial files petitioner has not alleged that she was misled but only that she relied on her husband to take care of the returns see 992_f2d_1256 2d cir although the taxpayer claims to have signed the returns without reading them she nevertheless is charged with constructive knowledge of their contents affg tcmemo_1992_228 887_f2d_959 9th cir spouse cannot obtain benefits by simply turning a blind eye to facts fully disclosed on return levin v commissioner tcmemo_1987_67 spouse cannot obtain benefits of innocent spouse protection in deduction case by simply turning a blind eye to--by preferring not to know of- -facts fully disclosed on a return of such a large nature as would reasonably put such spouse on notice that further inquiry would need to be made relief-seeking taxpayers must also establish inter alia that taking into account all the facts and circumstances it is inequitable to hold the electing taxpayer liable for the deficiency in tax for such taxable_year attributable to such understatement sec_6015 d emphasis added in determining the equities the relevant factors include but are not limited to significant benefits received as a result of the understatements by the spouse claiming relief and any participation in wrongdoing on the part of the ‘innocent’ spouse 53_f3d_523 2d cir affg in part and revg in part on another ground tcmemo_1993_549 see s rept pincite 1971_1_cb_606 whether the failure to report correctly tax_liability results from ‘concealment overreaching or any other wrongdoing’ on the part of the ‘guilty’ spouse is also relevant hayman v commissioner supra pincite see jonson v commissioner supra guidance in determining whether it would be inequitable to hold a requesting spouse liable can also be found in revproc_2000_15 2000_1_cb_447 see sec_1_6015-2 income_tax regs ‘since sec_6015 is similar to former sec_6013 e we may look to cases interpreting former sec_6013 for guidance when analyzing sec_6015 114_tc_276 rowe v commissioner tcmemo_2001_325 one particularly relevant factor is whether the requesting spouse significantly benefited directly or indirectly from the understatement ' sec_1_6015-2 income_tax regs normal support however is not considered a significant benefit see friedman v commissioner supra pincite hayman v commissioner supra pincite 93_tc_355 ‘unusual support or transfers of property to the spouse would however constitute benefit and should be taken into consideration ’ even when the benefit was received ‘several years after the year in which the omitted item should have been included in gross income’ 93_tc_672 quoting s rept supra pincite c b pincite see hayman v commissioner supra pincite we find that petitioner significantly benefited from the unpaid liability or items giving rise to the deficiency see revproc_2000_15 sec_4 c 2000_1_cb_447 the doyles received significant tax refunds as a result of the tax 2the original predecessor of sec_6015 explicitly required the consideration of whether or not the other spouse significantly benefitted directly or indirectly from the items omitted from gross_income see act of date publaw_91_679 84_stat_2063 although such consideration is no longer an explicit requirement of the statute nonetheless it is still a factor of significance see 93_tc_672 86_tc_228 affd 826_f2d_470 6th cir h rept part pincite -- - shelter deductions ’ petitioner testified that the refund checks were deposited into the family checking account to do the household things we wanted to do additionally the parties’ stipulation that petitioner and her husband enjoyed two vacation trips to europe immediately after this court’s decision that the couple owed significant amounts of federal_income_tax weighs heavily against her in determining the equity of the sought-after relief we also find it significant that petitioner and her husband tried to thwart respondent’s collection activities the record demonstrates that after this court sustained respondent’s deficiency determinations petitioner and her family engaged in a systematic plan to put their assets beyond the reach of respondent’s legitimate collection activities petitioner and her husband encumbered their personal_residence which they had previously owned lien free the proceeds of the mortgage were immediately converted into cash and cash equivalents and spread among petitioner’s children by deposit into freshly opened bank accounts in the children’s names petitioner and her husband liquidated investments and transferred the funds to their children the children used transferred funds to pay their by their very nature the erroneous deductions provided the doyles with more disposable income than they otherwise would have had for example the doyles sheltered approximately percent of their income - parents’ expenses petitioner and her husband took two trips to burope at a cost of approximately dollar_figure petitioner and her husband transferred real_property to their son for dollar_figure considering the above there can be no question that petitioner materially participated in this plan to make herself and her husband collection proof it is elementary of course that one seeking equity must do equity given the facts of this case it is not ineguitable to deny petitioner relief from joint income_tax_liability equitable relief--- sec_6015 e alternatively petitioner asks us to hold that respondent abused his discretion in denying her equitable relief pursuant to sec_6015 see 115_tc_183 affd 282_f3d_326 5th cir 114_tc_276 since sec_6015 is similar to sec_6015 d and the equitable factors considered are the same we hold that respondent did not abuse his discretion by denying petitioner’s request for relief under sec_6015 see alt v commissioner t c pincite barranco v commissioner tcmemo_2003_18 conclusion respondent did not err in denying petitioner relief from joint_and_several income_tax_liability under sec_6015 or f we hold that respondent correctly determined that collection by levy should proceed accordingly we shall enter a decision upholding respondent’s proposed collection action to reflect the foregoing decision will be entered for respondent


' internal_revenue_service appeals_office liberty avenue room pittsburgh pa number release date date december 3d certified mall dear department of the treasury employer_identification_number person to contact employee id number tel fax uil this is a final adverse determination regarding your exempt status under sec_501 c of the internal_revenue_code the mcode it is determined that you do not qualify as exempt from federal_income_tax under sec_501 c of the code effective july our revocation was made for the following reason s amongst other requirements to be an organization described in sec_501 c an organization must not participate in or intervene in including the publishing or distributing of statements any political campaign on behalf of or in opposition to any candidate for public_office sec_1 c -1 c provides that if an organization engages in this conduct it is classified as an maction organization which is an organization deemed to not have operated exclusively for tax-exempt purposes and thus is not an organization described in sec_501 c you operated as an action_organization because you participated or intervened in political campaigns on behalf of and in opposition to candidates for public_office by publishing and distributing statements as such we revoke our previous favorable determination as to your exempt status effective july contributions to your organization are not deductible under sec_170 of the code you are required to file federal_income_tax returns on forms file your return with the appropriate internal_revenue_service center per the instructions of the return for further instructions forms and information please visit www irs gov if you were a private_foundation as of the effective date of the adverse determination you are considered to be taxable private_foundation until you terminate your private_foundation_status under sec_507 of the code in addition to your income_tax return you must also continue to file form_990-pf by the 15th day of the fifth month after the end of your annual_accounting_period processing of income_tax returns and assessments of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the code we will mak this letter and the proposed adverse determination_letter available for public inspection under code sec_6110 after deleting certain identifying information we have provided to you in a separate mailing notice notice of intention to disclose please review the notice and the documents attached that show our proposed deletions if you disagree with our proposed deletions follow the instructions in notice if you decide to contest this determination you may file an action for declaratory_judgment under the provisions of sec_7428 of the code in one of the following three venues united_states tax_court the united_states court of federal claims or the united_states district_court for the district of columbia a petition or complaint in one of these three courts must be filed within days from the date this determination_letter was mailed to you please contact the clerk of the appropriate court for rules for filing petitions for declaratory_judgment to secure a petition form from the united_states tax_court write to the united_states tax_court second street n w washington d c see also publication you also have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matters that may not have been resolved through normal channels get prompt and proper handling if you want taxpayer_advocate assistance please contact the taxpayer_advocate for the irs office that issued this letter you may call toll-free for the taxpayer_advocate or visit www rs gov advocate for more information if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely yours a appeals team manager enclosure publication cc i ' internal_revenue_service date department of the treasury tboe eo examination commerce street dallas tx form t xy i' certffled mall - return rece lpt requetted dear ' we have enclosed a copy of our report ofexamination expjainidb w by we believe nwocaaion ofyour exempt status under section sol c ofthe internal_revenue_code code is necessary ifyou ucept our fltldinp take no furth action we will issue a final mvoca1ion letter ifyou do not agree with our proposed revocation you must submit to us a written request for appeals_office coosidenlfion within days from the date ofthis jetter to protest our dcci rion your protest should include a statement of the facts the applicable law and arguments in support oeyour position an appeals officer will review your case tho appeals_office is independent ofth e direct so buminations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication ex empt organizations appeal procedureslor unagreed issues explain how to appeal an internal_revenue_service irs docisioo pubjication ako includes information on your rights as a taxpayer and the irs cojlec don process you may also request that we refer this matter for technical_advice as explained in publication ifwe issue a detennination lettor to you based xl technical_advice no further administrative appeal is available to you within the irs regardjng the issue that was the subject ofthe technical_advice letter rev c loo numbtr 34i08f ifwe do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report ofexamination ifyou do not protest this proposed determination within days from the date ofthis letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 b x2 of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district ofcolumbia determines that the organization involved has exhausted its administrative remedies within the interna1 revenue service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 ofthe code you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs proq dures such as the fonnal appeals process the taxpayer_advocate cannot reverse a legally coltcct tax_determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance ifyou prefer you may contact your local taxpayer_advocate at fyou have any questions please call the contact person at the telephone number shown in the heading ofthis letter ifyou write please provide a telephone number and the most convenient time to call if we need to contact you thank you for your cooperation sincerely nanette m downing director eo examinations enclosures publication pubucation report of examination a u r rev catajot number 1iotf ' fodd 886a i name o taxpaye oepu1meat ofthc tttuui' ' -lntujw rnenue service explanation of items schedule no or exhibit ye tperiod ended issue sec_1 whether participated or intervened directly or indirectly in the united_states presidential_election or the during the taxable years ending june senatorial election on behalf of or in opposition to any candidate or june june whether the organization's exemption should be revoked effective july for engaging in prohibited political intervention facts background the - the organization- was recognized as an organization exempt from federal_income_tax under sec_501 c of the internal_revenue_code the code- and classified as an organization that was not a private_foundation because it was desaibed in sec_509 and sec_170 in an advance determination issued in october following the completion of its advance_ruling period it was issued a definitive ruling letter on october classification as an organization that is not a private_foundation because it is desaibed in sec_509 and sec_170 affinning its status under sec_501 c and its or the articles of incorporation of state in part that the purposes of the organization are to support and encourage free speech to engage in other charitable and educational activity as determined by the board_of directors and to engage in any and all lawfuj activities incidental to the toregoing purposes except as restricted herein the fifth section of the articles of incorporation states that -the corporation shall not participate in or intervene in any political campaign on behalf of any candidate for public_office to information_document_request dated april the organization operated two websites with similar names in a response dated june states that the use of the first website late administrator the organization further states that the volunteer administrator became unavailable and the domain name was not owned or controlled by the because of its inability to update the website or contact the website the organization was discontinued in after unsuccessfully attempting to regain control of the website was created in december and finalized for public ponn 886-ataft' departmcat die tjaliiij iateraal rcftllu semce page -1 'porm886a name of taxpayer i depodment of the t y laternal rtvc srmc explanation of items schedule no or euubit year period baded june june -tune use on april viewers to the the website was updated to direct website in early the majority of articles posted on were also posted on articles dated after january are posted only on the response further stated that the organization maintains no other web page however this is inconsistent with the facts gathered during the examination for example fundraising solicitations see eg solicitations phh15 kpph3 kpph4 kpph5 and kpph6 discussed infra contain the statement -set up and maintained two internet addresses to collect petitions publish my op j columns and display footage of anti-american activities- or contain the website addresses and in the heading the mission statement posted on reads in support of the ideals of to educate the public about his life and philosophy and to support and promote freedom of speech as well as the other constitutional safeguards blessed to americans in the bill of rights was formed will assist in the uncovering of serious wrongdoing in the federal govemment will promote and protect every citizen's right to know to speak out and to correct corruptions no matter where they may occur support and protect those who believe in free speech particularly as it applies to ethics and honesty in federal government will identify encourage to this end conferences symposia speaking events and other public fora also intends to accomplish its goals and convey its plans to educate the public through message through the publication of pamphlets newsletters books and similar written methods and through other fonns of intends to promote the public's media additionally understanding of the media and its role in tooay's important issues form 886-acaa a departldcllt of d e tremlii1- rcftllac scrricc page -2 foan886a name ottaxpayer o p tmcntof_ tftuut7 1rujeaw a- - serriot b lanaaon of items the organization was examined for the years ending june and june officersidjrectocslboard meeting schedule no or hibit year period boded june june une30 june the organization's president and founder is organization's fonn dated september president of the secretaryltreast rer no other officers were listed on attachmentc the forms for the years ending june officer as as director and as director and attachment c to the identify the only and june and his wife june listed the form_990 for the period ending june officer its president and two directors in addition the form_990 indicates that the president devote sec_30 hours per week to the organization and that each of the directors devotes hours per week in a letter dated december the organization states that the time devoted by the directors was an error and that the correct time devoted by each is hours per year indicates the organization has one the form_990 for the period ending june one officer its president four directors and one deputy executive director the president and deputy executive director each devote hours per wek and each director devotes dollar_figure hours per week indicates that the organization has the form_990 for the period ending june one officer its president and four directors the president devote sec_40 hours per week and each director devotes dollar_figure hours per week indicates that the organization has during the years ending june held on december not identify which board members attended other than to say that all board members were present the items discussed included three bof rd meetings were ' the minutes did programs and individual and december and june april cases activities relating to the fresideotlal election alerts displayed the organization's previously operated website alerts some of these articles were written prior to the tax years articles titled ii examined but au were present on the organization's website during those years the depana _ofdae t_uly- fa rewa c scmcc page -3 fonn886a name of taxpayer d pu1mcnt of the tceaou j' - iiiiiurwi reftnuc schedule no or lanation of items exhibit year pcriod ended june june une alerts were written by the organization's president and included logos of the at the beginning and end of each article many of the alerts contain statements pertaining to candidates for the presidential_election in the following are excerpts taken from the full text of the quoted alerts on alerts is contained in appendix a clear choice february but articulated the most important difference between a and a second term would adopt the prior made it clear that if elected administration policies related to terrorism treating most terrorist acts as violations of law many national security experts are convinced that the law enforcement approach to worldwide fanatical terrorists failed dramatically i hope we've had enough of the failed homeland concepts for protecting our should be reelected for that reason alone - heroic february no amount of so why should or anti-war activity kept suffer from out of the antl-war anti-usa excesses the answer is to and leaders of north vietnam because won't the anti-anti communists flock ilk had only compliments for the vicious i'm quite certain anarchists and any others who hate america but for more than big_number will be a hero to today's peaceniks whose names appear on the is nothing but a skunk i'm willing to bet with this coward gop's harsh rhetoric february will have no trouble dealing departmcllt rebe tre lii idtera rcftiiitc scmc e page - name ottaxpayer o thoetmuuq -lmemol semr c lanation of items sc hedule no or emibit year period encjcd june june une30 what's said about eadl opponent during a political campaign s important but perhaps just as important is how the rhetoric is crememberedcby those keeping score meanwhile those on the a liar a deserter and a moron using over the-top vicious rhetoric to vant their hatred at ttlis decent are calling the supporters and and that's ok if you're an emotional say the least negative thing about one of their candidates and suddenly irs as if the world has been turned inside out but let a take for example the are gleeful to trot out war record and point to decorations conveniently ignoring the fact that when crusade to crucify the united_states of america for having the nerve to try to stop the spread of deadly communism retumed to the u s moreover rushed to join not satisfied with air-brushing bizarre testimony before congress when weird reversals including then attacked - without any supporting evidence - the service trained to fly a sophisticated jet it does not matter that fighter aircraft and committed to respond at a momenfs notice to engage in aerial dogfights or drop bombs over enemy territory none of that matters to military service record even as they praise an anti-war leader they are detennined to sully courage in becoming needs to ansmre' march the voters' most important decision during this year's campaign is to choose which candidate more efficiently handlas national security and defense americans should not be criticized for asking good questions about years after the worst attack ever launched against america we are without a single new assault on our homeland because deputmeat oidae treuary -1 1_ rcftq8e rice paae -5 foan886a name oftaxpaye r t ocibc trcatut7 lni1eaw semcc e lanation of items schedule no or exhibit year period ended june june une3o of this time for a change leadership despite this level of success some say it's why are we tired of being safe defense soft on intelligence agency funding and harsh on is soft on national record ifs ludicrous to suggest we change pumping terrorism april are opec nations joining forces with the terrorists and the camp if their announced decrease in crude_oil production goes as planned gas prices will increase by at least cents at the pump over the next few weeks and will continue even higher over the long-term continued oil production squeezing will drive gas prices to the breaking point has already shifted blame to stating has not put enough presue on opec to maintain crude_oil production unfortunately if lower gas prices at the pump more lhan a few greedy registered ignoramuses will follow him anywhere promises otherwise ill-informed swing-voters but is aligned answer in a word capable d such a machiavellian deed has ever with america's enemies for own political gain the out of gas april like are perpetually obnoxious busybodies but put them in a position of power and they become downright dangerous the last time a remember-the eng gas lines of the late not go back to those bad old days of we ran out of gasoline 's i've got an idea let's occupied the like just wants the the job evidence august fonn aoa and apparently say anything to get deptuad_ 01die t_ i te r_ serricc page i form886a name oftaxpayu ofthe fmemoi ___ scmcc explanation ofitems schedule no or hibit year period ended june june june if heard probably would fine flimsy case not only would throw it out fifty dollars for annoying the court and wasting its precious time in view of the absence of any rear evidence i think voters must assume is highly questionable true character pesky citizens will not shut up august has held out as a elected on that basis alone college because there was no brilliance setting up and running a large business because years in the payroll has not spoken about there is nothing to talk about has not talked about and suggests should be brilliance in has not bragged about has never paid a because can't find any achievements and leadership qualities suggesting is material how about enti-war anti-american returned from activities after base of pacifists and those who blame america first otherwise all has to offer is years ago that would satisfy' which happened more than thirty political phony evidence as we are distracted by the daims and countercfaims about service to country recall flew a multimillion dollar fighter jet and was honorably discharged the amiversary of september passes provided the leadership and made the correct personnel and policy decisions to ensll'e we would be able to head off ml i'e attacks comfort and safety as the rest of the world faces unspeakable horror leadership have been the sole basis of our ideas and the acting frisky as a typical college student young critics like to talk about but while our was was hail pass september deputm 11iceftiai r_c em page -7 i form886a name oftaxpayer dcp dmeat of ' t- uq iqinmi rftmue stt'ricc explanation of items schedule no or exhibit yhr period ended june june june has the voting record of a sixties hippie pacifist so how possibly trot that out as a reason to be could also particfpated in activities that some have said are traitorous when conspired with the enemy to give sworn testimony in front of congress that in sane world october have you noticed how the are getting smaller and smaller they are shallow in their experiences but it's their lack of any plan that's so impressive if have a new or good idea they have hidden it well candidates for the or there are less than thirty days untillhe election and we are a nation at war h's a given that have the right stuff to wage effective and efficient wars against terror and in the conventional sense too harsh you say how else do you explain that two lightweights acting like used car salesmen with few sales to their credit are ruming neck and neck with two real who rose to the occasion after back into their primitive caves and to the very depths of hell we have seen know who as for the past four years we is not what else do we need to see or hear fundraislng solicitations the organization also made statements relating to the election in its extensive fund raising solicitations in response to information document requests the organization provided copies of many c i those fundraising solicitations along with their mailing dates and costs each solicitation dosed with a reminder that any donations were tax deductible the following are excerpts from mailings contained in appendix a from four identical solicitations liued kpph3 mailed july august kpph5 mailed august and kpphs mailed september kpph4 mailed the heading states americans for truth about a project of the and lists the websites and form aev 4-a deplldmtdt tel t ' j a- semec pap -8 i name oftaxpayer dcpottmmt olthe 1iu tury luflcmll rim_ scm e explanation of items if you're outraged that refuses to release american public then please sign your enclosed petition to candidate schedule no or exhibit year period ended june june june to the when was recently asked to provide evidence of attendance willingly produced dental records and other evidence of service but tour in after ti'l refuses to aq w r aitical guesti9qs about short-livest horne and anti-american activities emphasis in original i want to know what is hiding 'jvhydid get a free pass how did avoid a emphasis in original and most importantly what evidence of ties to conmunist sympathizers is contained in compiled by fbi agents who monitored anthamerican activities and seaet fbi file that was for more than a year some say is a shameless opportunist who cienounced to get into congress and is i'loiiv reinventing a war hero to get into the and h's up lp you and mi to t'qjjke sure the fvnedc8n people know he truth bout before irs too late emphasis in original the last thing america needs is another liar in the that's why m 'aunching a very specia' project of the in these fast months before the election form dcparw_ t - i 1aiiai r eveeuc 8c nicc page -- - - - - - - - - -_ _ - - - - - - - - - - - - - - - foon886a name oetupsyet i oftlet _ _ s rmc ihpjanatioo of items schedule no or hz hibit yeas period boded june june june ' free pass home and my goal to find out the truth about in communist sympathizers when but we are running out of time to expose original got back shady -service ties to anti-american lies emphasis in recent polls show that in the is running neck and neck with campaign but while service in the original has politely answered every question about his emphasis in from a solicitation titled phh13 mailed august i have concluded that today's are alike in two important ways are common liars and thieves emphasis in original the fallout here in know that sic is still resonating now that we all is under fbi criminal investigation for sic is nationa' security affairs consultant and spokesman on incredibly a significant number of these -wrgetful- americans would actually consider giving the another chance to lead this nation from emphasis in original after then engaged in a highly destructive violently anti-american effort to force the united_states to abandon our fight against world communism after a short term as a naval officer reft while engaged in activity that many would consider treasonous became the subject of a major fbi investigation' dep__1 idae t r__ hrricc page -10 name of taxpayer orlhet 1a1emol1l eftaue scbedule no or b lanation of items exhibit year period eaded june june une30 we have already devoted slgnlfacant resources to a new webpage and we will continue to appear on various media outlets to get the word out ps please send your most generous -summertime- gift and we'll continue our important missions without pause together we'll keep the liars and thieves out of power emphasis in original from a soficitation titled ubph1 mailed august may be out of the but another power couple is shelling out millions of dollars to take it back over yes i'm talking about and _ just like who want to destroy the america you and i love emphasis in original are exposes may call for the a really is but shameful voting record a tax-and spender who voted against cuts middle-class tax a weak-kneed who voted to slash our defense spending and gut the cia a so-called -man of faith- who voted in favor of the gruesome partlal-birth abortion procedure ke no mistake is every bit as dangerous as from a solicitation titled phh15 mailed october election just one week away - i am facing an with the emergency here's why as you koow your has spent the past eight months waging a petition campaign to demand to the american public - -idsi that find out once and for all what original been hiding fr2fd us emphasis in release secret - eal rdte t -1 1iiinuij rentaue semcc pap -u poan886a i name ottaxpayer depattmentofthe t -y' t tamj serriee explanation ofitems schedule no oc exhibit year pcriod boded june june june i joined with the american communist sympathizers in exposing ties to anti- you can - and should- feel very proud of the role you played in helping the expose the real can you help the campaign with a tax-deductible gift of honor our debts from our -expose today or and if americans to any and every left-wing assauh on our national security our sovereignty and our u s constitution we must be prepared to alert wins the activities relating to the election shortly after the statements opposing these statements included two flndraising solicitations phh-16 lowdollar_figure dated decerrtber presidential campaign ended the organization began making campaign for re-election in and hem phh-16 highdollar_figure dated december included in appendix b and contained the statement these solicitations are you and i is coming and we must be ready for be defeated in tries to be elected as can but everyone expects to be the i will be here to fight in with your continued financial backing emphasis in original from the state of first choice to roo for the every inch of the way but only similar statements appeared in the organization's newsletter and on the i contains an article reprinted from an april post on the website the front page of the july edition of entitled - this article s included in appendix b and contained the following statements is it too soon to get agitated about the possibility of running for the head of a race for america stopping important thing you and i can do as in ' in a recent fundraising leuer he wrote it's not according to is the most in the next two years stop went on to remind his readers that it is the duty_of out of the quest by running to it ep oitbe t_ -lahlra j a-ae semce page -12 foan886a i name ofl'axpayer tor t -1 -1 scrricre explanation of items schedule no or ezhibit year period bnded june june june might be helpful if the could replace would focus on a few good candidates who but it's a step in the right direction to remind voters who reanyare vvhat will be effective if is to inform voters not only about actual atrocious conduct also is to be defeated in and again in actual political agenda but there may not be a from power - but they will march forth activists who work to keep with a passion because they know the country will be better off without party for political in the sec_501 of the internal_revenue_code ' the codes provides in part that an organization is exempt if it is both organized and operated exclusively for religious charitable scientific testing for public safety literary or educational_purposes and if it does not participate in or intervene in including the publishing or distributing of statements any political campaign on behalf of or in opposition to any candidate for public_office sec_1_501_c_3_-1 of the federal_income_tax regufations the regulations- states an organization will be regarded as -operated exclusively for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in sec_501 c an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose sec_1 cx3 -1 c of the regulations provides that an organization is not operated exclusively for one or more exempt purposes if it is an actions organization sec_1 c -1 c iii provides an organization is an -action- organization if it participates or intervenes directly or indirectly in any political campa gn on behalf of or in opposition to any candidate for public_office the term candidate for public_office means an individual who offers himself or is proposed by others as a contestant for an elective_public_office whether such office be national dcpuildcdt oldie 1'1cuui' ' lutcl'llal r cn auc 8crricc pegoe -13 ' i name oftaxpayez dcputmeatof be t --y lllllemll rcftfiiic setrice explanation of items schedule no or exhibit year period ended june june une state or local activities which constitute participation or intervention in a political campaign on behalf of or in opposition to a candidate include but are not limited to the publication or distribution of written or printed statements or the making of oral statements on behalf of or in opposition to such a candidate government' position general summary the organization has demonstrated a deliberate and consistent pattem of support for and opposition to various candidates for public_office and engaged in these activities during the violation of the prohibition on political campaign intervention in sec_501 of the code election this is a election and the intervention in election the organization intervened in the statements on its websites and in its fundraising solicitations which opposed and of some of these statements were explicit such as election by making numerous and endorsed and and for the offices should be reelected for that reason alone - -ifs ludicrous to suggest we change and -it's up to you and me to make sure the american people know the before it's too late the last thing america needs is another others contained more general statements supporting or truth about liar in the opposing candidates occupied the general statements made in opposition to leading up to the november election include an april time a guy like back to those bad old days of true character is highly questionable think voters must assume an august racked leadership qualities and that all which happened more than thirty years ago the organization also made statements supporting tha candidacy of statement that -the last we ran out of gasoline let's not go candidacy in the months statement that -i an august statement that has to offer is short tol l' in such as ideas and leadership have been the sole basis of our comfort and safety as the rest of the world faces unspeakable horror in addition the organization unfavorably compared with and seen and as through statements such as we have for the past four years we know who is deputmcat rd t_ lalienl l a- e scrricc pafi1 foan 886a name oftaxpayer dq dmcato ihetiioiuwy-i scnicc e ianation of itcms schedule no 01' exlubit year period bnde4 w e w e une not what else do we need to see or hear -but while answered every question about refuse to tell the truth by releasing militarv record militarv file and fbi filel and how else do you explain that two lightweights acting like used car salesmen with few sales to their aedit are running neck and neck with two real men who rose to the occasion after september and to the very depths of hell driving the terrorists back into their primitive caves has politely service in the and all of the individuals mentioned were on all of these statements were eilher made or were available after the primaries had beg in january of the ballots in those primaries and therefore candidates for public_office these statements as well as the large number of similar statements contained in appendix a demonstrate the organization's tq' port for oppos ilion to articles or distributed in the form of printed solicitation notices at numerous times in the months leading up to the efection therefore the organization engaged in prohibited political campaign intervention during the campaign and were published as website and newsletter election and its intervention in election for in election for u s senate in the organization intervened in the making statements that urged published on the organization's website and in the organization's newsjetter in articles in entitled the be deteated in political agenda but also by defeat these statements were 'i the articles contain statements opposing election including -what will be effective if is to inform voters not only about actual abocious conduct and again in actual is to additionally the december phh low dollar_figureand phh high dollar_figure apposed and december fu'ldraising solicitations candidacy by stating you and i jmqr can be defeated in is coming and we must be ready for as tries to be elected the state of choice to run for the inch of the way but only with your continued financial backing but everyone expects i will be here to fight to be the in from first every re electlon website since was a candidate for re-election in indeed had maintained a as well as a political action corrvnittee for purposes of dcputm_ old t_ it _ 8cmc e pq e -1dollar_figure name oftaxpayu oldoet -i--' senic c janatioo ofitems schedule no or lhhibit ye u period boded june june une promoting statements were published candidacy therefore was a candidate for public_office when these through the above statements published on the organization's website and in its newsletter and fundralsing solicitations the organization demonstrated its opposition to political campaign intervention during the candidacy for the and therefore engaged in prohibited election for in taxpay position the organization has asserted that many of its statements were published to -illustrate the dangers for individuals if they choose to come forward to reveal a controversial or unpopular truth the organization asserts that its statements about the character of various candidates could be interpreted diffa'enuy by dffferent people and may have been considered unimportant finally the organization asserts that many of its statements do not contain atatementa that a person should vote for or against any candidate with regard to the fundraising solicitations the organization has also asserted that they were sent solely for fundraising purposes and not to influence an election and that no funds received from such soiicitations were used for campaign intervention recommendation the organization engaged in prohibited political intervention in the election and the published a series of written statements favoring the candidacy of and and opposing the candidacies of election for in lrhe organization throughout the relevant political campaigns these written published statements therefore constitute intervention in a political campaign the taxpayer's assertions that its statements were used to illustrate the dangers of whlstleblowing that the character traits highlighted could be either positive or negative that no explicit mermon of voting was included and that some statements were made solely for fundraislng purposes do not alter this conclusion as set forth above the organization made repeated statements supporting or opposing various candidates by expressing its opinion of the respective candidate's charader and qualifications the statements included explicit support for re-election and disparaging remarks about statements for or against a candidate and therefore political campaign intervention regardless of whether the readers of the statements agree there is no requirement under the sec_501 c prohibition on political campaignintervenlion that such fitness for office these consjltute and n die t 1iif lalcnl revea c scmcc p i6 -- -- ---- -- ---- ------ rdtoe t-- - sccricc lioan 886a b lanation ofitems name oftaxpayer schedule no_ or exhibit year period ended june june unc30 statements explicitly reference voting and there is no exception for fundraislng solicitations the organization has shown a pattern of deliberate and consistent intervention in political campaigns in violation of sec_501 c of the code and sec_1_501_c_3_-1 of the regulations therefore it is recommended that the exempt status of the organization be revoked effective july 1t aat ' t- i ' ___ emc c page -t1


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 ---------------------------------------- telephone number --------------------- refer reply to cc psi b02 plr-105093-11 date date legend x ----------------------------------------------------- ------------------------ state ------------- d1 ---------------------- dear --------------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x by x’s authorized representative requesting a ruling under sec_1362 of the internal_revenue_code facts the information submitted states that x was incorporated in state on d1 it was intended that x elect s_corporation treatment effective d1 however a form_2553 election by a small_business_corporation was not timely filed for x law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation plr-105093-11 sec_1362 provides the rule on when an s election will be effective generally if an s election is made within the first two and one-half months of a corporation's taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made sec_1362 provides that if an s election is made after the first two and one-half months of a corporation's taxable_year then the corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made sec_1362 provides that if an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making the election for the taxable_year or no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for such taxable_year and sec_1362 shall not apply conclusion based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation effective d1 accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective d1 within days following the date of this letter then such election will be treated as timely made for x's taxable_year beginning d1 a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed or implied as to the federal_income_tax consequences of the transaction described above under any other provision of the code specifically no opinion is expressed concerning whether x is otherwise eligible to be an s_corporation for federal tax purposes 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 sincerely charlotte chyr senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service department of the treasury index number u i l no washington dc person to contact telephone number refer reply to cc dom p si plr-110682-99 date date number release date legend company state shareholders a this letter responds to a letter dated date requesting a ruling on behalf of company under sec_1362 of the internal_revenue_code the information submitted discloses that company was incorporated on a under the laws of state company has two shareholders shareholders it is represented that company has intended to be an s_corporation since its incorporation believing itself to be an s_corporation company has operated accordingly since a after the end of its taxable_year beginning on a however company discovered that its s election had not been timely filed company requests a ruling that its sec_1362 election will be treated as timely made for its taxable_year that begins on a plr-110682-99 sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 explains when an s election will be effective generally if an s election is made within the first two and one half months of a corporation’s taxable_year then that corporation will be treated as an s_corporation for the year in which the election is made sec_1362 provides that if an s election is made after the first two and one half months of a corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year following the year in which the s election is made sec_1362 provides that if no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year and sec_1362 shall not apply applying the relevant law to the facts submitted and representations made we rule that company's sec_1362 election will be treated as timely made for its taxable_year that begins on a however this ruling is contingent on company filing form_2553 election by a small_business_corporation with an effective date of a with the appropriate service_center within days from the date of this ruling a copy of this letter should be attached to the form_2553 except as specifically set forth above we express no opinion concerning the federal tax consequences of the foregoing facts specifically we express no opinion on whether company otherwise qualifies as an s_corporation this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours william p o’shea chief branch office of the assistant chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes


unifcrm issue list department of the treasury internal_revenue_service a tax_exempt_and_government_entities_division xxx xxx attn xxx legend employer a state b group c employees plan x statute d dear xxx washington d c wig ter rat xxxx xxxx xxxx this is in response to a ruling_request dated xxxxxx as supplemented by additional correspondence dated xxxxxx and xxxx from your authorized representative concerning the pick up of certain employee contributions to plan x under sec_414 of the internal_revenue_code the code’ the following facts and representations have been submitted statute d of state b requires employer a to establish a pension_plan for certain of its group c employees in conformity with the provisions set forth in statute d pursuant to statute d employer a a municipality of state b sponsors plan x for the benefit of certain of its group c employees plan x a defined benefit pension_plan meets the qualification requirements of code sec_401 participation in plan x is elective on the part of group c employees of xxxx under statute d employer a is required to withhold a certain percentage of the salary of each employee who participates in plan x and pay the amount withheld directly to plan x statute d allows employer a to reduce the current salary of plan x participants and pay the mandatory employee contribution directly to plan x in lieu of contributions by the individual participants statute d also allows a municipality in state b to pick up and pay the mandatory employee contributions to plan x pursuant to sec_414 of the code the municipality shall pay these contributions from the same source of funds which is used to pay the salaries of plan x participants if contributions are picked up statute d provides that they shall be treated as employer contributions for federal_income_tax purposes pufsuant to the above statutory provisions the board_of trustees for employer a passed a resolution dated date which provides in part that employer a shall pick up the mandatory contribution to plan x employer a shall reduce eligible employees’ current salaries by the amount picked up by employer a employer a shall cease to withhold federal and state income taxes on the picked up contributions and eligible employees shall not be given the option to receive cash directly in lieu of contributions to plan x based on the foregoing facts and representations you have requested the following rulings that the mandatory employee contributions picked up by employer a shall be excluded from the gross_income of plan x participants until distributed and that the picked up contributions paid_by employer a are not wages for federal_income_tax withholding purposes and federal_income_tax need not be withheld on the picked up contributions code sec_414 provides that contributions otherwise designated as employee contributions shall be treated as employer contributions if such cogtributions are made to a plan described in code sec_401 established by a state government or a political_subdivision thereof or any agency_or_instrumentality of any one of the foregoing and are picked up by the employing unit the federal_income_tax treatment to be accorded contributions which are picked up by the employer within the meaning of code sec_414 is specified in revrul_77_462 1977_2_cb_358 in that revenue_ruling the employer school district agreed to assume and pay the amounts employees were required by state law to contribute to a state pension_plan revrul_77_462 24s xxxx concluded that the school district’s picked up contributions to the plan are excluded from the employees’ gross_income until such time as they are distributed to the employees the revenue_ruling held further that under the provisions of code sec_3401 the school district's contributions to the plan are excluded from wages for purposes of the collection of income_tax at source on wages therefore no withholding is required from the employees’ salaries with respect to such picked up contributions the issue of whether contributions have been picked up by an employer within the meaning of code sec_414 is addressed in revrul_81_35 1981_1_cb_255 and revrul_81_36 1981_1_cb_255 these revenue rulings established that the following two criteria must be met the employer must specify that the contributions although designated as employee cofitributions are being paid_by the employer in lieu of contributions by the employee and the employee must not be given the option of choosing to - receive the contributed amounts directly instead of having them paid_by the employer to the pension_plan furthermore it is immaterial for purposes of the applicability of code sec_414 whether an employer picks up contributions through a reduction in salary an offset against future salary increases or a combination of both in revrul_87_10 1987_1_cb_136 the internal_revenue_service considered whether contributions designated as employee contributions to a governmental_plan are excludable from the gross_income of the employee the service concluded that to satisfy the criteria set forth in revenue rulings and with respect to particular contributions the required specification of designated employee contributions must be completed before the period to which such contributions relate employer a’s resolution satisfies the criteria set forth in code sec_414 revrul_81_35 and revrul_81_36 by providing that employer a will pick up and make contributions to plan x in lieu of contributions by eligible employees and that no employee will have the option of receiving such amount directly in cash instead of having it contributed to plan x acéordingly we conclude the amounts picked up by employer a for group c employees shail be treated as employer contributions and will not be includable in employees’ gross_income for the taxable_year in which such amounts are contributed - i because we have determined that the picked up amounts are to be treated as employer contributions they are excepted from wages as defined in code sec_3401 for federal_income_tax withholding purposes therefore no withholding of federal_income_tax is required from employees’ salaries with respect to such picked up amounts out xxxx the effective date for the commencement of any proposed pick up cannot be any earlier than the later of the date the above resolution is signed or put into effect this ruling is based on the assumption that plan x will be qualified under code sec_401 at the time of the proposed contributions and distributions no opinion is expressed as to whether the amounts in question are subject_to tax under the federal_insurance_contributions_act no opinion is expressed as to whether the amounts in question are paid pursuant to a salary reduction agreement within the meaning of code sec_3121 b this ruling is directed only to the taxpayer that requested it code sec_61 k provides that it may not be used or cited by others as precedent a copy of this ruling is being sent to your authorized representative pursuant to a power_of_attorney on file in this office should you have any questions pertaining to this ruling you may contact xxxxxx of this office at x00xx sincerely yours johar -swieeor john swieca manager employee_plans technical branch tax_exempt_and_government_entities_division enclosures deleted copy of the ruling notice i cc xxxxx


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-116714-10 date date legend legend ----------------------------------------------------------------------------------------------------- ------------------------ ----------------------------------------------------------------------------------------------------- ----------------------- ------------------------- ----------------------------------------------------------------------------------------------------- -------------------------- ---------------------- ---------------------- --------------------------- --------------------------- -------------------- x trust a b date date date date state dear -------------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x by x's authorized representative requesting inadvertent termination relief pursuant to sec_1362 of the internal_revenue_code code facts plr-116714-10 the information submitted states that x a state corporation elected to be treated as an s_corporation effective date a was a shareholder of x on date a died pursuant to the terms of a's will shares of x stock were transferred to trust on date for the benefit of b x represents that trust was intended to qualify as a qualified_subchapter_s_trust qsst under sec_1361 however b did not timely file a qsst election on behalf of trust therefore x's s_corporation_election terminated two years after date on date b reported b's allocable share of trust income consistent with the treatment of trust as a qsst on all affected returns x represents that the circumstances resulting in the termination of x's s_corporation_election were inadvertent and were not motivated by tax_avoidance or retroactive tax planning x and its shareholders have agreed to make such adjustments consistent with the treatment of x as an s_corporation as may be required by the secretary law and analysis sec_1362 provides that except as provided in sec_1362 a small_business_corporation may elect in accordance with the provisions of sec_1362 to be an s_corporation sec_1361 provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 provides in part that the term small_business_corporation means a domestic_corporation which is not an ineligible_corporation and which 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_1361 provides that for purposes of sec_1361 a_trust all of which is treated under subpart e of part i of subchapter_j of chapter as owned by an individual who is a citizen or resident_of_the_united_states may be a shareholder sec_1361 provides that for purposes of sec_1361 a_trust with respect to stock transferred to it pursuant to the terms of a will may be a shareholder but only for the two-year period beginning on the day on which the stock is transferred to it sec_1361 provides that for purposes of sec_1361 in the case of a_trust described in sec_1361 the deemed owner shall be treated as the shareholder plr-116714-10 sec_1361 provides that in the case of a qsst with respect to which a beneficiary makes an election under sec_1361 -- a such trust shall be treated as a_trust described in sec_1361 and b for purposes of sec_678 the beneficiary of such trust shall be treated as the owner of that portion of the trust which consists of stock in an s_corporation with respect to which the election under sec_1361 is made sec_1361 provides that a beneficiary of a qsst or his legal_representative may elect to have sec_1361 apply sec_1361 provides that an election under sec_1361 shall be effective up to days and months before the date of the election sec_1_1361-1 of the income_tax regulations provides that the current income_beneficiary of the trust must make the election under sec_1361 by signing and filing with the service_center with which the corporation files its income_tax return the applicable form or a statement including the information listed in sec_1_1361-1 sec_1362 provides that an election under sec_1362 will be terminated whenever at any time on or after the first day of the first taxable_year for which the corporation is an s_corporation such corporation ceases to be a small_business_corporation sec_1362 provides that the termination shall be effective on and after the date of cessation sec_1362 provides in relevant part that if an election under sec_1362 by any corporation was terminated under sec_1362 or the secretary determines that the circumstances resulting in such termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in such termination steps were taken so that the corporation for which the termination occurred is a small_business_corporation and the corporation for which the termination occurred and each person who was a shareholder of the corporation at any time during the period specified pursuant to sec_1362 agrees to make the adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to this period then notwithstanding the circumstances resulting in the termination the corporation shall be treated as an s_corporation during the period specified by the secretary conclusion based solely on the representations made and the information submitted we conclude that x's s_corporation_election terminated under sec_1362 on date when trust became an ineligible shareholder we also conclude that this termination was inadvertent within the meaning of sec_1362 accordingly pursuant to the provisions of sec_1362 x will be treated as continuing to be an s_corporation from date and thereafter provided that x's s_corporation_election was valid and was not otherwise terminated under sec_1362 all of x's shareholders in determining their respective income_tax liabilities during the termination period and thereafter must include their pro_rata share of the separately_stated items of income including tax-exempt_income loss plr-116714-10 deduction or credit and nonseparately computed items of income or loss of x as provided in sec_1366 make any adjustments to basis as provided in sec_1367 and take into account any distributions made by x as provided in sec_1368 additionally during the termination period and thereafter trust will be treated as a qsst described in sec_1361 assuming the trust otherwise qualifies as a qsst and b will be treated as the owner of the x stock held by trust provided that b files a qsst election effective date with the appropriate service_center within days following the date of this letter if trust x or x's shareholders fail to treat x as described above this ruling shall be null and void a copy of this letter should be attached to the qsst election 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 specifically no opinion is expressed regarding whether x otherwise qualifies as an s_corporation or whether trust qualifies as a qsst under sec_1361 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 a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representatives the ruling contained in this letter is 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 ruling_request it is subject_to verification on examination sincerely s mary beth carchia senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index number ------------------------- ------------------------------- ----------------------------------------- ----------------------- -------------------------------------------- legend 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 corp bo6 plr-143737-09 date date d2 ------------------------------------------------------------------------------------- ------------------------------------------------------------------------------ ------------------------------------------------- d1 ---------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------ -------------------------------------------- controlled ------------------------------------------------------------------------------------- ------------------------------------------------------------------------------ ------------------------------------------------------------- sub ------------------------------------------------------------------------------------- ------------------------------------------------------------------------------ -------------------------------------------- sub ------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------- ------------------------------------------------------------------------------ --------------------------------------------------------------------------- sub ------------------------------------------------------------------------------------- ------------------------------------------------------------------------------ --------------------------------------- sub ---------------------------------------------------------------------------------------- ------------------------------------------------------------------------------ -------------------------- plr-143737-09 sub -------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------- ------------------------------------------------------------------------------ busine sec_1 busine sec_3 --------------------------------------------------------------- --------------------------------------------------------------- -------------------------- --------------------------------------------------------------- ---------------------------------------------------- month ------------------ date ----------------------- date ----------------------- date -------------------------- date date --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- ----------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- ------------------------------------------------------- date ---------------------- a b c d e -- --- ---------------- ----------------- ---------------- --- -- ------ ------ --- plr-143737-09 f g h j k dear -------------- this ruling is in reply to your letter dated date requesting rulings concerning some of the federal_income_tax consequences of a proposed transaction the material information submitted in the request and in later correspondence is set forth below the rulings contained in this letter are based on facts and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party this office has not verified any of the materials submitted in support of the request for rulings verification of the information representations and other data may be required as part of the audit process this letter is issued pursuant to revproc_2009_25 2009_24_irb_1088 regarding one or more significant issues solely under the jurisdiction of the associate chief_counsel corporate involving the tax consequences of a transaction or part of a transaction that occurs in the context of a sec_355 distribution this office expresses no opinion as to the overall tax consequences of the transactions described in this letter or as to any issue or step not specifically addressed by this letter rather the rulings contained in this letter only address one or more discrete legal issues involved in the transaction summary of facts d2 is a public company and the common parent of a consolidated_group d2 owns all the stock of d1 a corporation engaged in busine sec_1 until the restructuring that took place in month described below d2 also owned all the stock of sub a corporation engaged in busine sec_3 plr-143737-09 for what are represented to be valid business purposes including the creation of a holding_company structure to facilitate an initial_public_offering ipo with respect to busine sec_3 the following steps were taken in month first d2 contributed all the sub stock to d1 second sub issued to d1 a note with a principal_amount of c which was intended by the parties to qualify as a sec_301 distribution from sub to d1 because the principal_amount of the note exceeded d1’s basis in its sub stock the distribution created an excess_loss_account ela in the sub stock held by d1 third d1 created controlled a corporation d1 owned all the stock of controlled controlled then created a merger sub that merged into sub in a transaction that was intended by the parties to qualify as a reorganization under sec_368 and sec_368 as a result of the merger d1 owned all the controlled stock and controlled owned all the sub stock there are now elas in the controlled stock held by d1 and in the sub stock held by controlled in anticipation of an ipo of controlled controlled amended its certificate of incorporation the charter on date to authorize two classes of common_stock class a and class b the recap both classes have identical economic rights but class a stock carries a votes per share while class b stock carries b votes per share as part of the recap all of d1’s shares of controlled stock were converted into d shares of class b stock in a reorganization that d2 represents qualified as a reorganization under sec_368 no shares of class a stock were outstanding d2 states that the recap was intended to preserve the d2 group’s control of controlled in case the group’s economic ownership of controlled were reduced below after the ipo as amended on date controlled’s charter allows for the possibility of a partial or total elimination of the tiered voting structure in the controlled stock that was created in the recap among other things the charter generally provides that i any holder of class b stock may convert its class b stock into class a stock ii each class b share automatically converts into a class a share upon the transfer of such class b share to a person other than d2 or a subsidiary as defined by the charter of d2 iii all the class b stock automatically converts into class a stock in the event that the aggregate number of outstanding class a and class b shares beneficially owned by d2 and its affiliates as defined by the charter other than controlled and controlled’s subsidiaries as defined by the charter represents less than k of the aggregate number of outstanding shares of controlled common_stock and iv all the class b stock may be converted into class a stock by a majority vote of the class b stock however the charter also generally provides notwithstanding items i - iv of the preceding sentence that in the event of a distribution of the controlled stock to the public that is intended to qualify under sec_355 the class b stock loses its conversion rights and the voting power of the class b stock is reduced to the lowest positive whole number of votes per share that is possible while still permitting the distribution to qualify under sec_355 plr-143737-09 on date and date the assets pertaining to busine sec_3 that were not held by sub were transferred to controlled i by d2 in exchange for class a stock of controlled which was intended by the parties to qualify as an exchange under sec_351 and ii by certain subsidiaries of d2 in exchange for cash or short-term notes of controlled all of which have been repaid on date controlled issued e shares of class a stock to the public in the ipo since the ipo controlled’s stock price has appreciated considerably including in relation to d2’s stock price to take advantage of this situation and for what are represented to be valid business purposes d2 proposes the following steps the proposed transaction i on date d1 the sole shareholder of the controlled class b stock will distribute all of its controlled stock to d2 the internal spin-off ii on date d2 will announce and file with the sec an exchange_offer to d2’s shareholders pursuant to which d2 will offer to exchange all of its controlled class a stock for outstanding shares of d2 stock the exchange_offer the consummation of the exchange_offer will be conditioned upon a minimum level of participation in the exchange_offer by tendering d2 shareholders which minimum level of participation will be determined by d2 prior to the commencement of the exchange_offer but will be no less than f of the number of shares of controlled held by d2 after the unwind described below in step iii the exchange ratio for the exchange_offer will be set at a level intended to encourage the d2 shareholders to tender their d2 stock in the exchange_offer the expiration date of the exchange_offer the expiration date will be at least business days after the exchange_offer is announced iii on or shortly after the expiration date if the tender condition in step ii and other conditions to the exchange_offer are met d2 will convert its controlled class b stock into class a stock with g votes per share in a reorganization that d2 represents will qualify under sec_368 the unwind as a result of the internal spin-off and the unwind d2 will hold shares of controlled stock with h of the voting power and j of the value of all the outstanding_stock of controlled after the unwind d2 will transfer its controlled stock to tendering d2 shareholders pursuant to the exchange_offer in exchange for d2 stock the external split-off iv if d2 does not distribute all of its controlled stock in the external split-off then promptly after completion of the external split-off d2 will distribute to its shareholders all its remaining controlled stock the clean-up distribution after this step d2 will not own any controlled stock plr-143737-09 v d2 will contribute the stock of sub sub and sub to d1 in addition on date d2 previously contributed sub to d1 along with the contributions of subs the subsidiary contributions the subsidiary contributions were planned without regard to the internal spin-off and would have occurred or will occur whether or not the internal spin-off occurs representations a to the best knowledge and belief of d2 the internal spin-off will qualify under sec_355 assuming that the service issues the rulings set forth below regarding the unwind and the subsidiary contributions b to the best knowledge and belief of d2 the external split-off and the clean-up distribution will qualify under sec_355 assuming that the service issues the rulings set forth below regarding the unwind c to the best knowledge and belief of d2 the recap qualifies as a tax-free reorganization under sec_368 d there is and there will be as of immediately after the internal spin-off no legally binding obligation to change the capital structure or the charter of controlled including an obligation i to exercise any conversion rights ii to change the relative voting power of any shareholder or class of shares of controlled and or iii to affect any other right created in the recap e as of immediately after the internal spin-off there will be no legally binding obligation to proceed with the remainder of the proposed transaction no legally binding obligation to proceed with the remainder of the proposed transaction will arise absent the fulfillment of the minimum tender condition referred to step ii of the proposed transaction f at all times since the formation of controlled d1 has had control of controlled within the meaning of sec_368 g there is no regulatory legal contractual or economic compulsion or requirement that the subsidiary contributions be made as a condition of the internal spin-off the fact that the value of d1 will decrease as a result of the internal spin-off was not a consideration in the decision to contribute property to d1 the internal spin-off is not contingent on there being contributed to d1 assets having a specified or a roughly specified value plr-143737-09 rulings based solely on the information submitted and representations set forth above we rule as follows the unwind will not cause the internal spin-off to fail to satisfy the controls immediately before requirement of sec_355 the subsidiary contributions will not be treated as having been received by d1 in exchange for controlled stock distributed by d1 in the internal spin-off caveat no opinion is expressed or implied concerning the tax consequences of any other aspect of any transaction or item discussed or referenced in this letter including the tax consequences or characterization of the distributions other issues related to the distributions and the application of the anti-avoidance rule_of sec_1_1502-19 to the excess loss accounts in the stock of controlled and sub procedural statements this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling in accordance with the power_of_attorney on file in this office a copy of this letter is being sent to your authorized representative sincerely _________________________ stephen p fattman special counsel to the associate chief_counsel corporate