department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division jul - 20u uniform issue list xx xxx xxxxx xxxxx legend taxpayer financial_institution amount a amount b plan dear xxxxx xx xxx xxxxx xxx xx xxx xx xxx xx xxx xx this is in response to your request dated date as supplemented by correspondence dated date date date and date submitted on your behalf by your authorized representative in which you request a waiver of the 60-day rollover requirement contained in sec_402 of the internal_revenue_code the code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer represents that she received distributions from plan totaling amount a taxpayer asserts that her failure to accomplish a rollover of amount b a portion of amount a within the 60-day period prescribed by sec_402 of the code was due to taxpayer's reliance upon incorrect advice provided by a representative of plan taxpayer further represents that amount b has not been used for any other purpose taxpayer's former husband is a participant in plan as a result of a divorce settlement taxpayer was entitled to receive a distribution from plan which was made on date and date totaling amount a taxpayer represents that she intended to complete a timely rollover of amount to an ira with financial_institution however taxpayer was misinformed by a representative of plan about the length of time that taxpayer had to complete her rollover relying upon this advice taxpayer deposited amount b into an ira with financial_institution within the length of time conveyed to her by the plan representative but after her 60-day rollover period expired based on the facts and representations you request a ruling that the internal_revenue_service the service waive the day rollover requirement contained in sec_402 of the code with respect to the distribution of amount section a of the code provides that plan's trust shall be treated as a_trust described in sec_401 a and is exempt from taxation under sec_501 a sec_7701 j b of the code provides that any contribution to or distribution from the plan's trust shall be treated in the same manner as contributions to or distributions from a_trust described in sec_401 a sec_402 of the code provides that if any portion of the balance_to_the_credit of an employee in a qualified_trust is paid to the employee in an eligible_rollover_distribution and the distributee transfers any portion of the property received in such distribution to an eligible_retirement_plan then such distribution to the extent transferred shall not be includible in gross_income for the taxable_year in which paid sec_402 states that such rollover must be accomplished within days following the day on which the distributee received the property an ira constitutes one form of an eligible_retirement_plan sec_402 of the code provides that an eligible_rollover_distribution shall not include any distribution to the extent such distribution is required under sec_401 a related to required minimum distributions sec_402 of the code provides in relevant part that the secretary may waive the 60-day requirement under sec_402 where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement sec_1_402_c_-2 q a-12 provides that the eligible_rollover_distribution rules also apply to distributions to a spousal distributee such as a former spouse who is an alternate_payee under a qualified_domestic_relations_order revproc_2003_16 i r s date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuantto sec_402 of the code the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to 2ftl440032 complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer is consistent with her assertion that her failure to accomplish a timely rollover was caused taxpayer's reliance upon incorrect advice provided by a representative of plan therefore pursuant to sec_402 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount from plan taxpayer is granted a period of days from the issuance of this ruling letter to contribute amount b into a rollover ira or another qualified_plan provided all other requirements of sec_402 except the 60-day requirement are met with respect to such contribution the contribution will be considered a rollover_contribution within the meaning of sec_402 this ruling does not authorize the rollover of amounts that are required to be distributed by sec_401 a of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent if you wish to inquire about this ruling please contact xxxxx xxxx at xxx xxx-xxxx please address all correspondence to se t ep ra t2 sincerely yours -- c fl7uv-0 c - j- jason e levine manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose cc xxxxx xxxxx xxx xx


number release date id office uilc cca_2010022617184641 ----------------------------- from --------------- sent friday date pm to --------------- cc subject your question -------in answer to your questions irm is the relevant provisions for written determinations and seem most relevant there is no mandatory review by counsel of the redactions for processing of written determinations after you prepare the ss-8 determination_letter you should then process the public release version with respect to the timing issues it is more important that the taxpayer be given the full amount of time to review any proposed redactions and make any requests for additional deletions than is the exact timing that the documents are made available for public release the statutory period provided for the taxpayer to review and ask for additional deletions is days and if the taxpayer disagrees with the administrative determination on the redactions days after that to go to tax_court the time period for public release is days after issuance which is more flexible in addition the taxpayer can request a delay in release of days which is granted as a matter of right obviously if the matter goes to court on the redaction issues that would delay release as well


id office uilc cca_2011011014225841 -------------- number release date from --------------------------- sent monday date pm to --------------- cc ------------------------------------------------------------------------------------- subject allocation of joint credits- elect and estimated ---------------------- you have asked for advice regarding allocation of an overpayment from a married couple's joint_return in year which was credited to estimated_tax in year the taxpayers were divorcing when their ------- returns were due they filed separately but did have their returns completed by the same preparer the tpw claimed of the joint credit-elect from ------- and of the estimated_tax payments the tph’s ------- separate liability was dollar_figure--------- the tpw’s ------- separate liability was dollar_figure------------- the tph claimed no pre-payment credits and in fact paid in the dollar_figure----- due per his separate_return the two credits which were posted under the tph’s ssn because they’d filed joint the previous year were transferred from the tph’s ssn to the tpw’s the tph subsequently filed an amended_return presumably timely where he claimed of the credit-elect from ------- he did not similarly claim any part of the estimated_tax payments tph appears to have acted unilaterally as tpw did not file a complimentary amended_return you raised three questions question are the taxpayers’ original ------- returns valid evidence of an agreement between the spouses as to the allocation of the credit-elect from ------- and the --------- estimated_tax payments question are the credit-elect from ------- and the ------- estimated_tax payments correctly attributable to the tpw question was the allowance of the tph’s amended_return see below erroneous and must it be reversed disallowed issue an overpayment in year on a joint_return ceases to be an overpayment and becomes an estimated_tax payment once the couple elects to credit the amount to the next year's estimated_taxes see sec_6402 and sec_301_6402-3 the allocation of estimated_tax payments is not addressed in the code however reg e ii explains how joint payments of estimated_taxes should be allocated to separate returns regulation e ii provides for allocation of estimated_tax payments to either husband wife or divided between each's tax_liability by agreement of the parties revrul_76_140 1976_1_cb_376 addresses a similar factual situation under prior code sec_6015 the treatment under the previous code section is identical to the current treatment the section has simply been renumbered with the conversion of sec_6015 to addressing innocent spouse claims therefore the reasoning of the revenue_ruling remains sound in revrul_76_140 we indicated the policy that where taxpayers filed consistent returns in year allocating estimated_tax payments those returns would be considered evidence of an agreement between the parties as to allocation of the estimated_tax payments a subsequent refund claim without further evidence of a different agreement between the parties should be disallowed as such the taxpayers’ original - ------- returns are valid evidence of an agreement between the spouses as to the allocation of the ------- estimated_tax payments which include the credit-elect from ------- ------- issue because the original returns for ------- evidence an agreement between the parties to allocate of the estimated_tax payments to tpw such an allocation is acceptable under sec_1_6654-2 issue if the service issued a refund to tph for the estimated_tax payments requested on hi sec_1040x then an erroneous refund has been made if tph's account was credited but no refund was made the credit may be reversible if you have any further questions or comments please do not hesitate to contact me at the address above or ------------------- thank you- ------------------------------------------ ------------ --------------


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi plr-161977-01 date date legend company a state d1 d2 d3 dear this letter responds to your letter dated date requesting a ruling on behalf of company under sec_1362 facts company was incorporated in state and on d1 a company’s sole shareholder first acquired shares of company a represents that on d1 and at all times thereafter a intended that company be regarded as an s_corporation and has treated company as an s_corporation since d1 including causing company to file forms 1120s for the tax_year ending d2 and each subsequent tax_year a has represented that on d3 a received a letter from the internal_revenue_service indicating that the form_1120s filed for the year ending d3 could not be processed as company had not elected to be treated as an s_corporation law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective generally if an s election is made within the first two and one half months of a plr-161977-01 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 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 an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making the election 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 such election the secretary may treat such an election as timely made for such taxable_year and sec_1362 shall not apply conclusions based on facts submitted and representations made we conclude that company has established reasonable_cause for its failure to make a timely election and that company is eligible for relief under sec_1362 accordingly if company makes an election to be an s_corporation by filing a form_2553 with an effective date of d2 with the appropriate service_center within days from the date of this ruling company’s sec_1362 election will be treated as timely made a copy of this letter should be attached to the form_2553 except as expressly provided herein we neither express nor imply any opinion concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we neither express nor imply any opinion as to whether company qualifies as an s_corporation this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your representative sincerely jeanne e sullivan senior technician reviewer branch office of associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number info release date index number ---------------------------- ------- ---------------------------- ------------------------- department of the treasury washington dc person to contact --------------------- id no ----------- telephone number --------------------- refer reply to cc psi b1 - genin-148281-03 date nov taxpayer ------- dear -------------------- this responds to your recent letter in which it was requested that we recognize taxpayer’s election to be an s_corporation effective for the tax period ending date a corporation which meets the definition of a small_business_corporation under sec_1362 of the internal_revenue_code may elect to be treated as an s_corporation in order for an s_corporation_election to be effective for the taxable_year in which it is made it must be made within the first two and one-half months of the corporation s taxable_year sec_1362 if an s election is made after that time then the corporation will not be treated as an s_corporation until the taxable_year following the one in which the s election was filed sec_1362 an election made after the first two and one-half months of the taxable_year in which it is intended to be effective may be treated as effective if the secretary determines that there was reasonable_cause for the corporation s failure to make a timely election sec_1362 announcement copy enclosed provides guidance on seeking relief for late s_corporation elections generally to request relief for a late s_corporation_election you must request a private_letter_ruling from the national_office the procedures for requesting a private_letter_ruling are set out in revproc_2003_1 copy enclosed in addition revproc_2003_1 requires taxpayers to submit a user_fee along with their ruling_request the standard user_fee for a private_letter_ruling is dollar_figure however taxpayers with gross_income of less than dollar_figure million on their tax_return for the most recent 12-month taxable_year qualify for a reduced user_fee in the amount of dollar_figure if you qualify for the reduced fee you must include a statement certifying your gross_income for the last 12-month taxable_year otherwise the higher fee will apply if you decide to submit a formal request for a private_letter_ruling please review appendix b of revproc_2003_1 and be certain to include all required procedural statements also include the proper user_fee and any documents that substantiate your intent to be an s_corporation from inception please refer your request to our office by adding the following to the address we hope that this information is helpful to you if you have additional questions please contact rebekah myers at not a toll-free call as requested in the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer s dianna k miosi sincerely dianna k miosi chief branch office of office of the associate chief_counsel passthroughs and special industries attn cc pa t p o box ben franklin station washington dc direct to cc psi room enclosures announcement revproc_2003_1


internal_revenue_service number release date index number -------------------------- --------------------------------- ------------------------------ ----------------------------------- department of the treasury washington dc third party communication date of communication month dd yyyy person to contact ------------------- id no ---------------- telephone number -------------------- refer reply to cc pa plr-118517-17 date date ty ----------------------- legend taxpayer --------------------------------- subsidiaries -------------------------------------------------------------- state ------------------ a ----------- b ----------------- c ---------------------------------------- ---------- d ----------------- e ---------------------------------------- f --------------------------------------------- date x ----------------------- date y ----------------------- dollar_figurea ---------- dollar_figureb-------------------------- dollar_figurec --------------------- plr-118517-17 dollar_figured --------- dollar_figuree --------------------- dollar_figuref --------- dear --------------- this is in reply to taxpayer’s request for a ruling on behalf of its wholly-owned subsidiaries as to the obligations of subsidiaries to file and furnish information returns pursuant to sec_6041 of the internal_revenue_code to property owners for payments subsidiaries will make to such property owners and for costs subsidiaries will incur on behalf of the property owners as a consequence of c facts subsidiaries operate facilities in state which produce a state enacted c out of concern over the impact of a on b under c subsidiaries and other owners of similar facilities must provide nearby property owners with a permanent replacement d subsidiaries must provide a permanent replacement d to property owners by date x there are two ways subsidiaries might provide the permanent replacement d either by connection with state d system average cost estimated at dollar_figurea or by installing a system on the property estimated at dollar_figureb and maintaining it estimated at dollar_figurec until the permanent replacement is set up an alternative d will be supplied at approximately dollar_figured per year per property owner in addition subsidiaries offer two programs e and f to eligible_property owners to enroll the property owner must execute a release of liability that acknowledges that taxpayer has fully compensated them for any damages and that they will not seek further compensation or bring legal action against taxpayer or subsidiaries in connection with their d the validity of this release is the subject of current litigation in the future subsidiaries may offer some compensatory payments to additional property owners in exchange for their release from any liability for damage but no details of the payments or the scope of such compensation have been determined taxpayer requests the following rulings subsidiaries are not required to issue information returns forms with regard to any property owner who receives these compensatory payments described above because they are not income to the property owner plr-118517-17 to the extent the service is not able to grant ruling number for any of the above described compensatory payments taxpayer requests a ruling that subsidiaries are not required to issue information returns forms with regard to any property owner who receives the above-described compensatory payments because the income attributable to the payments is not fixed or determinable to the extent that some or all of the above-described compensatory payments are provided to additional property owners in the future subsidiaries will not be required to issue information returns forms to such property owners consistent with ruling or law and analysis sec_6041 and sec_1_6041-1 of the income_tax regulations provide with exceptions not applicable here that all persons engaged in a trade_or_business and making payment in the course of such trade_or_business to another person of rent salaries wages premiums annuities compensations remunerations emoluments or other fixed or determinable gains profits and income aggregating dollar_figure or more in the taxable_year must file an information_return with the internal_revenue_service under sec_6041 the payor is required to furnish an information statement to the payee forms and are used for this reporting sec_1_6041-1 the sec_6041 information reporting requirement applies to payments made during the calendar_year to another person of fixed or determinable income sec_1_6041-1 sec_1_6041-1 provides that income is fixed when paid in amounts definitely predetermined income is determinable whenever there is a basis of calculation by which the amount to be paid may be ascertained as used in sec_6041 income means gross_income sec_61 and sec_1_61-1 of the income_tax regulations provide that gross_income includes all income from whatever source derived unless excluded by law the supreme court of the united_states has long recognized that the definition of gross_income sweeps broadly and reflects congress’ intent to exert the full measure of its taxing power and to bring within the definition of income any accession to wealth 348_us_426 accordingly any receipt of funds by a taxpayer is presumed to be gross_income unless the taxpayer can demonstrate that the accession fits into one of the narrowly construed exclusions provided by law see glenshaw glass co pincite 504_us_229 the nature of an amount received in settlement of a controversy is determined by the nature of the claims that are settled 305_us_188 297_us_88 hort v commissioner plr-118517-17 u s if the amount received represents compensation or damages for lost profits it is taxable as ordinary_income however if the recovery is received as the replacement of capital destroyed or injured rather than for lost profits the money received is a return_of_capital and not taxable to the extent the payment does not exceed the adjusted_basis in the property 33_tc_323 to the extent payments for damage to property exceed the adjusted_basis in the property the payments are gross_income unless they qualify for an exclusion from or nonrecognition of income under another provision of the code such as sec_1033 the burden is on the taxpayer to demonstrate that the amounts received are for capital replacement 1_tc_952 aff’d 144_f2d_110 1st cir cert_denied 323_us_779 to the extent that subsidiaries’ payments pursuant to c compensate property owners for damage to their property the payments are not gross_income to the extent they do not exceed the property owners’ adjusted_basis in their property and are gross_income only to the extent those payments exceed the customers’ adjusted_basis in their property unless another provision of the code excludes or defers recognition of the income such as sec_1033 thus to the extent that subsidiaries’ payments to property owners pursuant to c for a new d are compensation_for damage to property they are not payments of fixed or determinable income under sec_6041 under these facts subsidiaries cannot determine how much of such payments are for damage to property consequently subsidiaries cannot also determine how much of the payments constitutes fixed or determinable income under sec_6041 subsidiaries are therefore not required to report such payments under sec_6041 see revrul_80_22 1980_1_cb_286 the service is unable to issue any ruling with respect to amounts paid or benefits provided by subsidiaries under e or f the provisions of programs e and f are the subject of current litigation pursuant to revproc_2017_3 sec_4 the service ordinarily does not issue a letter_ruling on the tax effect of a transaction if any part of the transaction is involved in litigation by the parties affected by the transaction in addition the service is unable to issue any ruling in response to ruling_request this request presents a hypothetical situation pursuant to revproc_2017_1 section the service does not issue rulings on hypothetical situations conclusion subsidiaries are not required to file or furnish information returns with respect to amounts paid and costs incurred in connection with providing property owners with a new d as required under c plr-118517-17 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative 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 the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination sincerely blaise g dusenberry senior technician reviewer procedure administration


third party communication none date of communication not applicable office_of_chief_counsel internal_revenue_service memorandum number release date cc ita b04 --------------------- postf-124290-12 uilc date date to reid m huey associate area_counsel st paul large business international from michael j montemurro branch chief branch income_tax accounting subject ---------------------------------------------- ------------------------------ this chief_counsel_advice responds to your request for advice dated date issue does a taxpayer have actual or constructive receipt of relinquished_property rq sales proceeds for purposes of sec_1_1031_k_-1 of the income_tax regulations if the rq is security for lines of credit used to purchase the rq and for general business operations and the taxpayer’s qualified_intermediary must use the proceeds to pay down amounts the taxpayer owes on the lines of credit conclusion the taxpayer does not have actual or constructive receipt of the rq sales proceeds for purposes of sec_1_1031_k_-1 by reason of the nature of the security burden and the debt pay-down arrangement facts taxpayer rents equipment to customers for use in farming construction manufacturing and warehousing in taxpayer implemented a like-kind_exchange program lke program through which it defers the recognition of gain from the sale of its rental postf-124290-12 equipment taxpayer entered into a master exchange_agreement mea with a qualified_intermediary qi to engage in these multiple exchanges in its lke program the mea is the written_agreement between taxpayer and qi for qi to acquire the rq from taxpayer transfer the rq acquire the replacement_property rp and transfer the rp to taxpayer in the mea taxpayer makes a blanket assignment of its rights under sale and purchase contracts to qi and provides for written notification of the assignment to all parties taxpayer maintains lines of credit with two creditors the proceeds from the lines of credit are used to purchase rp however taxpayer also uses proceeds from these lines of credit for other business purposes not just the acquisition of rp pursuant to its agreements with these creditors all rental properties including properties relinquished and acquired in its sec_1031 exchanges as rq and rp secure the outstanding balances on the lines of credit from the time taxpayer acquires the property until it is sold the outstanding balances on the lines of credit are also secured_by taxpayer’s accounts_receivable and new equipment held by taxpayer for sale in the ordinary course of business all property is separately listed as collateral for one or the other but not both of the lines of credit the full value of the rental property secures the entire outstanding balances on the lines of credit the mea provides that taxpayer does not have the right to receive pledge borrow or otherwise obtain the benefits of money or other_property held by qi the mea also provides that qi must use the proceeds from the sale of rq to the pay down taxpayer’s outstanding balances on the lines of credit consequently the proceeds from the disposition of rq as part of any exchange under the mea are deposited directly into a joint qi taxpayer account and then immediately disbursed by qi to satisfy taxpayer's obligation on one or the other line of credit under this arrangement taxpayer uses borrowed funds to acquire rp and complete its exchanges applicable law sec_1031 of the code provides that no gain_or_loss is recognized on the exchange of property held for productive use in a trade_or_business or for investment if such property is exchanged solely for property of like_kind that is to be held either for productive use in a trade_or_business or for investment sec_1_1031_k_-1 of the regulations provides in part that in the case of a transfer of relinquished_property in a deferred_exchange gain_or_loss may be recognized if the taxpayer actually or constructively receives money or other_property before the taxpayer actually receives like-kind replacement_property if the taxpayer actually or constructively receives money or other_property in the full amount of the consideration for the relinquished_property before the taxpayer actually receives the like-kind replacement_property the transaction will constitute a sale and not a deferred postf-124290-12 exchange even though the taxpayer may ultimately receive like-kind replacement_property sec_1_1031_k_-1 explains that except as provided in sec_1_1031_k_-1 relating to safe harbors for purposes of sec_1031 the determination of whether or the extent to which the taxpayer is in actual or constructive receipt of money or other_property before the taxpayer actually receives like-kind replacement_property is made under the general rules concerning actual or constructive receipt and without regard to the taxpayer's method_of_accounting the taxpayer is in actual receipt of money or property when the taxpayer actually receives the money or property or receives the economic benefit of the money or property the taxpayer is in constructive receipt of money or property at the time the money or property is credited to the taxpayer's account set apart for the taxpayer or otherwise made available so that the taxpayer may draw upon it at any time or so that the taxpayer can draw upon it if notice of intention to draw is given although the taxpayer is not in constructive receipt of money or property if the taxpayer's control of its receipt is subject_to substantial limitations or restrictions the taxpayer is in constructive receipt of the money or property at the time the limitations or restrictions lapse expire or are waived in addition actual or constructive receipt of money or property by an agent of the taxpayer is actual or constructive receipt by the taxpayer under sec_1_1031_k_-1 a qualified_intermediary is not considered the agent of the taxpayer for purposes of sec_1031 in such a case the taxpayer's transfer of relinquished_property and subsequent receipt of like-kind replacement_property is treated as an exchange and the determination of whether the taxpayer is in actual or constructive receipt of money or other_property before the taxpayer actually receives like-kind replacement_property is made as if the qualified_intermediary is not the agent of the taxpayer further under sec_1_1031_k_-1 the agreement between the taxpayer and the qualified_intermediary must expressly limit the taxpayer's rights to receive pledge borrow or otherwise obtain the benefits of money or other_property held by the qualified_intermediary sec_1_1031_k_-1 provides that a qualified_intermediary is a person who-- a is not the taxpayer or a disqualified_person and b enters into a written_agreement with the taxpayer the exchange_agreement and as required by the exchange_agreement acquires the relinquished_property from the taxpayer transfers the relinquished_property acquires the replacement_property and transfers the replacement_property to the taxpayer sec_1_1031_k_-1 requires that the exchange_agreement between the taxpayer and the qualified_intermediary provide that the taxpayer have no right to receive pledge borrow or otherwise obtain the benefits of money or other_property held by the qualified_intermediary before the end of the exchange_period other than those provided in sec_1_1031_k_-1 and iii postf-124290-12 sec_1031 of the code provides in part that in an exchange that would be within the provisions of sec_1031 if not for the fact that the property received in the exchange includes non like-kind_property or money the gain if any to the recipient must be recognized but in an amount not in excess of the sum of the money and the fair_market_value of the non like-kind_property sec_1_1031_b_-1 of the regulations provides that consideration in the form of an assumption_of_liabilities or a transfer subject_to a liability is to be treated as other_property or money for the purposes of sec_1031 if in an exchange described in sec_1031 each party either assumes a liability of the other party or acquires property subject_to a liability then in determining the amount of other_property or money consideration given in the form of an assumption_of_liabilities or the receipt of property subject_to a liability is offset against consideration received in the form of an assumption of liability or transfer subject_to a liability thus when there are mortgages on both sides of the transaction the mortgages are netted and the difference becomes recognized gain boot to the party transferring the property subject_to the larger mortgage in example of sec_1_1031_k_-1 b the transferor of relinquished_property in a deferred_exchange transfers property that is encumbered with a dollar_figure mortgage to c on date c assumes the mortgage on that date on date b receives the replacement_property and assumes a dollar_figure mortgage encumbering the replacement_property the consideration received by b in the form of the liability assumed by c dollar_figure is offset by the consideration given by b in the form of the liability assumed by b dollar_figure the excess of the liability assumed by c over the liability assumed by b dollar_figure is treated as money or other_property thus as provided in sec_1031 b recognizes gain in the amount of dollar_figure section dollar_figure of revproc_2003_39 2003_1_cb_971 on joint accounts provides that a taxpayer engaged in an lke program will not be considered in actual or constructive receipt of proceeds from the sale of relinquished_property deposited into or held in a joint bank trust escrow or similar account in the name of the taxpayer and the qualified_intermediary or in an account in the name of a third party other than a disqualified_person as defined in sec_1_1031_k_-1 for the benefit of both the taxpayer and the qualified_intermediary if the account is used to collect hold and or disburse proceeds arising from the sale of relinquished_property for the benefit of the qualified_intermediary the agreement setting forth the terms and conditions with respect to the account requires authorization from the qualified_intermediary to transfer proceeds from the sale of relinquished properties out of the account and the agreement setting forth the terms of the taxpayer's and qualified intermediary's rights with respect to or beneficial_interest in the account expressly limits the taxpayer's postf-124290-12 rights to receive pledge borrow or otherwise obtain the benefits of proceeds from the sale of relinquished_property held in the joint account as provided in sec_1_1031_k_-1 section dollar_figure of the revenue_procedure further provides that the account may also be used by the parties for other purposes provided that the other use does not undermine the qualified intermediary's right to control the proceeds from the sale of relinquished_property analysis in the present case proceeds from the disposition of the rq are paid to the joint account controlled by taxpayer and qi the qi then disburses the rq proceeds to pay down the debt on the taxpayer’s lines of credit as required by the agreements with taxpayer’s lenders taxpayer then acquires rp by financing the acquisition with new debt in an amount that equals or exceeds the debt that encumbered the rq under its arrangements with qi and its lenders qi must use the rq proceeds but not proceeds from its accounts_receivable and new equipment sales to pay down lines of credit the field_attorney argues that these arrangements taken together violate sec_1_1031_k_-1 which generally prohibits a taxpayer from obtaining the benefits of the rq proceeds before the end of the exchange_period the field_attorney argues that the debt pay-down arrangement results in taxpayer actually or constructively receiving the rq proceeds before the end of the exchange_period under this argument taxpayer cannot defer the gain realized on its transfers of rq under sec_1031 we disagree with the field attorney’s position the facts in the present case are similar to the situation described in example of sec_1_1031_k_-1 in the example the taxpayer is relieved of debt on the transfer of rq and incurs debt on the acquisition of rp the example concludes not that the taxpayer has actually or constructively received all or a portion of the proceeds of the rq but rather that the boot received in the form of debt relief is offset by the debt assumed under the boot netting rules of sec_1_1031_b_-1 the gain required to be recognized by the taxpayer in example is the excess of the debt relieved on the transfer of the rq and the debt incurred on the acquisition of rp while there are differences between the facts in example and those in the present case the differences do not result in taxpayer having actual or constructive receipt of the rq proceeds for purposes of sec_1_1031_k_-1 in the present case the debt that is secured_by the rq is incurred not only to purchase rq but also for general business operations in contrast example provides only that the rq is encumbered by a mortgage of dollar_figure and does not discuss when or why the property was encumbered however the result in example should not change if the debt was incurred as a result of a refinancing of the rq the proceeds of which were used for general business operations that is we not aware of any authority for making a distinction along the lines of the purpose of the encumbrance or whether the taxpayer postf-124290-12 used the proceeds for more than the purchase of rq consequently the fact that the debt in the present case was incurred for more than the acquisition of the rq should not result in actual or constructive receipt of the rq proceeds when qi pays off the rq debt another difference between the facts of example and those of the present case is that the transferee of the rq in example assumed the rq debt whereas in the present case qi uses the rq proceeds to pay down the rq debt that fact however should not result in actual or constructive receipt of the rq proceeds in 74_tc_555 the tax_court held that proceeds from the disposition of rq can be used to pay off debt on the rq without triggering gain if the taxpayer incurs or assumes a liability on the purchase of rp that equals or exceeds the debt on the rq in barker which was decided before the issuance of deferred_exchange regulations of sec_1_1031_k_-1 the taxpayer received cash in the exchange but was contractually obligated by the transferee of the rq to use the cash to pay off the rq debt thus the tax_court held that the boot netting principle in sec_1_1031_b_-1 covers not just assumptions of debt but also situations in which the proceeds of the rq are used to pay off rq debt in the present case the fact that the rq debt is used not only to purchase rq but also for general business operations and the fact that qi uses the rq proceeds to pay down taxpayer’s lines of credit does not result in taxpayer being in actual or constructive receipt of the rq proceeds for purposes of sec_1_1031_k_-1 accordingly taxpayer’s exchanges will qualify as like-kind_exchanges under sec_1031 if taxpayer meets the other requirements of sec_1031 and the regulations thereunder case development hazards and other considerations this writing may contain privileged information any unauthorized disclosure of this writing may undermine our ability to protect the privileged information if disclosure is determined to be necessary please contact this office for our views pursuant to sec_6110 of the code this document may not be used or cited as precedent please call ------------------------------at if you have any further questions


t c summary opinion united_states tax_court jeffrey s lindquist petitioner v commissioner of internal revenue respondent docket no filed date jeffrey s lindguist pro_se julia l wahl for respondent panuthos chief special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect at the time the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year in issue - - respondent determined a deficiency in petitioner’s federal_income_tax of dollar_figure for the taxable_year the issues for decision are whether petitioner is entitled to a deduction for a dependency_exemption for his son and whether petitioner is entitled to claim a child_tax_credit background some of the facts have been stipulated and they are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference at the time of filing the petition herein petitioner resided at kane pennsylvania petitioner was previously married to cara leanne lindquist ms lindguist they had a child justin lindguist justin born date on date petitioner and ms lindquist entered into a marital termination agreement which provided in part beginning in calendar_year and for so long as the child of the parties is eligible to be claimed as a dependent_exemption for state and federal_income_tax purposes petitioner may claim the parties’ son justin scott lindquist as a dependent_exemption provided that petitioner is current in the child_support obligation as provided for herein ms lindquist shall execute any and all documents provided to ms lindquist by petitioner as are necessary for petitioner to successfully claim said child as a dependent_exemption petitioner and ms lindquist were divorced on date pursuant to the findings_of_fact conclusions of law order for judgment and judgment and decree of dissolution divorce decree by the district_court of the third judicial district for mower county minnesota mower county district_court under the divorce decree they were granted joint legal custody of justin while ms lindquist was granted sole physical custody similar to the marital termination agreement the divorce decree also provided that beginning in calendar_year and for so long as the child of the parties is eligible to be claimed as a dependent_exemption for state and federal_income_tax purposes petitioner may claim the parties’ son justin scott lindquist as a dependent_exemption provided that petitioner is current in the child_support obligation as provided for herein ms lindquist shall execute any and all documents provided to ms lindquist by petitioner as are necessary for petitioner to successfully claim said child as a dependent_exemption petitioner filed a federal_income_tax return return petitioner claimed a dependency_exemption for justin and claimed a child_tax_credit in the amount of dollar_figure petitioner did not attach to his return a written declaration executed by ms lindguist nor did petitioner ask ms lindquist to sign a form_8332 release of claim to exemption for child of divorced or separated parents for the taxable_year since he believed that she would not execute the required form petitioner further concluded that it would be unrealistic for him as a resident of ' according to respondent ms lindquist also claimed a dependency_exemption for justin for the taxable_year q4e- pennsylvania to return to the mower county district_court in minnesota to seek enforcement of the terms of the divorce decree in the notice_of_deficiency respondent disallowed the dependency_exemption deduction for justin and disallowed the child_tax_credit claimed by petitioner for the taxable_year discussion dependency_exemption a taxpayer may be entitled to claim as a deduction an exemption_amount for each of his or her dependents sec_151 an individual must meet the following five tests in order to qualify as a dependent of the taxpayer support_test relationship or household test citizenship or residency test gross_income_test and joint_return_test sec_151 and sec_152 if the individual fails any of these tests he or she does not gualify as a dependent as to the support_test the taxpayer generally must provide more than half of a claimed dependent’s support for the calendar_year in which the taxable_year of the taxpayer begins sec_152 in the case of a child of divorced parents the custodial_parent is generally deemed to have furnished over half the support of such child and is thus permitted the dependency_exemption however an exception arises when the custodial_parent releases claim to the exemption pursuant to the provisions of sec_152 which provides --- - sec_152 support_test in case of divorced parents rtc -- exception where custodial_parent releases claim to exemption for the year --a child of parents shall be treated as having received over half of his support during a calendar_year from the noncustodial_parent if-- a the custodial_parent signs a written declaration in such manner and form as the secretary may by regulations prescribe that such custodial_parent will not claim such child as a dependent for any taxable_year beginning in such calendar_year and b the noncustodial_parent attaches such written declaration to the noncustodial parent’s return for the taxable_year beginning during such calendar_year for purposes of this subsection the term noncustodial_parent means the parent who is not the custodial_parent the temporary regulations promulgated with respect to sec_152 provide that a noncustodial_parent may claim the exemption for a dependent_child only if the noncustodial_parent attaches to his her income_tax return for the year of the exemption a written declaration from the custodial_parent stating that he she will not claim the child as a dependent for the taxable_year beginning in such calendar_year sec_1 4t a q a-3 temporary income_tax regs fed reg temporary regulations are entitled to the same weight as final regulations see peterson marital trust v commission102_tc_790 affd 78_f3d_795 2d cir 98_tc_141 - - date see 114_tc_184 affd on another ground sub nom 293_f3d_1208 10th cir the declaration required under sec_152 must be made either ona completed form_8332 or on a statement conforming to the substance of form_8332 miller v commissioner supra pincite form_8332 requires a taxpayer to furnish the names of the children for which exemption claims were released the years for which the claims were released the signature of the custodial_parent confirming his or her consent the social_security_number of the custodial_parent the date of the custodial parent’s signature and the name and the social_security_number of the parent claiming the exemption miller v commissioner supra pincite petitioner did not comply with the provisions of sec_152 e and the regulations thereunder by attaching to his return a written declaration or form_8332 executed by ms lindquist petitioner as a noncustodial_parent is not entitled to the dependency_exemption for justin for the taxable_year petitioner nevertheless argues that he is current in his child_support obligation and that under the terms of the marital termination agreement and divorce decree he is entitled to the dependency_exemption he further points out that it is unrealistic for him as a resident of pennsylvania to return to the mower county district_court in minnesota to seek enforcement of the terms of the divorce decree we are not unsympathetic to petitioner’s position however we are bound by the language of the statute as it is written and the accompanying regulations when consistent therewith 87_tc_1412 the internal_revenue_code is clear as to the precise circumstance in which a noncustodial_parent becomes entitled to a dependency_exemption see neal v commissioner t c memo respondent is sustained on this issue child_tax_credit a taxpayer may be entitled to claim a credit against tax with respect to each qualifying_child sec_24 the term qualifying_child is defined among other things as any individual if the taxpayer is allowed a deduction under sec_151 with respect to such individual for the taxable_year sec_24 a for the reasons stated above petitioner is not entitled to a dependency_exemption deduction under sec_151 with respect to justin it therefore follows that petitioner is not entitled to a child_tax_credit under sec_24 reviewed and adopted as the report of the small_tax_case division to reflect the foregoing decision will be entered for respondent


internal_revenue_service number info release date index number - - - department of the treasury washington dc person to contact --------------------- id no ------------- telephone number --------------------- refer reply to cc ita b03 - genin-163331-03 date december ------------------- ------------------------------------------- ----------------------------------------- ------------------------------ -------------------------------------- dear --------------- this refers to the letter dated date that we issued to ----------------------------- ------------------------------------------------------------------------------ requested the advice contained in the letter on behalf of your office that letter was published as a general information_letter genin-156710-01 upon further consideration we revoke that letter sincerely robert a berkovsky chief branch associate chief_counsel income_tax accounting


ta x e x e m p t a n d g o v e r n m e n t e n t i t i e s d i v i s i o n department of the treasury internal rev enue se rvice washington d c contact person telephone number identification_number employer_identification_number release number release date date date uil legend university university foundation m n dear we have considered the ruling requests submitted by m and n to allow an existing supporting_organization to support a different organization within the university corporate structure for the reasons described below we have ruled as requested facts m was formed to administer its assets for the long-term enhancement of the university and the university foundation to provide volunteer leadership to the university in its development and fundraising activities and to provide advice and support to the president of the university and to the university foundation m’s mission was expanded a few years ago to allow it to provide the same support and assistance to the regents of the university system and all of the colleges and universities in the system the considerable assets of m are principally land buildings and equipment construction in process and bond proceeds restricted for construction its main activity has been the acquisition ownership and development of real_estate_assets for the benefit of the university and the university foundation the taxpayer asserts that all of m’s assets both prior to and after the proposed transaction are and will be employed directly in its exempt_activities m is a nonprofit corporation recognized as exempt under sec_501 of the internal_revenue_code and is classified as other than a private_foundation under sec_509 it qualifies as a supporting_organization type i to the university foundation which is its sole member and it also supports the university the university foundation was chartered many years ago and soon after received a determination_letter from the service recognizing its exempt status it is classified as a public charity under sec_509 of the code its purpose is identical to the original purpose of m to administer its assets for the long-term enhancement of the university and the university foundation to provide volunteer leadership to the university in its development and fundraising activities and to provide advice and support to the president of the university it specifically manages its funds for scholarships faculty salary supplements awards and lectureships n has been recognized as exempt under sec_501 of the code it is a publicly_supported_organization described in sec_509 and sec_170 it was organized to acquire construct and equip buildings and facilities for research it also provides means to identify copyright patent and apply discoveries and otherwise promote and encourage research and studies of all kinds the university believes that it would be better to affiliate m with an organization whose mission more closely parallels its expanded mission the proposed transaction would replace the university foundation with n as the sole member of m and one of its two supported organizations this realignment would also allow m to centralize support services and lower its costs by combining them with n’s support services m’s articles of incorporation and by-laws would be revised to replace the university foundation with n under the new by-laws the board_of trustees of m would consist of a the president of the university b the chief fiscal officer of the university c the vice chair of n d the executive vice president of n and e six to seven members nominated and elected by the board_of directors of n of whom at least half will be directors or officers of n following the proposed transactions m will continue to benefit the university and the regents of the university and the other colleges and universities in the state system along with their affiliated support organizations it will in addition support n the taxpayer stated that n’s sources of public support will not change the taxpayer represents that neither n nor m are now or will be after the transactions controlled by disqualified persons within the meaning of sec_4946 of the code all of the organizations involved are subject_to the conflict of interest provisions under applicable state law rulings requested the proposed transactions will not adversely affect the tax-exempt status of m under sec_501 of the code the proposed transactions will not adversely affect the tax-exempt status of n under sec_501 of the code the proposed transactions will not give rise to unrelated_business_taxable_income to either m or n under sec_511 through of the code following the proposed transactions m will continue to qualify as an organization described in sec_501 of the code and it will continue to be classified as a supporting_organization under sec_509 following the proposed transactions n will continue to qualify as an organization described in sec_501 of the code and it will continue to be classified as a publicly_supported_organization under sec_509 and sec_170 following the proposed transactions contributions to m and n will continue to be deductible by the donor under sec_170 sec_2055 sec_2106 and sec_2522 of the code law sec_501 of the code exempts from federal_income_tax corporations organized and operated exclusively for charitable educational and other purposes provided that no part of the net_earnings inure to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 of the income_tax regulations provides that an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities that accomplish one or more of such exempt purposes specified in sec_501 of the code an organization will not be so regarded if more than an insubstantial part of its activities are not in furtherance of an exempt_purpose sec_509 of the code excludes from the definition of private_foundation an organization described in sec_501 which is organized and operated exclusively for the benefit of or to carry out the purposes of one or more specified public_charities has one of three specified relationships with the supported_organization and is not controlled by disqualified persons other than foundation managers sec_1_509_a_-4 of the regulations provides the organizational_test for supporting organizations to be organized for the purposes of sec_509 the articles must limit an organization’s purpose to supporting one or more organizations described in sec_509 or sec_509 of the code not expressly empower the organization to engage in activities which are not in furtherance of the purposes described in sec_509 identify the publicly supported organizations on whose behalf the organization is to be operated and not expressly empower the organization to support or benefit any organization other than the specified publicly supported organizations sec_1_509_a_-4 of the regulations contains the operational_test for supporting organizations a supporting_organization must engage solely in activities which support the specified publicly_supported_organization sec_1_509_a_-4 of the regulations describes the relationship now labeled type i- operated supervised or controlled by the relationship is comparable to that of a parent and subsidiary where the subsidiary is under the direction of and accountable or responsible to the parent this relationship is established by the fact that a majority of the officers directors or trustees of the supporting_organization are appointed by the governing body sec_511 of the code imposes a tax on the unrelated_business_taxable_income defined in sec_512 of organizations described in sec_501 i ii iii iv sec_512 of the code provides that the term unrelated_business_taxable_income means the gross_income derived from any unrelated_trade_or_business which it carries on regularly sec_513 of the code defines the term unrelated_trade_or_business as one that is not substantially related to the exercise or performance by an organization of its charitable purpose or function constituting the basis for its exemption sec_514 of the code distinguishes between debt-financed_property held to produce income and property that is used for purposes substantially related to the performance of the organization’s exempt_function only income from property that is unrelated is subject_to the computations in that section sec_4946 of the code defines disqualified_individual with respect to any private_foundation as an individual who is- a substantial_contributor to the foundation a foundation_manager an owner of more than percent of the total combined voting power of a corporation which is a substantial_contributor to the foundation or a member_of_the_family of any individual described above sec_4946 of the code refers to the definition of substantial_contributor in sec_507 which is a person who contributed or bequeathed an aggregate amount of more than dollar_figure to the private_foundation if the amount is more than percent of the total contributions and bequests received during the taxable_year analysi sec_1 the service issued a determination_letter recognizing m as an exempt_organization under sec_501 of the code m’s purposes and activities will continue to be the same after the proposed transactions as before because n supports and is closely tied to the university m will continue to support the university indirectly through its affiliation with n in addition to its direct support of the university therefore m will continue to be organized and operated exclusively for exempt purposes within the meaning of sec_501 the proposed transactions will not adversely affect m’s tax-exempt status the service issued a determination_letter recognizing n as an exempt_organization under sec_501 of the code the proposed transactions will not affect its existing purposes or activities they will only add the exempt_purpose of acting as the member of m as the member n’s function will include nominating and electing members of the board_of m the bylaws of m require that some of its board members must be officers and directors of n thus through its officers and directors n will have a continuing role in the management of m also an exempt_organization supporting the university and the other colleges and universities in its system therefore n will continue to be recognized as exempt after the proposed transactions the proposed transactions are one-time reorganizations of existing affiliated exempt entities the proposed transactions are not trades_or_businesses nor are they regularly carried on see sec_512 supra the property owned by m is not held for income but used directly to accomplish its exempt purposes thus any income that might arise will be related see sec_514 supra in sum the transactions will not give rise to unrelated_business_taxable_income to either m or n under sec_511 through of the code prior to the proposed transactions m qualified as an organization other than a private_foundation by reason of its supporting relationship to the university foundation following the proposed transactions m will qualify as an organization other than a private_foundation by reason of its type i supporting relationship to n m will be operated supervised and controlled by n a public charity m’s activities will support its two specified publicly supported organizations the university and n m will not be controlled directly or indirectly by disqualified persons other than foundation managers within the meaning of sec_4946 of the code prior to the proposed transactions n qualified as an organization other than a private_foundation because its financial support came primarily from public sources the taxpayer has represented that following the proposed transactions the sources of its financial support will not change therefore it will continue to qualify as a publicly_supported_organization under sec_509 and sec_170 of the code because m and n will continue to be recognized as exempt_organizations under sec_501 of the code for the reasons above donors may continue to deduct contributions to them under sec_170 sec_2055 sec_2106 and sec_2522 of the code ruling sec_1 the proposed transactions will not adversely affect the tax-exempt status of m under sec_501 of the code the proposed transactions will not adversely affect the tax-exempt status of n under sec_501 of the code the proposed transactions will not give rise to unrelated_business_taxable_income to either m or n under sec_511 through of the code following the proposed transactions m will continue to qualify as an organization described in sec_501 of the code and it will continue to be classified as a supporting_organization under sec_509 following the proposed transactions n will continue to qualify as an organization described in sec_501 of the code and it will continue to be classified as a publicly_supported_organization under sec_509 and sec_170 following the proposed transactions contributions to m and n will continue to be deductible by the donor under sec_170 sec_2055 sec_2106 and sec_2522 of the code this ruling will be made available for public inspection under sec_6110 of the code after certain deletions of identifying information are made for details see enclosed notice notice of intention to disclose a copy of this ruling with deletions that we intend to make available for public inspection is attached to notice if you disagree with our proposed deletions you should follow the instructions in notice this ruling is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent except as we have ruled above we express no opinion as to the tax consequences of the transaction under the cited provisions of the code or under any other provisions of the code we express no opinion as to future activities that any of the organizations may undertake if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter enclosure notice steve grodnitzky manager exempt_organizations technical group sincerely


o f f i c e o f t h e c h i e f c o u n s e l department of the treasury i n t e r n a l r e v e n u e s e r v i c e w a s h i n g t o n d c date cc psi genin-106744-16 number release date uil ---------------------------- ---------------------------------------- ------------------ ------------------- --------- dear --------------------- this letter responds to your request for information dated date you are requesting information regarding the allowable credit under sec_2010 of the internal_revenue_code that may be applied to reduce or eliminate the estate_tax imposed by sec_2001 sec_2001 of the code imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2010 provides that a credit of the applicable credit_amount shall be allowed to the estate of every decedent against the tax imposed by sec_2001 sec_2010 provides that the applicable credit_amount is the amount of the tentative_tax that would be determined under sec_2001 if the amount with respect to which such tentative_tax is to be computed were equal to the applicable_exclusion_amount sec_2010 provides that the applicable_exclusion_amount is the sum of the basic exclusion amount and in the case of a surviving_spouse the deceased spousal unused exclusion amount sec_2010 generally provides that the basic exclusion amount is dollar_figure to be adjusted for inflation annually after calendar_year publication survivors executors and administrators provides further information including the basic exclusion amount since for your assistance a copy of publication has been included with this letter genin-106744-16 this letter has called your attention to certain general principles of the law it is intended for informational purposes only and does not constitute a ruling see revproc_2016_1 sec_2 2016_1_irb_1 date if you have any additional questions please contact our office at -------------------- sincerely karlene m lesho senior technician reviewer branch passthroughs special industries enclosure publication survivors executors and administrators


t c summary opinion united_states tax_court james l and patricia r williams petitioners v commissioner of internal revenue respondent docket no 8323-06s filed date james l and patricia r williams pro sese lynn m curry for respondent panuthos chief special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the years in issue and all rule references are to the tax_court rules_of_practice and procedure respondent determined deficiencies of dollar_figure dollar_figure and dollar_figure in petitioners’ and federal income taxes respectively the issues for decision are whether petitioners are entitled to itemized_deductions in amounts greater than the standard deductions allowed by respondent for the years in issue and a credit for education expenses in and background some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits as well as additional exhibits introduced at trial are incorporated herein by this reference petitioners resided in orlando florida when the petition was filed during the years at issue patricia r williams was an engineer with the florida department of environmental protection and james l williams was a salesman for approximately the first months of mr williams worked for u s foods selling food products in central florida mr williams spent the majority of his time at work visiting customers and soliciting business u s foods did not provide an automobile for mr williams to use nor did it reimburse him for gasoline or other expenses all dollar amounts are rounded to the nearest dollar in or about date mr williams left u s foods and began working for gold medal gold medal provided a vehicle and paid for gasoline although mr williams occasionally used his own car for business purposes without reimbursement in date hurricane charley struck the east coast of florida shortly after that mr williams lost his job with gold medal and remained unemployed for the remainder of hurricane charley also damaged petitioners’ home and destroyed many of their records petitioners timely filed joint federal_income_tax returns for the years in issue on schedule a itemized_deductions petitioners claimed deductions totaling dollar_figure dollar_figure and dollar_figure for and respectively the claimed deductions consist of medical and dental expenses taxes contributions tax preparation fees and unreimbursed employee business_expenses respondent disallowed the claimed itemized_deductions in full and instead allowed petitioners the standard_deduction for each year petitioners also claimed education credits of dollar_figure and dollar_figure in and respectively which respondent disallowed in full discussion i in general the commissioner’s determinations set forth in a notice_of_deficiency generally are presumed correct and the taxpayer bears the burden of showing that the determinations are in error rule a 290_us_111 deductions and credits are a matter of legislative grace and the taxpayer bears the burden of proving entitlement to any deduction or credit claimed on a return see 503_us_79 wilson v commissioner tcmemo_2001_139 pursuant to sec_7491 the burden_of_proof as to factual matters shifts to the commissioner under certain circumstances petitioners have neither alleged that sec_7491 applies nor established their compliance with the requirements of sec_7491 and b to substantiate items maintain records and cooperate fully with respondent’s reasonable requests petitioners therefore bear the burden_of_proof where a taxpayer establishes that he has incurred deductible expenses but is unable to substantiate the exact amounts the court can estimate the deductible amount if the taxpayer presents sufficient evidence to establish a rational basis for making the estimate see 39_f2d_540 2d cir 85_tc_731 in addition we may permit a taxpayer to substantiate sec_274 imposes additional substantiation requirements for certain types of expenses see sec_1_274-5t temporary income_tax regs fed reg date the cohan_rule does not apply to expenses governed by sec_274 50_tc_823 continued deductions through secondary evidence where the underlying documents have been unintentionally lost or destroyed see 122_tc_305 ii itemized_deductions as stated above petitioners claimed itemized_deductions on their and tax returns totaling dollar_figure dollar_figure and dollar_figure respectively in reconstructing their records for trial however petitioners appear to concede all but dollar_figure dollar_figure and dollar_figure of these amounts we limit our discussion to these amounts a medical and dental expenses under sec_213 medical and dental expenses paid and not_compensated_for_by_insurance_or_otherwise are deductible to the extent they exceed percent of adjusted_gross_income agi petitioners reported agi of dollar_figure dollar_figure and dollar_figure in and respectively multiplying these amounts by percent yields dollar_figure dollar_figure and dollar_figure for the years in issue petitioners contend that they incurred medical and dental expenses totaling dollar_figure in dollar_figure in and dollar_figure in continued affd per curiam 412_f2d_201 2d cir although some of petitioners’ claimed itemized_deductions are subject_to sec_274 for the reasons discussed below we need not decide whether petitioners meet the heightened substantiation requirements because the claimed medical and dental expenses are less than percent of petitioners’ reported agi for each of the years in issue petitioners are not entitled to a deduction for medical and dental expenses see sec_213 b unreimbursed employee business_expenses in general a taxpayer may deduct ordinary and necessary expenses paid_or_incurred in connection with the operation of a trade_or_business sec_162 boyd v commissioner supra pincite a trade_or_business includes the trade_or_business of being an employee 91_tc_352 for such expenses to be deductible the taxpayer must not have the right to obtain reimbursement from his employer see 788_f2d_1406 9th cir affg tcmemo_1984_533 a taxpayer generally cannot deduct personal living or family_expenses sec_262 articles of clothing including shoes or boots are deductible only if the clothing is required in the taxpayer’s employment is not suitable for general or personal wear and is not worn for general or personal purposes 30_tc_757 nicely v commissioner tcmemo_2006_172 petitioners contend they spent a total of dollar_figure in each of petitioners did not claim a deduction for medical and dental expenses on their return however the dollar_figure of reconstructed expenses for includes dollar_figure of medical and dental expenses the years in issue for items such as clothing and shoes that were required for employment petitioners’ testimony on this issue was vague however and petitioners gave no indication that the clothing or shoes were unsuitable for general or personal wear accordingly such expenses are not deductible see yeomans v commissioner supra petitioners assert they spent dollar_figure on haircuts in each of the years at issue we have repeatedly held that such costs are nondeductible personal expenses see 74_tc_1266 52_tc_842 fryer v commissioner tcmemo_1974_26 petitioners therefore are not entitled to deduct the costs of clothing shoes and haircuts as business_expenses petitioners contend they paid_or_incurred numerous other business-related expenses for items such as gasoline a computer and a facsimile machine we need not consider these remaining items the standard_deduction for and was dollar_figure dollar_figure and dollar_figure respectively see sec_63 after the claimed deductions for medical and dental expenses clothing and shoes and haircuts are disallowed petitioners’ remaining deductions for each year do not exceed these amounts petitioners therefore are entitled only to the standard_deduction for each year sec_63 and c shepherd v commissioner tcmemo_1999_19 respondent’s determination on this issue is sustained iii education credits a taxpayer who incurs tuition and related expenses may be eligible for a credit under sec_25a see sec_25a c petitioners contend that mrs williams qualifies for an education credit under sec_25a for and petitioners introduced no evidence concerning where mrs williams attended school or the amount if any of her tuition and related expenses accordingly respondent’s determination is sustained to reflect the foregoing decision will be entered for respondent


department of the treasury p o box ben franklin station washington dc person to contact telephone number refer reply to cc dom p si - plr-111800-99 date date internal_revenue_service index no re legend decedent spouse son date marital trust trust a_trust b ssn ein ein ein z dear this is in response to your submission of and subsequent correspondence requesting an extension of time under sec_301_9100-1 of the procedure and administration regulations to make a reverse qualified_terminable_interest_property qtip_election under sec_2652 of the internal_revenue_code and to sever a qtip marital trust into two separate trusts under sec_26_2654-1 of the generation-skipping_transfer_tax gstt regulations the facts submitted and representations made are as follows decedent died testate on date survived by spouse and two children decedent's will provided that the residue of his estate was the will be further divided into a to be divided into a martial trust and a family_trust provided that the marital trust was to generation-skipping_transfer gst exempt trust trust a gst nonexempt trust trust b satisfy the requirements for qtip treatment the terms of the marital trust and a plr-111800-99 spouse and son as coexecutors of decedent's_estate employed an accounting firm to prepare decedent's federal estate_tax_return form_706 schedule m of form_706 the co-executors made an election under sec_2056 with respect to the entire value of the marital trust and claimed a deduction under sec_2056 for dollar_figure death value of the property passing to the trust and a law firm to review the return the date of on on schedule r as filed the coexecutors allocated decedent's dollar_figure million gst_exemption to the marital trust however the executors failed to indicate that the marital trust would be severed into two trusts and failed to make the election under sec_2652 with respect to trust a the estate proposes to sever the marital trust into two separate trusts and to make a reverse_qtip_election under sec_2652 with respect to trust a decedent's entire gst_exemption was available at his death is also represented that there have been no distributions of principal from the marital trust is represented that it it as proposed trust a will consist of a fraction of the current value on the date of severance of the marital trust numerator of the fraction will be the amount of decedent's gst_exemption available at his death and the denominator will be dollar_figurez the value of the marital trust as finally determined for federal trust b will consist of the balance of the estate_tax purposes current value on the date of severance of the marital trust the both trust a and trust b will be administered under the terms of decedent's will and will contain identical provisions with respect to distributions during spouse's life and the distribution of the remainders at her death decedent's_estate requests an extension of time under sec_301_9100-1 to sever the marital trust into trust a and trust b under b and to make the reverse_qtip_election under sec_2652 with respect to trust a - sec_2001 imposes a tax on the transfer of the taxable a citizen or resident of the estate of every decedent who is united_states sec_2056 provides that for purposes of the tax imposed by sec_2001 the value of the taxable_estate is to be determined by deducting from the value of the gross_estate an amount equal to the value of any interest in property that passes or has passed_from_the_decedent to the surviving_spouse plr-111800-99 sec_2056 provides the general_rule that no deduction shall be allowed for an interest passing to the surviving_spouse if an event or contingency or on the failure of an event or contingency to occur the interest will terminate or fail on the lapse of time on the occurrence of sec_2056 a provides that in the case of qualified_terminable_interest_property the entire property shall be treated as passing to the surviving_spouse for purposes of sec_2056 and no part of the property shall be treated as passing to any person other than the surviving_spouse in a form described in sec_2056 a sec_2056 b i defines qualified_terminable_interest_property qtip as property which passes from the decedent income_interest for life and sec_2056 in which the surviving_spouse has a qualifying to which an election under b v applies sec_2601 imposes a tax on every generation-skipping with regard to the generation-skipping_transfer_tax transfer each individual is allowed under sec_2631 an exemption of dollar_figure adjusted for inflation which may be allocated by such individual or by his or her executor to any property with respect to which such individual is the transferor under sec_2632 the allocation may be made at any time on or before the date prescribed for filing the individual's estate under sec_2632 any portion tax_return including extensions of an individual's gst_exemption not allocated within the time prescribed in sec_2632 is automatically allocated first to direct skips treated as occurring at the transferor's death and second to trusts with respect to which the decedent is the transferor and from which a taxable_termination or distribution might occur at or after the decedent's death automatic allocation is irrevocable no automatic allocation of gst_exemption is made to a_trust that will have a new transferor with respect to the entire trust prior to the occurrence of any generation-skipping_transfer with respect to the trust a taxable the under sec_26_2632-1 an allocation of gst_exemption is void if the allocation is made with respect to a_trust that has no gst potential with respect to the transferor making the allocation at the time of the allocation sec_2652 provides that in the case of any trust with respect to which a deduction is allowed to the decedent's_estate under sec_2056 the estate of the decedent may elect to treat all of the property in the trust for purposes of the gstt if the election to be treated as qualified_terminable_interest_property had not been made to as the reverse_qtip_election this election is referred the consequence of as a reverse plr -111800-99 qtip_election is that the decedent remains for gstt purposes the transferor of the qtip_trust for which the election is made as a result the decedent's gst_exemption may be allocated to the qtip_trust sec_26_2652-2 provides that a reverse_qtip_election is made on the return on which the qtip_election is made sec_26_2654-1 provides rules pursuant to which the if the governing instrument does not require severance of a_trust that is included in the transferor's gross_estate into two or more trusts is recognized for purposes of chapter severance the trust must be severed pursuant to discretionary authority granted either under the governing instrument or under under sec_26_2654-1 and sec_26_2654-1 local law the trust must be severed prior to the date prescribed for filing in the alternative the federal the federal estate_tax_return or estate_tax_return must contain a statement that the trust will be in addition the trust must either be severed on a severed fractional basis or a pecuniary basis if so required by the governing instrument if severed on a fractional basis the separate trusts need not be funded with a pro_rata portion of each asset held by the undivided trust under sec_301_9100-1 of the procedure and administration regulations the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of abroad under all subtitles of the internal_revenue_code except subtitles e satisfaction of the commissioner that the taxpayer has acted reasonably and in good_faith and granting relief will not prejudice the interests of the government if the taxpayer demonstrates to the a taxpayer who is and i h g sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government sec_301_9100-3 in this case the standards of sec_301_9100-1 and sec_301_9100-3 have been satisfied granted until days from the date of this letter for an amended schedule m showing that the assets listed on the consequently an extension of time is filing plr-111800-99 original schedule m are divided into trust a and trust b pursuant to decedent's will and filing an amended schedule r making the reverse_qtip_election for trust a the severance of the marital trust into trust a and trust b’ and the reverse_qtip_election with respect to trust a are deemed therefore to have occurred as of the decedent's date of death decedent's available gst_exemption will be allocated to trust a a copy of this letter should be attached to the amended schedules a copy is enclosed for that purpose except as specifically ruled herein we express no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code this ruling is directed only to the taxpayer who requested sec_6110 provides that it may not be used or cited it as precedent sincerely yours signed paul f kugler paul f kugler assistant chief_counsel passthroughs and special industries enclosures copy of letter copy for sec_6110 purposes