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 b04 plr-118627-18 date date re ------------------------------------------------------------- legend ----------------------------------------------------------------- --------------------------------------------------------------------- ------------------- ---------------------------------------------- ------------------------- ------------------------------------------------------------------ grantor spouse date trust a -------------------------------------------------------------------- trust b -------------------------------------------------------------- trust c -------------------------------------------------------------------- grandchild a ------------------------------------------------------ grandchild b ------------------------------------------------------- grandchild c ----------------------------------------------------------- grandchild d ---------------------------------------------------- grandchild e ---------------------------------------------------------- grandchild f ------------------------------------------------ grandchild g ----------------------------------------------------- date accountant -------------------- law firm son son daughter state state statute ------------------------------------------------------ court ------------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------- ---------------------------- --------------------- ------------------------ -------------------- --------- ---------------- ---------------------------------------------------------------------------------------------- plr-118627-18 ---------------------------------------- date date date date date year year year year year year --------------------- --------------------- --------------------------- -------------------------- ------------------------- ------ ------ ------ ------ ------ ------ dear -------------- this letter responds to your letter dated date and prior correspondence submitted by your authorized representative requesting rulings on the gift estate and generation-skipping_transfer_tax consequences of court orders to reform three trusts to correct scrivener’s errors and to modify the trusts to clarify a provision in the trusts the facts and representations submitted are as follows on date in year grantor created three irrevocable trusts trusts a b and c for the benefit of his grandchildren son son and daughter are grantor’s children trust a is to be held for the benefit of son 1’s children grandchild a b and c trust b is to be held for the benefit of son 2’s children grandchild d and e trust c is to be held for the benefit of daughter’s children grandchild f and g grandchild a through g are referred to collectively as the beneficiaries and individually as beneficiary year is after date the trustee of trust a and c is son the trustee of trust b is son the terms of each trust are almost identical under article iii b of each trust the trustee shall immediately divide the trust property into equal parts setting aside one such part for the benefit of each beneficiary article iii b provides that the trustee may distribute so much of the income and principal of the trust to or for the benefit of the beneficiary for whom it has been set_aside in such amounts at such times and in such manner as the trustee in its sole discretion deems advisable for the beneficiary’s health education including college and professional education welfare and support in reasonable comfort and to permit the beneficiary to enter into or engage in a business or profession in which the trustee believes the beneficiary has reasonable prospects of success article iii b provides that the separate trust held for a beneficiary shall terminate upon the death of such beneficiary upon termination the remaining principal and any plr-118627-18 undistributed_income of such separate trust shall be distributed as the deceased beneficiary may appoint by a provision of the beneficiary’s will which expressly refers to the power_of_appointment given by the trust agreement any portion of the remaining principal and any undistributed_income of such separate trust that is not validly appointed in such manner shall be distributed to the then living lineal_descendants of the beneficiary per stirpes and if there is none then to the living lineal_descendants of son son or daughter depending upon the beneficiary’s trust per stirpes article iii c provides that notwithstanding the provisions of paragraph b of article iii at the time any property is initially placed in or later added to the trust each living beneficiary shall have the unrestricted right to demand and receive from the trust that share of such property which is allocated to that beneficiary’s trust the trustee shall notify each beneficiary of the existence of this right within fourteen days from its receipt of such property beneficiaries must exercise such right by a written instrument delivered to the trustee within thirty days from the date such notice is given or such right shall lapse grantor and spouse each made gifts to trusts a b and c in year sec_1 through and years through grantor and spouse elected to treat the gifts each made to each trust in year sec_1 through and years through as made by both under sec_2513 grantor died on date in year and bequeathed a portion of his estate to each of the trusts following grantor’s death in year sec_12 through spouse continued to make gifts to each trust spouse died on date in year several years after grantor’s death the trustees became aware that article iii b lacked the language necessary to prevent an appointment of trust property to non-family members and that the broad language could be construed as granting a general_power_of_appointment to the beneficiaries this would result in inclusion of trust property in each beneficiary’s gross_estate it is represented that such a result was contrary to grantor’s intent on date son in his capacity as the trustee of trust a and trust c and as representative by joinder of trust b petitioned court to reform trusts a b and c to include the necessary limiting language to qualify each beneficiary’s power_of_appointment as a limited_power_of_appointment expressly prohibiting the appointment of trust assets to a beneficiary such beneficiary’s estate the creditors of such beneficiary and the creditors of such beneficiary’s estate the petition was supported by three affidavits one each from grantor’s accountant law firm and son in his capacity as the trustee of trusts a and c and as representative by joinder of trust b accountant swore that grantor intended the trusts to be gst exempt law firm swore that grantor did not recognize that including the power_of_appointment language would result in including the trust assets in each beneficiary’s gross_estate plr-118627-18 on date court issued an order effective date that limited the power_of_appointment language in article iii b to exclude the beneficiary the beneficiary’s estate the creditors of the beneficiary and the creditors of the beneficiary estate on date court issued an amended order clarifying that the trusts terminate at the death of the named grandchild and that per stirpes distributions are to be outright and in fee the amended order clarifies that each separate trust held for a beneficiary shall terminate upon the death of such beneficiary this is consistent with the provisions of each trust as originally executed further the amended order clarifies that each trust shall provide that upon such termination the remaining principal and any undistributed_income of such separate trust shall be distributed as such deceased beneficiary may appoint to or for the benefit of one or more of the lineal_descendants of the child of the grantor son son or daughter depending upon the trust who is a lineal ascendant of such beneficiary but excluding such beneficiary such beneficiary’s estate the creditors of such beneficiary and the creditors of such beneficiary’s estate the default provisions of each trust remain unchanged both orders were issued contingent upon a ruling from the internal_revenue_service on date court issued a second amended order that reforms article iii c to limit the beneficiary’s withdrawal right to the lesser_of that amount equal to the greater of that amount which under sec_2514 will not be considered a release of a power_of_appointment as the result of a lapse of the power currently the greater of dollar_figure or five percent of the aggregate value of the assets out of which or the proceeds of which the exercise of the lapsed power could be satisfied or that amount that under sec_2503 may be excluded in computing the total_amount_of_gifts made during such calendar_year or the fair_market_value of any property determined as of the date of the gift added to this trust by gift during such calendar_year this order is also contingent upon a ruling from the internal_revenue_service you have requested the following rulings the judicial reformation and modification of trusts a b and c will not cause the corpus of such trusts to be included in the gross_estate of spouse for federal estate_tax purposes trusts a b and c as reformed and modified do not provide the beneficiaries with general powers of appointment over the assets of such beneficiary’s trust under sec_2514 or sec_2041 and upon the death of the beneficiary the assets of the deceased beneficiary’s trust will not be includible in such beneficiary’s gross_estate under sec_2041 the judicial reformation and modification of trusts a b and c do not constitute the exercise or release of any general powers of appointment by a beneficiary resulting in a gift under sec_2514 plr-118627-18 trust a b and c are skip persons as defined under sec_2613 and accordingly the deemed_allocation rules of sec_2632 apply to allocate grantor’s and spouse’s gst_exemption to the year through year and year through year gifts_and_bequests to trust a b and c ruling_request sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2033 provides that the value of the gross_estate shall include the value of all property to the extent of the interest therein of the decedent at the time of the decedent’s death sec_2036 provides that the value of the decedent’s gross_estate includes the value of all property to the extent of any interest transferred by the decedent with respect to which the decedent has retained for life either an income_interest in the property or the right to designate the persons who will possess or enjoy the property or have an interest in the income of the property sec_2038 provides that in the case of transfers after date the value of the gross_estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer except in case of a bona_fide sale for an adequate_and_full_consideration in money or money’s worth by trust or otherwise where the enjoyment thereof was subject at the date of death to any change through the exercise of a power in whatever capacity exercisable by the decedent alone or by the decedent in conjunction with any other person without regard to when or from what source the decedent acquired such power to alter amend revoke or terminate or when any such power is relinquished during the 3-year period ending on the date of the decedent’s death in the present case trusts a b and c are irrevocable trusts during year through year and year through year spouse and grantor consented to treat their gifts as having been made one-half by each donor accordingly spouse and grantor are each treated as the transferor of one-half of the total transfers to the trusts during those years during year sec_12 through spouse made gifts to each trust accordingly spouse is the transferor of those gifts to the trusts during those years however spouse did not retain any right or interest in the trusts spouse did not retain a beneficial_interest in the trusts and did not retain the right to alter amend revoke or terminate any of the trusts further spouse did not retain the right to designate who would possess or enjoy the property or income derived from the trusts the reformation and modification of trusts a b and c were made pursuant to court orders and not as a result of rights retained by spouse accordingly based upon the facts submitted and representations made we conclude that the judicial reformation and modification of plr-118627-18 trusts a b and c will not cause the corpus of trust a b and c to be included in the gross_estate of spouse for federal estate_tax purposes ruling_request sec_2 and sec_2001 provides that a tax is imposed on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2031 provides generally that the value of the gross_estate of the decedent shall be determined by including to the extent provided for in sec_2031 through the value at the time of his death of all property real or personal tangible or intangible wherever situated sec_2041 provides that the value of the gross_estate includes the value of all property to the extent of any property with respect to which the decedent has at the time of his death a general_power_of_appointment created after date or with respect to which the decedent has at any time exercised or released such a power_of_appointment by a disposition which is of such nature that if it were a transfer of property owned by the decedent such property would be includible in the decedent's gross_estate under sec_2035 to inclusive for purposes of sec_2041 the power_of_appointment shall be considered to exist on the date of the decedent's death even though the exercise of the power is subject_to a precedent giving of notice or even though the exercise of the power takes effect only on the expiration of a stated period after its exercise whether or not on or before the date of the decedent's death notice has been given or the power has been exercised sec_2041 provides that for purposes of sec_2041 the term general_power_of_appointment means a power which is exercisable in favor of the decedent his estate his creditors or the creditors of his estate sec_2041 provides that the lapse of a power_of_appointment created after date during the life of the individual possessing the power shall be considered a release of such power sec_2501 imposes a gift_tax for each calendar_year on the transfer of property by gift during the year by an individual sec_2511 provides that the gift_tax shall apply whether the transfer is in trust or otherwise whether the gift is direct or indirect and whether the property is real or personal tangible or intangible for gift_tax purposes sec_2514 provides that the exercise or release of a general_power_of_appointment created after date shall be deemed a transfer of property by the individual possessing such power plr-118627-18 sec_2514 provides that the term general_power_of_appointment means a power which is exercisable in favor of the individual possessing the power his estate his creditors or the creditors of his estate sec_2514 provides that the lapse of a power_of_appointment created after date during the life of the person possessing the power is considered a release of the power sec_25_2514-3 of the gift_tax regulations provides in part that in any case where the possessor of a general_power_of_appointment is incapable of validly exercising or releasing a power by reason of minority or otherwise and the power may not be validly exercised or released on his behalf the failure to exercise or release of his power is not a lapse of the power however sec_2514 provides that a lapse during any calendar_year is considered as a release so as to be subject_to the gift_tax only to the extent that the property which could have been appointed by exercise of the lapsed power_of_appointment exceeds the greater of i dollar_figure or ii percent of the aggregate value at the time of the lapse of the assets out of which or the proceeds of which the exercise of the lapsed power could be satisfied state statute provides that upon application of a settlor or any interested person the court may reform the terms of a_trust even if unambiguous to conform the terms to the settlor's intent if it is proved by clear_and_convincing evidence that both the accomplishment of the settlor’s intent and the terms of the trust were affected by a mistake of fact or law whether in expression or inducement in determining the settlor’s original intent the court may consider evidence relevant to the settlor’s intent even though the evidence contradicts an apparent plain meaning of the trust instrument in 387_us_456 the court considered whether a state trial court's characterization of property rights conclusively binds a federal court or agency in a federal estate_tax controversy the court concluded that the decision of a state trial_court as to an underlying issue of state law should not be controlling when applied to a federal statute rather the highest court of the state is the best authority on the underlying substantive rule_of state law to be applied in the federal matter if there is no decision by that court then the federal authority must apply what it finds to be state law after giving proper regard to the state trial court's determination and to relevant rulings of other courts of the state in this respect the federal_agency may be said in effect to be sitting as a state court in the present case an examination of the relevant trust instruments affidavits and representations of the parties strongly indicates that grantor and spouse did not intend for the beneficiaries of trusts a b and c to have inter_vivos or testamentary general powers of appointment in reforming the trusts court found that there was clear_and_convincing evidence that the language in article iii b and article iii c were scrivener's errors and that the reformation and modification of the trusts was necessary and appropriate to achieve grantor’s and spouse’s objectives and that the reformation was not contrary to grantor's and spouse’s intentions plr-118627-18 consequently based on the facts submitted and representations made we conclude that the court's orders of date date and date reforming and modifying the trust instruments based on scrivener's errors are consistent with applicable state law that would be applied by the highest court of that state trusts a b and c as reformed and modified pursuant to the court's orders do not provide the beneficiaries with either inter_vivos or testamentary general powers of appointment over the assets of each respective beneficiary’s trust under sec_2041 and sec_2514 accordingly based on the facts submitted and the representations made we conclude that the judicial reformation and modification of trusts a b and c do not constitute the exercise or release of a general_power_of_appointment by a beneficiary resulting in a gift under sec_2514 and that the assets of the deceased beneficiary’s trust will not be includible in such beneficiary’s gross_estate under sec_2041 ruling_request sec_2601 imposes a tax on every generation-skipping_transfer gst made by a transferor to a skip_person a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2602 provides that the amount of gst tax imposed by sec_2601 is the taxable_amount multiplied by the applicable_rate sec_2641 defines the applicable_rate as the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer sec_2652 provides that except as provided in sec_2652 or sec_2653 the term transferor means in the case of any property subject_to the tax imposed by chapter the decedent and in the case of any property subject_to the tax imposed by chapter the donor an individual shall be treated as transferring any property with respect to which such individual is the transferor sec_2652 provides that if under sec_2513 one-half of a gift is treated as made by an individual and one-half of such gift is treated as made by the spouse of such individual such gift shall be so treated for purposes of chapter sec_2652 provides that a person has an interest_in_property_held_in_trust if at the time the determination is made such person has a right other than a future right to receive income or corpus from the trust sec_2631 provides that for year sec_1 through for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure adjusted for inflation which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor plr-118627-18 sec_2631 provides that for years through for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption amount which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable sec_2631 provides that for years through for purposes of sec_2631 the gst_exemption amount for any calendar_year shall be equal to the basic exclusion amount under sec_2010 for such calendar_year sec_2632 provides that if any individual makes a direct_skip during his lifetime any unused portion of such individual’s gst_exemption shall be allocated to the property transferred to the extent necessary to make the inclusion_ratio for such property zero if the amount of the direct_skip exceeds such unused portion the entire unused portion shall be allocated to the property transferred sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides that if a direct_skip occurs during the transferor’s lifetime the transferor’s gst_exemption not previously allocated unused gst_exemption is automatically allocated to the transferred property but not in excess of the fair_market_value of the property on the date of the transfer sec_26_2632-1 provides that the automatic allocation of gst_exemption is irrevocable after the due_date and is effective as of the date of the transfer to which it relates sec_2632 provides that any portion of an individual’s gst_exemption which has not been allocated within the time prescribed by sec_2632 shall be deemed to be allocated first to property which is the subject of a direct_skip occurring at such individual’s death sec_26_2632-1 provides that a decedent’s unused gst_exemption is automatically allocated on the due_date for filing form_706 to the extent not otherwise allocated by the decedent’s executor on or before that date sec_2612 provides that the term direct_skip means a transfer subject_to a tax imposed by chapter or of an interest in property to a skip_person sec_2613 provides that for purposes of chapter the term skip_person means a natural_person assigned to a generation which is two or more generations below the generation assignment of the transferor or a_trust if all interests in such trust are plr-118627-18 held by skip persons or if there is no person holding an interest in such trust and at no time after such transfer may a distribution including distributions in termination be made from such trust to a non-skip_person in the present case grantor and spouse made gifts to trusts a b and c the primary beneficiaries of trusts a b and c are the grandchildren of grantor and spouse pursuant to the reformation of trusts a b and c the beneficiaries possess testamentary limited powers of appointment to appoint to one or more of the lineal_descendants of son son or daughter depending upon which trust in default of the exercise the trust property passes to lineal_descendants of that grandchild or if there are none to the living descendants of son son or daughter depending upon which trust the beneficiaries lineal_descendants of the beneficiaries of son son and daughter are persons assigned to a generation which is two or more generations below the generation assignment of the grantor and accordingly the beneficiaries are skip persons as defined under sec_2613 accordingly we conclude trust a b and c are skip persons as defined under sec_2613 and the gifts to trusts a b and c are direct skips as defined in sec_2612 because grantor and spouse consented to split_gifts under sec_2513 for year through year and year through year grantor and spouse are treated as the transferor of one-half of the year through and year through year gifts to the trusts under sec_2652 therefore based on the facts submitted and representations made we conclude that the deemed_allocation rules under sec_2632 apply to allocate grantor’s and spouse’s unused gst_exemption to one-half each of the year through year and year through year gifts to the trusts and to allocate grantor’s unused gst_exemption to the bequests to the trusts in year and to allocate spouse’s unused gst_exemption to the year through year gifts to trusts a b and c 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 the rulings contained in this letter are based upon information and representations submitted by the taxpayers 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 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 plr-118627-18 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely lorraine e gardner lorraine e gardner senior counsel branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes


internal_revenue_service number release date index number ---------------------- -------------------------------------- ------------------- --------------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------- id no ------------------ telephone number ---------------------- refer reply to cc psi b01 plr-132962-12 date date legend x ------------------------------------------- -------------------------------- a ---------------------- b -------------------------------------------- ------------------- trust ------------------------------------------- -------------------------------- date ---------------------- date -------------------------- date ------------------ date ------------------ state ----------------- dear --------------- this responds to a letter dated date submitted on behalf of x by x’s authorized representative requesting a ruling under sec_1362 of the internal_revenue_code plr-132962-12 facts according to the information submitted x was incorporated under the laws of state effective date x elected to be taxed as an s_corporation on date a a shareholder of x died pursuant to a’s will a’s x shares were transferred to trust on date trust was an eligible shareholder of x until date as of date trust was intended to be treated as a qualified_subchapter_s_trust qsst however b the beneficiary of trust did not file a timely election to treat trust as a qsst therefore causing x’s s_corporation_election to terminate as of date x represents that trust qualified as a qsst under sec_1361 as of date and thereafter x further represents that the circumstances resulting in the failure_to_file a qsst election for trust was inadvertent and was 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_1361 of the code provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 defines a small_business_corporation as a domestic_corporation which is not an ineligible_corporation and which does not a have more than shareholders b have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual c have a nonresident_alien as a shareholder and d have more than class of stock sec_1361 provides that for purposes of sec_1361 a_trust all of which is treated under subpart e as owned by an individual who is a citizen or resident_of_the_united_states may be a shareholder sec_1361 provides that in the case of a qsst with respect to which a beneficiary makes an election under sec_1361 the trust is treated as a_trust described in sec_1361 and for purposes of sec_678 the beneficiary of the trust is treated as the owner of that portion of the trust which consists of stock in a s_corporation with respect to which the election under sec_1361 is made sec_1361 provides that a_trust with respect to stock transferred to it pursuant to a will but only for the 2-year period beginning on the day on which such is plr-132962-12 transferred to it sec_1362 provides in relevant part that if an election under sec_1362 by any corporation was terminated under sec_1362 or or sec_1361 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 in such corporation at any time during the period specified pursuant to sec_1362 agrees to make the adjustments consistent with the treatment of such corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in such termination such corporation shall be treated as an s_corporation during the period specified by the secretary conclusion based solely on the facts submitted and the representations made we conclude that x’s s_corporation_election terminated on date as a result of the failure to make a timely qsst election for trust we further conclude that the termination of x’s s election on date was inadvertent within the meaning of sec_1362 pursuant to the provisions of sec_1362 x will be treated as continuing to be an s_corporation as of date and thereafter provided that b files a qsst election for trust with an effective date of date with the appropriate service_center within days from the date of this letter and x’s s_corporation_election is not otherwise terminated under sec_1362 a copy of this letter must be attached to the qsst election accordingly x’s shareholders in determining their respective income_tax liabilities must include their pro_rata share of the separately and non-separately computed items of x as provided in sec_1366 make any adjustments to stock basis as provided in sec_1367 and take into account distributions made by x as of provided by sec_1368 except as specifically ruled upon above we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the code specifically we express or imply no opinion regarding x’s eligibility to be an s_corporation further no opinion is expressed or implied concerning whether trust meets the requirements of a qsst under sec_1361 this ruling is directed only to the taxpayer who requested it according to sec_6110 this ruling may not be used or cited as precedent plr-132962-12 pursuant to the power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative sincerely faith colson faith colson senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes cc


department of the treasury internal_revenue_service washington d c contact person id number date may sin of cv t legend x dear sir or madam this is in response to your ruling_request of date requesting advance approval of your grant procedures established pursuant to sec_4945 of the internal_revenue_code you are exempt from federal_income_tax under sec_501 of the code and have been determined to be a private_foundation as defined in sec_509 you will grant scholarships to individuals in the x area attending a college or graduate school of their choice the grantees will be selected on an objective and nondiscriminatory basis based on the standards set forth below regardless of the race color age religion gender family relationship or employment status of the applicant factor to be considered the selection committee is composed of your board_of trustees no scholarship may be awarded to any member of your board_of trustees its officers your creator or any of your family members scholarships may be paid directly to grant recipients or directly to the educational_institution you shall arrange to receive a report of the grantee’s courses taken and grades received in each academic period the report must be verified by the educational_institution and must be obtained at least once a year the report must also be approved by the facuity member supervising the grantee or by another appropriate_official of the institution to the extent that reports are untimely or indicate the misuse of scholarship funds you will withhold further payments also if funds were diverted to improper uses you would seek to recover such funds by all appropriate means sec_4945 of the code states that an individual grant will not constitute a taxable_expenditure if it is awarded on an objective and nondiscriminatory basis pursuant to a procedure approved in advance sec_53_4945-4 of the foundation and similar excise_taxes regulations states that to secure approval a private_foundation must demonstrate that i its grant procedure includes an objective and hondiscriminatory selection process ii such procedure is reasonably calculated to result in performance by grantees of the activities that the grants are intended to finance and iii the foundation pians to obtain reports to determine whether the grantees performed activities that the grants are intended to finance based on the information submitted and assuming your scholarship program will be conducted as proposed with a view to providing objectivity and nondiscrimination in the awarding of grants we rule that income provided for in sec_117 of the code to the extent that such grants are actually used for qualified_tuition_and_related_expenses within the meaning of sec_117 of the code foundation managers trustees or members of the selection committee or for a purpose that is inconsistent with the purposes described in sec_170 of the code the approval of your grant-making procedures is a one-time approval of your system of standards and procedures for selecting recipients of grants that meet the requirements of sec_4945 of the code thus approval will apply to succeeding grant programs only as long as the standards and procedures under which they are conducted do not differ materially from those described in your request any funds you distribute to individuals must be made on a true charitable basis in furtherance of the purposes for which you are organized therefore you shall maintain adequate_records and case histories so that any or all grant distributions can be substantiated upon request by the internal_revenue_service this ruling is directed only to the organization that requested it sec_61 k of the code provides that it may not be used or cited as precedent sincerely yours signed rodste s feige ut robert c harper jr manager exempt_organizations technical group


of f i c e of c h i ef c ou n sel department of the treasury i n t e r n al r e v e n u e s e r v i c e w ashington d c date number info release date uil conex-101697-08 the honorable james l oberstar u s house of representatives washington dc dear mr oberstar this letter responds to your inquiry dated date on behalf of your constituent ------------------------ ------------- contacted you about annual payments he makes in connection with minnesota critical habitat vehicle license plates according to the minnesota department of natural_resources website a dollar_figure per year fee is charged for a critical habitat license plate the dollar_figure fee is in addition to the regular costs for a minnesota license plate the department of natural_resources uses the dollar_figure payment to buy and manage important natural habitats which are preserved as public lands and are open to compatible public use like hunting and hiking http www dnr state mn us features plates index html last accessed date when a taxpayer with the intention of making a gift purchases an item of value from a qualified charity the excess of the payment over the value received is a charitable_contribution accordingly taxpayers who pay the additional fee are entitled to treat as a charitable_contribution the difference between the amount_paid for the critical habitat license plate and a regular minnesota license plate i hope this information is helpful if you have any questions please call me or ------------- -------------- at -------------------- sincerely john p moriarty chief branch office of associate chief_counsel income_tax accounting


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 october number release date uil ------------------------------ ------------------------------------------ -------------------------------------------- cc psi b03 genin-128050-15 --------------------- dear this letter responds to your request for information dated date in which you requested information on the transfer of united_states series i savings bonds the bonds purchased by you and your wife to a revocable_trust question how do we document the transfer of the bonds to a revocable_trust answer form pd f is used to reissue u s savings bonds including series i bonds to a personal trust which includes a revocable_trust when the form is filed the bonds should be included with the form as indicated by the form instructions sec_2 of form pd f requests the names of the grantors trustees taxpayer_identification_number and beneficiaries of the trust in general the grantors would be any persons who transfer property to the trust and the trustees would be those persons identified in the trust instrument the taxpayer identification numbers in the case of a revocable_trust created by husband and wife will generally be the husband and wife’s social_security numbers the beneficiaries of a_trust will generally include any living persons who may receive distributions from the trust depending on the terms of the trust the beneficiaries may include you and your wife as well as your children or other persons named or described in the trust form pd f is a publication of the bureau of public debt rather than the internal_revenue_service for further clarification regarding the form we suggest you contact the bureau of public debt forms management officer parkersburg wv as indicated on page of the form genin-128050-15 question will we be required to recognize and report interest earned on the bonds subsequent to their transfer to a revocable_trust answer in general the owner of series i bonds may defer reporting the accrued interest on the bonds on the owner’s federal_income_tax return until the bonds mature or are disposed of if the bonds are issued in the names of co-owners the identity of the owner who must report the interest_income is determined by the source of the funds used to purchase the bonds not by the names or social_security numbers on the bonds therefore if one of you contributed all of the money used to purchase the bonds the interest_income would be taxable to the contributor if the owner of series i bonds transfers them to a_trust and the transferor is considered the owner of the trust ie a grantor_trust for federal_income_tax purposes the transferor may continue to defer reporting interest accrued each year for example a transferor is treated as the owner of a_trust if the transferor can revoke the trust the transferor must include the total interest accrued in his or her income when the bonds are redeemed or finally mature whichever is earlier 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_2015_1 sec_2 2015_1_irb_1 date if you have any additional questions please contact our office at ------------------ sincerely bradford r poston senior counsel branch passthroughs special industries enclosures excerpts from irs publication your federal_income_tax excerpts from irs publication investment_income expenses genin-128050-15 excerpt from the u s savings bond website maintained by u s department of the treasury bureau of the public debt concerning the death of a savings bond owner http www treasurydirect gov indiv research indepth ebonds res_e_bonds_eedeath htm


t c memo united_states tax_court specialty staff inc petitioner v commissioner of internal revenue respondent docket no 9384-11l filed date terrie a hellman an officer for petitioner diane l worland for respondent memorandum opinion ruwe judge this matter is before the court on respondent’s motion for summary_judgment motion pursuant to rule respondent contends that no genuine issue exists as to any material fact and that the determination to maintain a notice_of_federal_tax_lien nftl filed pursuant to sec_6323 should be sustained background at the time the petition was filed petitioner had an indiana mailing address petitioner’s address was subsequently changed to a nevada address on date respondent issued petitioner a letter final notice_of_intent_to_levy and notice of your right to a hearing informing petitioner that respondent intended to levy to collect its unpaid employment_tax liability for the tax period ending date and that petitioner could request a hearing with respondent’s appeals_office on date respondent sent petitioner a letter notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 advising petitioner that an nftl had been filed with respect to its unpaid 1unless otherwise indicated all rule references are to the tax_court rules_of_practice and procedure and all section references are to the internal_revenue_code as amended employment_tax liability for the tax period ending date and that petitioner could request a hearing with respondent’s appeals_office on date petitioner submitted a form request for a collection_due_process or equivalent_hearing in response to respondent’s two previous notices in which it requested that respondent withdraw the nftl and stated that there has been an error and the damage caused by the error committed by the irs has caused millions in damages no other relief was requested in the form regarding the lien or the proposed levy during a collection_due_process cdp hearing regarding this matter the settlement officer advised petitioner’s president terrie hellman that petitioner did not qualify for a lien discharge or withdrawal because it was not in compliance with deposit requirements and continued to accrue tax_liability for each quarter respondent’s settlement officer reviewed respondent’s records and verified that for every quarter commencing with the fourth quarter of through the first quarter of petitioner had not made timely and adequate amounts of employment_tax deposits for the wages it reported as paid on its form sec_941 employer’s quarterly federal tax returns petitioner did not present any documentation before during or after the cdp hearing to demonstrate that respondent made any miscalculations of its employment_tax liability for the tax period ending date or miscalculations of any other employment_tax period which would affect its correct unpaid employment_tax liability for the tax period ending date petitioner did not submit to respondent’s settlement officer a form_433 collection information statement nor did it submit a proposed installment_agreement or a proposed offer-in-compromise on date respondent issued petitioner a notice_of_determination concerning collection action s under sec_6320 and or determining that respondent followed all legal and procedural requirements in the issuance of the notice_of_levy and the filing of the nftl petitioner timely filed a petition and an amendment to petition with this court discussion summary_judgment is intended to expedite litigation and to avoid unnecessary and expensive trials 61_tc_861 a motion for summary_judgment is granted where the pleadings and other materials show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law rule b 98_tc_518 aff’d 17_f3d_965 7th cir the burden is on the moving party to demonstrate that no genuine issue as to any material fact remains and that he is entitled to judgment as a matter of law 116_tc_73 in all cases the evidence is viewed in the light most favorable to the nonmoving party 100_tc_32 however the nonmoving party is required to go beyond the pleadings and by its own affidavits or by the ‘depositions answers to interrogatories and admissions on file ’ designate ‘specific facts showing that there is a genuine issue for trial ’ 477_us_317 see also 119_tc_157 115_tc_554 petitioner’s response to respondent’s motion fails to indicate that there is a genuine issue for trial consequently we conclude that there is no issue as to any material fact and that a decision may be rendered as a matter of law if a taxpayer’s underlying liability is properly at issue the court reviews any determination regarding the underlying liability de novo 114_tc_176 petitioner has the burden_of_proof regarding its underlying liability see rule a a taxpayer is precluded from disputing an issue including a challenge to the underlying liability which was not properly raised in the cdp hearing see 129_tc_107 petitioner made no arguments and presented no evidence to bring into doubt the correctness of the underlying tax_liability as calculated by respondent consequently petitioner’s underlying tax_liability is not properly before the court the court reviews administrative determinations by respondent’s office of appeals regarding nonliability issues for abuse_of_discretion 131_tc_197 goza v commissioner t c pincite- the determination of an appeals officer must take into consideration the verification that the requirements of applicable law and administrative procedure have been met issues raised by the taxpayer and whether any proposed collection action balances the need for the efficient collection_of_taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary sec_6320 sec_6330 see also 117_tc_183 the notice_of_determination sets forth the internal revenue service’s verification of compliance with applicable law and administrative procedure and petitioner did not challenge that verification consequently verification under sec_6330 is not at issue a taxpayer may raise in a cdp hearing any relevant issue including challenges to the appropriateness of collection actions and offers of collection alternatives which may include the posting of a bond the substitution of other assets an installment_agreement or an offer-in-compromise sec_6330 the court will not generally consider such issues reviewable for abuse_of_discretion if they were not raised during the cdp hearing process see giamelli v commissioner t c pincite see also 118_tc_488 the only relief that petitioner sought in the cdp hearing was the withdrawal of the federal_tax_lien in its pleadings petitioner contends that the nftl was prematurely filed petitioner was not instructed to submit a form_433 and was not requested to submit a proposed settlement and respondent’s settlement officer abused her discretion in denying petitioner’s request for withdrawal of the nftl filed with respect to its employment_tax liability for the tax period ending date because withdrawal of the lien would have facilitated collection of petitioner’s tax_liability petitioner contends that the nftl was prematurely filed sec_6321 provides that if any person liable to pay any_tax neglects or refuses to pay the same after demand the tax and any interest additional_amount addition_to_tax or assessable penalty shall be a lien in favor of the united_states upon all property and rights to property whether real or personal belonging to such person the lien imposed by sec_6321 generally arises at the time the assessment is made and continues until the tax_liability is satisfied or becomes unenforceable by reason of lapse of time sec_6322 sec_6320 and sec_6330 establish procedural protections for taxpayers when the commissioner elects to file an nftl under sec_6323 specifically sec_6320 provides that not more than business days after the day an nftl is filed the commissioner is obliged to provide written notice by inter alia certified or registered mail to the taxpayer’s last_known_address informing the taxpayer of his or her right to request an appeals_office hearing during the 30-day period beginning on the day after the 5-day period prescribed in sec_6320 sec_6320 provides that the procedures set forth in sec_6330 d and e generally are applicable in the case of tax_liens a review of the record indicates that the nftl was not prematurely filed and that petitioner received the requisite notices from respondent’s appeals_office petitioner also contends that it was not instructed to submit a form_433 or notified that it could present various collection alternatives at the cdp hearing however petitioner attached to its petition a completed form that indicates petitioner was informed that if it wanted to pursue collection alternatives it was recommended that petitioner submit a completed form 433a individual and or form 433b business as appropriate along with its submission of the hearing request the attached form also identifies various collection alternatives that might be available to a taxpayer in addition petitioner attached to its petition a document entitled irs timeline of events that contributed to the specialty staff inc status as it stands today the document indicates that during date petitioner’s president met with respondent’s revenue_officer at petitioner’s office and that the revenue_officer was provided with all the documents he requested missing petitioner’s forms 433-a and 433-b as petitioner’s president needed to gather a few additional pieces of information to complete those documents thus the record indicates that it is inaccurate for petitioner to contend that it was not made aware of either form_433 or collection alternatives before the cdp hearing took place petitioner failed to provide the settlement officer with the requested financial data and failed to propose either an installment_agreement or an offer-in-compromise additionally petitioner contends that respondent’s settlement officer abused her discretion in denying its request for withdrawal of the lien because withdrawal would have facilitated collection of petitioner’s tax_liability by allowing petitioner access to a potential line of credit petitioner contends that it repeatedly demonstrated that lien withdrawal was the only possibility remaining for respondent to collect taxes yet respondent ignored and continued pursuing illegal collection actions in support petitioner cites 136_tc_178 where we held although the commissioner’s appeals_office has discretion under sec_6325 to determine whether it is in the government’s interest to subordinate a federal_tax_lien it appears that the settlement officer’s refusal to consider petitioner’s request to subordinate the lien was based on an error of law the settlement officer erroneously concluded that the federal_tax_lien was already subordinated to a line of credit to the extent it was based upon an error of law his determination constitutes an abuse_of_discretion see 121_tc_111 that case is clearly distinguishable from the case before us there we found an abuse_of_discretion where a settlement officer refused to consider the merits of the taxpayer’s lien subordination request solely on the basis of his erroneous conclusion of law regarding the priority of a federal_tax_lien against a security_interest held by a third party furthermore because we held that the federal_tax_lien could have been subordinated and that the commissioner’s settlement officer committed an error of law the court did not reach the question of whether he 2petitioner did not provide any specific information regarding a potential line of credit abused his discretion by refusing to withdraw the nftl alessio azzari inc v commissioner t c pincite in the case before us respondent’s settlement officer did not similarly fail to consider petitioner’s request instead the settlement officer took into consideration petitioner’s continued failure to comply with its deposit requirements and its continuing accrual of significant unpaid employment_tax liabilities and determined that lien withdrawal would be inappropriate this court has previously held that a taxpayer’s history of noncompliance as well as its failure to be in current compliance with its federal_income_tax liabilities is a valid basis for the commissioner’s rejection of alternatives to collection martino v commissioner tcmemo_2009_43 londono v commissioner tcmemo_2003_99 in addition to petitioner’s noncompliance issues respondent’s settlement officer also considered its failure to raise specific issues regarding the propriety of the filing of the nftl and its failure to propose any collection alternatives other than lien withdrawal on the basis of those considerations the settlement officer arrived at her determination to deny petitioner’s request consequently we find that the settlement officer’s exercise of discretion was not arbitrary capricious or without foundation in fact or law as a result we hold that respondent’s settlement officer did not abuse her discretion in sustaining the filing of the nftl and in determining that the proposed levy action balances the need for efficient collection_of_taxes with the taxpayer’s legitimate concern that any collection action be no more intrusive than necessary to reflect the foregoing an appropriate order will be issued granting respondent’s motion and decision will be entered for respondent


t c memo united_states tax_court barry l moore petitioner v commissioner of internal revenue respondent docket no 11675-o0ol filed date eb kenneth wall for petitioner taylor cortright for respondent memorandum opinion armen special_trial_judge this matter is before the court on respondent's motion for partial summary_judgment as supplemented filed pursuant to rule respondent contends tt all rule references are to the tax_court rules_of_practice and procedure and all section references are to the internal_revenue_code as amended - that petitioner received notices of deficiency for each of the taxable years and through and therefore that petitioner is precluded by statute from contesting his liability for the underlying taxes for those years in this collection review proceeding summary_judgment is intended to expedite litigation and avoid unnecessary and expensive trials fla peach corp v commissioner 90_tc_678 rule states that either party may move with or without supporting affidavits for a summary adjudication in the moving party’s favor on all or any part of the legal issues in controversy if the pleadings answers to interrogatories depositions admissions and any other acceptable materials together with the affidavits if any show that there 1s no genuine issue as to any material fact and that a decision may be rendered as a matter of law rule a and bo 98_tc_518 affd 17_f3d_965 7th cir 90_tc_753 85_tc_527 rule d which addresses the adverse party’s response to a motion for summary_judgment states in pertinent part when a motion for summary_judgment is made and supported as provided in this rule an adverse_party may not rest upon the mere allegations or denials of such party's pleading but such party's response by affidavits or as otherwise provided in this rule must set forth specific facts showing that there is a - genuine issue for trial if the adverse_party does not so respond then a decision if appropriate may be entered against such party 87_tc_1213 the moving party however bears the burden of proving that there is no genuine issue of material fact and factual inferences will be read in a manner most favorable to the adverse_party 85_tc_812 79_tc_340 as explained in detail below we shall grant respondent's motion it background a notices of deficiency and on date respondent mailed to petitioner a notice_of_deficiency determining a deficiency of dollar_figure in petitioner’s federal_income_tax for and additions to tax under sec_6651 and sec_6653 a and b respondent mailed the notice to petitioner pincite1 n central exp dallas texas the n central address by letter dated date petitioner wrote to respondent acknowledging receipt of the above-described notice_of_deficiency and citing the uniform commercial code ucc for the proposition that the notice_of_deficiency a presentment on your behalf is dishonored petitioner failed to file a petition with this court challenging the notice_of_deficiency for q4e- on date respondent mailed to petitioner a notice_of_deficiency determining a deficiency of dollar_figure in petitioner’s federal_income_tax for and additions to tax under sec_6651 and a respondent mailed the notice to petitioner at the n central address by letter dated date petitioner wrote to respondent acknowledging receipt of the above-described notice_of_deficiency and again citing the ucc for the proposition that the notice_of_deficiency dated date a presentment on your behalf is dishonored petitioner failed to file a petition with the court challenging the notice_of_deficiency for through on date respondent issued to petitioner at the n central address a so-called 30-day_letter with respect to petitioner’s tax_liabilities for through by letter dated date john b kotmair jr mr kotmair of westminster maryland wrote to respondent challenging petitioner’s tax_liability for the taxable years through mr kotmair’s letter listed petitioner’s address as richardson heights village richardson texas the richardson heights address mr kotmair’s letter included as an attachment a copy of the above-described 30-day_letter dated the gist of mr kotmair’s letter was that respondent lacked authority to examine the taxable years through because petitioner did not file income_tax returns for those years - - date mr kotmair’s letter also included as an attachment a document entitled privacy_act release form and power_of_attorney executed by petitioner under oath before a notary public on date by which petitioner granted mr kotmair the authority to represent inquire of and procure from the internal_revenue_service any and all of the records pertaining to income taxes that agency alleges i owe this latter document listed petitioner’s address as the n central address by letter dated date mr kotmair wrote to respondent again challenging petitioner’s tax_liabilities for through and referring to matters discussed at an appeals_office conference conducted on date concerning those liabilities this letter listed petitioner’s address as the richardson heights address mr kotmair’s letter included as an attachment a copy of the above-described 30-day_letter dated date mr kotmair’s letter also included as an attachment a second document entitled privacy_act release form the above-described privacy_act release form and power_of_attorney identified john b kotmair jr as a fiduciary for save-a-patriot fellowship and stated that petitioner was a member of the group save-a-patriot fellowship has been identified as an organization that is opposed to the federal_income_tax see 962_fsupp_695 d md the gist of mr kotmair’s letter was that petitioner a citizen of texas living and working within its boundaries is not subject_to the federal_income_tax - - and power_of_attorney executed by petitioner under oath before a notary public on date this latter document listed petitioner’s address as the richardson heights address on date respondent mailed to petitioner a notice_of_deficiency determining deficiencies in petitioner’s federal income taxes for and in the amounts of dollar_figure dollar_figure and dollar_figure respectively and additions to tax under sec_6651 and sec_6654 for each of those years respondent provided the court with u s postal service form_3877 certified mail list showing that respondent mailed the foregoing notice to petitioner at the following three addresses the n central address the richardson heights address and dalrich village richardson texas the dalrich village address a copy of the notice was also mailed to mr kotmair respondent has no record that the notice_of_deficiency for through was returned to respondent by the u s postal service undelivered petitioner failed to file a petition with the court challenging the notice_of_deficiency for through respondent erroneously stated in the supplement filed date to his pending motion that the notice_of_deficiency for through was mailed to petitioner on date we rely on the postmark on u s postal service form_3877 as proof that the notice was mailed on date see 89_tc_321 we note further that the notice itself is dated date - and through on date respondent mailed to petitioner a notice_of_deficiency determining deficiencies in petitioner’s federal income taxes for and in the amounts of dollar_figure dollar_figure and dollar_figure respectively and additions to tax under sec_6651l a and a for and on date respondent also mailed to petitioner a notice_of_deficiency determining a deficiency in petitioner’s federal_income_tax for in the amount of dollar_figure and additions to tax under sec_6651 and a both of the foregoing notices of deficiency were mailed to petitioner at the dalrich village address on date respondent mailed to mr kotmair a copy of the two above-described notices of deficiency issued to petitioner by letter dated date mr kotmair wrote to respondent acknowledging that petitioner had received the notices of deficiency for and through mr kotmair’s letter listed petitioner’s address as the dalrich village address mr kotmair’s letter included as an attachment a third document entitled privacy_act release form and power_of_attorney executed by petitioner under oath before a notary public on date this document listed petitioner’s address as the dalrich village address petitioner failed to --- - file a petition with the court challenging the notices of deficiency for and through b collection procedures on date respondent mailed to petitioner a final notice_of_intent_to_levy and notice of your right to a hearing requesting that petitioner pay his delinquent taxes for the years and through two days later on date respondent filed a notice_of_federal_tax_lien with dallas county in dallas texas listing petitioner’s tax_liabilities for the taxable years through on date respondent received from petitioner a form request for a collection_due_process_hearing challenging respondent’s levy notice for the taxable years and through on date respondent received from petitioner a second form this one challenging respondent’s lien notice for the taxable years through each of the forms listed petitioner’s address as the dalrich village address on date respondent’s appeals_office issued to petitioner a notice_of_determination concerning collection actions under sec_6320 and sec_6330 stating that an administrative hearing was conducted on date and that respondent would proceed with collection as set forth in the lien the disputed collection action does not include petitioner’s tax_liability for --- - and levy notices described above on date petitioner filed with the court a petition for review of respondent's determination to proceed with collection the petition lists petitioner’s address as the dalrich village address in richardson texas the petition includes allegations that petitioner is not liable for the underlying taxes due to the expiration of the period of limitations for assessment and collection respondent filed an answer to the petition c respondent’s motion for partial summary_judgment on date respondent filed a motion for partial summary_judgment asserting that petitioner received the notices of deficiency for and through and therefore that petitioner is precluded by statute from contesting his liability for the underlying taxes for those years in this proceeding respondent’s motion which was supported by attached exhibits a through j the notices of deficiency issued to petitioner and petitioner’s and mr kotmair’s written responses thereto was duly served on petitioner’s counsel on date the court issued a notice of filing directing petitioner to file an objection if any to respondent’s motion by date on date petitioner filed an objection to respondent's motion citing rule e and stating that petitioner was unable to admit or deny the allegations in -- - respondent’s motion because respondent did not provide petitioner’s counsel with any of the pertinent documents in advance of filing the motion by order dated date the court notified the parties that respondent’s motion would be called for hearing at the court’s motions session to be held in washington d c on date counsel for both parties appeared at the aforementioned motions session and offered argument with respect to respondent's motion during the hearing the court questioned petitioner’s counsel whether petitioner denied that he actually received the notices of deficiency in guestion or that he authored the letters to respondent dated date and date the responses by petitioner’s counsel to the court’s queries were evasive and coy consequently the court suggested that counsel obtain an affidavit from petitioner addressing the court’s queries at the conclusion of the hearing the court orally directed the parties to file written supplements the parties complied with the court’s order petitioner’s written supplement includes assertions that respondent failed to establish that petitioner actually received the notices of deficiency and that respondent erred in mailing notices to the dalrich village address which petitioner asserts was an address for a mail boxes etc business instead of to petitioner’s residential address which petitioner failed to - specifically identify petitioner failed to provide the court with an affidavit denying the pertinent allegations set forth in respondent’s motion see rule e ii discussion sec_6321 provides that if any person liable to pay any_tax neglects or refuses to pay the same after demand the unpaid tax shall be a lien in favor of the united_states upon all property and rights to property belonging to such person sec_6322 provides that the lien imposed under sec_6321 generally arises at the time of assessment however sec_6323 provides that the lien shall not be valid against any purchaser holder of a security_interest mechanic’s_lienor or judgment lien creditor until the secretary files a notice of lien with the appropriate public official sec_6320 provides that the secretary shall provide the person described in sec_6321 with written notice of the filing of a notice of lien under sec_6323 including notice of the administrative appeals available to the person sec_6331 provides that if any person liable to pay any_tax neglects or refuses to pay such tax within days after notice_and_demand for payment the secretary is authorized to collect such tax by levy upon property belonging to the person sec_6331 provides that the secretary is obliged to provide the person with notice before proceeding with collection by levy on the person's property including notice of the available administrative appeals in the internal_revenue_service restructuring and reform act of publaw_105_206 112_stat_685 congress enacted new sec_6320 pertaining to liens and pertaining to levies to provide protections for taxpayers in tax collection matters these provisions generally provide that the commissioner cannot proceed with the collection_of_taxes by way of a lien or levy on a person's property until the person has been given notice of and the opportunity for an administrative review of the matter in the form of an appeals_office hearing and if dissatisfied with judicial review of the administrative determination in either the tax_court or a federal district_court in 114_tc_176 we explained that sec_6330 provides for an appeals_office hearing to address collection issues such as spousal defenses the appropriateness of the commissioner's intended collection action and possible alternative means of collection sec_6330 b provides that neither the existence nor the amount of the underlying tax_liability can be contested at an appeals_office hearing unless the taxpayer did not receive a notice_of_deficiency for the taxes in question or did not otherwise have an earlier opportunity to dispute such tax_liability the taxpayer in goza had received a notice_of_deficiency yet failed to file a petition for redetermination with the court when the taxpayer subsegquently attempted to use the court's collection review procedure as a forum to assert frivolous and groundless constitutional arguments against the federal_income_tax the court dismissed the petition for failure to state a claim upon which relief can be granted based upon our review of the record in this case we hold that there is no dispute as to a material fact and that respondent is entitled to partial summary_judgment as a matter of law the record shows that petitioner wrote to respondent on date and date and acknowledged receiving the notices of deficiency for and respectively petitioner failed to affirmatively deny that he authored these letters see 114_tc_604 the record also shows that respondent mailed duplicate original notices of deficiency for through by certified mail to petitioner’s last_known_address including the n central address the richardson heights address and the dalrich village address ’ although petitioner did not write to respondent and acknowledge receipt of the notice_of_deficiency for through respondent has no record that such notice was ever returned ’ in addition a copy of the notice_of_deficiency was mailed to mr kotmair -- to respondent undelivered in addition petitioner failed to affirmatively deny that he actually received the notice_of_deficiency for through the record also shows that mr kotmair wrote to respondent and confirmed that petitioner actually received the notices of deficiency for and through these notices were mailed to petitioner at the dalrich village address the same address used by petitioner when he filed the petition in this case petitioner failed to affirmatively deny that he actually received the notices of deficiency for and through petitioner failed to properly respond to respondent’s motion for partial summary_judgment in short petitioner failed to allege specific facts showing that there is a genuine issue for trial regarding his receipt of the disputed notices of deficiency rule d in the absence of any allegation denying receipt of the notices of deficiency for and through the record establishes that petitioner actually received each of those notices therefore consistent with sec_6330 b petitioner is barred from contesting the existence or amount of his tax_liabilities for and the record also shows that by letters dated date and date mr kotmair wrote to respondent acknowledging the 30-day_letter for through and challenging petitioner’s tax_liabilities for those years on the ground that petitioner is not a taxpayer who is subject_to the federal_income_tax -- - through in this collection review proceeding see goza v commissioner supra in particular petitioner's claim that the period of limitations for assessment and collection has expired for the years in question represents an impermissible challenge to the existence of the underlying tax_liability petitioner’s claim constitutes an affirmative defense that should have been raised in a petition for redetermination filed pursuant to sec_6213 a see rule 40_tc_1061 consistent with sec_6330 we hold that petitioner may not raise such claim in this proceeding to reflect the foregoing an appropriate order will be issued granting respondent’s motion for partial summary_judgment as supplemented


internal_revenue_service number release date index number ------------------------------ ------------------------------------ ------------------------------ -------------------------------- ------------------------------------------ ---------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------- id no ------------- telephone number --------------------- refer reply to cc psi b1 plr-150587-07 date date legend x ---------------------- y -------------------------------------------------- ------------------------------ country country date dear -------------- ---------------- ------------ ------------------- this is in response to a letter dated date requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election to treat y as an entity disregarded as separate from its owner for federal tax purposes under sec_301_7701-3 facts according to the information submitted and representations made within the request on date x an entity formed under the laws of country acquired y an entity formed under the laws of country y intended to be treated as a disregarded_entity for federal tax purposes effective date however the form_8832 entity classification election inadvertently was not timely filed law and analysis plr-150587-07 sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally unless the entity makes an election to be treated otherwise a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability if a foreign eligible_entity has only one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 if a foreign eligible_entity has more than one owner it may elect to be treated as a partnership pursuant to the rules in sec_301_7701-3 sec_301_7701-3 further provides that an entity classification election must be filed on form_8832 entity classification election and can be effective up to days prior to the date the form is filed or up to months after the date on which the form is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election with a deadline prescribed by a regulation published in the federal_register 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_9100-2 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 evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 conclusion based solely upon the information submitted we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result an extension of days from the date of this letter is granted to elect to treat y as disregarded as an entity separate from its owner for federal tax purposes effective date the entity classification election should be made by filing form_8832 with the appropriate service_center a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose plr-150587-07 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer s requesting it sec_6110 of the internal_revenue_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 will be sent to your authorized representative sincerely william p o’shea william p o’shea associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court jose angel lujan petitioner v commissioner of internal revenue respondent docket no filed date josé angel lujan pro_se james p dawson and tamara s moravia-israel for respondent memorandum findings_of_fact and opinion jacobs judge respondent determined the following deficiencies in petitioner’s federal income taxes and an addition_to_tax addition_to_tax year deficiency sec_6654 dollar_figure sec_651 big_number big_number all section references are to the internal_revenue_code in effect for the years in issue the primary issue we must resolve is whether petitioner an argentinean citizen is subject_to u s tax on compensation he received during and resolution of this issue requires us to decide whether during and petitioner was a resident_alien as that term is defined in sec_7701 b a which in turn requires us to determine whether petitioner meets’ the substantial_presence_test of sec_7701 for those years if petitioner is subject_to u s tax on the compensation he received during and we then must resolve whether petitioner is liable for the sec_6654 addition_to_tax failure to pay estimated income_tax for and findings_of_fact some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference background petitioner’s mailing address was in buenos aires argentina at the time he filed his petition contesting respondent’s determination petitioner was born and raised in argentina he received a law degree from the universidad de buenos aires in in he entered the united_states on a student visa petitioner’s wife and children accompanied him petitioner took courses at the university of texas and its law school receiving a master’s degree in comparative jurisprudence in and a master’s degree in latin american studies in after completing his studies petitioner accepted employment as an international attorney with an austin texas law firm in addition he worked for law firms located in new york and washington d c at all relevant times petitioner’s family lived in austin in so doing petitioner’s children were able to complete high school in the united_states petitioner’s personal belongings as well as several automobiles that he and his wife owned were located in austin petitioner and his wife each held a driver’s license issued by the state of texas petitioner also maintained an argentinean driver’s license at all relevant times petitioner and his wife maintained savings and checking accounts in austin petitioner did not maintain a bank account in argentina q4e- on date petitioner was issued a b-1 b-2 visa which type of visa is issued to a nonresident_alien for entry into the united_states for business purposes expiring on date consulting work lone star power argentina-i l p lone star a u s partnership retained petitioner as a consultant in connection with its procuring permission from the argentinean government to construct and operate an electrical power plant in santa fe province argentina located approximately kilometers from buenos aires for these services lone star agreed to pay petitioner dollar_figure per month and reimburse him for expenses he incurred in connection with his travel to and stay in argentina petitioner performed the majority of his services for lone star in argentina during his business trips to argentina petitioner stayed at various hotels took cabs and dined at restaurants during lone star paid petitioner dollar_figure in compensation and reimbursed him for his expenses falcon seaboard power corp falcon seaboard headquartered in houston texas replaced lone star with regard to the proposed construction of the power plant project on date petitioner and falcon seaboard entered into an agreement similar to that which petitioner had entered into with lone star i1 e petitioner received dollar_figure per month as a consulting fee and reimbursement for his out-of-pocket expenditures - in date falcon seaboard established a presence in argentina by organizing a wholly owned subsidiary falcon seaboard argentina s a falcon seaboard argentina falcon seaboard argentina did not maintain an office in argentina rather it utilized the office of its attorney ernesto galante mr galante in buenos aires on a space-available basis petitioner’s business cards showed petitioner’s business address to be both that of falcon seaboard in houston and that of mr galante in buenos aires during falcon seaboard paid petitioner dollar_figure as a consulting fee and an unspecified amount as reimbursement for his hotel taxi and meal expenses in argentina over time falcon seaboard realized that construction of the power plant project was not feasible and ultimately abandoned the project after petitioner’s consulting services were terminated he returned to austin prior to his termination petitioner traveled to austin as often as possible to be with his family the following summarizes petitioner’s entrances to and exits from the united_states during and from petitioner’s and governmental records entry entry exit out exit out exit entry exit out days total into into of u s of u s out into of withi days u s per u s per per p’s per ins of argentina argentina n the withi ins visa memo u s per per u s n the per passport passport u s visa days days days days days days day sec_11 day sec_12 days days entry into entry into exit out exi entry exit out days total days u s per u s per of u s t into of within within the ins visa per ins out argentina argentina the u s of per per u s u s passport passport per vis a days days days days days days days days days days day sec_11 day sec_12 day sec_185 days argentinean activities at all relevant times petitioner maintained an argentinean driver’s license beginning in date he served as an adviser to the argentinean military and was active in several argentinean political groups absence of filing and tax returns petitioner did not file u s or argentinean income_tax returns for or moreover he did not pay any u s estimated income taxes for these years notice_of_deficiency in the notice_of_deficiency respondent determined that petitioner was a resident_alien for and which required him to file u s income_tax returns for those years reflecting the compensation he received dollar_figure for and dollar_figure for respondent further determined that for both years petitioner was liable for the sec_6654 addition_to_tax for failure to pay estimated income_tax opinion in general all u s citizens wherever resident and all resident_alien individuals citizens of a foreign_country are liable for income taxes imposed by the internal_revenue_code whether the income received is from sources within or without the united_states see sec_1_1-1 income_tax regs an individual is a nonresident_alien and generally not subject_to u s income_tax - on foreign_source_income if the individual is neither a u s citizen nor a u s resident see sec_7701 b an alien individual is treated as a u s resident for any calendar_year if at any time during the year that individual is a lawful u s permanent resident the green_card_test meets the substantial_presence_test or makes an election to be treated as a lawful u s resident see sec_7701 a sec_301 b -1 b proced admin regs there is no evidence in the record that petitioner was a lawful u s permanent resident or that he made an election to be treated as a resident pursuant to sec_301_7701_b_-4 v proced admin regs accordingly petitioner is considered a resident_alien only if he meets the sec_7701 a substantial_presence_test the substantial_presence_test is an objective test an alien individual is treated as a u s resident_alien with respect to any year in which the alien is present in the united_states on at least days during the current calendar_year and for at least days during the current_year and the preceding calendar years calculated pursuant to a weighted formula see sec_7701 b a pursuant to sec_7701 a each day of presence in the current_year is counted as a full_day each day of presence in the first preceding year is counted as one- third of a day and each day of presence in the second preceding year is counted as one-sixth of a day see also sec_301 b -1 c proced admin regs in sum the applicable multipliers are continued -- - an individual is treated as present in the united_states on any day that the individual is physically present in the united_states at any time during the day see sec_7701 a as such the day of entry into the united_states and the day of departure from the united_states are both counted the parties disagree as to the number of days petitioner was present in the united_states during and although petitioner does not dispute the entry dates in the immigration and naturalization service records he disagrees with several departure dates that respondent utilizes we believe the departure dates utilized by respondent are accurate petitioner contends that he was not physically present in the united_states for days in either or petitioner maintains that at most he was present in the united_states for days in and days in respondent on the other hand maintains that petitioner was in the united_states for days in and days in the record supports respondent’s continued current_year lst preceding year 2nd preceding year during opening statement at trial respondent’s counsel referred to petitioner being present in the united_states for days in whereas on brief respondent refers to petitioner being present in the united_states for days in the record supports a finding that petitioner was present in the united_states for days in see supra p calculations in determining the number of days petitioner incorrectly failed to include the day of entry into the united_states and the day of departure from the united_states on the basis of the record before us we conclude that petitioner meets the substantial_presence_test for both years in issue accordingly petitioner is deemed a u s resident_alien for and and is subject_to u s tax on the compensation he received we now turn our attention to whether petitioner is liable for the sec_6654 addition_to_tax for the years in issue the sec_6654 addition is imposed on an individual taxpayer who fails to make timely payments of estimated_tax an underpayment of estimated_tax exists if a tax payment for any of the four installment period due dates usually quarterly is less than the amount of taxes required to be paid each installment see sec_6654 the amount of the addition is determined by applying the applicable_interest_rate to the amount of the underpayment for the period of time that the underpayment exists see sec_6654 petitioner failed to make any estimated_tax payments in and and he does not qualify for any exception to the sec_6654 addition_to_tax consequently he is liable for the sec_6654 addition_to_tax for both years as determined by respondent in reaching our holdings we have considered all of the arguments petitioner presented for contrary holdings including -- petitioner’s claim that he qualifies for the closer_connection_exception of sec_7701 b b and sec_301 b -2 a proced admin regs and to the extent not discussed above find them to be not relevant or without merit to reflect the foregoing decision will be entered for respondent


t c summary opinion united_states tax_court gregory paul imberger petitioner v commissioner of internal revenue respondent docket no 14361-02s filed date gregory paul imberger pro_se paul k voelker for respondent pajak 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 unless otherwise indicated section references are to the internal_revenue_code in effect for the year in issue the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority respondent determined a deficiency of dollar_figure in petitioner's federal_income_tax this court must decide whether petitioner has unreported income for some of the facts in this case have been stipulated and are so found petitioner resided in henderson nevada at the time he filed his petition during taxable_year petitioner was employed as a pharmacy technician at merck-medco petitioner filed a form 1040ez income_tax return for single and joint filers with no dependents petitioner reported dollar_figure on line and dollar_figure on line for an adjusted_gross_income of dollar_figure petitioner attached to his tax_return a form_w-2 wage and tax statement in the amount of dollar_figure and a form 1099-g certain government benefits in the amount of dollar_figure respondent received three forms w-2g certain gambling winnings for the year two from el dorado casino el dorado in the amounts of dollar_figure marked poker and dollar_figure marked slot respectively and one from sunset station hotel casino sunset station in the amount of dollar_figure marked slots from these forms w-2g respondent determined that petitioner had unreported gambling income of dollar_figure for taxable_year sec_61 provides that gross_income includes all income from whatever source derived unless excludable by a specific provision of the code no specific code section excludes gambling winnings from gross_income sec_165 allows gambling_losses but only to the extent of gambling winnings petitioner did not claim any gambling_losses no question has been raised in this case with respect to the burden of production under sec_6201 or the burden_of_proof under sec_7491 petitioner contends that he did not win the dollar_figure reported on the forms w-2g in his petition petitioner asserts i do not gamble therefore how could i win this money at trial petitioner testified i gamble a little bit like an occasional football game you know like the super bowl so i can’t say that i don’t gamble but not slots contrary to his testimony petitioner opened a customer slot account at sunset station in at trial petitioner admitted he was a member of the slot club at sunset station the assistant general manager at el dorado testified that when a player wins dollar_figure or more a slot floor employee employee verifies the identity of the winner by obtaining a driver’s license state-issued identification military identification or passport the employee visually verifies that the picture is that of the person before him the employee fills out a form w-2g the casino shift manager reviews the information and approves the jackpot ticket for payment el dorado accepts a verbal social_security_number from a winner who presents other identification el dorado requires winners to sign the form w-2g in the presence of the employee who fills out the form w-2g sunset station electronically copies the driver’s license and social_security card of winners the information provided by a winner is recorded on a form w-2g sunset station also requires the winner to sign the form w-2g at the time of payment petitioner’s name address during the year in issue and driver’s license number are on the two forms w-2g issued by el dorado dated date and date respectively petitioner’s name address during the year in issue social_security_number and driver’s license number are on the form w-2g issued by sunset station dated date petitioner contends that the signatures on all three forms w-2g are not his and that he did not win the money in issue petitioner’s testimony was not credible and is contradicted by the written evidence petitioner’s name address during the year in issue and driver’s license number appear on each form w-2g the signatures on all three forms w-2g are virtually the same as the signatures on petitioner’s tax_return driver’s license social_security card tax_court petition and stipulation of facts we observe that on the el dorado forms w-2g the second and third numbers of petitioner’s social_security_number are transposed ie rather than which is the correct number sequence neither petitioner nor respondent raised this transposition in petitioner’s social_security_number and we shall treat it as a transposition on this record we conclude that the forms w-2g issued by sunset station and el dorado represent gambling income includable in petitioner’s gross_income for taxable_year we sustain respondent’s determination reviewed and adopted as the report of the small_tax_case division decision will be entered for respondent


internal_revenue_service number release date index number --------------------- ------------------------------- ---------------------------------------- --------------------------------------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------- telephone number --------------------- refer reply to cc psi plr-127028-04 date november legend x ------------------------------------------------------------------------------------------------------ y ------------------------------------------------------------------------------------------------------ ----------------------- ----------------------- state --------- -------------------------- d1 ---------------------- d2 dear ----------- this letter responds to your letter dated date and subsequent correspondence on behalf of x as x’s authorized representative requesting an extension of time under ' of the procedure and administration regulations for x to file an election to be classified as an association_taxable_as_a_corporation for federal tax purposes effective d2 facts according to the information submitted x was formed as a limited_liability_company under the laws of state on d1 x’s sole owner y a u s_corporation intended to elect under ' to classify x as an association_taxable_as_a_corporation for federal tax purposes effective d2 however due to inadvertence x failed to file a timely form_8832 entity classification election sec_301_7701-3 provides in part that a business_entity that is not sec_301_7701-3 provides that an eligible_entity may elect to be sec_301_7701-3 provides guidance on the classification of a domestic sec_301_7701-3 provides that an election under ' c i plr-127028-04 law and analysis classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes eligible_entity for federal tax purposes sec_301_7701-3 provides that unless it elects otherwise a domestic eligible_entity is disregarded as an entity separate from its owner if it has a single owner classified other than as provided in ' b by filing form_8832 entity classification election with the service_center designated on the form will be effective on the date specified on form_8832 or on the date filed if no such date is specified on the form the effective date specified on form_8832 cannot be more than days prior to the date the form is filed and cannot be more than months after the date on which the form is filed reasonable extension of time under the rules set forth in and to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines a regulatory election to include an election whose due_date is prescribed by a regulation published in the federal_register making certain elections determine whether to grant an extension of time for regulatory elections that do not meet the requirements of ' under ' a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusions sec_301_9100-1 provides that the commissioner has discretion to grant a sec_301_9100-2 provides the rules governing automatic extensions of time for sec_301_9100-3 sets forth the standards the commissioner will use to except as specifically set forth above no opinion is expressed or implied as to based on the facts submitted and representations made we conclude that the plr-127028-04 requirements of ' have been satisfied as a result x is granted an extension of time of days from the date of this letter to file form_8832 to elect to be classified as an association_taxable_as_a_corporation for federal tax purposes effective d2 a copy of this letter should be attached to the form_8832 a copy is attached for that purpose the federal tax consequences of the transaction described above under any other provision of the code sec_6110 provides that it may not be used or cited as precedent letter to x heather c maloy associate chief_counsel passthroughs and special industries under a power_of_attorney on file with this office we are sending a copy of this this ruling is directed only to the taxpayer on whose behalf it was requested sincerely s enclosures copy of this letter copy for sec_6110 purposes cc -------------- ------------------------------------- ------------------------------------------ ---------------------------------------- --------------------- ------------------------------- ------------------------------------------ ---------------------------------------- --------------------------------------------- ----------------------------------- -------------------------------- ----------------------------- plr-127028-04