internal_revenue_service index number 468a 468a department of the treasury washington dc person to contact telephone number refer reply to cc dom p si date feb plr-119014-98 re request for a revised schedule of ruling amounts taxpayer parent plant location commission a commission b district fund dear this letter responds to the request of taxpayer dated date and supplemental information submitted by taxpayer for a revised schedule of ruling amounts in accordance with sec_1_468a-3 of the income_tax regulations taxpayer was previously granted a revised schedule of ruling amounts on date information for the schedule of ruling amounts was submitted on behalf of the taxpayer pursuant to sec_1_468a-3 taxpayer represents the facts and information relating to its request for a revised schedule of ruling amounts as follows taxpayer is percent owned by parent and files a consolidated federal_income_tax return with parent taxpayer has a direct ownership_interest of in plant which is situated in location taxpayer is under the audit jurisdiction of the district_director of district percent plr-119014-98 plant's operating license expires in taxpayer is subject_to the jurisdiction percent of the taxpayer's total electric sales and of commission a which covers percent these percentages commission b which covers may vary slightly from year to year the estimated base cost for decommissioning the plant is based on an independent study and is premised on the prompt removal immediate dismantling method percent for a total of commission a in docket no effective nuclear decommissioning costs to be included in the taxpayer's cost of service for this ratemaking purposes for the plant in the amount of percent base cost escalated using an estimated after-tax rate of return on assets of results in an estimated future decommissioning cost of - these rates were estimated after taking into consideration the tax and investment changes made to sec_468a of the internal_revenue_code made by of the energy policy act of amounts for commission b are not specifically reviewed herein _ authorized there are no proceedings pending before either commission a or commission b that may result in an increase or decrease in the amount of decommissioning costs for the plant to be included in taxpayer's cost of service for ratemaking purposes the funding_period and level_funding limitation period for the plant extends from the estimated period for which the fund will be in effect is _ the estimated_useful_life of the plant is thus the taxpayer has calculated its qualifying percentage to be _ percent sec_468a of the internal_revenue_code provides that a taxpayer may elect to deduct the amount of payments made to a qualified nuclear decommissioning fund however sec_468a limits the amount_paid into the fund for any taxable_year to the lesser_of the amount of nuclear decommissioning costs allocable to the fund that is included in the taxpayer's cost of service for ratemaking purposes for the taxable_year or the ruling_amount applicable to that year sec_468a of the code provides that no deduction shall be allowed for any payment to the nuclear decommissioning fund unless the taxpayer requests and receives from the secretary a schedule of ruling amounts the ruling_amount for any taxable_year is defined under sec_468a as the amount which the secretary determines to be necessary to fund that portion of nuclear decommissioning costs which bears the same ratio to the nuclear power plant as the period for which the fund is in effect bears to the estimated_useful_life of the plant this term is further defined to include the amount necessary to prevent excessive funding of nuclear plr-119014-98 decommissioning costs or funding of these costs at a rate more rapid than level_funding taking into account such discount rates as the secretary deems appropriate sec_468a of the code provides that a taxpayer shall be deemed to have made a payment to the nuclear decommissioning fund on the last day of the taxable_year if the payment is made on account of the taxable_year within months after the close of the taxable_year sec_1_468a-1 of the regulations provides that an eligible_taxpayer may elect to deduct nuclear decommissioning costs under sec_468a of the code an eligible_taxpayer as defined under sec_4 468a-1 b is a taxpayer that has a qualifying interest in a nuclear power plant as defined under sec_41 468a-1 b a qualifying interest is among other things a direct ownership_interest including an interest held as a tenant in common or joint tenant sec_1_468a-2 of the regulations provides that the maximum amount of cash payments made or deemed made to a nuclear decommissioning fund during any taxable_year shall not exceed the lesser_of i the cost of service amount applicable to the nuclear decommissioning fund for such taxable_year or ii the ruling_amount applicable to the nuclear decommissioning fund for such taxable_year sec_1_468a-3 of the regulations provides that in general a schedule of ruling amounts for a nuclear decommissioning fund is a ruling specifying annual payments that over the taxable years remaining in the funding_period as of the date the schedule first applies will result in a projected balance of the nuclear decommissioning fund as of the last day of the funding_period equal to and in no event more than the amount of decommissioning costs allocable to the fund sec_1_468a-3 of the regulations provides that each schedule of ruling amounts shall be based on the reasonable assumptions and determinations used by the applicable public_utility commission s in establishing or approving the amount of decommissioning costs to be included in the cost of service for ratemaking purposes taking into account amounts that are otherwise required to be included in the taxpayer's income under sec_88 of the code and the regulations thereunder each schedule of ruling amounts shall be based on the public_utility commission's reasonable assumptions concerning i the after-tax rate of return to be earned by the amounts collected for decommissioning ii the total estimated cost of decommissioning the nuclear power plant and iii the frequency of contributions to the nuclear decommissioning fund for a taxable_year plr-119014-98 sec_1_468a-3 of the regulations requires the internal_revenue_service to provide a schedule of ruling amounts that is identical to the schedule proposed by the taxpayer but no such schedule shall be provided by the service unless the taxpayer's proposed schedule is consistent with the principles and provisions of this section sec_1_468a-3 of the regulations provides that the ruling_amount specified in a schedule of ruling amounts for any taxable_year in the level_funding limitation period shall not be less than the ruling_amount specified in such schedule for any earlier taxable_year under sec_4 468a-3 b the level_funding limitation period begins on the first day of the first taxable_year for which a deductible payment is made to the nuclear decommissioning fund and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes sec_1_468a-3 of the regulations provides that the funding_period for a nuclear decommissioning fund is the period that begins on the first day of the first taxable_year for which a deductible payment is made or deemed to be made to such nuclear decommissioning fund and ends the later of i the last day of the taxable_year that includes the estimated date on which decommissioning costs of the nuclear power plant to which the nuclear decommissioning fund relates will no longer be included in the taxpayer's cost of service for ratemaking purposes or ii the last day of the taxable_year that includes the estimated date on which the nuclear power plant to which the nuclear decommissioning fund relates will no longer be included in the taxpayer's rate base for ratemaking purposes sec_1_468a-3 of the regulations provides that the amount of decommissioning costs allocable to a nuclear decommissioning fund is the taxpayer's share of the total estimated cost of decommissioning the nuclear power plant multiplied by the qualifying percentage sec_1_468a-3 of the regulations provides that in general the total estimated cost of decommissioning a nuclear power plant is the reasonably estimated cost of decommissioning used by the applicable public_utility commission in establishing or approving the amount of these costs to be included in cost of service for ratemaking purposes sec_1_468a-3 of the regulations provides that a taxpayer's share of the total estimated cost of decommissioning a nuclear power plant equals the total estimated cost of decommissioning the plant multiplied by the taxpayer's qualifying interest in the plant plr-119014-98 sec_1_468a-3 of the regulations provides that the qualifying percentage for any nuclear decommissioning fund is equal to the fraction the numerator of which is the number of taxable years in the estimated period for which the nuclear decommissioning fund is to be in effect and the denominator of which is the number of taxable years in the estimated_useful_life of the applicable nuclear power plant sec_1_468a-3 of the regulations provides that the estimated period for which a nuclear decommissioning fund is to be in effect begins on the later of the first day of the first taxable_year for which a deductible payment is made to the nuclear decommissioning fund or deemed made or the first day of the taxable_year that includes the date that the nuclear power plant begins commercial operations as determined by the applicable public_utility commission at the time the plant was first included in the taxpayer's rate base and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes according to sec_1_468a-3 the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes is determined under the ratemaking assumptions used by the applicable public_utility commission in establishing or approving rates during the first ratemaking proceeding in which the nuclear power plant was included in the taxpayer's rate base sec_1_468a-3 of the regulations provides that the estimated_useful_life of a nuclear power plant begins on the first day of the taxable_year that includes the date that the plant begins commercial operations as determined by the applicable public_utility commission at the time the plant was first included in the taxpayer's rate base and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes according to sec_1_468a-3 the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes is determined under the ratemaking assumptions used by the applicable public_utility commission in establishing or approving rates during the first ratemaking proceeding in which the nuclear power plant was included in the taxpayer's rate base sec_1_468a-3 of the regulations provides that if two or more public_utility commissions establish or approve rates for electric energy generated by a single nuclear power plant then the schedule of ruling amounts shall be separately determined pursuant to the rules of sec_1_468a-3 through e for each public_utility commission that has determined the amount of decommissioning costs to be included in the cost of service for ratemaking purposes for this plant under sec_1_468a-3 plr-119014-98 this separate determination shall be based on the reasonable assumptions and determinations used by the relevant public_utility commission and shall take into account only that portion of the total estimated cost of decommissioning that is properly allocable to the ratepayer whose rates are established or approved by the public_utility commission according to sec_1_468a-3 the ruling amounts for any taxable_year is the sum of the ruling amounts for such taxable_year determined under the separate schedules of ruling amounts sec_1_468a-3 of the regulations provides that the internal_revenue_service shall not provide a taxpayer with a schedule of ruling amounts for any nuclear decommissioning fund unless the public_utility commission that establishes or approves the rates for electric energy generated by the plant to which the nuclear decommissioning fund relates has determined the amount of decommissioning costs to be included in the taxpayer's cost of service for ratemaking purposes and has disclosed the after-tax rate of return and any other assumptions and determinations used in establishing or approving the amount sec_1_468a-3 of the regulations enumerates the information required to be contained in a request for a schedule of ruling amounts filed by a taxpayer in order to receive a ruling_amount for any taxable_year sec_1_468a-3 of the regulations provides that a taxpayer is required to request a revised schedule of ruling amounts for a nuclear decommissioning fund if a any public_utility commission that establishes or approves rates for the furnishing or sale of electric energy generated by a nuclear power plant to which the nuclear decommissioning fund relates increases the proposed period over which decommissioning costs of the nuclear power plant will be included in cost of service for ratemaking purposes adjusts the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes or reduces the amount of decommissioning costs to be included in cost of service for any taxable_year and b the taxpayer's most recent request for a schedule of ruling amounts did not provide notice to the service of such action by the public_utility commission sec_1_468a-3 of the regulations provides that any taxpayer that has previously obtained a schedule of ruling amounts can request a revised schedule of ruling amounts such a request must be made in accordance with the rules of sec_1_468a-3 the internal_revenue_service shall not provide a revised schedule of ruling amounts applicable to a taxable_year in response to a request for a schedule of ruling amounts that is filed after the deemed payment deadline date for such taxable_year of plr-119014-98 we have examined the representations and information submitted by the taxpayer in relation to the requirements set forth in the sec_468a of the code and the regulations thereunder the following conclusions based solely on these representations of the facts we reach taxpayer has a qualifying interest in the plant and is therefore an eligible_taxpayer under sec_1_468a-1 of the regulations commissions a and b have determined the amount of decommissioning costs to be included in the taxpayer's cost of service for ratemaking purposes as required by sec_1_468a-3 of the regulations taxpayer as owner of the plant has calculated its share of the total decommissioning costs under sec_1_468a-3 of the regulations taxpayer has determined that pursuant to sec_4 468a-3 d of the regulations the qualifying percentage is percent taxpayer has proposed a schedule of ruling amounts which meets the requirements of sec_1_468a-3 and of the regulations the annual payments specified in the proposed schedule of ruling amounts are based on the reasonable assumptions and determinations used by commissions a and b funding_period equal to or less than the amount of decommissioning costs allocable to the fund and will result in a projected fund balance at the end of the the maximum amount of cash payments made or deemed made to the fund during any taxable_year is restricted to the lesser amount of the decommissioning costs applicable to the fund or the ruling_amount applicable to the fund as set forth under sec_1_468a-2 of the regulations taxpayer subject_to the jurisdiction of two public_utility commissions for ratemaking purposes has calculated its share of the total decommissioning costs allocable to commissions a and b as required by sec_1_468a-3 of the regulations based on the above determinations we conclude that the taxpayer's proposed schedule of ruling amounts satisfies the requirements of sec_468a of the code plr-119014-98 approved schedule of ruling amounts taxable years commissions a and b year comm a comn b total approval of the schedule of ruling amounts is contingent on there being no change in the facts and circumstances known or assumed at the time this ruling is issued if any of the events described in sec_1_468a-3 iii of the regulations occur in future years the taxpayer must request a review and revision of the schedule of ruling amounts generally the taxpayer is required to file such a request on or before the deemed payment deadline date for the first taxable_year in which the rates reflecting such action became effective when no such event occurs the taxpayer must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline of the tenth taxable_year following the close of the tax_year in which the most recent schedule of ruling amounts was received the approved schedule of ruling amounts is relevant only to those payments made to the fund payments allocable to any funds other than the fund cannot qualify for purposes of the deduction under the provisions of sec_468a of the code as stated above payments made to the fund can qualify only to the extent that they do not exceed the lesser_of the decommissioning costs applicable to the fund or the ruling amounts applicable to the fund in the taxable_year this letter_ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that this ruling may not be used or cited as precedent ‘ amounts for commission b are not specifically reviewed herein and are merely reprinted to arrive at the amount for the total annual ruling_amount for purposes of the mandatory review required under sec_1_468a-3 of the regulations the date of the schedule of ruling amounts approved by the service on date governs the review period for the commission b ruling amounts y n plr-119014-98 pursuant to sec_1_468a-7 of the regulations a copy of this letter must be attached with the required election statement to the taxpayer's federal_income_tax return for each taxable_year in which the taxpayer claims a deduction for payments made to the fund sincerely yours chol b ram sy ie charles b ramsey chief branch office of the assistant chief_counsel passthroughs and special industries enclosure copy 2f-


internal_revenue_service number release date index numbers ---------------- -------------------------------- ---------------------------- ----------------------------------- --------------------------- department of the treasury washington dc person to contact ---------------------- id no ------------- telephone number -------------------- refer reply to cc psi b03 - plr-139924-07 date date ----------------------------------------- --------------------------------------------------- -------------------------------------------------------- ----------------------------------------------------------------- legend company ------------------------------------ sub ----------------------------------------------------------- fund business -------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- regions a ------------------------ ----------------------------------------------------------- b ------------------------------- ----------------------------------------------------------- c ----------------------------------------------------------- d ----------------------------------------------------------- e ----------------------------------------------------------- country -------------------------------------- --------------------------------- ------------------ ---------- ------- ----------- ----------------- --------------------------- we received a letter dated date submitted on behalf of d the information submitted discloses that in a company formed and sponsored plr-139924-07 country country a b dear ---------------- requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election to be classified as a disregarded_entity for federal tax purposes this letter responds to that request facts sub a fund to focus on business in regions in pursuit of its business purposes fund acquired directly or indirectly entities a b c d and e the entities a is a country entity which owns c a country entity b is a country entity which owns d and e also country entities company and sub intended the entities to be disregarded entities for federal tax purposes effective on b however each of the entities inadvertently failed to timely file form_8832 entity classification election law and analysis classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes as provided in sec_301_7701-3 an eligible_entity with at least two members can elect to be classified as either an association and thus a corporation under sec_301_7701-2 or a partnership and an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner b unless the entity elects otherwise a foreign eligible_entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides in part that for purposes of sec_301_7701-3 sec_301_7701-3 provides that except as provided in sec_301 sec_301_7701-3 provides in part that a business_entity that is not sec_301_7701-3 provides in part that except as provided in sec_301_7701-3 provides in part that an election made under plr-139924-07 a member of a foreign eligible_entity has limited_liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member sec_301_7701-3 and v an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 with the service_center designated on form_8832 sec_301_7701-3 will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 can not be more than days prior to the date on which the election is filed and can not be more than months after the date on which the election is filed 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 internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or an announcement published in the internal_revenue_bulletin 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 granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the granting of relief will not prejudice the interests of the government conclusions requirements of sec_301_9100-1 and sec_301_9100-3 are satisfied consequently d is granted an extension of time of days from the date of this letter for electing under sec_301_7701-3 to be treated as a disregarded_entity effective b d must file form_8832 within the extension period with the appropriate service_center with a copy of this letter attached sec_301_9100-3 provides that requests for relief under sec_301_9100-3 will be based on the facts and representations submitted d has established that the sec_301_9100-1 through provide the standards the plr-139924-07 except for the specific ruling 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 sec_301_9100-1 provides that the granting of an extension of time for making an election is not a determination that the taxpayer is otherwise eligible to make the election sec_6110 of the internal_revenue_code this ruling may not be used or cited as precedent being forwarded to taxpayer’s authorized representative pursuant to a power_of_attorney on file with this office a copy of this letter is this ruling is directed only to the taxpayer requesting it according to sincerely s william p o’shea associate chief_counsel passthroughs special industries enclosures copies of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ------------------------------------------------------------ ----- -------------------------- ----------------------------------------------- ----------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ---------------- telephone number -------------------- refer reply to cc intl b06 plr-103690-19 date date ty ------ legend -------------------------------------------------------------- taxpayer --------------------------- law firm ---------------------------------------------------- company ------------------ date ------------------- individual ---------------- individual individual ------------------- accounting firm ------------------ accounting firm --------------------------------------- year ------ dear ----------------- this responds to correspondence dated date requesting that the internal_revenue_service service grant taxpayer an extension of time under sec_301_9100-1 and sec_301_9100-3 to file form 4876-a election to be treated as an interest_charge_disc for taxpayer’s first taxable_year additional information was submitted in a letter dated date the ruling contained in this letter is based upon information and representations submitted by taxpayer and accounting firm and accompanied by affidavits and penalty of perjury statements executed by appropriate parties this office has not verified any of the materials submitted in support of the request for a ruling it is subject_to verification on examination plr-103690-19 facts taxpayer is a domestic_corporation with a calendar taxable_year taxpayer was formed on date to operate as an interest charge domestic_international_sales_corporation ic- disc and has established a commission arrangement with company both taxpayer and company are owned in the same proportion by individual sec_1 and the shareholders taxpayer was formed as a result of discussions between the shareholders and law firm about establishing an ic-disc to take advantage of company’s foreign sales activities law firm had provided legal assistance to the shareholders’ other related businesses for many years including organizing another ic-disc similar to past arrangements the shareholders retained law firm to organize taxpayer as an ic- disc including preparing the required corporate documents to organize taxpayer as a legal entity law firm however anticipated that accounting firm would prepare and timely file form 4876-a during the preparation of taxpayer’s form 1120-ic-disc interest charge domestic_international_sales_corporation return for year accounting firm realized that form 4876-a had never been filed accounting firm nonetheless filed form 4876-a with taxpayer’s year form 1120-ic-disc the service subsequently acknowledged receipt of taxpayer’s form 4876-a but declined to accept the election as timely for year since its incorporation taxpayer has conducted business and complied with all relevant rules and procedures consistent with its understanding that it was an ic-disc accounting firm submitted this request for relief on behalf of taxpayer under sec_301_9100-3 for an extension of time to file form 4876-a for year taxpayer’s first taxable_year law and analysis sec_992 of the sec_1 provides that an election by a corporation to be treated as a disc2 shall be made by such corporation for a taxable_year at any time during the 90-day period immediately preceding the beginning of the taxable_year except that the secretary may give his consent to the making of an election at such other times as he may designate sec_992 provides that the election shall be made in the manner prescribed by the secretary and shall be valid only if all persons who are shareholders in such corporation on the first day of the first taxable_year for which such election is effective consent to the election unless specified otherwise all section references are references to the internal_revenue_code_of_1986 as amended as used in this letter the terms ic-disc and disc have the same meaning plr-103690-19 sec_1_921-1t provides in part that a corporation electing ic- disc status must file form 4876-a and that a corporation electing to be treated as an ic-disc for its first taxable_year shall make its election within days after the beginning of that year sec_301_9100-1 provides in part that the commissioner in exercising the commissioner’s discretion may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that a regulatory election is an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin for this purpose an election includes an application_for relief in respect of tax sec_301_9100-3 provides that requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 automatic extensions must be made under the rules of sec_301_9100-3 requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that the grant of relief will not prejudice the interests of the government the ic-disc election described in sec_1_921-1t is a regulatory election as defined in sec_301_9100-1 therefore the commissioner has discretionary authority under sec_301_9100-1 to grant taxpayer an extension of time provided that taxpayer satisfies the standards for relief set forth in sec_301_9100-3 based on the facts and representations submitted with taxpayer’s ruling_request we conclude that taxpayer satisfies sec_301_9100-3 accordingly taxpayer is granted an extension of time of days from the date of this ruling letter to file form 4876-a such filing will be treated as a timely election to be treated as an ic-disc for taxpayer’s first taxable_year year the granting of an extension in this ruling letter is not a determination that taxpayer is otherwise eligible to make the election or to claim ic-disc status or benefits see sec_301_9100-1 taxpayer should attach a copy of this ruling letter to its form 4876-a and federal_income_tax return for the taxable years to which this ruling letter applies plr-103690-19 this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent 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 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely _______________________________ robert z kelley senior counsel branch office of associate chief_counsel international enclosures copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court spencer hosie and diane rice hosie petitioners v commissioner of internal revenue respondent docket no 16162-13l filed date david b porter for petitioners matthew d carlson for respondent memorandum opinion lauber judge in this collection_due_process cdp case petitioners seek review pursuant to sec_6320 and sec_6330 of the determinations by all statutory references are to the internal_revenue_code in effect at all relevant times all rule references are to the tax_court rules_of_practice and procedure we round all monetary amounts to the nearest dollar the internal_revenue_service irs or respondent to uphold the filing of a notice_of_federal_tax_lien nftl and two notices of intent to levy respondent has moved for summary_judgment under rule contending that there are no disputed issues of material fact and that his determination to uphold the collection actions was proper as a matter of law we agree and thus will grant the motion background the facts set forth below are based on the parties’ pleadings and attached documents petitioners resided in california when they petitioned this court petitioners both of whom are attorneys have a long history of noncompli- ance with their federal tax obligations for and petitioners filed joint income_tax returns but did not pay the balances due this case concerns two of those years and the irs assessed the tax_liabilities shown as due on petitioners’ and returns--dollar_figure and dollar_figure respectively--and began collection efforts on date the irs sent petitioners a letter final notice_of_intent_to_levy and notice of your right to a hearing regarding their liability three days later the irs sent petitioners a letter regarding their liability later that same month the irs filed an nftl regarding petition- ers’ liability and timely sent them a letter notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 all letters were sent to petitioners’ last_known_address at their residence in belvedere california on date petitioners timely filed form request for a collection_due_process or equivalent_hearing they listed their and years as the subject of this hearing request they did not dispute their underlying tax_liability for either year and they did not request a collection alternative they stated their intention to sell their personal_residence to pay the balances due but indicated that i t will take six to eight weeks to do so on date the irs acknowledged receipt of petitioners’ hearing request and a settlement officer so from the irs appeals_office subsequently scheduled a telephone cdp hearing on date petitioners provided the so with financial information indicating that their assets included among other things equity in real_estate with an aggregate value of almost dollar_figure million property fair_market_value loan balance personal_residence vacation home dollar_figure big_number dollar_figure big_number estimated equity dollar_figure big_number on date the parties held a cdp hearing petitioners’ repre- sentative did not contest petitioners’ underlying tax_liability for either or but instead proposed an installment_agreement with a payment of dollar_figure per month by this time petitioners had defaulted on four previous installment agreements all involving their tax_liability these prior agreements executed in date date date and date required monthly payments ranging between dollar_figure and dollar_figure plus certain lump-sum payments in each case petitioners had made no payments or quickly reneged on their promises the so indicated that any new installment_agreement would have to include all outstanding tax_liabilities and would be considered only if petitioners made a substantial upfront payment the so directed petitioners’ attention to the dollar_figure million of equity in their real_estate as a source of funds to pay their tax_liabilities petitioners stated their intention to sell their personal_residence but requested that sale of their vacation home be delayed they had previously informed the irs of plans to sell their personal_residence in order to pay their tax_liabilities but had never followed through on those plans at the conclusion of the cdp hearing petitioners’ representative said he would discuss with petitioners the possibility of making a substantial upfront payment respondent alleges that the so scheduled a followup appointment with petitioners for date petitioners deny agreeing to a specific date neither petitioners nor their representative contacted the so after the date cdp hearing after waiting for months with no word from petitioners the so reviewed the case file he verified that the and assessments were properly made and that all other requirements of applicable law and administrative procedure had been met the so thereupon closed the case and on june and sent petitioners notices of determination sustaining the collection actions for and respectively petitioners timely sought review in this court a summary_judgment discussion the purpose of summary_judgment is to expedite litigation and avoid costly time-consuming and unnecessary trials fla peach corp v commissioner 90_tc_678 under rule b the court may grant summary_judgment when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law 98_tc_518 aff’d 17_f3d_965 7th cir in deciding whether to grant summary_judgment we construe factual materials and inferences drawn from them in the light most favorable to the nonmoving party ibid however the nonmoving party may not rest upon the mere allegations or denials of his pleadings but must set forth specific facts showing that there is a genuine dispute for trial rule d petitioners dispute whether the parties agreed to date as a specific date to discuss a partial payment option an so is not obligated to negotiate inde- finitely or wait any specific time after a cdp hearing before issuing a determina- tion see 137_tc_123 kuretski v commissioner tcmemo_2012_262 aff’d 755_f3d_929 d c cir clawson v commissioner tcmemo_2004_106 petitioners stated in their date hearing request that they needed six to eight weeks to sell their personal_residence more than six months elapsed before the so issued the notice_of_determination the cdp hearing was held on date when the so heard nothing from petitioners by late june he had waited long enough whether the parties explicitly agreed to a followup discussion on date is not an issue of material fact and petitioners have pointed to no other genuine dispute of material fact that would require trial see rule d sundstrand corp t c pincite this case is therefore appropriate for summary adjudication b collection_due_process petitioners concede their underlying tax_liabilities for and when there is no dispute concerning the underlying tax_liability we review the irs’ determination for abuse_of_discretion 114_tc_176 abuse_of_discretion exists when a determination is arbitrary capri- cious or without sound basis in fact or law see 125_tc_301 aff’d 469_f3d_27 1st cir we must determine whether the so in sustaining the collection actions properly verified that the requirements of applicable law and administrative procedure had been met considered any relevant issues petitioners raised and determined 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_6330 after reviewing the record we conclude that the so properly verified that all requirements of applicable law and administrative procedure had been met peti- tioners assert that they did not receive a distinct irs letter scheduling a cdp hearing for and that they did not contemplate that the tax_year would be involved in the hearing but their cdp hearing request explicitly requested a hearing for both and 201l and their representative discussed both years with the so during the hearing see sec_301_6330-1 q a- d2 proced admin regs providing that to the extent practicable a cdp hearing for one tax period will be combined with any cdp hearings the taxpayer has requested for other tax periods there was no meaningful distinction between the two years the only relevant issue concerned petitioners’ eligibility for an installment_agreement and the facts pertinent to that question were the same for all open years petitioners do not contend that they were harmed in any way by their alleged nonreceipt of a distinct irs letter scheduling a cdp hearing for assuming arguendo that they did not receive such a letter any error was harmless petitioners next argue that the so abused his discretion by denying their request for an installment_agreement in its discretion the irs may accept an installment_agreement if it determines that doing so will facilitate full or partial collection of a tax_liability see sec_6159 the irs also has discretion to reject a proposed installment_agreement subject_to certain restrictions when the liability is below dollar_figure see 140_tc_173 sec_301_6159-1 c i proced admin regs this court gives due defer- ence to the determinations that the irs makes in the exercise of this discretionary authority see 112_tc_19 marascalco v commissioner tcmemo_2010_130 aff’d 420_fedappx_423 5th cir we will not substitute our judgment for that of the irs recalculate a taxpayer’s ability to pay or independently determine what would be an acceptable collection alternative see thompson t c pincite o’donnell v commissioner tcmemo_2013_247 the so rejected petitioners’ proposed installment_agreement after determin- ing that their tax_liabilities could be fully or partially satisfied by liquidating or borrowing against their assets dollar_figure million of equity in their residence and vacation home see internal_revenue_manual irm pt and date taxpayers do not qualify for installment agreements if balance due accounts can be fully or partially satisfied by liquidating assets boulware v commissioner tcmemo_2014_80 finding that settlement officer’s reliance on this irm provision was not an abuse_of_discretion petitioners made no showing of ill health economic hardship or other circumstance warranting an exception from this general_rule see eichler v commissioner t c __ __ slip op pincite date irm pt date id pt and between and petitioners had defaulted on four previous installment agreements one of which involved lower monthly payments than the dollar_figure they now promised to make the so did not abuse his discretion in rejecting this offer petitioners next argue that the so abused his discretion by refusing to withdraw the nftl filing for the irs’ decision whether to withdraw an nftl is discretionary if the irs determines conditions for withdrawal are present the irs may but is not required to authorize the withdrawal sec_301_6323_j_-1 proced admin regs even where the irs accepts an installment_agreement withdrawal of an nftl filing is not automatic see blackman v commissioner tcmemo_2013_194 petitioners contend that an nftl can complicate the sale of realty and that the so should have withdrawn the nftl to give them more time to sell their resi- dence petitioners’ argument is entirely hypothetical they set forth no facts to demonstrate that the existence of the nftl actually incommoded sale of the prop- erty or that withdrawal of the nftl would facilitate collection of their tax_liabilities speculation of this sort is insufficient to show that the so abused his discretion in declining to withdraw the nftl for see cunningham v commissioner tcmemo_2014_200 finally petitioners assert that the so did not properly balance the need for efficient collection_of_taxes with petitioners’ concerns that the collection action be no more intrusive than necessary but the so was far from ungenerous he was willing to consider a collection alternative despite petitioners’ ten-year history of noncompliance their default on four previous installment agreements and their possession of dollar_figure million of equity in their residence and vacation home he gave them three months after the cdp hearing to come forward with a serious proposal that would include a significant upfront payment he issued the notices of determination only after encountering a lengthy period of silence from peti- tioners this was not an abuse_of_discretion by any stretch of the imagination finding no abuse_of_discretion in any respect we will grant summary_judgment for respondent and affirm the proposed collection actions an appropriate order and decision will be entered


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi b07-plr-117406-02 date date taxpayer member a member b a b c date date dear this letter responds to a letter dated date submitted on behalf of taxpayer by its authorized representatives requesting rulings under sec_29 of the internal_revenue_code facts the facts as represented by taxpayer and taxpayer’s authorized representatives are as follows the taxpayer is a limited_liability_company that is classified as a partnership for federal tax purposes all of the interests in which presently are owned by member a and member b taxpayer has entered into an agreement with a to purchase a synthetic_fuel facility the facility that produces solid synthetic_fuel from coal the product the facility was constructed pursuant to a construction_contract between b and plr-117406-02 c entered into on date and amended on date the construction_contract did not limit the amount of damages that either party could seek against the other party in the event of the other party’s default under the contract b obtained an opinion of counsel that the construction_contract constituted a binding written contract under applicable state laws prior to date and at all times thereafter through completion of the contract the facility was designed and built with equipment that can be readily disassembled and moved to another site to take advantage of a supply of coal or for other business reasons the facility’s equipment includes four processors in which coal is exposed to heat and pressure two oil heaters that heat the oil that is circulated through the processors and a screw conveyor in which a dust control agent is applied to the processed coal the taxpayer intends to relocate the facility the taxpayer has represented that following the relocation the fair_market_value of the original property will be more than percent of the facility’s total value the cost of the new property plus the value of the original property in connection with the relocation of the facility the taxpayer intends to make certain modifications to the processors in the facility the taxpayer has represented that these modifications will not significantly increase the production capacity of the facility or significantly extend the life of the facility the taxpayer will pay all costs and expenses associated with the operation and maintenance of the facility including any applicable_property taxes and the cost of hazard insurance the taxpayer has supplied a detailed description of the patented process employed at the facility the taxpayer will obtain a license from the holder of the patent permitting the taxpayer to use this process in the facility in the facility the oil used in the processors will be heated to approximately degrees fahrenheit and the will be admitted at approximately p s i a recognized expert in combustion coal and chemical analysis has performed numerous tests on the coal to be used at the facility and has submitted a report in which the expert concludes that significant chemical changes take place with the application of the process to the coal and that the material is reduced by to by weight you have requested the following rulings the contract for construction of the facility constitutes a binding written contract in effect before date within the meaning of sec_29 taxpayer with the use of the enumerated process will produce a qualified plr-117406-02 fuel within the meaning of sec_29 the production of the qualified_fuel from the facility will be attributable solely to taxpayer entitling taxpayer to the sec_29 credit for the production of the qualified_fuel from the facility that is sold to an unrelated_person if the facility was placed_in_service prior to date within the meaning of sec_29 relocation of the facility after date or replacement of parts of the facility after that date will not result in a new placed_in_service_date for the facility for purposes of sec_29 provided the fair_market_value of the original property is more than percent of the facility’s total fair_market_value at the time of the relocation or replacement if the facility was placed_in_service prior to date within the meaning of sec_29 the proposed modifications to the processors will not result in a new placed_in_service_date for the facility for purposes of sec_29 provided such changes do not significantly increase the production capacity of the facility or significantly extend the life of the facility the sec_29 credit attributable to taxpayer may be allocated to the members of taxpayer in accordance with the members’ interest in taxpayer when the credit arises for the sec_29 credit a member’s interest in taxpayer is determined based on a valid allocation of the receipts from the sale of the sec_29 qualified_fuel a termination of taxpayer under sec_708 will not preclude the reconstituted partnership from claiming the sec_29 credit on production and sale of synthetic_fuel to unrelated persons ruling_request sec_29 and f provide that sec_29 applies with respect to qualified_fuels which are produced in a facility placed_in_service after date and before date and which are sold before date sec_29 modifies sec_29 in the case of a facility producing qualified_fuels described in sec_29 sec_29 provides that for purposes of sec_29 a facility shall be treated as placed_in_service before date if the facility is placed_in_service before date pursuant to a binding written contract in effect before date sec_29 provides that if the facility is originally placed_in_service after date sec_29 shall be applied by substituting date for date a contract is binding only if it is enforceable under local law against a taxpayer and does not limit damages to a specified amount eg by use of a liquidated_damages plr-117406-02 provision a contract provision limiting damages to an amount equal to at least five percent of the total_contract_price for example should be treated as not limiting damages the construction_contract for the facility executed prior to date did not limit the amount of damages that either party could seek against the other party in the event of breach b obtained an opinion of counsel that the contract is binding under applicable law therefore the contract is a binding written contract for purposes of sec_29 ruling requests and sec_29 allows a credit for qualified_fuels sold by the taxpayer to an unrelated_person during the taxable_year the production of which is attributable to the taxpayer the credit for the taxable_year is an amount equal to dollar_figure adjusted for inflation multiplied by the barrel-of-oil_equivalent of qualified_fuels sold sec_29 defines qualified_fuels to include liquid gaseous or solid synthetic fuels produced from coal including lignite including such fuels when used as feedstocks in revrul_86_100 1986_2_cb_3 the internal_revenue_service ruled that the definition of the term synthetic_fuel under sec_48 and its regulations are relevant to the interpretation of the term under sec_29 former sec_48 provided a credit for the cost of equipment used for converting an alternative_substance into a synthetic liquid gaseous or solid fuel revrul_86_100 notes that both sec_29 and former sec_48 contain almost identical language and have the same overall congressional intent namely to encourage energy conservation and aid development of domestic energy production under sec_1_48-9 of the income_tax regulations a synthetic_fuel differs significantly in chemical composition as opposed to physical composition from the alternate_substance used to produce it coal is an alternate_substance under sec_1_48-9 based on the information submitted and representations made including the preponderance of the test results we agree that the fuel to be produced in the facility using the described process on the coal will result in a significant chemical change in coal transforming the coal feedstock into a solid synthetic_fuel because the taxpayer will own the facility and operate and maintain the facility through its agent we conclude that the taxpayer will be entitled to the sec_29 credit for the production of the qualified_fuel from the facility that is sold to an unrelated_person ruling requests and to qualify for the sec_29 credit a facility must be placed_in_service before date pursuant to a binding written contract in effect before date while sec_29 does not define placed_in_service the term has been defined for plr-117406-02 purposes of the deduction for depreciation and the investment_tax_credit property is placed_in_service in the taxable_year the property is placed in a condition or state of readiness and availability for a specifically assigned function sec_1 a - e i and sec_1_46-3 of the income_tax regulations placed_in_service has consistently been construed as having the same meaning for purposes of the deduction for depreciation and the investment_tax_credit see revrul_76_256 1976_2_cb_46 revrul_94_31 1994_1_cb_16 concerns sec_45 which provides a credit for electricity produced from certain renewable resources including wind the credit is based on the amount of electricity produced_by_the_taxpayer at a qualified_facility during the 10-year period beginning on the date the facility was originally placed_in_service and sold by the taxpayer to an unrelated_person during the taxable_year revrul_94_31 holds that for purposes of sec_45 a facility qualifies as originally placed_in_service even though it contains some used_property provided the fair_market_value of the used_property is not more than percent of the facility’s total value the cost of the new property plus the value of the used_property revrul_94_31 concerns a factual context similar to the present situation consistent with the holding in revrul_94_31 if the facility was placed_in_service prior to date within the meaning of sec_29 the relocation of the facility after date or replacement of parts of the facility after that date will not result in a new placed_in_service_date for the facility for purposes of sec_29 provided the fair_market_value of the original property is more than percent of the facility’s total fair_market_value at the time of the relocation or replacement when property is placed_in_service is a factual determination and we express no opinion on when the facility was placed_in_service revproc_2001_30 provides that modifications of a facility after date are permitted under sec_29 and g if such modifications do not significantly increase the production capacity of the facility or significantly extend the life of the facility accordingly if the facility was placed_in_service prior to date the proposed modifications to the processors in the facility will not result in a new placed_in_service_date for the facility for purposes of sec_29 provided such modifications do not significantly increase the production capacity of the facility or significantly extend the life of the facility ruling_request sec_29 allows a credit for qualified_fuels sold by the taxpayer to an unrelated_person during the taxable_year the production of which is attributable to the taxpayer sec_7701 provides that taxpayer means any person subject_to any internal revenue tax generally under sec_7701 the term person includes plr-117406-02 an individual a_trust estate partnership_association company or corporation sec_702 provides that each partner in a partnership determines the partner’s income_tax by taking into account separately the partner’s distributive_share of the partnership’s other items of income gain loss deduction or credit to the extent provided by regulations prescribed by the secretary sec_1_702-1 provides that the distributive_share is determined as provided in sec_704 and sec_1_704-1 sec_704 provides that a partner’s distributive_share of income gain loss deduction or credit is except as otherwise provided in chapter of subtitle a of title_26 determined by the partnership_agreement sec_704 provides that a partner’s distributive_share of income gain loss deduction or credit or item thereof is determined in accordance with the partners interest in the partnership determined by taking into account all facts and circumstances if the partnership_agreement does not provide as to the partner’s distributive_share of income gain loss deduction or credit or item thereof or the allocation to a partner under the agreement of income gain loss deduction or credit or item thereof does not have substantial economic_effect sec_1_704-1 provides that allocations of tax_credits and tax_credit recapture except for sec_38 property are not reflected by adjustments to the partners’ capital accounts thus these allocations cannot have economic_effect under sec_1_704-1 and the tax_credits and tax_credit recapture must be allocated in accordance with the partners’ interest in the partnership as of the time the tax_credit or tax_credit recapture arises if a partnership expenditure whether or not deductible that gives rise to a tax_credit in a partnership_tax_year also gives rise to valid allocations of partnership loss or deduction or other downward capital_account adjustments for the year then the partners’ interests in the partnership with respect to such tax_credit or the cost giving rise to it are in the same proportion as the partners’ respective distributive shares of the loss or deduction and adjustments see sec_1_704-1 example identical principles apply in determining the partners’ interests in the partnership with respect to tax_credits that arise from receipts of the partnership whether or not taxable based on the information submitted and the representations made we conclude that the sec_29 credit attributable to the taxpayer may be allocated to the members of taxpayer in accordance with the members’ interests in taxpayer when the credit arises for the sec_29 credit a member’s interest in taxpayer is determined based on a valid allocation of the receipts from the sale of the sec_29 qualified_fuel ruling_request sec_708 provides that a partnership shall be considered as terminated if within a twelve-month period there is a sale_or_exchange of percent or plr-117406-02 more of the total interest in partnership capital and profits sec_1_708-1 provides that if a partnership is terminated by a sale_or_exchange of an interest the following is deemed to occur the partnership contributes all of its assets and liabilities to a new partnership in exchange for an interest in the new partnership and immediately thereafter the terminated partnership distributes interests in the new partnership to the purchasing partner and the other remaining partners in proportion to their respective interests in the terminated partnership in liquidation of the terminated partnership either for the continuation of the business by the new partnership or for its dissolution and winding up sec_1_708-1 applies to terminations of partnerships under sec_708 occurring on or after date the sec_29 credit has always been a time sensitive credit in that eligibility for the credit is determined when facilities or wells producing qualified_fuels are placed_in_service and when such qualifying fuels are produced and sold to unrelated persons for example the sec_44d credit as originally enacted in the crude_oil windfall profit tax act of was generally available for the production and sale of alternative fuels after date and before date from facilities placed_in_service after date and before date the sec_29 credit has been extended by congress four times the placed- in-service deadline and the period for claiming the sec_29 credit were extended in the technical_and_miscellaneous_revenue_act_of_1988 for placed_in_service omnibus budget reconciliation act of for placed_in_service and for the end of the credit_period energy policy act of for placed_in_service and for end of the credit_period and small_business job protection act of date for placed_in_service if sec_29 were read to require a facility to have been placed_in_service by the taxpayer facilities placed_in_service before that are sold or transferred to a new taxpayer after would entitle the purchaser transferee to claim the sec_29 credit it is clear from the legislative_history of sec_44d that congress intended the credit to apply to facilities placed_in_service after and that the placed-in-service deadline in sec_29 must be read as applying to when the facility is first placed_in_service within the applicable dates the placed-in-service deadlines contained in sec_29 and sec_29 focus on the facility and not the owner of the facility the legislative_history of sec_44d clearly shows that congress wanted to encourage the production of new alternative fuels from facilities first placed_in_service after and not provide tax incentive for production capacity in service before sec_29 demonstrates that congress knows how to preclude transferees of facilities from claiming the sec_29 credit that provision provides that an extension of the period for placing facilities in service after does not apply to any plr-117406-02 facility that produces coke or coke gas unless the original_use of the facility commences with the taxpayer accordingly the determination of whether a facility has satisfied the placed-in- service deadline under sec_29 and sec_29 is made by reference to when the facility is first placed_in_service not when the facility is placed_in_service by a transferee taxpayer therefore we conclude that a termination of taxpayer under sec_708 will not preclude the reconstituted partnership from claiming the sec_29 credit on the production and sale of synthetic_fuel to unrelated persons conclusions accordingly based on the information submitted and the representations made we conclude as follows the contract for construction of the facility constitutes a binding written contract in effect before date within the meaning of sec_29 taxpayer with the use of the enumerated process will produce a qualified_fuel within the meaning of sec_29 the production of the qualified_fuel from the facility will be attributable solely to taxpayer entitling taxpayer to the sec_29 credit for the production of the qualified_fuel from the facility that is sold to an unrelated_person if the facility was placed_in_service prior to date within the meaning of sec_29 relocation of the facility after date or replacement of parts of the facility after that date will not result in a new placed_in_service_date for the facility for purposes of sec_29 provided the fair_market_value of the original property is more than percent of the facility’s total fair_market_value at the time of the relocation or replacement if the facility was placed_in_service prior to date within the meaning of sec_29 the proposed modifications to the processors will not result in a new placed_in_service_date for the facility for purposes of sec_29 provided such changes do not significantly increase the production capacity of the facility or significantly extend the life of the facility the sec_29 credit attributable to taxpayer may be allocated to the members of taxpayer in accordance with the members’ interest in taxpayer when the credit arises for the sec_29 credit a member’s interest in taxpayer is determined based on a valid allocation of the receipts from the sale of the sec_29 qualified_fuel plr-117406-02 a termination of taxpayer under sec_708 will not preclude the reconstituted partnership from claiming the sec_29 credit on production and sale of synthetic_fuel to unrelated persons except as specifically ruled upon above we express no opinion concerning the federal_income_tax consequences of the transaction described above this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent temporary or final regulations pertaining to one or more of the issues addressed in this ruling have not yet been adopted therefore this ruling may be modified or revoked by the adoption of temporary or final regulations to the extent the regulations are inconsistent with any conclusion in this ruling see section dollar_figure of revproc_2002_1 2002_1_irb_1 however when the criteria of section dollar_figure of revproc_2002_1 are satisfied a ruling is not revoked or modified retroactively except in rare or unusual circumstances in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to taxpayer and to a second authorized representative sincerely joseph h makurath senior technician reviewer office of associate chief_counsel passthroughs and special industries


id office uilc cca-915212-10 ---------------- number release date from ---------------------- sent wednesday date 12pm to --------------------- cc ----------------------------- subject rproc -- bonus compensation hi revproc_2008_52 has be amplified modified and clarified by revproc_2009_39 section dollar_figure of revproc_2009_39 allows the taxpayer to make an automatic change request for the situation where the employee has to be employed at the end of the year to receive the bonus and the bonus is paid with in month of the taxable_year end since the employee has to be employed at the end of year the taxpayer would incur the liability for the bonus in the year of payment i hope this answer your question


internal_revenue_service number release date index numbers ---------------------------------------------------- ------------------------------------------------------------- -------------------------- ------------------------------------- ------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------------- id no --------------- ----------------- telephone number ---------------------- refer reply to cc psi b03 plr-135958-15 date date legend x --------------------------------------- ---------------------------------- ------------------------ a ----------------------------- state -------------- date ------------------------ year ------- dear --------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_754 of the internal_revenue_code code the information submitted states that x is a state limited_partnership a a partner of x died on date x inadvertently failed to make a timely election under sec_754 for the year of a’s death year x represents that it has acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government plr-135958-15 sec_754 provides that a partnership may elect to adjust the basis of partnership property when there is a distribution_of_property or a transfer of a partnership_interest an election under sec_754 applies with respect to all distributions of property by the partnership and to all transfers of interests in the partnership during the taxable_year with respect to which the election was filed and all subsequent taxable years sec_1_754-1 of the income_tax regulations provides that an election under sec_754 to adjust the basis of partnership property under sec_734 and sec_743 with respect to a distribution_of_property to a partner or a transfer of an interest in a partnership must be made in a written_statement filed with the partnership return for the taxable_year during which the distribution or transfer occurs for the election to be valid the return must be filed not later than the time prescribed by sec_1 e including extensions for filing the return for such taxable_year 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 whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards that 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 rules for requesting extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government based solely upon the facts submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to make a sec_754 election for its year taxable_year and thereafter the election should be made in a written_statement filed with the appropriate service_center for association with x’s year tax_return a copy of this letter should be attached to the statement filed this ruling is contingent on x adjusting the basis of its properties to reflect any sec_734 or sec_743 adjustments that would have been made if the sec_754 election had been timely made these basis adjustments must reflect any additional_depreciation plr-135958-15 that would have been allowable if the sec_754 election had been timely made regardless of whether the statutory period of limitation on assessment or filing a claim_for_refund has expired for any year subject_to this grant of late relief any depreciation deduction allowable for an open_year is to be computed based upon the remaining useful_life and using property basis as adjusted by the greater of any depreciation deduction allowed_or_allowable in any prior year had the sec_754 election been timely made additionally the partners of x must adjust the basis of their interests in x to reflect what that basis would be if the sec_754 election had been timely made regardless of whether the statutory period of limitation on assessment or filing a claim_for_refund has expired for any year subject_to this grant of late relief specifically the partners of x must reduce the basis of their interests in x in the amount of any additional_depreciation that would have been allowable if the sec_754 election had been timely made except as specifically ruled upon above we express or imply no opinion concerning the tax consequences of any facts discussed or referenced in this letter this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office we are sending a copy of this letter_ruling to your authorized representatives sincerely associate chief_counsel passthroughs and special industries by ________________________________ mary beth carchia senior technician reviewer branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes


eee a y tax_exempt_and_government_entities_division department of the treasury internal_revenue_service washington d c oct -2 uniform issue list legend taxpayer a ira x date date date financial representative z broker l amount c dear this is in response to letters dated date and date in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested taxpayer a age asserts that on date he received a distribution from ira x of amount c and that taxpayer a’s failure to accomplish a rollover of amount cc was due to the error of a representative of broker l in providing incorrect advice and erroneously causing the distribution of amount c taxpayer a asserts that amount c has not been used for any other purpose uu85 page in december broker l to inform taxpayer a that his required_minimum_distribution rmd for had not yet been distributed financial representative z advised taxpayer taxpayer a was called by financial representative z of a that he needed to receive a distribution of amount c from ira x to meet the rmd requirements taxpayer a asserts he was aware of the rmd rule and relied upon financial representative z to calculate the rmd amount amount c was distributed on date however on date sec_1 and taxpayer a had already received distributions which were sufficient to satisfy taxpayer a’s year from ira x financial representative z did not notice the previous date and date distributions and erroneously caused taxpayer a to receive amount c taxpayer a did not discover this error until his accountant informed him of the error during the preparation of his year federal_income_tax return rmd broker l has issued a letter to taxpayer a admitting the error of its representative in calculating taxpayer a’s distribution rmd and in issuing the date based on the facts and representations you request a ruling that the internal_revenue_service waive the 60-day rollover requirement with respect to the distribution of amount c contained in sec_408 of the code the code’ sec_408 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ira_rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that sec_408 of the code does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or page ii the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary may waive the day requirement under sec_408 and sec_408 of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_16 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and documentation submitted by taxpayer a is consistent with taxpayer a’s assertion that on date he received a distribution from ira x of amount c and that taxpayer a’s failure to accomplish a rollover of page amount c was due to the error of a representative of broker l incorrect advice and erroneously causing the distribution of amount c in providing therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of the date amount c from ira x pursuant to this ruling letter taxpayer a is granted a period of days measured from the date of the issuance of this letter_ruling to make a rollover_contribution of an amount equal to the date amount c to an ira or iras described in code sec_408 provided all other requirements of code sec_408 except the 60-day requirement are met with respect to such ira contribution the contribution will be considered a rollover_contribution within the meaning of code sec_408 please note that pursuant to code sec_408 this ruling letter does not authorize the rollover of the code sec_401 minimum required distributions no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicable thereto pursuant to a power_of_attorney on file with this office a copy of this letter_ruling is being sent to your authorized representative this letter is directed only to the taxpayer who requested it sec_61 k of the code provides that it may not be used or cited as precedent if you wish to inquire about this ruling please contact please address all correspondence to se t ep ra t3 sincerely yours frances v sloan manager employee_plans technical group enclosures deleted copy of letter_ruling notice of intention to disclose


internal_revenue_service index no 468a number release date cc dom p si plr-109365-98 date re revised schedule of ruling amounts taxpayer parent plant location commission district fund dear this letter responds to the request of taxpayer dated date and supplemental information submitted by your authorized representative on behalf of taxpayer for a revised schedule of ruling amounts pursuant to sec_1_468a-3 of the income_tax regulations the ruling amounts authorized in the previous ruling letter dated date information was submitted pursuant to sec_1_468a-3 we understand the facts as submitted by taxpayer to be as follows taxpayer is a wholly owned subsidiary of parent which files a consolidated federal_income_tax return with its affiliated companies including taxpayer taxpayer owns a as a tenant in common in the plant which is situated in location taxpayer is subject_to the jurisdiction of the commission taxpayer is under the audit jurisdiction of the district_director of district the operating license of the plant expires on the method for decommissioning the plant is prompt removal dismantling the taxpayer presently is subject_to regulation only by the commission plr-109365-98 the commission in previously included decommissioning costs in taxpayer’s cost of service in the annual amount of taxpayer was previously authorized ruling amounts only for the tax years as the commission did not take into account the energy policy act of taxpayer now requests permission to in determining the decommissioning costs for the plant the commission used an estimated base cost of this base cost escalated annually at a rate of results in a future decommissioning cost of the funding_period and level_funding limitation period extends from the estimated_useful_life of the plant is and the estimated period for which the fund will be in effect is therefore the qualifying percentage is the assumed after-tax rate of return to be earned on the assets of the fund is at the present time there are no proceedings before the commission that may result in an increase or decrease in the amount of decommissioning costs for the plant to be included in taxpayer’s cost of service for ratemaking purposes sec_468a of the internal_revenue_code provides that a taxpayer may elect to deduct the amount of payments made to a qualified decommissioning fund however sec_468a limits the amount_paid into such fund for any taxable_year to the lesser_of the amount of nuclear decommissioning costs allocable to this fund which is included in the taxpayer's cost of service for ratemaking purposes for the tax_year or the ruling_amount applicable to this year sec_468a of the code provides that no deduction shall be allowed for any payment to the nuclear decommissioning fund unless the taxpayer requests and receives from the secretary a schedule of ruling amounts the ruling_amount for any_tax year is defined under sec_468a as the amount which the secretary determines to be necessary to fund that portion of nuclear decommissioning costs which bears the same ratio to the total nuclear power plant as the period for which the nuclear decommissioning fund is in effect bears to the estimated_useful_life of the plant this term is further defined to include the plr-109365-98 amount necessary to prevent excessive funding of nuclear decommissioning costs or funding of these costs at a rate more rapid than level_funding taking into account such discount rates as the secretary deems appropriate sec_468a of the code provides that a taxpayer shall be deemed to have made a payment to the nuclear decommissioning fund on the last day of the tax_year if the payment is made on account of this tax_year and is made within months after the close of the tax_year additionally a taxpayer that files for a schedule of ruling amounts and receives such schedule of ruling amounts after the month deadline for making a payment to a nuclear decommissioning fund must make such payment to the fund within days after the date that the taxpayer receives the schedule of ruling amounts for the tax_year sec_1_468a-1 of the regulations provides that an eligible_taxpayer may elect to deduct nuclear decommissioning costs under sec_468a of the code an eligible_taxpayer as defined under sec_1_468a-1 of the regulations is a taxpayer that has a qualifying interest in among other things a direct ownership_interest including an interest as a tenant in common or joint tenant sec_1_468a-2 of the regulations provides that the maximum amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year shall not exceed the lesser_of i the cost of service amount applicable to the nuclear decommissioning fund for such tax_year or ii the ruling_amount applicable to the nuclear decommissioning fund for such tax_year if the amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year exceeds the limitation of paragraph b the excess is not deductible by the electing taxpayer in addition under sec_1_468a-5 there are rules which provide that the internal_revenue_service may disqualify a nuclear decommissioning fund if the amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year exceeds the limitation of paragraph b sec_1_468a-3 of the regulations provides that in general a schedule of ruling amounts for a nuclear decommissioning fund is a ruling specifying annual payments that over the tax years remaining in the funding_period as of the date the schedule first applies will result in a projected balance of the nuclear decommissioning fund as of the last day of the funding_period equal to and in no event more plr-109365-98 than the amount of decommissioning costs allocable to the fund sec_1_468a-3 of the regulations provides that to the extent consistent with the principles and provisions of this section each schedule of ruling amounts shall be based on the reasonable assumptions and determinations used by the applicable public_utility commission in establishing or approving the amount of decommissioning costs to be included in the cost of service for ratemaking purposes under sec_1_468a-3 the internal_revenue_service shall provide a schedule of ruling amounts identical to the schedule proposed by the taxpayer but no such schedule shall be provided by the service unless the taxpayer’s proposed schedule is consistent with the principles and provisions of this section sec_1_468a-3 of the regulations provides that in general the ruling_amount for any_tax year in the level_funding limitation period shall not be less than the ruling_amount for any earlier tax_year under sec_1_468a-3 the level_funding limitation period begins on the first day of the tax_year for which a deductible payment is made to the nuclear decommissioning fund and ends on the last day on which the nuclear power plant will no longer be included in the taxpayer’s rate base for ratemaking purposes sec_1_468a-3 of the regulations provides that in general the total estimated cost of decommissioning a nuclear power plant is the reasonably estimated cost of decommissioning used by the applicable public_utility commission in establishing or approving the amount of these costs to be included in cost of service for ratemaking purposes sec_1_468a-3 of the regulations provides that a taxpayer’s share of the total estimated cost of decommissioning a nuclear power plant equals the total estimated cost of decommissioning such plant multiplied by the taxpayer’s qualifying interest in the plant under sec_1_468a-3 the qualifying percentage for any nuclear decommissioning fund is equal to a fraction the numerator of which is the number of tax years in the estimated period for which the nuclear decommissioning fund is to be in effect and the denominator of which is the number of tax years in the estimated_useful_life of the applicable plant sec_1_468a-3 of the regulations provides that the internal_revenue_service shall not provide a taxpayer with a schedule of ruling amounts for any nuclear decommissioning fund unless the public_utility commission that establishes or approves the rates for electric energy generated by the plant has plr-109365-98 determined the amount of decommissioning costs to be included in the taxpayer’s cost of service for ratemaking purposes and has disclosed the after-tax rate of return and any other assumptions and determinations used in establishing or approving the amount sec_1_468a-3 of the regulations provides that any taxpayer that has previously obtained a schedule of ruling amounts can request a revised schedule of ruling amounts such a request must be made in accordance with the rules of sec_1_468a-3 the internal_revenue_service shall not provide a revised schedule of ruling amounts applicable to a tax_year in response to a request for a schedule of ruling amounts that is filed after the deemed deadline date for such tax_year section of the energy policy act of public law act eliminated for tax years beginning after date the investment restrictions contained in sec_468a of the code that section also revised sec_468a by lowering the tax_rate applicable to a nuclear decommissioning fund we have examined the representations and the data submitted by the taxpayer in relation to the requirements set forth in the code and the regulations based solely upon these representations of the facts we reach the following conclusions the taxpayer has a qualifying interest in the plant and is therefore an eligible_taxpayer under sec_1_468a-1 of the regulations the commission has permitted the amount of decommissioning costs to be included in the taxpayer’s cost of service for ratemaking purposes as required by sec_1_468a-3 of the regulations the taxpayer has calculated its share of the total decommissioning costs under sec_1_468a-3 of the regulations the taxpayer has determined that is the qualifying percentage as calculated under sec_1_468a-3 of the regulations based on the above determinations we conclude that the taxpayer’s proposed schedule of ruling amounts with regard to the plr-109365-98 commission satisfies the requirements of sec_468a of the code approved schedule of ruling amounts tax years year each year the approved schedule of ruling amounts for the commission is being limited to a five year period as a result of the statutory changes made by the act the elimination of the investment restrictions and the reduction of the tax_rate applicable to income earned by the fund may result in a greater after-tax rate of return than was estimated prior to the enactment of the act by the commission which based its determinations as to the approved after-tax rate of return on restricted investments and a higher tax_rate this increased after-tax rate of return would over the life of the fund result in a balance in the fund on the last day of the funding_period that would exceed the amount of decommissioning costs allocable to the fund in order to prevent the excess accumulation in the fund this schedule of ruling amounts is limited to a five year period for the commission approval of the schedule of ruling amounts is contingent on there being no change in the facts and circumstances known or assumed at the time the current ruling is issued if any of the events described in sec_1_468a-3 of the regulations occur in future years the taxpayer must request a review and revision of the schedule of ruling amounts generally the taxpayer is required to file such a request on or before the deemed payment deadline date for the first tax_year in which the rates reflecting such action became effective when no such event occurs the taxpayer must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline of the 10th tax_year following the close of the tax_year in which the most recent schedule of ruling amounts was received plr-109365-98 the approved schedule of ruling amounts is relevant only to those payments made to the fund payments allocable to any funds other than the fund cannot qualify for purposes of the deduction under the provisions of sec_468a of the code as stated earlier payments made to such fund can qualify only to the extent that they do not exceed the lesser_of the decommissioning costs applicable to such fund or the ruling amounts applicable to this fund in the tax_year this ruling is directed only to the taxpayer who requested it section 6llo j of the code provides it may not be used or cited as precedent pursuant to sec_1_468a-7 of the regulations a copy of this letter must be attached with the required election statement to the taxpayer’s federal_income_tax return for each tax_year in which the taxpayer claims a deduction for payments made to the fund sincerely yours charles b ramsey chief branch office of assistant chief_counsel passthroughs and special industries


internal_revenue_service index number number release date cc dom corp plr-122010-98 date distributing controlled distributing corporation y business e business g date a b c d plr-122010-98 exchange alternative exchange this responds to a request dated date submitted on your behalf by your authorized representative that we supplement our letter_ruling dated date plr-121669-97 the prior ruling regarding certain federal_income_tax consequences of a series of transactions which included the distribution of all of the outstanding capital stock of the successor to controlled new controlled by distributing to holders of its group b common_stock in exchange for that stock and to holders of its group c common_stock as a distribution with respect to their group c common_stock the distribution the prior ruling held inter alia that the distribution qualified as a tax-free distribution under sec_355 of the internal_revenue_code capitalized terms retain the meanings originally assigned to them following the distribution distributing was renamed corporation y and the successor to controlled was renamed distributing corporation y through wholly owned subsidiaries is engaged in business e and business g by resolution dated date a the board_of directors of corporation y authorized the repurchase of up to b million shares representing approximately c percent of the capital stock of corporation y over a period not to exceed d months in the prior ruling corporation y represented that it had no plan or intention to repurchase shares following the distribution other than through stock purchases meeting the requirements of sec_4 b of revproc_96_30 1996_1_cb_696 at such time as corporation y determines to repurchase shares corporation y will engage a broker to act as its agent to repurchase shares in the open market the broker would execute purchases under guidelines established by corporation y these typically would include price limits eg a price lower than a pre-determined ceiling and volume limits eg no more than a pre-determined percentage of the trading volume on a particular day these guidelines would be supplemented by regular contacts daily or even more frequent between corporation y and the broker to monitor the program and to be responsive to specific conditions in the market plr-122010-98 all trades executed under this program will be executed on exchange or occasionally on alternative exchange be reported on the tape and included in corporation y’s daily trading volume the stock specialist will record the trade as a trade between corporation y’s broker and the broker acting as seller’s agent corporation y is not made aware of the identity of the seller alternatively corporation y may receive unsolicited telephone inquiries from brokers other than the one selected as its purchasing agent offering a block of stock at a set price a block_trade these brokers will have received a sell order from one of their clients and are attempting to execute it directly with corporation y under securities and exchange guidelines corporation y is permitted to entertain these unsolicited requests even if its broker is buying shares on its behalf in the market the same day if corporation y accepts the block_trade at the offered price or such other price as may be agreed upon the trade will be executed on exchange or on alternative exchange as the case may be be reported on the tape and included in corporation y’s daily trading volume the stock specialist will record the block_trade as a trade between the broker soliciting the block_trade as corporation y’s agent and the same broker as seller’s agent corporation y is not made aware of the identity of the seller sec_4 b iii of revproc_96_30 requires that stock repurchases be made in the open market with respect to the proposed stock repurchases corporation y has made the following representation corporation y will not know the identify of the seller of its stock with respect to any block_trade in which corporation y may participate based on the information submitted and on the representation set forth above we hold as follows corporation y’s repurchases of capital stock pursuant to a block_trade will constitute repurchases made in the open market within the meaning of sec_4 b iii of revproc_96_30 this supplement is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent plr-122010-98 each taxpayer involved in the transaction should attach a copy of this supplement to the taxpayer’s federal_income_tax return for the taxable_year in which the transaction is consummated under a power_of_attorney on file in this office a copy of this letter is being sent to your authorized representative sincerely assistant chief_counsel corporate by victor l penico chief branch refers to written_determination number