internal_revenue_service number release date index number ------------------- ------------------------------ ------------------------- --------------------------------- ------------- ----------------------------- department of the treasury washington dc third party communication date of communication month dd yyyy person to contact ----------------------- id no ------------- telephone number --------------------- refer reply to cc intl plr-149369-05 date date taxpayer legend ------------------------------------------------------------------------------------------ ---------------------- -------------------------------- -------------------------------------------------------------- ------------------------------------------------------ -------------------------------------------------- partnership branch x branch y branch z tax_year one -------------------- tax_year two -------------------- -------------------- tax_year three tax_year four --------- country a country b country c country d individual a cpa firm dear ------------ this replies to your representative’s letter dated date in which your representative requests on behalf of taxpayer an extension of time under sec_301_9100-3 for taxpayer to file the elections and agreements described in sec_1 g i and 1503-2t g i as follows ----------------------- ---------------- ----------- -------------- ------------------------- ---------------- plr-149369-05 partnership branch x branch y branch z tax_year one a loss_year a loss_year a loss_year a loss_year tax_year two na b loss_year na b loss_year tax_year three na b loss_year na b loss_year legend a election and agreement described in sec_1_1503-2 b election and agreement described in sec_1_1503-2t g i na not applicable additional information was submitted on date and date the information submitted for consideration is substantially as set forth below the ruling contained in this letter is predicated upon facts and representations submitted by taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for a ruling verification of the factual information representations and other data may be required as a part of the audit process taxpayer was the u s common parent of an affiliated_group_of_corporations that filed a u s consolidated federal_income_tax return for tax years one two and three during tax_year one taxpayer was a partner in partnership that was an entity treated as a partnership for both country d and u s tax purposes during tax years one two and three branch x in country a branch y in country b and branch z in country c were each a foreign_branch of taxpayer under sec_1 c a partnership and branches x y and z incurred losses in the tax years indicated in the above table taxpayer’s interests in partnership and branches x y and z were separate units as defined under sec_1_1503-2 and and their losses were dual consolidated losses dcls as defined in sec_1_1503-2 during tax years one two and three taxpayer had a small accounting staff and none were tax professionals taxpayer engaged cpa firm to prepare its u s consolidated federal_income_tax returns for those years including the preparation of required elections and disclosures throughout this period these tax returns were reviewed by tax partners of cpa firm who are no longer members of that firm in tax_year four taxpayer brought to the attention of cpa firm that dcl elections described in sec_1_1503-2 and sec_1_1503-2t g i may have been plr-149369-05 inadvertently omitted from its tax returns for the dcls incurred by partnership and branches x y and z in tax years one through three individual a a tax partner with cpa firm reviewed the prior years’ tax returns and discussed the filing_requirements with one of cpa firm’s international tax mangers as a result individual a agreed that dcl elections should have been filed for the tax years as set forth in the above table taxpayer represents that it filed this application_for relief before the internal_revenue_service discovered the failure_to_file the elections and agreements described in sec_1_1503-2 and sec_1_1503-2t g i as set forth in the above table sec_301_9100-3 taxpayer represents that branch x is not subject_to income_tax in country a as a corporation or otherwise at the entity level either on its worldwide income or on a residence basis and thus is not a hybrid_entity_separate_unit as that term is defined in sec_1_1503-2 taxpayer represents that branch y is not subject_to income_tax in country b as a corporation or otherwise at the entity level either on its worldwide income or on a residence basis and thus is not a hybrid_entity_separate_unit as that term is defined in sec_1_1503-2 taxpayer represents that branch z is not subject_to income_tax in country c as a corporation or otherwise at the entity level either on its worldwide income or on a residence basis and thus is not a hybrid_entity_separate_unit as that term is defined in sec_1_1503-2 taxpayer represents that the income_tax laws of country a do not deny the use of losses expenses or deductions of branch x to offset income of another person because the dual_resident_corporation or separate_unit is also subject_to income_taxation by another country on its worldwide income or on a residence basis taxpayer represents that the income_tax laws of country d do not deny the use of losses expenses or deductions of partnership to offset income of another person because the dual_resident_corporation or separate_unit is also subject_to income_taxation by another country on its worldwide income or on a residence basis sec_301_9100-1 provides that the commissioner has discretion to grant a taxpayer a reasonable extension of time under the rules set forth in sec_301_9100-3 to make a regulatory election under all subtitles of the internal_revenue_code except subtitles e g h and i plr-149369-05 sec_301_9100-1 provides that an election includes an application_for relief in respect of tax and defines a regulatory election as an election whose due_date is prescribed by a regulation a revenue_ruling revenue_procedure notice or announcement sec_301_9100-3 provides that requests for relief subject_to this section will be granted when the taxpayer provides evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith within the meaning of sec_301_9100-3 subject_to the conditions set forth in sec_301_9100-3 and the grant of relief will not prejudice the interests of the government within the meaning of sec_301_9100-3 in the present situation the elections and agreements described in sec_1_1503-2 and sec_1_1503-2t g i are regulatory elections 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 rules set forth in sec_301_9100-3 based on the facts and representations submitted we conclude that taxpayer satisfies the standards for relief as set forth in sec_301_9100-3 accordingly taxpayer is granted an extension of time of days from the date of this ruling letter for it to file the elections and agreements described in sec_1_1503-2 and sec_1_1503-2t g i as set forth in the above table the granting of an extension of time is not a determination that taxpayer is otherwise eligible to file the elections and agreements sec_301_9100-1 for example a taxpayer that is subject_to mirror legislation enacted by a foreign_country may be ineligible to file election agreements pursuant to sec_1_1503-2 a copy of this ruling letter should be associated with the elections and agreements this ruling is directed only to taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent no ruling has been requested and none is expressed as to the application of any other section of the code or regulations to the facts presented plr-149369-05 pursuant to a power_of_attorney on file in this office a copy of this ruling letter is being furnished to your authorized representative sincerely associate chief_counsel international by _ s richard l chewning richard l chewning senior counsel office of the associate chief_counsel international enclosures copy for purposes


department of the treasury i n t e r n a l r e v e n u e s e r v i c e washington d c date deputy chief_counsel number info release date uil conex-150299-06 the honorable mel martinez united_states senator east robinson street suite orlando florida attention ------------------ dear senator martinez this letter is in response to your inquiry dated date on behalf of your constituent ---- ----------------- ---- --------- asked whether the --------------------------- can legally stop withholding and paying taxes under the federal_insurance_contributions_act fica on wages it pays to certain employees a nd how this decision will effect employees’ retirement benefits we cannot provide an opinion about the legality of the university’s decision to discontinue its social_security contributions or address how this decision may affect employees’ retirement benefits however we can provide you with general information about when the wages state and local governments or their instrumentalities pay to employees are not subject_to fica_taxes fica_taxes consist of old-age survivors and disability insurance taxes also known as social_security_taxes and hospital insurance taxes also known as medicare taxes employees and employers must pay fica_taxes under sec_3101 and sec_3111 of the internal_revenue_code the code generally all wages an employer pays for services an employee performs are subject_to fica_taxes unless the law specifically exempts the payments from the term wages or the services from the term employment the code defines those terms in sec_3121 and b the law generally excludes from employment services individuals perform in the employ of any state political_subdivision or their instrumentalities such as a state university for example however the exception from employment does not apply to services included under a sec_218 agreement sec_3121 of the code a sec_218 agreement is a voluntary agreement between a state and the social_security administration ssa to provide social_security coverage for employees of state or local governments and their instrumentalities since if the services state_or_local_government employees perform are not included under a sec_218 agreement the exception from employment will not apply to them unless they are members of the retirement_system of a state political_subdivision or their instrumentalities sec_3121 of the code thus state and local_government employers must withhold and pay fica_taxes subject_to limited exceptions if their employees do not participate in a public_retirement_system sec_3121 of the code these employers are exempt from the social_security portion of fica_taxes if the employees are not covered by a sec_218 agreement but are members of a public_retirement_system whether a retirement arrangement is a retirement_system within the meaning of sec_3121 of the code generally depends on whether the retirement arrangement provides benefits equivalent to social_security_benefits if a taxpayer wants a ruling that its retirement arrangement is a retirement_system for fica purposes the taxpayer may request a private_letter_ruling revproc_2006_1 2006_1_irb_1 provides instructions for submitting a request for a private_letter_ruling i am enclosing a copy for your information employees of state and local governments and their instrumentalities who are members of a public_retirement_system and therefore exempt from the social_security portion of fica under sec_3121 of the code may still be subject_to the medicare portion of the fica_taxes all employees hired by state or local governments after date are subject_to the medicare portion of fica regardless of membership in an employer’s retirement_system sec_3121 of the code however under sec_3121 of the code employees hired before date are exempt from medicare unless covered by a sec_218 agreement if the employees are members of a public_retirement_system the employees were bona_fide employees of the employer on date the employees performed regular and substantial services for remuneration for the employer before date the employee has worked continuously since date the employee and employer did not enter into the employment relationship to avoid paying the medicare_tax services that students perform as employees of schools colleges or universities at which they are enrolled and regularly attend classes are excepted from the definition of employment for fica tax purposes sec_3121 of the code thus wages employers pay to such students are exempt from both the social_security and medicare portions of fica_taxes although this letter is not a ruling i hope the information is helpful if you have further questions please contact me or --------------------at ----- ------------- sincerely lynne camillo chief employment_tax branch division counsel associate chief_counsel tax exempt and government entities enclosure


internal_revenue_service number release date index number --------------------------------------------- ----------------------------- -------------------------------------- ---------------------------------------------- --------------------------------- --------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------- telephone number --------------------- refer reply to cc psi b02 plr-108686-05 date date --------- ---------------------- ------------------------------------- legend x ------------------------------------------ country date dear --- -------------- this responds to a letter dated date submitted on behalf of x requesting that the service grant x an extension of time under sec_301_9100-3 of the procedure and administration regulations to elect to be treated as a disregarded_entity under sec_301_7701-3 x represents that x is a foreign_entity eligible to elect to be treated as a disregarded_entity however the service has no record of a timely filed form_8832 entity classification election electing to treat x as a disregarded_entity effective date entity for federal_income_tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if the foreign eligible_entity has only one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 the information submitted states that x was formed under the laws of country sec_301_7701-3 provides guidance on the classification of a foreign sec_301_9100-1 through provide the standards the sec_301_9100-1 provides that the commissioner may grant a reasonable sec_301_7701-3 provides that an entity classification election must be filed plr-108686-05 on form_8832 and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form is filed extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and granting relief will not prejudice the interests of the government conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 with the appropriate service_center and elect to be treated as a disregarded_entity effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose federal tax consequences of the facts described above under any other provision of the code provides that it may not be used or cited as precedent except as specifically set forth above no opinion is expressed concerning the based solely on the information submitted and the representations made we this ruling is directed only to the taxpayer requesting it sec_6110 plr-108686-05 being sent to x’s authorized representatives pursuant to a power_of_attorney on file with this office a copy of this letter is sincerely heather c maloy associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


department of the treasury internal_revenue_service washington d c jan ' ae wa oo tg tax exempt and government entities ute sec_4 reeekererererererkeekreeerer rkakkekrekaekrrererererererer rereeererekeerereerererrer attn arekkkereererererreeer legend employer m st t ate a plan x --- rkekekekekeekrererrerererereerekereeeeeere - kkkkekeerekrkeererererkerererrreererererererere keke ererererereererererereeeeererke group nemployees me kkekkrkekekrkeererrkeerererereererererereererer keekekrkrekrekerererrerererrerererererrerrerer statute p statute q statute r statute s ee kkkkkkkekrerkeerererkerkekrerrerkrerererkeeeererere man krkekeekeeereekerereereereerereereeeererreeree woe khkekkekrekekrererererereekrerekerereerererere ee hkkkekekheekrerkekrekrererekekekeerererererereere proposed resolution n rrkeeeeerererkrererererererereeererererereere dear rererereeeererekee this is in response to a ruling_request dated date as supplemented by correspondence dated august date and date submitted on your behalf by your authorized representative concerning the federal_income_tax treatment under sec_414 of the internal_revenue_code code of certain contributions to plan x the following facts and representations have been submitted by your authorized representative employer m a government employer in state a established and created plan x in accordance with statute p and statute q for the benefit of the group n employees you represent that plan x meets the qualification requirements set forth under sec_401 a of the code statute r provides that each group n employee shall contribute dollar_figure percent of his her salary to plan x statute s provides that a municipality such as employer m may pick up the group n employees’ contributions required by statute r statute s further provides that if a municipality decides to pick up the contributions they shall be treated as employer rreekeekekerererkererererere contributions in determining tax treatment under the internal_revenue_code statute s also provides that a municipality shall continue to withhold federal and state income taxes based on these contributions until the internal_revenue_service or the federal courts rule that pursuant to sec_414 of the code these contributions shall not be included as gross_income of the group n employees until such time as they are distributed or made available employer m may pick up these contributions by a reduction in the cash salary of the group n employees or by an offset against a future salary increase or by a combination of both to effectuate the pickup as provided for in statute s employer m intends to adopt proposed resolution n proposed resolution n provides that employer m will pick up the group n employees’ contributions to plan x in accordance with statute r and statute s the pickup of contributions will apply to all group n employees who are members of plan x once employer m receives a ruling it will exclude the picked up contributions from the gross pay of the group n employees and employer m will cease to withhold federal and state income taxes on the picked-up contributions employer m will make contributions on behalf of the group n_ employees participating in plan x and no participant may receive the contributed amounts directly in lieu of having such contributions paid_by employer m to plan x based on the aforementioned facts you request the following rulings that no part of the employee contributions picked up by employer m will constitute gross_income to the group n employees on whose behalf the pickup is made that no part of the picked up contributions paid_by employer m will constitute wages for federal_income_tax withholding purposes and federal income taxes need not be withheld on the picked up contributions sec_414 of the code provides that contributions otherwise designated as employee contributions shall be treated as employer contributions if such contributions are made to a pian determined to be qualified under sec_401 established by a state government or a political_subdivision thereof and are picked up by the employing unit the federal_income_tax treatment to be accorded contributions which are picked up by the employer within the meaning of sec_414 of the code is specified in revenue_ruling 1977_2_cb_358 in that revenue_ruling the employer school district agreed to assume and pay the amounts employees were required by state law to contribute to a state pension_plan revrul_77_462 concluded that the school district's picked-up contributions to the plan are excluded from the employees' gross_income until such time as they are distributed to the employees the revenue_ruling held further that under the provisions of sec_3401 of the code the school district's contributions to the plan are excluded from wages for purposes of the collection of income_tax at source on wages therefore no withholding is required from the employees’ salaries with respect to such picked-up contributions the issue of whether contributions have been picked up by an employer within the meaning of sec_414 of the code is addressed in revrul_81_35 1981_1_cb_255 and revrul_81_36 1981_1_cb_255 these revenue rulings established that the krerkerererrerereeekerrerrer following two criteria must be met the employer must specify that the contributions although designated as employee contributions are being paid_by the employer in lieu of contributions by the employee and the employee must not be given the option of choosing to receive the contributed amounts directly instead of having them paid_by the employer to the pension_plan in revrul_87_10 1987_1_cb_136 the internal_revenue_service considered whether contributions designated as employee contributions to a governmental_plan are excludable from the gross_income of the employee the service concluded that to satisfy the criteria set forth in revenue rulings and with respect to particular contributions the required specification of designated employee contributions must be completed before the period to which such contributions relate in this request proposed resolution n satisfies the criteria set forth in revrul_81_35 and revrul_81_36 by providing in effect that employer m will make contributions to plan x in lieu of contributions by the group n employees under proposed resolution n group n employees participating in plan x may not receive the contributed amounts directly in lieu of having such contributions paid_by employer m to plan x accordingly we conclude with respect to ruling requests number sec_1 and that the amounts picked up by employer m on behalf of the group n employees who participate in plan x shall be treated as employer contributions and will not be includible in the group n employees' gross_income in the year in which such amounts are contributed for federal_income_tax treatment these amounts will be includible in the gross_income of the group n employees or their beneficiaries in the taxable_year in which they are distributed to the extent that the amounts represent contributions made by employer m because we have determined that the picked-up amounts are to be treated as employer contributions they are excepted from wages as defined in sec_3401 of the code for federal_income_tax withholding purposes in addition no part of the amounts picked up by employer m will constitute wages for federal_income_tax withholding purposes in the taxable_year in which they are contributed to plan x these rulings apply only if the effective date for the commencement of the pick-up is no earlier than the later of the date proposed resolution n is signed or the date the pick-up is put into effect this ruling is based on proposed resolution n as set forth in your letter dated date for purposes of the application of sec_414 of the code it is immaterial whether an employer picks up contributions through a reduction in salary an offset against future salary increases or a combination of both these rulings are based on the assumption that plan x will be qualified under sec_401 of the code at the time of the proposed contributions and distributions no opinion is expressed as to whether the amounts in question are subject_to tax under the federal_insurance_contributions_act no opinion is expressed as to whether the amounts in question are paid pursuant to a salary reduction agreement within the meaning of sec_3121 rrekekrrerererererereerrere these rulings are directed only to the taxpayer who requested them sec_6110 of the code provides that they may not be used or cited by others as precedent a copy of this letter has been sent to your authorized representative in accordance with the power_of_attorney on file with this office if you have questions regarding this ruling you may contact krekekekerkererrerrrerkererererrrrrere sincerely yours signed joyce e floyd joyce e floyd manager employee_plans technical group enclosures deleted copy of this letter and notice


department of the treasury int ernal revenue service washington d c o f f i c e o f date c h i e f c o u n s e l number release date cc psi cam-107806-99 uilc internal_revenue_service national_office chief_counsel_advice memorandum for industry director natural_resources construction lm nrc from kathleen reed senior technician reviewer branch office of associate chief_counsel passthroughs and special industries cc psi subject denial of consent for change in method_of_accounting in accordance with section a of revproc_2001_1 2001_1_irb_1 this chief_counsel_advice advises you that consent for a change in accounting_method has been denied to a taxpayer within your jurisdiction pursuant to sec_6110 of the internal_revenue_code this chief_counsel_advice is not to be cited as precedent legend taxpayer b c d taxpayer filed a form_3115 application_for change in accounting_method to request permission to change its method of computing depreciation under sec_168 for street lighting equipment taxpayer previously treated equipment used wholly for street lighting as included in asset cla sec_49 electric utility transmission and distribution plant of revproc_87_56 c b taxpayer believes this cam-107806-99 classification was improper specifically taxpayer believes that this property does not belong in asset class dollar_figure or any other asset class of revproc_87_56 thus taxpayer believes that street lighting is described in sec_168 that is property that does not have a class_life and is not otherwise classified under sec_168 or as a result taxpayer requested permission to change its method of computing depreciation under sec_168 for street lighting from 150-percent declining balance method_of_depreciation over a 20-year recovery_period to 200-percent declining balance method_of_depreciation over a 7-year recovery_period this method change would have been effective with the taxable_year beginning b year_of_change and would have resulted in a net negative sec_481 adjustment decrease in taxable_income of dollar_figurec taxpayer proposed to take this net negative sec_481 adjustment into account ratably over taxable years in computing taxable_income beginning with the year_of_change the issue is whether taxpayer’s requested method of depreciating street lighting is a permissible method_of_accounting for depreciation of this property under sec_168 the depreciation deduction provided by sec_167 for tangible_property placed_in_service after macrs_property generally is determined under sec_168 this section prescribes two methods_of_accounting for determining depreciation allowances one method is the general depreciation system in sec_168 and the other method is the alternative_depreciation_system in sec_168 under either depreciation system the depreciation deduction is computed by using a prescribed depreciation method recovery_period and convention for purposes of the general depreciation system the depreciation method recovery_period and convention are determined by the property's classification under sec_168 pursuant to sec_168 property with a class_life of years or less is classified as 3-year_property property with a class_life of more than years but less than years is classified as 5-year_property property with a class_life of years or more but less than years is classified as 7-year_property property with a class_life of years or more but less than years is classified as 10-year_property property with a class_life of years or more but less than years is classified as 15-year_property and property with a class_life of years or more is classified as 20-year_property the term class_life is defined in sec_168 as meaning the class_life if any that would be applicable with respect to any property as of date under sec_167 determined without regard to sec_167 and as if the taxpayer had made an election under sec_167 as in effect on the day before the date of enactment of the revenue reconciliation act of former sec_167 provided that for a taxpayer who elected the asset_depreciation_range adr system of cam-107806-99 depreciation the depreciation allowance was based on the class_life prescribed by the secretary that reasonably reflected the anticipated useful_life of that class of property to the industry or other group sec_1_167_a_-11 of the income_tax regulations provides rules for classifying property under former sec_167 under sec_1_167_a_-11 property shall be classified according to primary use even though the activity in which such property is primarily used is insubstantial in relation to all the taxpayer’s activity the present class lives of macrs_property for purposes of sec_168 are set forth in revproc_87_56 under the general depreciation system of sec_168 the depreciation method recovery_period and convention are prescribed in respectively sec_168 c and d for 7-year_property the depreciation method and recovery_period generally are the 200-percent declining balance method_of_depreciation and a 7-year recovery_period pursuant to respectively sec_168 and c for 20-year_property the depreciation method and recovery_period generally are the 150-percent declining balance method_of_depreciation and a 20-year recovery_period pursuant to respectively sec_168 and c the applicable convention for 7-year and 20-year_property is the half-year_convention or the mid-quarter convention as determined under sec_168 revproc_87_56 divides assets into two broad categories asset classes dollar_figure through that consist of specific depreciable assets used in all business activities and asset classes through that consist of depreciable assets used in specific business activities an asset that falls within both an asset category that is asset classes dollar_figure through and an activity category that is asset classes through would be included in the asset category see 111_tc_105 the asset class lives described in revproc_87_56 are based on a system of classification that was first described in revproc_62_21 the system is based on broadly defined industry classifications that is industry activities the class lives given are for a composite of assets used in the activity with any composite system the actual life of many of the assets in the class will be longer than that of the class and the actual life of many other assets in the class will be shorter than that of the class the asset classification system evolved from a voluntary system in to the fixed system of sec_168 in which the recovery periods can only be changed by congress section dollar_figure of revproc_87_56 c b pincite provides certain asset guideline classes in revproc_83_35 included_property on the basis of regulated accounts for purposes of sec_168 of the code and this revenue_procedure asset classes include property cam-107806-99 described therein without regard to whether a taxpayer is a regulated_public_utility or an unregulated company see h_r conf_rep no 99th cong 2nd sess vol c b this language recognizes that utility property does not have to be regulated to fit within certain asset classes of revproc_87_56 for purposes of sec_168 although it did for former sec_168 acrs fcc accounts are included in the description of certain telephone related assets icc accounts are included in the description of certain railroad related assets and cab accounts are included in the description of certain airline related assets ferc accounts however are not specifically mentioned in electric utility service accounts asset classes dollar_figure through distribution is the final step in the sale of electricity until recently users of electricity generally did not pay for distribution separately from the charge for the generation although in setting rates public_utility commissions considered both aspects the street lights consume electricity the amount of electricity used for a particular light over any period can be estimated with a high degree of accuracy based on the estimated hours of use no separate metering is necessary and running separate lines is frequently unnecessary in the simplest case the lighting fixture is placed where needed on existing distribution poles the utility has electricity where street lighting is needed thus the utility provides the electricity and the equipment for producing the light as a part of its business of distributing the electricity three revenue rulings consistent with our analysis that street lighting is part of distribution are mentioned below revrul_78_67 c b discusses expenditures_for light watchmen a lighting fixture containing a photoelectric cell installed on a pole usually on a customer’s premises similar in appearance to a street light revrul_78_67 concludes that expenditures_for the light watchmen are additions to a utility’s distribution system and are subject_to the repair_allowance provision that applied to adr property revrul_83_146 c b discusses propane storage tanks and related customer installations leased by a retailer of propane and finds the propane storage tanks and related customer installations are related to the taxpayer’s business of furnishing gas to customers finally in revrul_77_476 1977_2_cb_5 an oil pipeline used by a public_utility to move oil to an inland generation plant from the utility’s dock is determined to be part of the activity of generation of electricity rather than pipeline transportation this ruling shows that the asset classification system looks at activities broadly and is not intended to divide a taxpayer’s business into a myriad of activities clearly under sec_1_167_a_-11 property is classified according to its primary use even though the activity in which such property is primarily used is insubstantial in relation to all the activities of a taxpayer however for an activity to be classified as a separate activity the activity must be substantial although it may cam-107806-99 be insubstantial in relation to all of other activities of the taxpayer significant and separate not as here merely part of the activity in question providing street lighting is simply part of distribution of electricity to the ultimate consumer this activity is included in asset cla sec_49 the deregulation of the electric utility industry which allows the sale of the street lighting equipment to a municipality does not change the classification of street lighting assets owned by taxpayer for purposes of determining taxpayer’s depreciation deduction these assets continue to be used as part of its business of distributing electricity likewise recognizing that these assets may be sold by taxpayer purchased by a municipality and subject_to new ratemaking that acknowledges that taxpayer would no longer own the assets does not indicate that these assets were never part of distribution of electricity taxpayer was granted a conference of right to discuss this issue on d and also submitted a post-conference submission on its proposed change taxpayer as stated at the conference and in its post-conference submission believes that the ultimate use of the street lights determines the classification of street lights for depreciation purposes and since the street lights are used by its customers and not by taxpayer there is no asset class for such property and thus should be assigned a 7-year recovery_period we cannot accept this view based on our analysis set forth above as asset class dollar_figure of revproc_87_56 properly embraces street lights being part of that class for the electric utility activity conducted by taxpayer accordingly we have denied consent to taxpayer’s requested method change taxpayer should file amended returns for the year_of_change and subsequent years to reflect the correct method of depreciating street lighting assets and to increase taxable_income for the amount of any net negative sec_481 adjustment taken by taxpayer that is attributable to its request to change the depreciation for street lighting assets if you have any questions on this matter do not hesitate to call kathleen reed


internal_revenue_service department of the treasury index number washington dc person to contact telephone number refer reply to cc dom it a brd plr-104060-98 date nov taxpayers lender dear this is in response to a letter from your authorized representative dated date requesting a private_letter_ruling regarding whether taxpayers can amortize points paid on a mortgage to purchase their principal_residence over the life of the loan taxpayers are husband and wife and file joint federal_income_tax returns on a calendar_year basis using the cash_receipts_and_disbursements_method of accounting late in year taxpayers acquired a principal_residence and obtained a mortgage to finance the purchase from lender taxpayers paid dollar_figure points to lender in connection with the mortgage taxpayers’ itemized_deductions for year including the points paid to lender are less than the standard_deduction available to them for that year accordingly taxpayers propose to utilize the standard_deduction for year and amortize the points over the remaining life of the loan beginning in year sec_461 of the internal_revenue_code relating to the general_rule for taxable_year of deduction provides that the amount of any deduction or credit allowed by this subtitle shall be taken for the taxable_year which is the proper taxable_year under the method_of_accounting used in computing taxable_income under sec_1_461-1 of the income_tax regulations a taxpayer using the cash_receipts_and_disbursements_method of accounting generally takes into account amounts representing allowable deductions in the taxable_year in which the amounts are paid sec_461 provides special rules with respect to prepaid_interest sec_461 provides in general that if the taxable_income of a taxpayer is computed under the cash_receipts_and_disbursements_method of accounting interest_paid by the taxpayer which under regulations prescribed by the secretary is properly allocable to any period- a with respect to which the interest represents a charge for the use or forbearance of money and which is after the close of the taxable_year in which paid shall be charged to capital_account and shall be treated as paid in the period to which so allocable sec_461 provides that this subsection shall not apply to points paid in respect of any indebtedness incurred in connection with the purchase or improvement of and secured_by the principal_residence of the taxpayer to the extent that under regulations prescribed by the secretary such payment of points is an established business practice in the area in which such indebtedness is incurred and the amount of such payment does not exceed the amount generally charged in such area the legislative_history to sec_464 g indicates that the general_rule of sec_461 g9 was enacted to resolve controversies over the treatment of prepaid_interest by cash_method taxpayers it is unsettled however whether a cash_method taxpayer can deduct prepaid_interest in full in the year paid recent court decisions have supported the internal_revenue_service in requiring a cash_method taxpayer to allocate his deductions for prepaid_interest over the period of the loan the house bill requires a cash_method taxpayer to deduct prepaid_interest over the period of the loan to the extent the interest represents the cost of using the borrowed funds during each period the house bill also requires points paid on a loan to be deducted ratably over the term of the loan except in the case of mortgage incurred in connection with the purchase or improvement of and secured_by the taxpayer's principal_residence h_r conf_rep no 94th cong 2d session p in discussing the treatment of points the report continues the senate amendment is the same as the house bill except that the rule permitting current deductibility of points on a home mortgage is amended to apply only if points are generally charged in the geographical area where the loan is made and to the extent of the number of points generally charged in that area for a home loan emphasis added therefore the legislative_history to sec_461 g indicates a congréssional intent to permit but not require taxpayers currently to deduct paints on their home acquisition debt this intent is corroborated by the structure of the statute sec_461 merely provides that the general_rule requiring the amortization of prepaid_interest does nat apply to points paid on qualifying_indebtedness incurred to purchase or improve a principal_residence the section does not mandate that these points be deducted currently nor does it prohibit a taxpayer from adopting the general_rule accordingly we conclude that taxpayers may amortize the points paid to lender and take the allocable amount into account over the remaining life of the loan beginning in year assuming taxpayers elect to itemize deductions in those later years no opinion is expressed or implied concerning the tax treatment of the transaction under the provisions of any other sections of the code or regulations that may be applicable thereto or the tax treatment of any conditions existing at the time of or effects resulting from the transaction that are not specifically covered by the above ruling a copy of this ruling should be attached to the federal_income_tax return to which it this ruling is directed only to taxpayers sec_6110 of the code is relevant provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this ruling is being sent to your authorized representative sincerely assistant chief_counsel income_tax and accounting by l f douglas assistant to the chief branch fahey


department of the treasury internal_revenue_service washington d c number release date cc dom fs it a wta-n-100227-00 uil date internal_revenue_service national_office field_service_advice memorandum for from assistant chief_counsel cc dom fs subject this field_service_advice responds to your memorandum received in our office on date field_service_advice is not binding on examination or appeals and is not a final case determination this document is not to be cited as precedent legend taxpayer issue conclusion facts the claim states that the deduction is for an expense incurred by the taxpayer in his employment as law and analysis sec_162 allows deductions for all ordinary and necessary expenses paid_or_incurred in carrying_on_a_trade_or_business according to the supreme court for purposes of a sec_162 business deduction the origin of the liability out of which the expense accrues or the kind of transaction out of which the obligation arose is crucial and controlling 308_us_488 this is the origin_of_the_claim_test which the court most clearly enunciated in gilmore v 372_us_39 in gilmore the taxpayer’s gross_income was derived entirely from two related sources his salary as president of three automobile corporations that were franchised automobile dealers and dividends from his controlling stock in the corporations his wife sued him for divorce alimony and an alleged community_property interest in the stock the taxpayer deducted his legal expenses in defending against the suit alleging that had he not succeeded in defeating the claims he might have lost his stock his corporate positions and the franchises the court however held that the origin and character of the claim with respect to which an expense was incurred rather than its potential consequences upon the fortunes of the taxpayer is the controlling basic test of whether the expense was ‘business’ or ‘personal’ and hence whether it is deductible or not u s pincite the court then noted that the wife’s claims against the taxpayer originated entirely from the marital relationship and not from the taxpayer’s income producing activity accordingly the deductions were denied because none of the taxpayer’s expenditures resisting these claims were business_expenses id pincite thus the rule is that a court in determining whether a deduction relates to a taxpayer’s trade_or_business will look to the origin of the taxpayer’s claim rather than the effect that could or would have been wrought on the taxpayer’s fortunes sec_7701 states that the term trade_or_business includes the performance of the functions of a public_office thus certain expenses officeholders incur in performing their duties are deductible nonetheless politicians may not deduct the expenses of their political campaigns 13_bta_513 reversed on another ground 34_f2d_263 3d cir reversed sub nom 281_us_699 323_us_57 in reed the tax court’s holding was based at least in part on the premise that the taxpayer who was not an incumbent was not engaging in a trade_or_business by conducting a campaign for public_office b t a pincite in mcdonald however the taxpayer was an incumbent running for a subsequent term by that time the law was as it is now that mcdonald’s holding of a political albeit judicial office was a trade_or_business nonetheless the court held that sec_23 the predecessor of sec_162 confin ed deductible expenses solely to outlays in efforts or services -- here the business of judging -- from which the income flows u s pincite running for office was not such an effort or service consequently the related expenses were not deductible furthermore this principle that campaign expenses are not deductible has been expanded to encompass other political activities of an officeholder 715_f2d_245 6th cir in diggs the sixth circuit emphasized that politicians perform many different functions and that each function must be examined separately to determine if it generates a deductible expense f 2d pincite in ruling that the taxpayer a congressman could not deduct the cost of attending his party’s quadrennial national convention the court set a rule that while expenses a legislator incurs in connection with his duty to ascertain assess and advance the interest of constituents may be deducted expenses he or she incurs in connection with personal and party aggrandizement are not deductible f 2d pincite 3under this standard for example a member of congress may deduct amounts paid from his own funds to hire additional employees to handle an unusually heavy workload revrul_73_464 1973_2_cb_35 under sec_7701 the taxpayer’s trade_or_business was performing the functions of a public_office under reed mcdonald and diggs not all of the functions of his public_office gave rise to deductible expenses indeed as diggs specifically states only expenses_incurred to ascertain assess and advance the interest of constituents are deductible under sec_162 expenses_incurred in connection with personal and party aggrandizement are not diggs f 2d pincite here the origin of the claim was political activities that under reed mcdonald and diggs did not give rise to deductible expenses according deductions for the payments should be denied additionally taxpayer’s counsel cites a revenue_ruling that allowed an elected public official to deduct expenses_incurred in defending against a recall revrul_71_470 1971_2_cb_121 the service distinguished the facts from those of mcdonald and noted that the official was not a candidate for public_office and was not seeking a new term but was merely defending his position for his current term c b pincite the ruling does not apply to these facts in that the taxpayer was not subject_to a recall drive case development hazards and other considerations please call if you have any further questions thomas d moffitt senior technician reviewer income_tax accounting branch field service division cc regional_counsel southeast region


t c memo united_states tax_court arlene williams petitioner v commissioner of internal revenue respondent docket no 3070-o1l filed date arlene williams pro_se wendy s harris for respondent memorandum opinion chiechi judge this case is before the court on respon- dent’s motion for summary_judgment respondent’s motion ' we shall grant respondent’s motion ‘although the court ordered petitioner to file a response to respondent’s motion petitioner failed to do so - - background the record establishes and or the parties do not dispute the following petitioner resided in las vegas nevada at the time she filed the petition in this case on date petitioner filed late a federal_income_tax tax_return for her taxable_year return in her return petitioner reported total income of dollar_figure and total_tax of dollar_figure petitioner attached a document to her return peti- tioner’s attachment to her return that contained state- ments contentions and arguments that the court finds to be frivolous and or groundless ’ on date respondent issued to petitioner a notice_of_deficiency notice with respect to her taxable_year which she received in that notice respondent determined a deficiency in an addition under sec_6651 to and an accuracy-related_penalty under sec_6662 on petitioner’s tax for her taxable_year in the respective amounts of dollar_figure dollar_figure and dollar_figure petitioner’s attachment to her return is very similar to the documents that certain other taxpayers with cases in the court attached to their tax returns see eg copeland v commissioner tcmemo_2003_46 smith v commissioner tcmemo_2003_45 all section 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 petitioner did not file a petition in the court with respect to the notice relating to her taxable_year instead on date in response to the notice petitioner sent a letter petitioner’s date letter to the internal_revenue_service that contained statements contentions argu- ments and reguests that the court finds to be frivolous and or groundless on date respondent assessed petitioner’s tax as well as an addition_to_tax a penalty and interest as pro- vided by law for her taxable_year we shall refer to those assessed amounts as well as interest as provided by law accrued after date as petitioner’s unpaid liabil- ity for on september october and date respon- dent issued to petitioner separate notices of balance due with respect to petitioner’s unpaid liability for on date respondent issued to petitioner a final notice_of_intent_to_levy and notice of your right to a hearing notice_of_intent_to_levy with respect to her taxable_year on or about date in response to the notice_of_intent_to_levy petitioner filed form request for a petitioner’s date letter is very similar to the letters that certain other taxpayers with cases in the court sent to the internal_revenue_service in response to the notices issued to them see eg copeland v commissioner supra smith v commissioner supra q4e- collection_due_process_hearing form and requested a hearing with respondent’s appeals_office appeals_office petitioner attached a document to her form petitioner’s attachment to form that contained statements contentions arguments and requests that the court finds to be frivolous and or groundless on date respondent’s appeals officer held an appeals_office hearing with petitioner with respect to the notice_of_intent_to_levy at the appeals_office hearing the appeals officer gave petitioner a summary record of assessments with respect to her taxable_year on date the appeals_office issued to petitioner a notice_of_determination concerning collection action s under sec_6320 and or notice_of_determination an attach- ment to the notice_of_determination stated in pertinent part applicable law and administrative procedures based on the information available the requirements of applicable law and administrative procedures have been met sec_6331 requires that the internal_revenue_service notify a taxpayer at least days before a notice_of_levy can be issued the 30-day notice was mailed to you at the last_known_address via petitioner’s attachment to form contained statements contentions arguments and requests that are very similar to the statements contentions arguments and requests contained in the attachments to forms filed with the internal_revenue_service by certain other taxpayers with cases in the court see eg fink v commissioner tcmemo_2003_61 certified mail sec_6330 states that no levy may be made unless the internal_revenue_service notifies a taxpayer of the opportunity for a hearing with the internal_revenue_service office of appeals letter final notice was mailed to the taxpayer via certified mail the taxpayer responded timely sec_6330 allows the tax- payer to raise any relevant issue relating to the unpaid tax or the proposed levy at the hearing includ- ing appropriate spousal defenses challenges to the appropriateness of collection actions and offers of collection alternatives the taxpayer may also raise at the collection_due_process_hearing challenges to the existence or amount of the underlying tax_liability for any_tax period if the taxpayer did not receive any statutory_notice_of_deficiency for such tax_liability or did not otherwise have an opportunity to dispute such tax_liability a collection_due_process_hearing was held and you acknowledged receipt of the statutory notice of defi- ciency no petition was filed it was explained to you that under sec_6330 b there was an opportu- nity to dispute the tax_liability but you chose not to not sic petition to the united_states tax_court and the only item of discussion are collection alterna- tives you were not willing to discuss collection alternatives but wanted to address the underlying liability instead this appeals officer has had no prior involvement with respect to these liabilities relevant issues presented by the taxpayer you have stated in your request for a collection_due_process_hearing in regard to the notice_of_federal_tax_lien i am challenging the existence of the underlying tax_liability i explained to you that you do not have the right to challenge the existence of the under- lying tax_liability because you received a statutory_notice_of_deficiency during the collection due pro- cess hearing i provided you a summary record of assess-- ment i have been satisfied all administrative proce- dures have been met no collection alternatives were presented other than what is stated above balancing efficient collection and intrusiveness no other collection alternatives have been presented as a more efficient manner of collecting the amount of tax due levy action is the most efficient manner of collection discussion the court may grant summary_judgment where there is no genuine issue of material fact and a decision may be rendered as a matter of law rule b 98_tc_518 affd 17_f3d_965 7th cir we conclude that there are no genuine issues of material fact regarding the questions raised in respondent’s motion where as is the case here the validity of the underlying tax_liability is not properly placed at issue the court will review the determination of the commissioner of internal revenue for abuse_of_discretion 114_tc_604 114_tc_176 based upon our examination of the entire record before us we find that respondent did not abuse respondent’s discretion in determining to proceed with the collection action as determined in the notice_of_determination with respect to petitioner’s taxable_year although respondent does not ask the court to impose a penalty on petitioner under sec_6673 the court will - sua sponte determine whether to impose such a penalty sec_6673 authorizes the court to require a taxpayer to pay to the united_states a penalty in an amount not to exceed dollar_figure whenever it appears to the court inter alia that a proceeding before it was instituted or maintained primarily for delay sec_6673 a or that the taxpayer’s position in such a proceed- ing is frivolous or groundless sec_6673 b in 115_tc_576 we issued an uneguivocal warning to taxpayers concerning the imposi- tion of a penalty under sec_6673 on those taxpayers who abuse the protections afforded by sec_6320 and sec_6330 by instituting or maintaining actions under those sections primarily for delay or by taking frivolous or groundless positions in such actions in the instant case petitioner advances we believe primar- ily for delay frivolous and or groundless contentions argu- ments and requests thereby causing the court to waste its limited resources we shall impose a penalty on petitioner pursuant to sec_6673 in the amount of dollar_figure we have considered all of petitioner’s contentions argu- ments and requests that are not discussed herein and we find them to be without merit and or irrelevant on the record before us we shall grant respondent’s motion to reflect the foregoing an order granting respondent’s motion and decision will be entered for respondent


cca_2016021108252507 id uilc number release date from -------------------- sent thursday date am to -------------------------- cc ------------------------------------------------------------------------ bcc subject re question about tmp hi --------------- if ------------------------------------- is the tmp and ----------- is the person legally authorized to sign on behalf of -------------- he may sign the statute extension despite the fact of ----- -------- manager may be a tmp that is a state law concept the fact that -------------- is disregarded under federal tax laws cannot change state_agency law and convert the owner of a de into a general_partner with power under state law to bind other partners the tmp is the llc only a general_partner or member please let me know if you have any questions or if i can be of any further assistance thanks ------- ----------------- ---------------------- -------------- -------------------------------- ----------------------------


internal_revenue_service number release date index number --------------------------------------------- ------------------------------------------- ----------------------------------------- --------------------------------- department of the treasury washington dc third party communication date of communication month dd yyyy person to contact ----------------- id no ----------------- telephone number --------------------- refer reply to cc ita plr-132888-10 date october re request for extension of time to make the election not to deduct the additional re request for extension of time to make the election not to deduct the additional first year depreciation taxpayer a b c date1 date2 lb_i official ---------------------- --------------------------------------------------------------------- ------- ---------------------------------------- --------------- -------------------------- ------------------ dear ------------- this letter responds to a letter dated date and subsequent correspondence requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election not to deduct the additional first year depreciation under sec_168 of the internal_revenue_code for all classes of qualified_property placed_in_service in the taxable_year ended date1 the a taxable_year facts taxpayer represents that the facts are as follows taxpayer is a limited_partnership engaged through its subsidiaries in the ----------- ------------------------------------------------------------------- taxpayer timely filed its form_1065 u s return of partnership income for the taxable_year ended date1 on date2 taxpayer prepared and reviewed this tax_return taxpayer engaged b to electronically file taxpayer’s federal tax_return for the a taxable_year b however did not review this tax_return nor sign the tax_return as preparer plr-132888-10 on this return taxpayer did not claim the additional first year depreciation deduction for all classes of qualified_property placed_in_service by taxpayer during the a taxable_year taxpayer however inadvertently failed to attach the election statement to the federal tax_return for the a taxable_year with respect to all classes of qualified_property subsequent to filing its a federal tax_return taxpayer discovered that it had failed to attach the election statement to the return for the a taxable_year with respect to all classes of qualified_property thereafter taxpayer contacted c for advice to correct this mistake ruling requested taxpayer requests an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election not to deduct the additional first year depreciation under sec_168 for all classes of qualified_property placed_in_service by taxpayer in the taxable_year ended date1 law and analysis sec_168 as amended by the economic stimulus act of pub_l_no 122_stat_613 date provides a 50-percent additional first year depreciation deduction for qualified_property acquired and placed_in_service during sec_168 provides that a taxpayer may elect not to deduct the percent additional first year depreciation for any class of property placed_in_service during the taxable_year the term class of property is defined in sec_1_168_k_-1 of the income_tax regulations as meaning in general each class of property described in sec_168 for example 5-year_property see section dollar_figure of revproc_2008_54 2008_38_irb_722 rules similar to the rules in sec_1_168_k_-1 for qualified_property or for percent additional first year depreciation deduction apply for purposes of sec_168 as currently in effect sec_1_168_k_-1 provides that the election not to deduct additional first year depreciation must be made by the due_date including extensions of the federal tax_return for the taxable_year in which the property is placed_in_service by the taxpayer sec_1_168_k_-1 provides that the election not to deduct additional first year depreciation must be made in the manner prescribed on form_4562 depreciation and amortization and its instructions the instructions to form_4562 for the taxable_year ended date1 provided that the election not to deduct the additional first year depreciation is made by attaching a statement to the taxpayer’s timely filed tax_return plr-132888-10 indicating that the taxpayer is electing not to deduct the additional first year depreciation and the class of property for which the taxpayer is making the election under sec_301_9100-1 the commissioner has discretion to grant a reasonable extension of time under the rules set forth in and to make a regulatory election sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of ' sec_301_9100-3 provides that requests for relief under ' will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusions based solely on the facts and representations submitted we conclude that the requirements of and have been satisfied accordingly taxpayer is granted calendar days from the date of this letter to make the election not to deduct the additional first year depreciation under sec_168 for all classes of property placed_in_service by taxpayer during the taxable_year ended date1 that qualify for the additional first year depreciation this election must be made by taxpayer filing an amended federal tax_return for that taxable_year with a statement indicating that taxpayer is electing not to deduct the additional first year depreciation for all classes of property placed_in_service by taxpayer during that taxable_year except as specifically set forth above we express no opinion concerning the federal_income_tax consequences of the facts described above under any other provisions of the code specifically no opinion is expressed or implied on whether any item of depreciable_property placed_in_service by taxpayer during the taxable_year ended date1 is eligible for the additional first year depreciation deduction in accordance with the power_of_attorney we are sending a copy of this letter to taxpayer’s authorized representative we are also sending a copy of this letter to the appropriate lb_i official plr-132888-10 this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent sincerely kathleen reed kathleen reed branch chief branch office of associate chief_counsel income_tax and accounting enclosures copy of this letter copy for sec_6110 purposes