internal_revenue_service number release date index number --------------------------- --------------------------- ---------------------------------------------------- ----------------------- in re -------------------------------------------------- -------- --------------------------------------- ----------------------------------------------- ----------------------- department of the treasury washington dc person to contact ---------------- id no ------------- telephone number --------------------- refer reply to cc psi b09 - plr-162089-02 date april legend son trust date donor spouse daughter grandchild ------------------------------------------------------------------------------------ ------------------------- ------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------ ----------------------- ---------------------- --------------------------------- -------------------------------- ---------------- ------------------------------------------------------------------------------------ ------------------------- a trustee date b date bank family trusts c partnership d partnership partnership corporation e date successor trustee ---------------------- --------- --------------------- ---------------------- --- ------------------- -------------------------------------------- ------------------- --------- ------------------------- --- -------------------------- ----------------------------------------- ------------------------- -------------------- plr-162089-02 date date family date date court ------- ---------------- ----------------- -------------- ---------------- ------------------------------------------------------------------------------------ -------------------- this is in response to your letter dated date and prior ---------------------- ------ ---------------- -------------------- the information submitted and representations made are summarized as follows date f family grandchild dear ------------ correspondence submitted on behalf of son as trustee of the trust requesting a ruling regarding the generation-skipping_transfer gst tax consequences of a settlement agreement modifying the terms of a_trust that is exempt from the application of the gst tax imposed under sec_2601 of the internal_revenue_code on date a date prior to date donor and spouse each established four virtually identical irrevocable inter_vivos trusts one for the benefit of each of their four then living grandchildren each of the trusts provides either son or daughter with a right to a percentage of the yearly net_income of the trust the trust the subject of the instant ruling_request is one of the eight trusts established on date and was established by donor for the primary benefit of grandchild and grandchild 1's issue on date donor transferred dollar_figurea to the trust it is represented that no additions have been made to the trust subsequent to the initial funding original trustees the trust provides generally that commencing on date the trustees shall pay to son b percent of the yearly trust income the balance of the net_income of the trust is to be paid to grandchild for her maintenance support education business needs and other trustee-approved requirements after grandchild reaches age sixteen for so long as both son and daughter are living and serving as original trustees the original trustees son and daughter shall not be required to account to either beneficiaries or representatives of beneficiaries at any time regarding the handling of trust properties or the withholding or distributing of trust income or corpus successor trustees shall pay the net_income to the beneficiary grandchild of this trust namely grandchild during her life for the purposes and in the amounts set forth the preamble of the trust provides that daughter son and trustee shall be the article third of the trust provides generally that the original trustees and the trust the three other trusts established by donor and the four trusts article fourth of the trust provides generally that the trust shall continue to be plr-162089-02 above upon the death of grandchild if the trust is still operative and in effect the trustees and successor trustees shall pay the net_income first to the issue of grandchild should grandchild leave no issue the trustees and successor trustees shall pay the net_income in equal shares to donor’s other grandchildren who may have survived grandchild or the issue of donor’s other grandchildren who may have predeceased grandchild provided however the shares of any deceased grandchildren shall be divided per capita among all the issue of said deceased grandchildren upon the death of all of donor’s grandchildren if such deaths take place during the operation of this trust the income to be paid to grandchild shall be paid should grandchild leave no issue per capita to the living issue of donor’s other grandchildren established by spouse each contain an equalization provision in order to ensure that any grandchild born after date would be provided for in a manner similar to that of donor and spouse’s four then living grandchildren pursuant to the equalization provision upon the birth of any grandchild after date each of the trusts established by donor shall contribute a portion of its income and corpus to a new trust to be held under the same conditions for the subsequently born grandchild operative so long as any of the trustees herein named are living the trust shall terminate only after all of the deaths of the trustees the particular time of termination after said deaths shall be either on a date twenty-one years after the death of the last trustee or date whichever is earlier as between the said two times following the deaths of the trustees upon termination of this trust the successor trustee shall pay over deliver and convey the trust estate with its accumulations and all undistributed_net_income to grandchild absolutely if grandchild is then living in the event that grandchild shall have died prior to the disposition of this trust the successor trustees shall distribute the trust estate to any living issue of grandchild should grandchild leave no issue the successor trustees shall distribute the trust estate in equal shares to donor’s other grandchildren who may have survived grandchild or the issue of donor’s grandchildren who have predeceased grandchild provided however the shares of any deceased grandchildren shall be divided per capita among all the living issue of said deceased grandchildren upon the death therefore of all donor’s grandchildren if such deaths take place prior to the termination of this trust the trust corpus herein provided to be paid to grandchild should she leave no issue shall be paid per capita to the living issue of donor’s other grandchildren three successor trustees at least one of which is a national bank with a_trust department the successor trustees shall be unanimously appointed by the original trustees son and daughter by means of a written instrument legally effecting such appointment after the death of either daughter or son if no such appointment has been made it shall be the obligation of the survivor of them within ten days after the article fifth of the trust provides generally that there shall not be more than after the execution of the trust on date four additional grandchildren were plr-162089-02 death of the other to appoint successor trustees any appointment of successor trustees may be revoked at any time by both daughter and son if the two of them are living or either of them if one is deceased and new successor trustees appointed in the place of the ones removed should the original trustees for any reason fail to appoint specific successor trustees the bank shall serve as successor trustee the appointment of successor trustees shall become effective on the deaths of both original trustees daughter and son should trustee survive both daughter and son the successor trustee shall serve together with trustee in administering this trust the appointment of successor trustees shall not become effective so long as either of the original trustees son and daughter are living son or daughter shall have the right to administer this trust alone born pursuant to the equalization provisions for after-born grandchildren contained in the trust and in the three similar trusts established by donor on date four additional trusts one for each after-born grandchild were established by donor pursuant to the equalization provisions for after-born grandchildren contained in the four similar trusts established by spouse four additional trusts one for each after-born grandchild were established by spouse thus a total of eight trusts were established by donor and eight trusts were established by spouse collectively the parties refer to these sixteen trusts as the family trusts each of the family trusts invests directly or indirectly in publicly held stock and securities real_estate interests in closely-held entities and other miscellaneous assets each of the family trusts owns a c percent limited_partnership_interest in partnership partnership owns a d percent general_partnership interest in partnership partnership is a class b limited_partner in partnership corporation owns a e percent general_partnership interest in partnership and a e percent general_partnership interest in partnership corporation is wholly owned by son appointed successor trustee successor trustee resigned in date since date son has served as the sole trustee family retained the services of an attorney because they were unsatisfied with son’s administration of various trusts offers and counteroffers of settlement were continually made however settlement negotiations broke down around the end of date things that son breached his fiduciary obligations relating to the investment administration management and use of the family trusts’ funds that various related_party transactions were improper and that trust accounts were incorrect before the time for filing an answer to these complaints expired a death in the family led the respective parties to attempt to resolve their disputes again after lengthy negotiations in date daughter and members of her family collectively referred to as on date daughter and trustee resigned as trustees successor trustee was on date family filed three complaints in the court alleging among other article second paragraph b of the trust will be modified to provide that the plr-162089-02 a basis for settlement was reached and finally reduced to writing on date the settlement agreement as a result of the settlement agreement the following modifications will be made to the trust article first of the trust will be modified in part to provide that reference to the term net_income shall not be deemed to include accumulated but undistributed_income of the trust article second paragraph a of the trust will be modified to provide generally that commencing on date the trustees shall pay to son at such times and in such amounts as son in his own discretion might require f percent of the yearly net_income of the trust upon the death of son and until the trust terminates the trustees shall pay f percent of the yearly net_income of the trust to son’s then living lineal_descendants per stirpes trustees shall pay the balance of the net_income including that which is not distributable and that which is not distributed to or taken by son or his lineal_descendants to the beneficiary or the beneficiaries hereinafter designated for so long as either daughter or son shall be living in such amounts and at such times after the beneficiary has reached the age of sixteen years as the trustees shall deem necessary and proper for the maintenance support education business needs and other trustee-approved requirements of the beneficiary or beneficiaries all net_income not distributed shall be accumulated and added to corpus in addition the provision in article second paragraph b that provides that the original trustees son and daughter shall not be required to account to beneficiaries at any time regarding the handling of trust properties or the withholding or distributing of trust income or corpus will be deleted order to ensure that any grandchildren born after the execution of this trust agreement an after-born grandchild shall be provided for in a manner equal to that of grandchild and donor’s other grandchildren who are living as of date for whom donor has established three other trusts donor specifically directs as follows upon the birth of any after-born grandchild there shall be allocated to such after-born grandchild as a separate trust a portion of the assets of this trust determined by multiplying the fair_market_value of the assets of this trust by a fraction the numerator being one and the denominator being the total number of donor’s grandchildren whether then living or deceased each trust so set_aside for an after-born grandchild shall be held administered and disposed of for such grandchild as otherwise provided in this trust subject_to the following such trust shall be subject_to further division upon the birth of additional after-born grandchildren each after-born grandchild for whom an additional trust is established pursuant to this paragraph shall be considered the beneficiary of such trust and after his or her death his or her issue shall be beneficiaries as provided herein separate trusts similarly established for a beneficiary may be combined into one trust by the trustees in such event if daughter article third of the trust will be modified in part to provide generally that in plr-162089-02 or son has any rights to receive a percentage of the income from a separate trust such rights shall continue as to a combined trust provided such percentage shall be recomputed for a combined trust based upon the percentage of the assets of the combined trust represented by assets from each separate trust at the time of combination multiplied by the percentage of income to which son or daughter was entitled from such separate trust and such products shall be added together to produce the recomputed percentage of income to which son or daughter is entitled from a combined trust whether or not the separate trusts for an after-born grandchild are combined the date of termination of each trust or portion of a combined trust shall be determined by the provisions of the trusts from which such trusts or portions were created article fourth of the trust will be modified in part to provide generally that the trust shall continue to be operative so long as any of the original trustees are living upon termination of the trust the successor trustee shall pay over deliver and convey the trust estate as then constituted to grandchild absolutely if grandchild is then living article fifth of the trust will be modified to provide generally that in the event of the death resignation or incapacity of son to serve as a trustee his successor shall be that person or persons whom son designates a through a separate written instrument delivered during his life to the other serving trustee or b in his last will and testament which is admitted to probate any written instrument under article fifth clause a shall be witnessed by two individuals and notarized the latest dated written instrument or last will and testament shall control if a successor trustee is not serving or is not nominated herein then a successor trustee the family trustee shall be nominated appointed and confirmed by a majority of the then living lineal_descendants of son family who are sui juris notwithstanding anything to the contrary or otherwise after the death of son the family beneficiaries who are sui juris may by majority vote remove the family trustee for any reason and appoint a new family trustee and if the then acting family trustee becomes incapacitated or incompetent shall replace such trustee grandchild and his successors the family trustee is the successor trustee to daughter in the event of the death resignation or incapacity of the family trustee then a successor trustee shall be nominated appointed and confirmed by a majority of daughter if she is then living and her then living lineal_descendants who are sui juris family notwithstanding anything to the contrary or otherwise the members_of_family who are sui juris may by majority vote remove the family trustee for any reason and appoint a new family trustee and if the then acting family trustee becomes incapacitated or incompetent shall replace such trustee there shall at all times be a one trustee who is son or who is selected by either son or family and b one trustee who is grandchild or is selected by family no trustee shall vote or participate in any manner on any discretionary distribution of income or principal to himself or herself or to a beneficiary to whom such trustee is related to or subordinate to within the meaning of sec_672 or to a person whom such trustee or beneficiary is legally obligated to support the trustee who is so the settlement agreement has been approved by the court conditioned upon a plr-162089-02 restricted in his or her participation in any trustee action under this section shall by written document delivered to the other then acting trustee designate a third party who is not related to or subordinate to within the meaning of sec_672 such restricted trustee or the beneficiary to act as a special trustee solely for the purpose of exercising such discretion and the special trustee shall exercise that discretion provided however that such special trustee shall be subject_to the same terms and limitations applicable to any other named trustee favorable ruling by the service on the effect the settlement agreement has on the trust’s exemption from the gst tax son as trustee of the trust has requested rulings that the following aspects of the settlement agreement will not adversely affect the gst exempt status of the trust the modifications and changes to the trust concerning the appointment and removal of a trustee and the method of appointing successor trustees the resolution of the issue of the proper construction and application of the equalization provisions of the trust the construction of the trust as to the right to income from the trust after the death of son by continuing son’s right to income upon his death for son’s lineal_descendants until the termination of the trust and otherwise continuing the right to discretionary distributions of income to the remainder beneficiaries the resolution of the issue of the proper construction of the trust with respect to accumulated but undistributed_net_income the elimination of language regarding trustee accountings and the resolution of various economic issues between the parties including but not limited to a equalization of the trust corpus between the family trusts so that the assets of each trust are identical as of the effective date of the settlement agreement b equalization of the right to income of the family trusts so that as of the effective date of the settlement and thereafter the family trusts remain equalized c the transfer of stock of corporation equally to each family_trust d the purchase and or redemption of the interests of the partnership in partnership and e the reimbursement of family 1’s legal fees and costs incurred in the dispute distribution a taxable_termination and a direct_skip under b a of the tax_reform_act_of_1986 and sec_26_2601-1 of the generation-skipping_transfer_tax regulations the generation-skipping_transfer_tax provisions do not apply to any generation-skipping_transfer under a_trust as defined in sec_2652 that was irrevocable on date however this exemption does not apply if additions actual or constructive are made to the trust after date sec_2611 defines the term generation-skipping_transfer as a taxable sec_26_2601-1 provides that any trust in existence on sec_2601 imposes a tax on every generation-skipping_transfer sec_26_2601-1 provides rules for determining when a modification sec_26_2601-1 provides that a court-approved settlement of a bona plr-162089-02 date will be considered an irrevocable_trust except as provided in sec_26_2601-1 or c which relates to property includible in a grantor’s gross_estate under sec_2038 and sec_2042 in the present case the trust is considered to have been irrevocable on date because neither sec_2038 nor sec_2042 applies judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the generation-skipping_transfer_tax under sec_26_2601-1 or hereinafter referred to as an exempt trust will not cause the trust to lose its exempt status the rules contained in sec_26_2601-1 are applicable only for purposes of determining whether an exempt trust retains its exempt status for generation-skipping_transfer_tax purposes the rules do not apply in determining for example whether the transaction results in a gift subject_to gift_tax or may cause the trust to be included in the gross_estate of a beneficiary or may result in the realization of capital_gain for purposes of sec_1001 fide issue regarding the administration of the trust or the construction of terms of the governing instrument will not cause an exempt trust to be subject_to the provisions of chapter if the settlement is the product of arm’s length negotiations and the settlement is within the range of reasonable outcomes under the governing instrument and applicable state law addressing the issues resolved by the settlement a settlement that results in a compromise between the positions of the litigating parties and reflects the parties’ assessments of the relative strengths of their positions is a settlement that is within the range of reasonable outcomes and there have been no additions made to the trust after date accordingly the trust is exempt from the gst tax under sec_26_2601-1 agreement is a settlement of a bona_fide issue the product of arm’s length negotiations and is within the range of reasonable outcomes under the governing instrument and applicable state law therefore provided that the court approves the proposed agreement the modifications will not violate b a of the tax_reform_act_of_1986 and will not affect the exempt status of the trust representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party if there is a change in material fact or law local or federal before the transactions considered in this ruling take effect the ruling will have no force or effect while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination in the present case the trust was created and became irrevocable on date based on the facts presented and the representations made the settlement the rulings contained in this letter are based upon information and except as expressly provided herein no opinion is expressed or implied plr-162089-02 concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in addition no opinion is expressed or implied with respect to the income_tax consequences of any transaction the code provides that it may not be used or cited as precedent being sent to son as trustee of the trust this ruling is directed only to the taxpayer requesting it sec_6110 of pursuant to the power_of_attorney on file with this office a copy of this letter is sincerely melissa c liquerman branch chief branch office of associate chief_counsel passthroughs special industries enclosure copy for sec_6110 purposes


internal_revenue_service department of the treasury number release date index nos ein washington dc person to contact telephone number refer reply to cc ita plr-100592-02 date date dear this is in reference to a form_1128 application to adopt change or retain a tax_year submitted on behalf of the above-named taxpayer requesting permission to change its accounting_period for federal_income_tax purposes from a taxable_year ending january to a taxable_year ending december effective the taxpayer has requested that the form_1128 be considered timely filed under the authority contained in sec_301_9100-3 of the procedure and administration regulations the taxpayer's form_1128 requesting a change in accounting_period to a tax_year ending december was due on or before the information furnished indicates that the application_for the change in accounting_period was filed late because of an error or misunderstanding however this application_for sec_301_9100-3 relief was filed within days of the return’s due_date revproc_2000_11 2000_1_cb_309 provides procedures by which certain corporations may obtain automatic approval to change their annual accounting periods under sec_442 of the internal_revenue_code a corporation complying with all the applicable provisions of this revenue_procedure has obtained the consent of the commissioner of the internal_revenue_service to change its annual_accounting_period under sec_442 and the income_tax regulations thereunder section of revproc_2000_11 provides a form_1128 filed pursuant to this revenue_procedure will be considered timely filed for purposes of sec_1_442-1 only if it is filed on or before the time including extensions for filing the return for the short_period required to effect such change 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 such as the instant case 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 evidence to establish that the taxpayer acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government based on the facts and information submitted and the representations made it is held that the taxpayer has acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government accordingly the requirements of the plr-100592-02 regulations for the granting of relief have been satisfied in this case and the taxpayer’s late filed form_1128 requesting permission to change to a tax_year ending december effective for the short_period of is considered timely filed since changes in accounting_period under revproc_2000_11 are under the jurisdiction of the director internal_revenue_service center where the taxpayer’s returns are filed we have forwarded the application to the director andover service_center any further communication regarding this matter should be directed to the service_center the ruling contained in this letter is based upon facts and representations submitted by the 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 part of an examination process this ruling addresses the granting of sec_301_9100-3 relief only no opinion is expressed regarding the tax treatment of the instant transaction under the provisions of any other sections of the code or regulations that may be applicable thereto or regarding the tax treatment of any conditions existing at the time of or effects resulting from the instant transaction specifically no opinion is expressed as to whether the taxpayer is permitted under the code and applicable regulations to change to the tax_year requested in the subject form_1128 in accordance with the provisions of a power_of_attorney currently on file we are sending a copy of this letter_ruling to the taxpayer's authorized representative this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent sincerely yours michael j montemurro senior technician reviewer office of associate chief_counsel income_tax accounting enclosures copy of this letter copy for sec_6110 purposes


department of the treasury internal_revenue_service washington d c government entities division aug uniform issue list set ev iat legend taxpayer custodian a company b ira c account d amount e dear this letter is in response to a request for a letter_ruling dated date as supplemented by a facsimile dated date in which you have applied for a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested the taxpayer maintained ira c an individual_retirement_account ira under code sec_408 with custodian a on date in anticipation of modifying his investment options the taxpayer took a distribution of amount e from ira c the money was intended to be redeposited into an ira account on date amount e was deposited in account d a non-ira account with company b between date and date the taxpayer’s neighborhood was hit by three hurricanes causing extensive damage to the taxpayer’s place of business and residence as a result of the second hurricane the taxpayer’s county was declared a federal disaster_area on date this hurricane also caused most banks and businesses to be closed for up to two weeks the third hurricane caused further power outages for nearly two additional weeks because of the amount of time and the emotional stress and anxiety of completing the necessary repairs to his home and business the taxpayer failed to comply with the 60-day requirement as well as the extended date deadline accorded the taxpayer pursuant to news_release ir-2004-15 of which the taxpayer was not aware the taxpayer has submitted documentation that amount e has remained in account d at all times based on the above facts and representations you request that the internal_revenue_service service waive the 60-day rollover requirement with respect to the distribution of amount e because the failure to waive such requirement would be against equity or good conscience code sec_408 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 code sec_408 defines and provides the rules applicable to ira_rollovers 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 code sec_408 provides that sec_408 does not apply to any amount_paid or distributed out of an ira to the individual for whose benefit the ira is maintained if - 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 code sec_408 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 code sec_408 provides a similar 60-day rollover period for partial rollovers code sec_408 provides that the secretary may waive the 60-day requirement under sec_408 and sec_408 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 revproc_2003_16 2003_4_irb_359 provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to code 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 by the taxpayer demonstrates that his failure to rollover amount e was due to the devastation to his home business and the general area resulting from the impact of three hurricanes surrounding the rollover period no portion of amount e has been used and it remains in account d therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount e from ira c with custodian a you are granted a period of days from the issuance of this ruling letter to make your rollover provided all other requirements of sec_408 except the 60-day requirement are met with respect to such contributions these amounts will be considered rollover_contributions within the meaning of sec_408 this ruling does not authorize the rollover of amounts that are required to be distributed by code sec_401 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 this letter is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent if you wish to inquire about this ruling please contact se t ep ra t1 i d a sincerely yours manager employee_plans technical group enclosures deleted copy of this letter notice of intention to disclose notice


department of the treasury certified internal_revenue_service tege appeals programs n los angeles street los angeles ca release number release date date redaction legend a b c k dear taxpayer_identification_number person to contact employee id number tel fax refer reply to in re exempt status tax years and subsequent years uil index this is a final adverse determination to your application_for exempt status under sec_501 of the internal_revenue_code as an organization described under sec_501 our adverse determination was made for the following reason s sec_1_501_c_3_-1 provides that an organization is not operated exclusively for exempt purposes unless it serves a public rather than a private interest you operated for the benefit of private interests of a particular and specified_individual as such you failed to meet the requirements of sec_501 and sec_1_501_c_3_-1 in that you have not demonstrated that you are operated exclusively for exempt purposes within the meaning of internal_revenue_code sec_501 contributions to your organization are not deductible under code sec_170 you are required to file federal form_1120 for the year s shown above if you decide to contest this determination under the declaratory_judgment provisions of code sec_7428 a petition to the united_states tax_court the united_states court of claims or the district_court of the united_states for the district of columbia must be filed before the ninety-first day after the date this determination was mailed to you contact the clerk of the appropriate court for rules for filing petitions for declaratory_judgment to secure a petition form from the united_states tax_court write to the united_states tax_court second street n w washington d c you also have the right to contact the office_of_the_taxpayer_advocate however you should first contact the person whose name and telephone number are shown above since this person can access your tax information and can help you get answers you can call and ask for taxpayer_advocate assistance taxpayer_advocate assistance cannot be used as a substitute for established irs procedures formal appeals procedures etc the taxpayer_advocate is not able to reverse legal or technically correct_tax determinations or extend the time fixed by law that you have to file a petition in the united_states tax_court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling number are shown in the heading of this letter your exempt status as required by code sec_6104 if you have any questions please contact the person whose name and telephone we will notify the appropriate state officials of this final adverse determination of shari kolnicki acting appeals team manager sincerely department of the treasury internal_revenue_service washington d c contact person identification_number contact number fax number employer_identification_number vil tax_exempt_and_government_entities_division date iy legend p name q date s name z name dear we have considered your application_for recognition of exemption from federal_income_tax under internal_revenue_code sec_501 based on the information provided we have concluded that you do not qualify for exemption under code sec_501 the basis for our conclusion is set forth below issue s do you qualify for exemption under sec_501 of the code no for the reasons described below facts you were previously granted exemption under sec_501 of the code your exemption was revoked due to the non-filing of form_990 for three consecutive years accordingly you submitted this new form_1023 application_for exemption for retroactive reinstatement you were incorporated as a nonprofit corporation on date q in the state of p your articles of incorporation state your specific purpose is to assist families with children born with physical handicaps and or medical conditions with their extraordinary education medical and health care expenses since your formation you have only raised money for z to pay her medical_expenses such as specialized treatments medical equipment and therapy for example you have paid for three heart surgeries numerous cranial sacral treatments and numerous prescriptions you indicated you were founded by caring members in your community unrelated to z who were aware of her abnormal case history and the circumstances surrounding her medical_care and health including her tremendous will to survive you are even named for z you have held numerous fundraising events such as golf outings and a casino night on behalf of z her photo appears prominently on each of the fundraising flyers as well as her history over one half your gross_receipts from these events were provided for z’s medical_expenses moreover there had been no application process for requesting funding for the last several years you had only one active board member and sole officer s who reviewed the medical documentation for z’s expenses and signed all the checks s is a family friend you also wrote there was no bias in paying her expenses and funds were reimbursements to z’s family for treatments already paid for furthermore board members and their relatives are not eligible to receive funds you have since expanded your board by adding four unrelated individuals law sec_501 of the internal_revenue_code code provides for the exemption from federal_income_tax of organizations organized and operated exclusively for charitable educational and other purposes including the prevention of cruelty to children or animals provided that no part of the net_earnings inure to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 of the regulations provides that in order to be exempt as an organization described in sec_501 an organization must be both organized and operated exclusively for one or more of the purposes specified in such section if an organization fails to meet either the organizational_test or the operational_test it is not exempt sec_1_501_c_3_-1 of the regulations provides that an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages primarily in activities that accomplish one or more of such exempt purposes specified in sec_501 an organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt_purpose sec_1_501_c_3_-1 of the income_tax regulations provides that an organization is not organized or operated exclusively for an exempt_purpose unless it serves a public rather than a private interest the organization must demonstrate that it is not organized or operated for the benefit of private interests such as designated individuals the creator or his family shareholders of the organization or persons controlled directly or indirectly by such private interests revrul_67_367 1967_2_cb_188 describes a nonprofit organization whose sole activity was the operation of a ‘scholarship’ plan for making payments to pre-selected specifically named individuals the organization did not qualify for exemption from federal_income_tax under sec_501 of the code because it was serving private rather than public or charitable interests revrul_76_206 1976_1_cb_154 describes a nonprofit organization formed to generate community interest in the retention of classical music programs by a local for- profit radio station by conducting activities that increased the station's revenues the organization had a broad community board however the organization was found to be serving a private rather than a public interest and did not qualify for exemption from federal_income_tax under sec_501 c in wendy l parker rehabilitation foundation inc v commissioner tcmemo_1986_348 the tax_court upheld the service's position that a foundation formed to aid coma victims including a family_member of the founders was not entitled to recognition of exemption approximately of the organization's net_income was expected to be distributed to aid the family coma victim the distribution of funds from the foundation were for the medical and rehabilitative care of wendy parker and this was to relieve the parker family of the economic burden of providing such care application of law you are not described in sec_501 of the code because you fail the operational_test as per sec_1_501_c_3_-1 of the regulations you are not described in sec_1_501_c_3_-1 of the regulations because you are operating for the non-exempt private purpose of raising funds to pay for a preselected person’s medical_expenses you are not described in sec_1_501_c_3_-1 of the income_tax regulations because you are operating for private interests rather than public interests your activities have only benefited z for example e e you have only provided financial assistance to z over one half of the gross_proceeds have been used for z’s medical_expenses e you have no formal application process or selection process for requesting assistance you are like the organization described in revrul_67_367 because you were formed and are operated to benefit a preselected individual your fundraising materials illustrate this by showing a prominent picture of z and her history these materials also show the proceeds were to be used for her medical_expenses the fact that you are named after z also substantiates you were formed to benefit a preselected designated individual which shows you are serving private interests precluding exemption under sec_501 you are similar to the organization described in revrul_76_206 because you are not serving public or charitable interests you are fundraising on z’s behalf to pay her medical_expenses and over one half of your gross_proceeds have been used to pay for z’s medical_expenses although your board is unrelated to z and her family this does not change the fact that you are serving substantial private interests you are similar to the organization described in the court case wendy l parker rehabilitation foundation because you were formed to pay the medical_expenses for a preselected individual like this organization you are serving the private benefit of an individual and her family by paying her medical_expenses and relieving her family of their financial obligation by providing such care applicant’s position you state that you were formed to help z and other children with special medical needs from the community your fundraising efforts have been affected by the downturn in the economy and you are hoping to eventually reach out to other children with special needs however to date z has been the sole beneficiary of your fundraising efforts service’s response to applicant’s position you failed to provide any additional information from which it can be concluded that you are operating exclusively for c purposes you are operating for the benefit of a designated individual as described in the preceding facts and analysis and are serving private interests rather than public interests this precludes exemption under sec_501 conclusion you do not qualify for tax-exemption under sec_501 because you were formed and have operated to raise funds for the benefit of a designated individual you therefore are serving a private rather than a public or charitable interest you have the right to file a protest if you believe this determination is incorrect to protest you must submit a protest statement explaining your views and reasoning you must submit the protest statement signed by one of your officers within days from the date of this letter we will consider your statement and decide if the information affects our determination if your protest statement does not provide a basis to reconsider our determination we will forward your case to our appeals_office you can find more information about the role of the appeals_office in publication types of information that should be included in your protest statement can be found in publication the protest statement must be accompanied by the following declaration under penalties of perjury declare that have examined this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete your protest will be considered incomplete without this statement if an organization's representative submits the protest a substitute declaration must be included stating that the representative prepared the protest and accompanying documents and whether the representative knows personally that the statements of facts contained in the protest and accompanying documents are true and correct an attorney certified_public_accountant or an individual enrolled to practice before the internal_revenue_service may represent you during the appeal process if you want representation during the appeal process you must file a proper power_of_attorney form_2848 power_of_attorney and declaration of representative if you have not already done so you can find more information about representation in publication practice_before_the_irs and power_of_attorney all forms and publications mentioned in this letter can be found at www irs gov forms and publications if you do not file a protest within days you will not be able to file a suit for declaratory_judgment in court because the internal_revenue_service irs will consider the failure to appeal as a failure to exhaust available administrative remedies code sec_7428 provides in part that a declaratory_judgment or decree shall not be issued in any proceeding unless the tax_court the united_states court of federal claims or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted ail of the administrative remedies available to it within the irs if you do not intend to protest this determination you do not need to take any further action determination_letter that letter will provide information about filing tax returns and other matters if we do not hear from you within days we will issue a final adverse please send your protest statement form_2848 and any supporting documents to the applicable address mail to deliver to internal_revenue_service eo determinations quality assurance room p o box cincinnati oh internal_revenue_service eo determinations quality assurance main street room cincinnati oh you may fax your statement using the fax number shown in the heading of this letter you fax your statement please call the person identified in the heading of this letter to confirm that he or she received your fax if if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely director exempt_organizations enclosure publication


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-118551-12 date date legend x ----------------------------------------- --------------------------------------------------------------------------------------------------- state ------ date --------------------- ---------------------- date - dear ---------------- this letter responds to a letter dated date submitted by x’s authorized representatives on behalf of x requesting a ruling under sec_1361 of the internal_revenue_code the information submitted states that x was incorporated under the laws of state and subsequently made an election to be treated as an s_corporation effective date x and its shareholders intend to enter into an agreement agreement effective date which contains provisions relating to minimum distributions to shareholders by x x and its shareholders intend that x will make distributions under these provisions based on the shareholders’ varying interests in x’s income in the current or immediately preceding_taxable_year varying interests distributions or earlier if such earlier year’s taxable_income is adjusted after x’s original return for the such earlier year is filed discretionary payments x and its shareholders intend that the varying interest distributions will include year-end and quarterly distributions that enable the shareholders to make timely estimated and final tax_payments in addition to above distributions x may declare dividends and make pro_rata distributions to the shareholders based on the number of shares that the shareholders plr-118551-12 own as of a record_date record_date distributions the agreement will provide that x will make these record_date distributions in accordance with the corporate laws of state which provides that all shares of the same class are equal sec_1361 provides that for purposes of the code the term s_corporation means with respect to the taxable_year a small_business_corporation for which an election under sec_1362 is in effect for the year sec_1361 provides that the term small_business_corporation means a domestic_corporation that among other things does not have more than one class of stock accordingly s_corporations may not have more than one class of stock sec_1_1361-1 of the income_tax regulations provides that a corporation that has more than one class of stock does not qualify as a small_business_corporation except as provided in sec_1_1361-1 relating to instruments obligations or arrangements treated as a second class of stock a corporation is treated as having only one class of stock if all outstanding shares of stock of the corporation confer identical rights to distribution and liquidation proceeds sec_1_1361-1 provides in part that the determination whether all outstanding shares of stock confer identical rights to distribution and liquidation proceeds is made based on the corporate charter articles of incorporation bylaws applicable state law and binding agreements relating to distribution and liquidation proceeds collectively the governing provisions although a corporation is not treated as having more than one class of stock so long as the governing provisions provide for identical distribution and liquidation rights any distributions including actual constructive or deemed distributions that differ in timing or amount are to be given appropriate tax effect in accordance with the facts and circumstances sec_1_1361-1 provides that a governing provision does not within the meaning of sec_1_1361-1 alter the rights to liquidation and distribution proceeds conferred by an s corporation's stock merely because the governing provision provides that as a result of a change in stock ownership distributions in a taxable_year are to be made on the basis of the shareholders’ varying interests in the s corporation's income in the current or immediately preceding_taxable_year if distributions pursuant to the provision are not made within a reasonable_time after the close of the taxable_year in which the varying interests occur the distribution may be recharacterized depending on the facts and circumstances but will not result in a second class of stock based solely on the facts submitted and the representations made we conclude that the agreement’s provisions relating to varying interests distributions record_date distributions and discretionary payments do not cause x to have more than one class of stock for purposes of sec_1361 plr-118551-12 except for the specific ruling above we express or imply no opinion concerning the federal_income_tax consequences of the facts of this case under any other provision of the code specifically we express or imply no opinion regarding x’s eligibility to be an s_corporation this ruling is directed only to the taxpayer who requested it section sec_6110 of the code provides that it may not be used or cited as precedent pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representatives sincerely bradford r poston senior counsel branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index number --------------------- -------------------------------------------- ------------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------------id no -------------- telephone number ---------------------- refer reply to cc psi b01 plr-134979-17 date date legend a b x --------------------------------------------------------------------------------------------------------- ------------------------- --------------------------------------------------------------------------------------------------------- ------------------------ --------------------------------------------------------------------------------------------------------- ------------------------ trust ---------------------------------------------------------- state --------------- date --------------------------- date -------------------- date --------------------------------------------------------------------------------------------------------- ------------------- dear---------------- this responds to a letter dated date and subsequent information submitted on behalf of a b and x requesting rulings under sec_1361 and sec_1361 of the internal_revenue_code the code plr-134979-17 facts the information submitted states that a and b were married on date and are in the process of finalizing the division of assets as a result of their divorce one such marital asset of a and b are shares of stock in x an s_corporation the shares of x stock are currently held by a revocable_trust of which a is the grantor a’s grantor_trust the state court presiding of the divorce of a and b issued a divorce decree on date as modified by an order dated date together the decree a key part of the decree is a requirement that a cause a’s grantor_trust to transfer all of the shares of x stock it holds to trust the beneficiaries of which are a and b with certain agreed-upon provisions a and b negotiated the terms of the trust and both signed the agreement setting forth the trust’s terms the decree orders that the transfer of the shares of x stock to the trust is subject_to the prior approval of the tax issues by the irs other than a nominal amount of cash the trust will be funded only with the shares of x stock currently held by a’s grantor_trust the trust agreement provides that the principal purpose of the trust is to set forth and govern all incidents_of_ownership and control of the x stock owned by the trust the trust is a single trust however for administrative purposes only the property held in trust will be accounted for internally in two separate shares each a share and together the shares one for a and one for b each share hold sec_50 of the x stock held in trust in connection with the divorce b provided consideration for b’s lifetime distribution rights under the trust but provided no consideration for any remainder_interest in the trust the x stock is subject_to certain liabilities and the trust may assume certain liabilities a b and x represent that the sum of the amount of liabilities to be assumed by the trust plus the amount of the liabilities to which the property to be transferred to the trust is subject will not exceed the total of the adjusted_basis of the property transferred some or all distributions received by the trust from x will be used by the trustee of trust to make required_payments on the liabilities against which the x stock is pledged and those payments will be made equally from a’s share and b’s share in exchange for b agreeing to have the liabilities be paid from b’s share a’s share will issue to b’s share a promissory note for amounts paid out of b’s share with respect to the liabilities additionally although distributions from x to trust will be applied equally to each share a will have a right to certain distributions from trust that will not be shared by b the trustee of the trust intends to elect to treat the trust as an electing_small_business_trust esbt under sec_1361 plr-134979-17 taxpayer requests that we rule as follows x will not be considered to have a second class of stock in violation of sec_1361 solely as a result of the provisions in the trust agreement the consideration provided by b for b’s lifetime distribution rights in connection with the divorce does not prevent the trust from qualifying as an esbt under sec_1361 ruling sec_1361 provides that the term small_business_corporation means a domestic_corporation which is not an ineligible_corporation and which does not a have more than shareholders b have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual c have a nonresident_alien as a shareholder and d have more than one class of stock sec_1_1361-1 provides in part that a corporation is generally treated as having only one class of stock if all outstanding shares of stock of the corporation confer identical rights to distribution and liquidation proceeds sec_1_1361-1 provides that the determination of whether all outstanding shares of stock confer identical rights to distribution and liquidation proceeds is made based on the corporate charter articles of incorporation bylaws applicable state laws and binding agreements relating to distribution and liquidation proceeds collectively governing provisions a commercial contractual agreement such as a lease employment agreement or loan agreement is not a binding agreement relating to distribution and liquidation proceeds and thus is not a governing provision unless a principal purpose of the agreement is to circumvent the one class of stock requirement of sec_1361 and sec_1_1361-1 although a corporation is not treated as having more than one class of stock so long as the governing provisions provide for identical distribution and liquidation rights any distributions including actual constructive or deemed distributions that differ in timing or amount are to be given appropriate tax effect in accordance with the facts and circumstances trust agreement is not a governing provision that is required to be taken into account under sec_1_1361-1 accordingly the trust agreement is disregarded in determining whether the outstanding shares of x stock confer identical rights to distributions and liquidation proceeds therefore x will not be considered as having more than one class of stock under sec_1361 as a result of the trust agreement plr-134979-17 ruling sec_1361 provides that for purposes of sec_1361 an electing_small_business_trust esbt may be an s_corporation shareholder sec_1361 provides that an esbt means any trust if i such trust does not have as a beneficiary any person other than i an individual ii an estate iii an organization described in sec_170 which holds a contingent_interest in such trust and is not a potential_current_beneficiary ii no interest in such trust was acquired by purchase and iii an election under sec_1361 applies to such trust sec_1361 provides that for purposes of sec_1361 provides that for purposes of sec_1361 the term purchase means any acquisition if the basis of the property acquired in determined under sec_1012 sec_1012 provides that the basis_of_property shall be the cost of such property except as otherwise provided in this subchapter and subchapters c related to corporate_distributions and adjustments k related to partners and partnerships and p related to capital_gains_and_losses sec_1041 provides that no gain_or_loss shall be recognized on a transfer of property from an individual to or in trust for the benefit of a spouse or a former spouse but only if the transfer is incident to the divorce sec_1041 provides that in the case of any transfer of property described in sec_1041 the property shall be treated as acquired by the transferee by gift and the basis of the transferee in the property shall be the adjusted_basis of the transferor sec_1041 provides that for purposes of sec_1041 a transfer of property is incident to the divorce if the transfer occurs within one year after the date on which the marriage ceases or is related to the cessation of the marriage sec_1041 provides that sec_1041 shall not apply to the transfer of property in trust to the extent that the sum of the amount of the liabilities assumed plus the amount of the liabilities to which the property is subject exceeds the total of the adjusted_basis of the property transferred proper adjustment shall be made under sec_1041 in the basis of the transferee in such property to take into account gain recognized sec_1_1041-1t q a-7 of the temporary income_tax regulations provides that a transfer of property is related to the cessation of the marriage if the transfer is pursuant to a divorce_or_separation_instrument as defined in sec_71 and the transfer occurs not more than six years after the date on which the marriage ceases a divorce plr-134979-17 or separation instrument includes a modification or amendment to such decree or instrument a is causing a’s grantor_trust to transfer the shares of x stock to the trust pursuant to the divorce decree and the amount of the liabilities assumed plus the liabilities that the property transferred is subject_to does not exceed the adjusted_basis of the property transferred accordingly based on the facts submitted and representations made provided that the transfer of the shares of x stock to the trust occurs within six years of the entry of final judgment and the terms of the trust as executed by a and b remain materially identical to those submitted we conclude that sec_1041 applies and a and b will not recognize any gain_or_loss on the transfer of the shares of x stock from a’s grantor_trust to the trust further sec_1041 applies such that the transfer is treated as a gift under sec_1041 as such b’s acquisition of b’s lifetime distribution rights in the trust for consideration is not a purchase within sec_1361 because the sale is not governed by sec_1012 accordingly b’s acquisition of b’s distribution rights will not disqualify trust from being an esbt except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically we neither express nor imply any opinion concerning the application of sec_682 to the trust and whether the trust is a grantor_trust under sec_671 this ruling is directed only to the taxpayer who requested it according to sec_6110 this ruling may not be used or cited as precedent pursuant to the power_of_attorney on file with this office we are sending a copy of this letter to x's authorized representatives sincerely faith p colson faith p colson senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


significant index no department of the treasury - internal_revenue_service washington d c tax_exempt_and_government_entities_division apr tep ert ad re dear hospital health system nursing home child_care_facility this letter is to inform you that hospital's request for modifications of the conditional waivers of the minimum_funding_standard granted for the plan for the plan_year ending december ruling letter dated date and for the plan years ending december and december approved accordingly we are replacing the conditions outlined in our ruling letter dated date with the conditions below granted in a ruling letter dated date and modified in a granted in a ruling letter dated date have been security will automatically be moved to the first collateral acceptable to the is maintained for the plan for the full amount of the funding waivers it is anticipated that the furthermore position upon the expiration of the liens currently held by will be notified in advance of any disposition of it is anticipated that the hospital assets or merger of the hospital with another organization and that the hospital the hospital makes the following contributions to the plan _ will be given an opportunity to protect its financial interests inthe - i contributions of at least dollar_figure each will be paid_by each due_date for required quarterly contributions under sec_412 or sec_430 of the internal_revenue_code code as applicable beginning date such contributions will continue until the plan’s enrolled_actuary certifies ‘that the plan is fully funded according to the provisions of sec_404 of the code for plan years beginning before date or that the plan's funding shortfall is zero according to the provisions of sec_430 of the code but without reducing plan assets for carryover or prefunding balances for plan years beginning after date proof of such contributions must be provided within days after each contribution is due or days after the date of this ruling letter if later beginning with the date payment ii in addition quarterly contributions will be made to eliminate the dollar_figure shortfall in contributions over a period of two years these contributions will be at least dollar_figure required quarterly contributions under sec_412 or sec_430 j of the code as applicable the first such contribution will be due_date and the last such contribution will be due_date however no each and will be made by each due_date for _ such contributions will be required after the date the enrolled_actuary certifies that the plan is fully funded according to the provisions of sec_404 of the code for plan years beginning before date or that the plan's funding shortfall is zero according to the provisions of sec_430 of the code but without reducing plan assets for carryover or prefunding balances for plan years beginning after date proof of such contributions must be provided within days after each contribution is due the hospital files forms to report any accumulated funding deficiencies _ that may arise while the plan is subject_to a waiver of the minimum_funding_standard or if later any year in which there is an accumulated_funding_deficiency for years beginning before date or in which there is any remaining unpaid minimum contribution for years beginning after date and pays the applicable excise_tax that is due under ‘ sec_4971 of the code for those plan years in a timely manner a copy of form_5330 and proof of payment of the excise_tax will be provided to the service within days after the form_5500 is filed or days after the date of this letter_ruling if later beginning with the form_5330 filed for the plan_year ending december -exists in the funding_standard_account of the plan beginning with the plan_year ending december excise_tax under sec_4971 of the code according to the procedures and timing specified in applicable guidance published by the service furthermore for each plan_year that a deficiency the hospital requests a waiver of the the hospital provides the following information for each pian year that the plan is subject_to a waiver of the minimum_funding_standard or if later any year in which there is a deficiency in the funding_standard_account for plan years beginning before date or if there is any remaining unpaid - minimum contribution for plan years beginning after date i a copy of the annual actuarial valuation report form_5500 including attachments and december statement of plan assets to be provided within days after the form_5500 is filed or days after the date of this ruling letter if later beginning with the information filed for the plan_year ending december ii copies of consolidating and consolidated quarterly financial results including balance_sheet income and expense statement and cash_flow information for the health system to be provided within days after the end of each quarter or days after the date of this letter_ruling if later beginning with the quarter ending date iii copies of audited annual reports including consolidated and consolidating statements for the health system to be provided by april after the end of each fiscal_year or days after the date of this ruling letter if later beginning with the fiscal_year ending date iv a copy of the document that outlines the hospital’s long-term strategic plan and financial forecast to be provided by december of each year or days after the date of this ruling letter if later beginning with ‘date _ for any plan_year that the plan is subject_to a waiver of the minimum_funding_standard or if later any year in which there is a funding deficiency for years beginning before date or in which there is any remaining unpaid _ minimum contribution for years beginning after date the it is not necessary for the hospital to resubmit any information that has already been provided to the service hospital does not establish a new defined benefit or defined_contribution_plan nor does it increase the benefits payable under the existing plans based on information provided by the hospital benefits under the plan ceased accruing and the only defined_contribution_plan is a plan described as of april under sec_403 of the code that provides employer matching_contributions of of employee contributions up to of compensation please note that the hospital has received three funding waivers beginning with the plan_year ending december sec_412 of the internal_revenue_code and sec_303 of erisa limit the number of funding waivers to three in any fifteen- year period therefore the hospital will not be able to request any additional funding waivers until the plan_year ending december effect after amendment by the pension_protection_act of ppa '06 in sec_412 of the code and sec_302 of erisa as amended this limit continues to remain in information must be provided to both of our office and to of the or other individuals designated by the respective agencies using the address numbers or fax numbers below you agreed to these conditions in a letter dated date if any one of these conditions is not satisfied all three waivers are retroactively null and void the conditional waivers were granted in accordance with sec_412 of the code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa’ prior to amendment by ppa ‘06 the hospital is a small independent facility located in short-term acute care hospital and is part of the health system along with the nursing home and child_care_facility ti is a general - the hospital experienced a significant decrease in operating cash_flow beginning in primarily due to decreased patient volume and the loss of one of its general surgeons and later the loss of its entire orthopedic and urological surgical groups the hospital was able to replace both groups and return surgical volumes to their previous levels by the end of the hospital has taken a number of steps to address its financial difficulties including the review of referral patterns and employed physician contracts the identification of cost-saving opportunities the recruitment of surgical specialties in order to increase patient volume and revenue and the renegotiation of hmo contracts in order to gain better reimbursement terms in addition the hospital froze the pension_plan effective april to eliminate the cost of continuing benefit accruals despite the health system’s financial difficulties they continued to make contributions to the plan for the plan years ending december and have funded dollar_figure required for those plan years in the absence of funding waivers the hospital has contributed dollar_figure date under the waiver agreement from date through contributions that would have been of the approximately dollar_figure and the hospital requested a modification of the funding waiver on the basis that they had not fully understood that the condition regarding required contributions for the year referenced contributions credited to the plan_year as opposed to plan contributions made during the complying with the other conditions imposed on these funding waivers plan_year the hospital has shown good_faith in hence the waivers of the minimum_funding standards for the plan for the plan years ending december conditions listed above have been modified subject_to the and your attention is called to sec_412 of the code and sec_304 of erisa which describe the consequences that would result in the event the plan is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived_funding_deficiency remains unamortized these rules are continued after amendment by ppa '06 in sec_412 of the code and sec_302 of erisa as amended please note that any amendment that increases the liabilities of a profit sharing plan or any other retirement plans covering employees covered by this plan maintained by the health system would be considered an amendment for purposes of these sections of the code and erisa similarly the establishment of a new profit sharing plan or any other retirement_plan by the health system covering employees covered by this plan would be considered an amendment for purposes of these sections of the code and erisa in addition any such amendments would violate the above conditions upon which the waivers are granted oo _ at to the and to your sincerely yours we have sent a copy of this letter to the if you require further assistance in this matter please contact authorized representative pursuant to a power_of_attorney on file in this office this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent andrew e zuckerman director employee_plans rulings and agreements


t c memo united_states tax_court george h and evelyn g cooper petitioners v commissioner of internal revenue respondent docket no filed date on the facts held ps have not established that they are entitled to deduct on their federal_income_tax return ordinary and necessary business_expenses in excess of the amount allowed by r and petitioners are liable for the late filing addition_to_tax under sec_6651 i r c george h cooper pro_se roberta d repasy for respondent memorandum findings_of_fact and opinion nims judge respondent determined a deficiency in petitioners' federal_income_tax for in the amount of dollar_figure and an addition_to_tax for that year under sec_6651 in the amount of dollar_figure all section references are to sections of the internal_revenue_code in effect for and all rule references are to the tax_court rules_of_practice and procedure after concessions the issues remaining for decision are whether petitioners are entitled to deduct certain alleged business_expenses incurred by george h cooper petitioner in excess of dollar_figure the amount allowed by respondent and whether petitioners are liable for the late filing addition_to_tax under sec_6651 the limitation on the amount of petitioners' claimed schedule a miscellaneous_itemized_deductions is a mechanical adjustment the allowable_amount of such deductions will be calculated under rule using the amount of petitioners' adjusted_gross_income determined as a result of this proceeding the amount of self-employment_tax due on the income that petitioner received from con tex inc is also a mechanical adjustment the amount of which will also be calculated under rule findings_of_fact some of the facts have been stipulated and are so found petitioners resided in london england when they filed their petition from july through date petitioner performed services as an independent_contractor for con tex inc the stubs detached from the checks for services which petitioner received from con tex inc reveal that of the total amount petitioner received from date to date dollar_figure represented reimbursed expenses in addition of the dollar_figure petitioner received on date dollar_figure represented reimbursed expenses thus petitioner's expense reimbursement from con tex inc totaled dollar_figure opinion in an opening statement preceding his testimony petitioner represented to the court that he was engaged by con tex inc as a contract worker in connection with a contract that con tex inc had with ford motor company ford to introduce certain systems and procedures to ford petitioner stated that con tex inc was terminated by ford after months and that both he and con tex inc ended up losing money petitioner testified that insofar as his services as a contract worker were concerned con tex inc agreed to reimburse him for air fares and accommodations that he would incur along the way but that he was expected to pay some of his own expenses in anticipation of further contracts the parties agree that petitioner incurred expenses of dollar_figure for which he was reimbursed and that the dollar_figure is included in the agreed upon dollar_figure which petitioner received from con tex inc in thus the net_income which petitioner received from con tex inc totaled dollar_figure neither the dollar_figure the dollar_figure nor petitioner's relationship with con tex inc is disclosed on petitioners' return petitioners claim that they are entitled to deduct as ordinary and necessary business_expenses amounts in excess of the dollar_figure reimbursement falls short in at least two respects petitioners have failed to show that any such excess expenditures were ordinary and necessary expenses_incurred in a trade_or_business and they have failed to substantiate the amount of any such excess petitioner's testimony that he was expected to pay some of his own expenses over and above those for which he was reimbursed is vague and self-serving and wholly unsupported by any other credible_evidence sec_162 permits a deduction for the ordinary and necessary expenses paid_or_incurred during the tax_year in carrying_on_a_trade_or_business such expenses must be ordinary and necessary in the conduct of the taxpayer's business and directly attributable to such business the term does not include nondeductible personal living or family_expenses sec_1_162-17 income_tax regs in addition expenses paid_or_incurred for travel entertainment and meals are not deductible unless substantiated by adequate_records or corroborating evidence of the amount of the expense the time and place of travel or entertainment the business_purpose of the expense and the business relationship to the taxpayer of the beneficiary of the expense sec_274 petitioner submitted various documents purporting to substantiate his claimed excess expenses in addition he submitted several summaries of his expenses the documents and summaries submitted by petitioner and the testimony he presented at the time of trial fail to substantiate his claimed excess expenses indeed although petitioner testified that he kept meticulous records he stated that one of the summaries he prepared from these records was a probable chronology of the travel he undertook on behalf of con tex inc he also admitted that not all of the documents he submitted in support of his claimed deductions pertained to his work for con tex inc furthermore at least one of the airline itineraries submitted by petitioner pertains to travel by petitioner's wife evelyn cooper petitioner admitted that this travel was not related to his work for con tex inc in addition a ticket for travel in date submitted by petitioner does not relate to petitioner's work for con tex inc since he did not even begin such work until date therefore petitioner's records were not precise as he maintains and are not reliable furthermore despite petitioner's mischaracterized meticulous record keeping the various summaries he prepared from his records each set forth a different amount of his alleged expenses for example a spreadsheet allegedly prepared by petitioner to assist his return preparer with the preparation of petitioners' tax_return purports to show that petitioner incurred expenses of dollar_figure relating to his work with con tex inc this summary also purports to show that petitioner was reimbursed dollar_figure for such expenses by contrast a summary of expenses prepared by petitioner and presented to the examining agent in this case states that petitioner incurred business_expenses totaling dollar_figure relating to his work with con tex inc during the tax_year a third summary purporting to show the expenses_incurred by petitioner and which allegedly takes into account amounts set forth on documents included within several exhibits prepared by petitioner states that petitioner incurred dollar_figure in expenses during the tax_year yet the amounts set forth on the documents total only dollar_figure finally a summary prepared by petitioner for purposes of the trial of this case and about which petitioner testified that it was a probable chronology of his business travel during the tax_year reports that petitioner incurred business_expenses totaling dollar_figure during the tax_year when asked which of these amounts was accurate petitioner stated that the actual expenses that i incurred is none of these these are different treatments of information at the time that i was asked to provide information if petitioner is unable to accurately determine the amount of his expenses for the tax_year he cannot expect the court to do so from the jumble of data he has submitted petitioner has also failed to show that the claimed expenses were ordinary and necessary for the conduct of business indeed petitioner testified that with the exception of meals unless client or staff related he was reimbursed by con tex inc for all expenses that legitimately contributed to its business lastly petitioner has not met the strict requirements of sec_274 as to his claimed travel entertainment and meals expenses petitioner provided no evidence as to how much of his claimed meals expense was reimbursable ie client or staff related and how much he actually paid out of his own pocket we accordingly hold that petitioners are not entitled to deduct business_expenses in excess of the amount allowed by respondent sec_6651 provides for an addition_to_tax of percent per month for each month or part of a month for which a return is late the aggregate not to exceed percent a taxpayer has a nondelegable duty to file a timely return but can avoid the addition_to_tax for failing to do so by affirmatively showing that the delinquency was due to reasonable_cause and not due to willful neglect sec_6651 the taxpayer bears the burden of proving both that the failure did not result from willful neglect and that the failure was due to reasonable_cause 469_us_241 if the taxpayer does not meet this twin burden the imposition of the addition_to_tax is mandatory 32_tc_479 affd 283_f2d_227 8th cir petitioners maintain that they should not be liable for the addition_to_tax under sec_6651 even though their return for the tax_year which was due on date was not filed until date petitioner testified that near the time their return was due to be filed he and his wife were moving to england he stated that he turned over all of his records to his return preparer for his use in preparing the return petitioner also testified that his return preparer told him that petitioners did not owe any taxes for their tax_year the implication apparently intended by petitioner through his testimony regarding his return preparer appears to be that the filing delinquency was somehow the fault of the return preparer and not petitioners' petitioner also testified that he did not recall telling the return preparer that he had earned any income from con tex inc the largest single source of petitioners' income for as a matter of fact petitioners have presented no evidence that their return was actually prepared by someone other than themselves the return filed date contains no signature other than those of petitioners and bears no indication that it was prepared by anyone other than them but assuming for the sake of argument that petitioners' return was prepared by someone other than themselves petitioners still have not met their burden_of_proof reliance on another to timely file a return is not reasonable_cause for the delinquent filing of a return taxpayers still have a duty to ascertain and meet the statutory deadline which petitioners have not done united_states v boyle supra see also radabaugh v commissioner tcmemo_1992_572 massengill v commissioner tcmemo_1986_159 even if petitioners were told by a return preparer that it was unnecessary to file a return that would not excuse them from the late filing addition in the absence of proof that adequate_disclosure of their income was made to the preparer we hold that petitioners are liable for the late filing addition_to_tax under sec_6651 the amount to be determined under rule to reflect the foregoing decision will be entered under rule


internal_revenue_service p o box cincinnati oh release number release date date date department of the treasury employer_identification_number contact person - id number contact telephone number legend uil c name of college f name of graduate school g name of university p location of university q name of degree program dear we have considered your request for advance approval of your grant-making program under sec_4945 of the internal_revenue_code dated date our records indicate that you were recognized as exempt from federal_income_tax under sec_501 of the code and that you are classified as a private_foundation as defined in sec_509 your letter indicates that you will operate a grant-making program the purpose is to provide scholarships to new or present students who are pursuing a q degree at c and f at gin p year the number of scholarships and the amount of each scholarship will vary each all applicants accepted for admission to c and f are considered eligible to receive scholarships after the office of admissions of c and f completes its screening of applicants to its programs based on application undergraduate and academic record letters of recommendation level of study completed and interviews with faculty of c and f candidates are ranked the scholarship recommendation committee reviews the rankings and makes recommendations to you committee is made up of the dean and the senior associate dean of c there is not a separate scholarship application_for the scholarship program and the university does not publicize the scholarship program the scholarship recommendation the recipient is notified of the award by letter you will pay scholarship proceeds directly tog you provide a letter to g specifying that g’s acceptance of the scholarship proceeds constitutes g’s agreement to a refund any unearned portion of a scholarship if subsequent to the payment of a scholarship a scholarship recipient fails to meet any term m t or condition of the scholarship program and ii notify you if a scholarship recipient fails lo meet any term or condition of the scholarship program no scholarships may be awarded to any individual who is related by blood adoption or marriage to any member of the recommendation committee or any disqualified_person as defined in sec_4946 of the code also you may not benefit directly or indirectly from selecting certain scholarship recipients over other potential scholarship recipients the organization agrees to maintain records which include the following a b c information used to evaluate the qualification of potential grantees identification of the grantees including any relationship of any grantee to the private_foundation the amount and purpose of each grant and all grantee reports and other follow-up data obtained in administering the private foundation’s grant program sec_4945 and b of the code impose certain excise_taxes on taxable_expenditures made by a private_foundation sec_4945 of the code provides that the term taxable_expenditure means any amount_paid or incurred by a private_foundation as a grant to an individual for travel study or other similar purposes by such individual unless such grant satisfies the requirements of subsection g sec_4945 of the code provides that sec_4945 shall not apply to individual grants awarded on an objective and nondiscriminatory basis pursuant to a procedure approved in advance if it is demonstrated that the grant constitutes a scholarship or fellowship_grant which is subject_to the provisions of sec_117 and is to be used for study at an educational_organization described in sec_170 the grant constitutes a prize or award which is subject_to the provisions of sec_74 if the recipient of such prize or award is selected from the general_public or the purpose of the grant is to achieve a specific objective produce a report or similar product or improve or enhance a literary artistic musical scientific teaching or other similar capacity skill or talent of the grantee sec_53_4945-4 of the regulations provides that to secure approval a private_foundation must demonstrate that i its grant procedure includes an objective and nondiscriminatory selection process such procedure is reasonably calculated to result in performance by grantees of the activities that the grants are intended to finance and d n t ii1 the foundation plans to obtain reports to determine whether the grantees performed activities that the grants are intended to finance based on the information submitted and assuming your award programs will be conducted as proposed with a view to provide objectivity and nondiscrimination in making the awards we have determined that your procedures for granting the awards comply with the requirements contained in sec_4945 of the code and that awards granted in accordance with such procedures will not constitute taxable_expenditures within the meaning of sec_4945 in addition we have determined that awards made under your procedures are excludable from the gross_income of the recipients subject_to the limitations provided by sec_117 of the code this determination is conditioned on the understanding that there will be no material_change in the facts upon which it is based it is further conditioned on the premise that no grants will be awarded to foundation managers or members of the selection committee or for a purpose that is inconsistent with the purpose described in sec_170 of the code the approval of your award program procedures herein constitutes a one-time approval of your system standards and procedures designed to result in awards which meet the requirements of sec_4945 of the code this determination only covers the grant programs described above thus approval shall apply to subsequent award programs only as long as the standards and procedures under which they are conducted do not differ matertally from those described in your request any funds you distribute to individuals must be made on a true charitable basis in furtherance of the purposes for which you are organized therefore you should maintain adequate_records and case histories so that any or all award distributions can be substantiated upon request by the internal_revenue_service this determination is directed only to the organization that requested it sec_6110 of the code provides that it may not be used or cited as a precedent you must report any future changes in your grant making procedures please keep a copy of this letter in your permanent records we have sent a copy of this letter to your representative as indicated in your power_of_attorney if you have any questions please contact the person whose name and telephone number are shown above sincerely yours robert choi director exempt_organizations rulings and agreements


significant index number commsssonen tax_exempt_and_government_entities_division department of the treasury internal_revenue_service washington d c apr a920 qe te cray taxpayer dear this letter constitutes notice that approval has been granted for your request for a 5-year automatic_extension for amortizing the unfunded liabilities as of date for the above-named plan which are described in sec_431 and sec_431 of the intemal revenue code code and sec_304 and sec_304 b of the employee_retirement_income_security_act_of_1974 erisa this extension is effective with the plan_year beginning date this extension applies to the eligible amortization charge bases established as of date the extension of the amortization periods of the unfunded liabilities of the plan was granted in accordance with sec_431 of the code sec_431 of the code requires the secretary to extend the period of time required to amortize any unfunded_liability of a plan for a period of time not in excess of years if the plan submits an application meeting the criteria stated in sec_431 the plan has submitted the required information to meet the criteria in sec_431 including a certification from the plan’s actuary that i absent the extension under subparagraph a the plan would have an accumulated_funding_deficiency in the current plan_year or any of the succeeding plan years ii the plan_sponsor has adopted a plan to improve the plan's funding status iii the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended and iv the notice required under paragraph a has been provided we have sent a copy of this letter to the and to the this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited by others as precedent if you require further assistance in this matter please contact sincerely yours david m ziegler manager ep actuarial group