internal_revenue_service number release date index number --------------------------- -------------------------------------------- -------------------------------- ------------------------------- legend department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------------- id no -------------- telephone number ---------------------- refer reply to cc psi plr-137164-13 date x d1 d2 d3 d4 ------------------------------------------------------------------------------------------------------ ------------------------ ----------------- ---------------------------- ---------------------- ------------------ state --------- dear --------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x by its authorized representative requesting a ruling under sec_1362 of the internal_revenue_code code facts x was incorporated under the laws of state on d1 and elected to be an s_corporation effective d2 between d3 and d4 an ineligible s_corporation shareholder owned shares of x stock and therefore x’s s_corporation_election terminated on d3 x represents that the termination was not motivated by tax_avoidance or retroactive tax planning x further represents that x and its shareholders have filed consistently with the treatment of x as an s_corporation since d2 x and its plr-137164-13 shareholders have agreed to make any adjustments that the commissioner may require consistent with the treatment of x as an s_corporation law and analysis sec_1362 provides that except as provided in sec_1362 a small_business_corporation may elect in accordance with the provisions of sec_1362 to be an s_corporation sec_1361 provides that the term s_corporation means with respect to any taxable_year a small_business_corporation for which an election under sec_1362 is in effect for such year sec_1361 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_1362 provides that an election under sec_1362 will be terminated whenever at any time on or after the first day of the first taxable_year for which the corporation is an s_corporation such corporation ceases to be a small_business_corporation sec_1362 provides in part that if an election under sec_1362 by any corporation was terminated under sec_1362 or the secretary determines that the circumstances resulting in the termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in the termination steps were taken so that the corporation for which the termination occurred is a small_business_corporation and the corporation for which the termination occurred and each person who was a shareholder in the corporation at any time during the period specified pursuant to sec_1362 agrees to make the adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in the termination the corporation shall be treated as an s_corporation during the period specified by the secretary conclusion based solely on the facts submitted and the representations made we conclude that x’s s_corporation_election terminated on d3 because x had an ineligible shareholder however we conclude that the termination was inadvertent within the meaning of sec_1362 consequently we rule that x will be treated as continuing to be plr-137164-13 an s_corporation from d3 and thereafter provided that x’s s_corporation_election is not otherwise terminated under sec_1362 except as specifically ruled above we express or imply no opinion concerning the federal tax consequences of the facts described above under any other provisions of the code including whether x was otherwise a valid s_corporation this ruling is directed only to the taxpayer that requested it sec_6110 provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to x’s authorized representative sincerely mary beth carchia senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index number ------------------------- ------------------------------ -------------------------------------- --------------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------------- id no -------------- telephone number ---------------------- refer reply to cc psi b01 plr-117504-14 date date legend x ----------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------- --------------------------------------------------- state -------------- dear ----------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x by its authorized representative requesting a ruling under sec_7704 of the internal_revenue_code facts x is a limited_partnership organized under the laws of state and intends to become a publicly_traded_partnership within the meaning of sec_7704 by effecting an initial_public_offering of limited_partner interests x expects to earn income principally by assessing fees for gathering transporting processing treating and disposing of saltwater produced in the exploration and production of oil and natural_gas produced water x’s primary assets will consist of ownership interests of saltwater disposal wells and associated assets including pipelines rights of way and the equipment necessary to operate the saltwater disposal wells x may redeliver produced water for continued oil recovery operations but will not charge a fee for redelivery as a complement to its primary business x will remove residual oil and other similar hydrocarbons skim oil from drilling waste during the disposal process at its facilities x expects to earn income by marketing the skim oil in relevant markets other than to end users at the retail level plr-117504-14 x makes the following representations personnel are provided for produced water handling and the personnel received unique training for the operation of the saltwater disposal system the saltwater disposal system is dedicated to processing treatment and disposal of produced water the saltwater disposal system does not have other commercially viable uses and is not easily converted for other uses processing and treatment of produced water is required prior to injection into a disposal well in order to comply with governmental regulations and industry standards the personnel provide necessary onsite services at all saltwater disposal wells on a daily basis offsite monitoring services are performed on an ongoing basis and are offered exclusively for use with x’s salt water disposal system law and analysis sec_7704 provides that except as provided in sec_7704 a publicly_traded_partnership shall be treated as a corporation sec_7704 provides that the term publicly_traded_partnership means any partnership if interests in such partnership are traded on an established_securities_market or interests in such partnership are readily_tradable on a secondary market or the substantial equivalent thereof sec_7704 provides in part that sec_7704 shall not apply to any publicly_traded_partnership for any taxable_year if such partnership met the gross_income requirements of sec_7704 for such taxable_year and each preceding_taxable_year beginning after date during which the partnership or any predecessor was in existence sec_7704 provides that a partnership meets the gross_income requirements of sec_7704 for any taxable_year if percent or more of the gross_income of such partnership for such taxable_year consists of qualifying_income sec_7704 defines qualifying_income to include income and gains derived from the exploration development mining or production processing refining transportation including pipelines transporting gas oil or products thereof or the marketing of any mineral_or_natural_resource including fertilizer geothermal_energy and timber conclusion plr-117504-14 based solely on the facts presented and representations made we conclude that income derived by x from the gathering transporting processing treating and disposing of saltwater produced in the exploration and production of oil and natural_gas constitutes qualifying_income within the meaning of sec_7704 further income derived by x from the recovery and marketing of skim oil other than to end users at the retail level constitutes qualifying_income within the meaning of sec_7704 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in particular no opinion is expressed as to whether x meets the percent gross_income requirement in sec_7704 in any taxable_year for which this ruling may apply the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination this ruling is directed only to the taxpayer requesting it however in the event of a technical_termination of x under sec_708 the resulting_partnership may continue to rely on this ruling in determining its qualifying_income under sec_7704 sec_6110 provides that this ruling may not be used or cited as precedent in accordance with the power_of_attorney on file with this office we are sending copies of this letter to your authorized representatives sincerely laura c fields laura c fields senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court ruey read petitioner v commissioner of internal revenue respondent docket no filed date ruey read pro_se jeremy d cameron and a gary begun for respondent memorandum findings_of_fact and opinion nega judge respondent determined a deficiency in petitioner’s federal_income_tax of dollar_figure and a sec_6662 penalty of dollar_figure for the tax_year specifically respondent determined that petitioner failed to report dollar_figure unless otherwise indicated all section references are to the internal continued of income from stock sales dollar_figure in capital_gains income and dollar_figure in taxable dividend income for petitioner contends that her ex-husband dale bicher committed identity theft and purchased and sold stocks in her name without her knowledge findings_of_fact some of the facts have been stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference petitioner resided in florida when the petition was filed in a handwritten application was submitted to usaa to open a checking account in petitioner’s name petitioner’s signature appeared on the application and she was listed as the sole account_holder mr bicher was listed as petitioner’s agent and he wrote and signed checks on the account on date a brokerage account with optionsxpress inc optionsxpress was opened in petitioner’s name petitioner was listed as the sole account_holder the account application contained her signature and a copy continued revenue code in effect for the year at issue and all rule references are to the tax_court rules_of_practice and procedure respondent also determined an increase in petitioner’s child_tax_credit this is a computational issue and will be resolved by our decision with respect to petitioner’s unreported income of her signed driver’s license that same day petitioner signed an optionsxpress power_of_attorney form authorizing mr bicher to buy and sell stocks on the optionsxpress account on their jointly filed federal_income_tax return petitioner and mr bicher reported a dollar_figure stock sale from the optionsxpress account in date petitioner and mr bicher separated in date the address for the optionsxpress account was changed to a post office box address controlled by petitioner and petitioner’s daughter optionsxpress sent monthly statements to this updated address that reflected account activity such as stock sales and dividends received that same month petitioner changed the address for the usaa checking account to a post office box address solely controlled by her usaa sent monthly statements to this updated address at least one statement reflected a disbursement from optionsxpress on date petitioner timely filed a petition with the court in response to the notice_of_deficiency that respondent issued on date in the petition petitioner alleged that mr bicher fraudulently opened the optionsxpress account and the usaa checking account in her name without her knowledge at trial petitioner claimed that mr bicher traced her signature from her driver’s license onto the optionsxpress application and the power_of_attorney form she testified that when she jointly filed her tax_return she merely signed the return and was not aware of the stock sale from the optionsxpress account in that year she also stated that when she changed the address of the usaa checking account she thought she was changing the address of her usaa car insurance account in the notice_of_deficiency issued to petitioner and mr bicher for the tax_year upon which this case is based respondent among other things calculated petitioner and mr bicher’s deficiency on a joint_return basis petitioner and respondent have now stipulated that petitioner and mr bicher did not file a joint_return for and that petitioner is not entitled to innocent spouse relief for i petitioner’s tax_liability opinion generally the commissioner’s determination_of_a_deficiency is presumed correct and the taxpayer has the burden of proving it incorrect rule a 290_us_111 in cases involving unreported income this court has recognized an exception to this rule where the commissioner introduces no substantive evidence and relies solely on the presumption of correctness 73_tc_394 however this exception is limited and does not apply where as in this case the commissioner has provided a minimal evidentiary foundation 994_f2d_1542 11th cir aff’g tcmemo_1991_636 sec_61 defines gross_income as all income from whatever source derived including gains from dealings in property and dividends see sec_61 gains made through the purchase and sale of stock are taxable_income and gain is generally measured by the difference between the purchase_price and the selling_price sec_1001 295_us_123 tax on the sale of stock is laid upon the person who owns the stock producing the income 42_tc_628 respondent used petitioner’s brokerage account and checking account records to determine that petitioner received dollar_figure of income from stock sales dollar_figure in capital_gains and dollar_figure in taxable dividends for the tax_year petitioner claims she was the victim of identity theft she claims she did not know of the optionsxpress brokerage account in her name or of the usaa checking account used to deposit the proceeds from the stock transactions we do not believe a fraud defense applies in this case petitioner’s optionsxpress account application required her signature and a copy of her signed driver’s license her signature on the power_of_attorney form that authorized mr bicher to buy and sell stocks on the account is consistent with her signature on her driver’s license and on the optionsxpress account application it seems implausible that mr bicher would have traced the miniature version of her signature on her driver’s license to create a larger replica on the account application and the power_of_attorney form as petitioner claims petitioner also reported a stock sale from the optionsxpress account on her jointly filed income_tax return furthermore she received monthly statements from this account to her solely controlled post office box address during the year at issue with nothing more the court finds that she at least had knowledge of the optionsxpress account petitioner’s testimony regarding her knowledge or lack thereof of the usaa checking account also seems suspect petitioner testified that she did not know a usaa checking account was opened in her name she claims that she opened only a usaa car insurance account petitioner’s usaa checking account was opened approximately years ago and the application to open the account was handwritten in order for mr bicher to open the account without petitioner he would have had to both sign his name on the application as her agent and fraudulently sign her name as the account owner this scenario seems dubious at best furthermore the usaa checking account was opened approximately years before petitioner was alerted to any possible fraud on the account we find petitioner’s claim to have recently discovered the existence of the account less likely than that she had known of the account since its inception and belatedly came to be suspicious of mr bicher’s handling of their financial affairs we find that for the year at issue petitioner owned and controlled both the optionsxpress brokerage account used to sell stocks and generate taxable dividends and the usaa checking account where the proceeds were deposited accordingly we sustain respondent’s determination ii sec_6662 penalty sec_6662 and b imposes a accuracy-related_penalty on any portion of an underpayment of federal_income_tax which is attributable to a substantial_understatement_of_income_tax an understatement of income_tax is substantial if it exceeds the greater of of the tax required to be shown on the return or dollar_figure sec_6662 under sec_7491 the commissioner bears the burden of production with regard to penalties and must come forward with sufficient evidence indicating that it is appropriate to impose penalties 116_tc_438 respondent has computed the deficiency and the understatement of income_tax is greater than dollar_figure which is greater than of the tax required to be shown on petitioner’s return for thus respondent’s burden of going forward has been satisfied once the commissioner has met the burden of production the taxpayer must come forward with persuasive evidence that the penalty is inappropriate because for example the taxpayer acted with reasonable_cause and in good_faith sec_6664 higbee v commissioner t c pincite the decision as to whether a taxpayer acted with reasonable_cause and in good_faith is made on a case-by-case basis taking into account all of the pertinent facts and circumstances see sec_1_6664-4 income_tax regs petitioner set forth no specific facts to show that the penalty should not apply for example she did not offer any testimony or other evidence to show that she relied on professional tax_advice see id we accordingly sustain respondent’s imposition of an accuracy-related_penalty for the tax_year to reflect the foregoing and the parties’ stipulation that petitioner and dale b bicher did not file a joint_return for decision will be entered under rule


internal_revenue_service number release date index number ------------------ ----------------- -------------------- ------------ department of the treasury washington dc person to contact ---------------------- id no -------------- telephone number -------------------- refer reply to cc intl br1 - plr-104818-05 date ty ------- ------------------ ------- ------------ ---------------------- ----------------------- a ----------------------------------------------------------------------------- date b country c date d dear ----------------- a’s loss of lawful permanent resident status expatriation did not have for one of its principal purposes the avoidance of u s taxes under subtitle a or subtitle b of the code the information submitted for consideration is substantially as set forth below representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination will be subject_to country c tax on his worldwide income on the date of a's expatriation his net_worth exceeded the applicable_amount set forth in sec_877 a was born on date b in country c a surrendered his green card on date d a this is in response to a letter received date requesting a ruling that the rulings contained in this letter are based upon information and a former u s citizen whose net_worth or average tax_liability exceeds these sec_877 generally provides that a citizen who loses u s citizenship or a u s plr-104818-05 long-term_resident who ceases to be taxed as a lawful permanent resident individuals who expatriate within the 10-year period immediately preceding the close of the taxable_year will be subject_to the special rules of sec_877 for such taxable_year unless such loss did not have for one of its principal purposes the avoidance of u s taxes sec_2107 and sec_2501 provide special estate and gift_tax regimes respectively for individuals who expatriate with a principal purpose to avoid u s taxes a former u s citizen or former u s long-term_resident will be treated as having expatriated with a principal purpose to avoid u s taxes for purposes of sec_877 sec_2107 and sec_2501 if the individual's average income_tax_liability or the individual's net_worth on the date of expatriation exceed certain thresholds see sec_877 sec_2107 and sec_2501 thresholds however will not be presumed to have a principal purpose of tax_avoidance if that former citizen is described within certain statutory categories and submits a request for a ruling within one year of the date of loss of u s citizenship for the secretary's determination as to whether such loss had for one of its principal purposes the avoidance of u s taxes see sec_877 sec_2107 and sec_2501 former long-term_resident whose net_worth or average tax_liability exceeds the applicable thresholds will not be presumed to have a principal purpose of tax_avoidance if that former resident is described within certain categories and submits a complete and good_faith request for a ruling as to whether such loss had for one of its principal purposes the avoidance of u s taxes notice_98_34 requires that certain information be submitted with a request for a ruling that an individual's expatriation did not have for one of its principal purposes the avoidance of u s taxes and resident fully subject_to tax in country c the country in which he was born modified by notice_98_34 including additional information requested by the service after review of the submission under notice_98_34 1998_2_cb_29 modifying notice_97_19 1997_1_cb_394 a a is eligible to request a ruling pursuant to notice_98_34 because he is a citizen a submitted all of the information required to be submitted by notice_97_19 as accordingly based solely on the facts submitted and the representations made we conclude that a has made a complete and good_faith submission in accordance with sec_877 and notice_98_34 therefore a will not be presumed under sec_877 to have had as one of his principal purposes for expatriating the avoidance of except as expressly provided herein no opinion is expressed or implied plr-104818-05 u s taxes however because the information submitted does not clearly establish the existence or lack of a principal purpose to avoid taxes under subtitle a or b of the code no opinion is expressed as to whether a's expatriation had for one of its principal purposes the avoidance of such taxes concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in addition no opinion is expressed as to a's u s tax_liability for the taxable years prior to or after his expatriation under sections of the code other than sec_877 sec_2107 and sec_2501 which a obtained the ruling whether or not a is otherwise required to file a return the code provides that it may not be used or cited as precedent will be sent to a’s representative a copy of this letter must be attached to a's u s income_tax return for the year in in accordance with a power_of_attorney on file in this office a copy of this letter this ruling is directed only to the taxpayer requesting it sec_6110 of sincerely _______________ elizabeth u karzon branch chief cc intl br1 c ------------------------- c ------------------------------- ------------------------------- --------------------- -----------------------------------------


t c memo united_states tax_court james e anderson and cheryl j latos petitioners v commissioner of internal revenue respondent cheryl j latos petitioner v commissioner of internal revenue respondent docket nos 16522-02l 5829-06l filed date cheryl j latos pro_se frank w louis for respondent memorandum findings_of_fact and opinion chiechi judge petitioners filed the respective petitions in these consolidated cases in response to notices of determina- tion concerning collection action s under sec_6320 and or notice_of_determination issued to james e anderson and cheryl j latos and to cheryl j latos respectively we must decide whether to sustain the determinations in those notices we hold that we shall to the extent stated herein findings_of_fact all of the facts in each of these cases which petitioner cheryl j latos ms latos and respondent submitted under rule have been stipulated by them and are so found except to the extent stated herein at the time ms latos and mr anderson filed the respective petitions in these cases they resided in wood river junction rhode island case at docket no 16522-02l during mr anderson worked as a fisherman on a u s fishing vessel that had a crew of less than ten people ms latos and mr anderson jointly filed form_1040 u s individual_income_tax_return form_1040 for their taxable_year 1all rule references are to the tax_court rules_of_practice and procedure all section references are to the internal_revenue_code in effect at all relevant times 2in the case at docket no 16522-02l respondent filed a motion to dismiss for lack of prosecution as to petitioner james e anderson mr anderson the former spouse of ms latos the court shall grant that motion and shall enter the same decision with respect to mr anderson that the court shall enter with respect to ms latos both ms latos and mr anderson are parties in the case at docket no 16522-02l and only ms latos is a party in the case at docket no 5829-06l for convenience we shall generally refer only to ms latos and not to ms latos and mr anderson return in the return ms latos and mr anderson claimed four exemptions and a total exemption_amount of dollar_figure and showed federal_income_tax income_tax due of dollar_figure when ms latos and mr anderson filed the return they did not pay the income_tax due shown in that return at a time not disclosed by the record respondent determined that ms latos and mr anderson made a mathematical error in claiming in their return a total exemption_amount for four exemptions of dollar_figure instead of dollar_figure respondent corrected that mathematical error and the resulting error that ms latos and mr anderson made in computing the amount of income_tax due shown in their return the correct amount of income_tax that ms latos and mr anderson should have shown due in that return is dollar_figure correct amount of tax due on date respondent assessed the correct amount of tax due additions to tax under sec_6651 and sec_6654 for ms latos’ taxable_year and interest as provided by law we shall refer to any such unpaid assessed amounts with respect to ms latos’ taxable_year as well as interest provided by law accrued after date as ms latos’ unpaid liability 3each exemption_amount for the taxable_year of ms latos and mr anderson was dollar_figure 4the correct amount of tax due does not include any self-employment_tax respondent issued to ms latos the notice_and_demand for payment required by sec_6303 with respect to ms latos’ unpaid liability on date respondent issued to ms latos a notice_of_intent_to_levy and notice of your right to a hearing with respect to inter alia her taxable_year notice_of_intent_to_levy on date in response to the notice_of_intent_to_levy ms latos mailed to respondent form request for a collection_due_process_hearing ms latos’ form with respect to the notice_of_intent_to_levy and requested a hearing with respondent’s appeals_office appeals_office in that form ms latos indicated that she did not agree with the notice_of_intent_to_levy and gave the follow- ing explanation for her disagreement irs must collect from the employer and has no statutory authorization to collect from the employee a two-page attachment to ms latos’ form with respect to the notice_of_intent_to_levy stated in pertinent part taxpayer is an employee taxpayers have also requested that the irs seek techni- cal advice on the provisions of title_26 - internal_revenue_code subtitle c - employment_taxes chapter - collection of income_tax at source sec_3402 income_tax collected at source a requirement of withholding in general except as otherwise provided in this section every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accor- dance with tables or computational pro- cedures prescribed by the secretary sec_3403 liability for tax the employer shall be liable for the payment of the tax required to be deducted and withheld under this chapter and shall not be liable to any per- son for the amount of any such payment sec_31_3403-1 liability for tax every employer required to deduct and withhold the tax under sec_3402 from the wages of an em- ployee is liable for the payment of such tax whether or not it is collected from the employee by the employer if for example the employer deducts less than the correct amount of tax or if he fails to deduct any part of the tax he is nevertheless liable for the correct amount of the tax see however sec_31_3402_d_-1 sec_31_6205-1 adjustments of underpayments a in general an employer who makes or has made an undercollection or underpayment of-- iii income_tax required under sec_3402 to be withheld with respect to any payment of wages or compensation shall correct such error as provided in this section c income_tax required to be withheld from wages-- deductions from employee if no income_tax or less than the correct amount of income_tax required under sec_3402 to be withheld from wages is deducted from wages paid to an em- ployee in a calendar_year the employer shall collect the amount of the undercollection on or before the last day of such year by deducting such amount from remuneration of the employee if any under his control such deductions may be made even though the remuneration for any reason does not constitute wages any undercollection in a calendar_year not corrected by a deduction made pursuant to the foregoing provisions of this sub- paragraph is a matter for settlement between the employee and the employer within such calendar_year for provisions relating to the employer’s liability for the tax whether or not he collects it from the employee see sec_31_3403-1 t d fr date fr date as amended by t d fr date sec_31_3402_d_-1 failure to withhold if the employer in violation of the provisions of sec_3402 fails to deduct and withhold the tax and thereafter the income_tax against which the tax under sec_3402 may be credited is paid the tax under sec_3402 shall not be collected from the employer such payment does not how- ever operate to relieve the employer from liabil- ity for penalties or additions to the tax applica- ble in respect of such failure to deduct and with- hold the employer will not be relieved of his liability for payment of the tax required to be withheld unless he can show that the tax against which the tax under sec_3403 may be credited has been paid see sec_31 relating to lia- bility for tax reproduced literally on date respondent filed a notice_of_federal_tax_lien with respect to inter alia ms latos’ taxable_year on date respondent issued to ms latos a notice_of_federal_tax_lien filing and your right to a hearing notice of tax_lien with respect to inter alia ms latos’ taxable_year notice of tax_lien on date in response to the notice of tax_lien ms latos mailed to respondent form ms latos’ form with respect to the notice of tax_lien and requested a hearing with the appeals_office in that form ms latos indicated that she did not agree with the notice of tax_lien and gave the following explanation for her disagreement re- quested appeals hearings for all years - never received hear- ings attached to ms latos’ form with respect to the notice of tax_lien was the first page of the two-page attachment to ms latos’ form with respect to the notice_of_intent_to_levy on date a settlement officer with the appeals_office settlement officer held a conference with ms latos with respect to the notice_of_intent_to_levy and the notice of tax_lien during that conference ms latos claimed that neither she nor mr anderson is responsible for paying income_tax on the amounts that mr anderson received during from his fishing activities instead according to ms latos the alleged employer of mr anderson during that year is responsible for paying such income_tax 5ms latos and respondent stipulated that respondent issued the notice of tax_lien to ms latos on date that stipulation is clearly contrary to the facts that we have found are established by the record and we shall disregard it see 93_tc_181 on date the appeals_office issued to ms latos a notice_of_determination with respect to inter alia her taxable_year notice_of_determination that notice stated in pertinent part summary of determination your position on the liability for the income_tax is without merit you have not proposed any viable alter- natives to enforced collection action without suffi- cient response to requests for information and alterna- tives appeals has determined that no choice exists but to return the matter to the jurisdiction of the compli- ance division for necessary action an attachment to the notice_of_determination stated in pertinent part attachment to collection_due_process lien and levy issue james e anderson cheryl j latos summary and recommendation you submitted two forms request for a collection_due_process_hearing in response to the issuance of letter final notice notice_of_intent_to_levy and notice of your rights to a hearing issued on date and the filing of a notice_of_federal_tax_lien on date your requests were received on date and decem- ber respectively the settlement officer conducting the hearing has had no prior involvement with these matters the impact of the hearing request on the statute_of_limitations has been verified to be proper the request for a collection_due_process_hearing was timely made and the hearing was conducted in expedi- tious fashion at your request neither in your written communication nor at the hearing did you raise any issues that would provide for relief from the collec- tion action proposed no alternative security to that afforded by the notice_of_federal_tax_lien was of- fered it is the recommendation of appeals that the proposed levy action and the filing of the notice_of_federal_tax_lien be sustained brief background you have been engaged in a dispute with the service with respect to the employment status of mr anderson for a number of years this matter involves it relates to your position that mr anderson is an employee and that the employer should have with- held federal income taxes from his wages your conten- tion is that mr anderson is an employee and that all taxes are the responsibility of his employer previous tax years have been subject_to examination collection taxpayer_advocate and appeals consideration they are currently at various stages of the judicial process at the hearing you indicated that mr anderson is a fishing boat captain in he received his compensation from work performed on a fishing vessel no federal income taxes were actually withheld in the years in question the issue of withholding_tax has been decided by church f 2nd19 ustc the united_states tax_court ruled and the 2nd circuit_court of appeals af- firmed that failure of an employer to withhold the tax did not lessen the taxpayer’s obligation to report and pay tax on the income received other than your posi- tion that the employer should be liable for the with- holding tax no other issues were raised you declined to discuss alternatives to the lien and levy accord- ingly the determination is based upon a review of the available information the collection action should be sustained discussion and analysis verification that law and procedures were followed under sec_6330 you are entitled in a collection_due_process matter to raise the issue of liability if you did not otherwise have an opportunity to so in this particular case no statutory_notice_of_deficiency for the liability was issued nor did you have any other venue to raise the issue of liability the hearing allowed for you to present your arguments with respect to this liability you did so and also chose not to discuss any collection alternatives you contend that your position is correct and any alternative to collec- tion would undermine efforts to hold the employer responsible for all taxes in connection with the work preformed by mr anderson discussion did take place with respect to the impact that the notice_of_federal_tax_lien is having upon your financial situation alternatives such as a bond letter_of_credit and substitute protection to the security provided the united_states by the federal_tax_lien were suggested you avoided any discussion of alternatives citing your position relative to the assessment the review of the administrative file and computer records indicates that all procedural and legal re- quirements have been met notice_and_demand was issued and neglect or refusal to pay has occurred irc sec- tion d requires that the internal revenue ser- vice notify a taxpayer at least days before a notice_of_levy can be issued transcripts show that this notice was mailed to you you timely responded and an opportunity for a hearing with the office of appeals has been provided the notice_of_federal_tax_lien was properly requested the record reveals that the as- sessments were made that verification of the existence of the liability was verified and the requesting offi- cial was properly authorized to make such request the tax_return for the year was assessed on date the assessments were all properly made you have neglected or refused to pay the liabilities a review of the computer files shows that the outstand- ing balances are still due and owing a letter final notice - notice_of_intent_to_levy and notice of your rights to a hearing was issued on date the form contesting the levy action was filed on date the request was timely the notice_of_federal_tax_lien was filed on date the form contesting the action was re- ceived in a timely manner on date the original request indicated that you had requested a 6see supra note hearing and never received one appeals has verified or received verification that applicable laws and administrative procedures have been met has considered the issues raised and has balanced the collection action with the legitimate concerns that such action be no more intrusive than necessary as required by sec_6330 information in the case file shows that the internal_revenue_service followed law and procedure in this case the liabilities were properly assessed notice_and_demand was made and the assessments were not paid sec_6330 allows the taxpayer to raise any relevant issues relating to the unpaid tax on the proposed levy at the scheduled hearing on date a hear- ing was held only cheryl latos attended discussions centered on the validity of the liabilities you es- chewed discussion of alternatives to the proposed enforced collection actions issues raised by the taxpayer you raised the issue of the validity of the assessment in this appeal the issue involved the tax assessments for inter alia it related only to income_tax the current tax assessed is not related to self-employment based upon the discussion at the hearing held on date you contend that mr anderson is an employee you indicate that it is the responsibility of the employer to withhold taxes the law does not support your position no withholding was taken from the remuneration of mr anderson no esti- mated payments were ever made for the years in ques- tion as previously cited above church f2nd ustc the fact that an employer does not withhold does not lessen your obligation to pay the income_tax you raised no other issues at the hearing attempts to discuss collection alternatives were met with a nega- tive response a request for financial information that could facilitate alternatives was declined your belief is that the liability issue should be resolved in your favor and collection alternatives would there- fore be unnecessary balancing efficient collection and intrusiveness levy action appears to be the most efficient and least intrusive manner in which to resolve the liability had the requested financial information been provided and a viable alternative proposed perhaps another alternative could have been explored you failed to demonstrate that the proposed action is overly intru- sive or that a better alternative is available absent the requested information and viable alternative pro- posals it is the determination of appeals that the intended levy balances the efficient collection_of_taxes with your legitimate concern that the collection action be no more intrusive than necessary with respect to the notice_of_federal_tax_lien you have also failed to demonstrate that the action is overly intrusive or that a better alternative is available no security other than that proposed by the lien has been proposed at the hearing you indicated that you were attempting to use the equity in your home to refinance your stated intention was to pay unsecured debt and make certain household improvements it appears that the absence of the lien would leave the tax_liabilities unsecured and conceivably unpaid the proposed levy action as well as the filing of the notice_of_federal_tax_lien is sustained reproduced literally case at docket no 5829-06l ms latos and mr anderson jointly filed form_1040 for their taxable_year return in their return ms latos and mr anderson showed income_tax due of dollar_figure which they paid when they filed that return on date respondent issued a notice of defi- ciency to ms latos with respect to her taxable_year on date respondent rescinded that notice in order to allow ms latos an opportunity to contest administratively the determinations therein ms latos and respondent were unable to resolve administratively their differences with respect to ms latos’ taxable_year as a result on date respon- dent issued a notice_of_deficiency to ms latos with respect to that year notice_of_deficiency in that notice respon- dent determined a deficiency in self-employment_tax relating to certain fishing activities of mr anderson during ms latos did not file a petition with the court with respect to the notice_of_deficiency on date respondent assessed the self-employ- ment tax determined in the notice_of_deficiency and interest as provided by law during date ms latos discussed that assessment with respondent’s problem resolution office as a result respondent abated a portion of the self-employment_tax assessed for ms latos’ taxable_year so as to reduce the amount of such self-employment_tax liability to the amount of tax under the federal_insurance_contributions_act fica tax for which ms latos and mr anderson would have been liable if mr anderson had been treated as an employee for that year we shall refer to any such unpaid and unabated assessed amounts with respect to ms latos’ taxable_year as well as interest as provided by law accrued after date as ms latos’ unpaid liability respondent issued to ms latos the notice_and_demand for payment required by sec_6303 with respect to ms latos’ unpaid liability ms latos and mr anderson jointly filed form_1040 for their taxable_year return in their return ms latos and mr anderson showed income_tax due of dollar_figure which they did not pay when they filed that return on date respondent assessed the income_tax due shown in the return additions to tax under sec_6651 and sec_6654 for ms latos’ taxable_year and inter- est as provided by law we shall refer to any such unpaid assessed amounts with respect to ms latos’ taxable_year as well as interest as provided by law accrued after date as ms latos’ unpaid liability respondent issued to ms latos the notice_and_demand for payment required by sec_6303 with respect to ms latos’ unpaid liability ms latos and mr anderson jointly filed form_1040 for their taxable_year return in their return ms latos and mr anderson showed income_tax due of dollar_figure which they did not pay when they filed that return on date respondent assessed the income_tax due 7the income_tax due shown in the return does not in- clude any self-employment_tax 8the income_tax due shown in the return does not in- clude any self-employment_tax shown in the return additions to tax under sec_6651 and sec_6654 for ms latos’ taxable_year and inter- est as provided by law we shall refer to any such unpaid assessed amounts with respect to ms latos’ taxable_year as well as interest as provided by law accrued after date as ms latos’ unpaid liability we shall refer collectively to ms latos’ unpaid liability ms latos’ unpaid liability ms latos’ unpaid liability and ms latos’ unpaid liability as ms latos’ unpaid and liabilities respondent issued to ms latos the notice_and_demand for payment required by sec_6303 with respect to ms latos’ unpaid liability on date respondent received from ms latos a request for technical_advice as to whether mr anderson was an employee or self-employed during and on date respondent held a telephonic conference with ms latos regarding respondent’s proposed technical_advice with respect to that request and gave ms lato sec_21 days within which to respond on date respondent mailed to ms latos the technical_advice_memorandum tam that respondent issued in response to ms latos’ request for technical_advice the effects of respondent’s conclusions in that tam were that mr ander- son was an employee of the owners of the boats on which he engaged in fishing activities during and that he was self-employed when he engaged in such activities during consistent with the tam on date respondent assessed fica tax with respect to ms latos’ taxable_year on the same date respondent also assessed interest as provided by law with respect to that year on date respondent filed a notice_of_federal_tax_lien with respect to inter alia ms latos’ taxable years through through tax_lien_filing dollar_figure on date respondent issued to ms latos a notice_of_federal_tax_lien with respect to inter alia her taxable years through through notice of tax_lien dollar_figure on date in response to the through notice of tax_lien ms latos mailed to respondent form and requested a hearing with the appeals_office in that form ms latos indicated that she did not agree with the through 9see infra note 10the amount with respect to ms latos’ taxable_year shown in the through tax_lien_filing under the heading unpaid balance included inter alia the fica tax and any interest thereon that respondent assessed on date see infra note 11the amount with respect to ms latos’ taxable_year shown in the through notice of tax_lien under the heading amount owed included inter alia the fica tax and any interest thereon that respondent assessed on date see infra note notice of tax_lien and gave the following explanation for her disagreement not self-employed sec_3403 b on date a settlement officer held a telephonic conference with ms latos with respect to the through notice of tax_lien during that conference ms latos claimed that neither she nor mr anderson is responsible for paying income_tax on the respective amounts that mr anderson received during and from his fishing activities instead according to ms latos the alleged employer of mr anderson during those years is responsible for paying such tax on date the appeals_office issued to ms latos a notice_of_determination with respect to inter alia her taxable years through through notice_of_determination that notice stated in pertinent part summary of determination the federal_tax_lien is sustained an attachment to the through notice_of_determination stated in pertinent part 12as discussed above ms latos’ unpaid liability is based on respondent’s determination_of_a_deficiency in self- employment_tax and not income_tax for her taxable_year see discussion infra note regarding the nature of the self- employment_tax attachment to letter tax form type tax period date of notice_of_federal_tax_lien the irs received from you form postmarked this is a request for a collection_due_process_hearing you filed this form in response to the col- lection department’s recordation of notices of federal_tax_lien against you relative to the above listed liabilities the statutes for collection of these liabilities were suspended during the hearing process because your request for a hearing was mailed prior to the deadline for timely filing as provided for in sec_6330 the settlement officer in this case had no prior in- volvement with the liabilities in question verification that law and procedure were followed information in the administrative case file and related computer records shows that the irs followed law and procedure in this case the assessments in ques- tion were properly made under sec_6201 and notice_and_demand was sent to you as per sec_6303 you did not pay the liabilities the irs gave you additional opportunities to pay the balances due voluntarily but you failed to do so the collection department recorded the liens to protect the govern- ment’s interest relevant issues raised by the taxpayer on the form you state not self employed sec_3403 and sec_3102 the federal_tax_lien will not be released until the full balances of all the tax years involved are paid in full at your hearing it was discussed that the equity in ms latos’ resi- dence should be liquidated by either refinancing or selling the property balancing efficient collection with the instructiveness of proposed collection actions although the tax_liens are inherently intrusive you have proposed no other method of securing the govern- ment’s interest therefore the liens should remain on file until the balances due in question are fully paid reproduced literally opinion a taxpayer may raise challenges to the existence or the amount of the taxpayer’s underlying tax_liability if the taxpayer did not receive a notice_of_deficiency or did not otherwise have an opportunity to dispute such liability sec_6330 including the tax_liability reported in the return that such taxpayer filed 122_tc_1 where the validity of the underlying tax_liability is properly at issue the court will review the matter on a de novo basis where the validity of the underlying tax_liability is not prop- erly at issue the court will review the determinations of the commissioner of internal revenue for abuse_of_discretion 114_tc_604 114_tc_176 before turning to the position of ms latos in these cases it is important to bear in mind that ms latos and respondent stipulated that it is only the unpaid assessed self-employ- ment tax determined in the notice_of_deficiency as well as interest as provided by law that is at issue for ms latos’ taxable_year it is only the unpaid assessed income_tax due shown in each of the income_tax returns for ms latos’ taxable years and as well as assessed additions to tax and interest as provided by law that is at issue for each of those years and it is only the unpaid assessed income_tax due shown in the return increased by the income_tax attrib- utable to the mathematical error made in that return in calculat- ing the total amount of exemptions allowable as well as assessed additions to tax and interest as provided by law that is at issue for ms latos’ taxable_year it is ms latos’ position that the court should not sustain the determinations with respect to her taxable years through set forth in the respective notices of determination upon which these cases are baseddollar_figure in support of that position ms latos argues that because mr anderson was an employee of the owners of the boats on which he engaged in fishing activities during each of the years through each such owner as mr anderson’s employer is responsible under sec_3403 for paying ms latos’ unpaid and liabili- 13we do not have deficiency jurisdiction over the fica tax or any interest thereon with respect to ms latos’ taxable_year see 54_tc_1402 consequently we do not have jurisdiction over respondent’s determinations in the through notice_of_determination with respect thereto see sec_6330 tiesdollar_figure in further support of her position that the court should not sustain the determinations at issue ms latos argues that respondent abused respondent’s discretion in making those deter- minations because the settlement officer did not verify that all applicable laws and procedures for the collection of employment_taxes have been met in accordance with sec_6330 emphasis added in anderson v commissioner tcmemo_2003_112 ms latos and mr anderson filed a petition with the court in response to a notice_of_determination regarding a notice_of_intent_to_levy with respect to their taxable years through dollar_figure ms latos and mr anderson advanced in anderson essentially the same arguments that ms latos advances in the instant cases in anderson v commissioner supra the court held that ms latos and mr anderson were precluded under sec_6330 from challenging the underlying tax_liability for their taxable_year because they received a notice_of_deficiency for that year in which respondent determined a deficiency in self- employment_tax and failed to file a petition with the court 14ms latos does not contest the respective amounts of ms latos’ unpaid and liabilities 15in the case at docket no 5829-06l ms latos filed a petition with the court in response to the through notice_of_determination regarding a notice of tax_lien with respect to inter alia her taxable years through with respect to that noticedollar_figure for the reasons stated in ander- son v commissioner supra we hold that ms latos may not challenge ms latos’ unpaid liability in anderson v commissioner supra the court further held that because ms latos and mr anderson did not receive a notice_of_deficiency with respect to their taxable_year or their taxable_year and did not otherwise have an opportunity to contest the underlying tax_liability for each such year they were entitled to challenge each such underlying tax_liability in challenging the respective income_tax liabilities for their taxable years and ms latos and mr anderson argued in anderson v commissioner supra as ms latos argues here that the alleged employer of mr anderson during each of 16in anderson v commissioner tcmemo_2003_112 ms latos and mr anderson argued with respect to their taxable_year inter alia that the court did not have jurisdiction over that year because the actions of respondent’s problem resolution office in abating a portion of the self-employment_tax assessed for converted such self-employment_tax to fica tax the court rejected that argument and held that it had jurisdiction over taxable_year because the actions of respondent’s problem resolution office did not change the fact that the liability was assessed as self-employment_tax under the defi- ciency procedures id in anderson v commissioner supra ms latos and mr anderson also challenged the underlying tax_liability for their taxable_year as ms latos does here on the same ground on which they challenged in anderson as ms latos does here the underlying tax_liability for each of the taxable years and viz the alleged employer of mr anderson during each of those years is responsible for paying each of those liabilities as discussed below in anderson the court rejected that argument as to taxable years and id the years and was responsible for paying the respective unpaid income_tax liabilities for those years the court re- jected that argument according to the court the obvious fallacy in petitioners’ reasoning is that the income_tax is petitioners’ obligation in the first instance an employer on the other hand is an inter- mediary or collection agent who may be obligated to withhold amounts from an employee for the employee’s future use as a credit or payment of any income_tax_liability whether mr anderson was self-employed or instead was an employee of the boat owners the fact remains that nothing was withheld from what they paid him thus his gross_receipts from that source are subject_to income_tax in their entirety with no credit for withholding petitioners’ arguments are without substance and constitute nothing more than mere protester type argu- ments which are not worthy of further analysis or review accordingly we hold that petitioners are liable for the income_tax as reported by them for and id ms latos did not receive a notice_of_deficiency with respect to her taxable years and however in anderson v commissioner supra ms latos and mr anderson had the opportunity to dispute the underlying tax_liability for each of those years and they did so albeit unsuccessfully on the record before us we conclude that ms latos may not challenge ms latos’ unpaid liability or ms latos’ unpaid liabilitydollar_figure 17assuming arguendo that we had concluded that ms latos is continued ms latos did not receive a notice_of_deficiency with respect to her taxable_year nor did she otherwise have an opportunity to dispute the underlying tax_liability for that year we shall review that liability on a de novo basis sego v commissioner t c pincite ms latos advances essentially the same arguments here with respect to ms latos’ unpaid liability that she and mr anderson advanced and the court rejected in anderson v commissioner tcmemo_2003_112 with respect to their unpaid income_tax_liability for each of their taxable years and for the reasons stated in anderson continued entitled to challenge the underlying tax_liability for each of her taxable years and we reject her argument with respect to each such liability for the reasons stated in anderson v commissioner supra in this connection we note that ms latos also relies in the instant cases on 541_us_114 a case that the supreme court of the united_states supreme court decided after the court issued anderson ms latos’ reliance on galletti is misplaced the issue presented in galletti was whether the proper assessment of income_tax that a partnership was required to withhold under sec_3403 extended the period of limitations to collect such tax from the partnership’s general partners who were liable for the payment of the partnership’s debts united_states v galletti supra the supreme court held that it did id the supreme court did not hold in galletti that an employer is responsible for paying the income_tax_liability of an employee of such employer id as the united_states court_of_appeals for the second circuit held in 810_f2d_19 2d cir it is clear that the failure of an employer to meet its obligation to withhold income_tax does not in any way lessen the obligation of an employee to pay income_tax indeed we have long since rejected the contrary posi- tion even in the context of a criminal prosecution citations omitted v commissioner supra we reject ms latos’ arguments here with respect to ms latos’ unpaid liabilitydollar_figure in anderson v commissioner supra the court further held that respondent’s appeals officer complied with the verification requirements of sec_6330 and that respondent did not abuse respondent’s discretion in making the determinations at issue in that case for the reasons stated in anderson v commissioner supra we find that the settlement officer involved in each of the instant cases complied with the verification requirements of sec_6330 and that respondent did not abuse respondent’s discretion in making the respective determina- tions over which we have jurisdiction19 in the through notice_of_determination and the notice of determinationdollar_figure 18see also discussion supra note addressing ms latos’ misplaced reliance on united_states v galletti supra 19see supra note 20we reject as baseless ms latos’ argument that the settle- ment officer involved in each of the instant cases did not comply with the verification requirements of sec_6330 because such settlement officer did not verify that all applicable laws and procedures for the collection of employment_taxes have been met emphasis added the instant cases involve the collec- tion of ms latos’ unpaid self-employment_tax liability for her taxable_year and her unpaid income_tax_liability for each of her taxable years and these cases do not involve the collection of employment_tax for any of those years we note that although the self-employment_tax is collected together with the income_tax it is not part of the income_tax itself chatterji v commissioner t c pincite as we indicated in chatterji the self-employment_tax imposed is ‘an additional tax on the income derived by the self-employed continued based upon our examination of the entire record before us we hold that we shall sustain respondent’s respective determina- tions over which we have jurisdiction21 in the through notice_of_determination and the notice_of_determination although respondent does not ask us to impose a penalty on ms latos under sec_6673 we consider sua sponte whether we should impose a penalty on her under that section sec_6673 authorizes the court to require a taxpayer to pay a penalty to the united_states in an amount not to exceed dollar_figure whenever it appears that the taxpayer instituted or maintained a proceeding in the court primarily for delay or that the taxpayer’s position in such a proceeding is frivolous or groundless as discussed above ms latos advances in the instant cases essentially the same arguments with respect to each of her taxable years through that she and mr anderson ad- vanced with respect to their taxable years through in anderson v commissioner tcmemo_2003_112 with respect to her taxable_year at issue here in anderson v commissioner supra the court held that ms latos and mr anderson were precluded under sec_6330 from challenging the continued taxpayer as an employee ’ id citation omitted 21see supra note underlying tax_liability for that year because they received a notice_of_deficiency for that year and failed to file a petition with the court with respect to that notice nonethe- less ms latos continues to challenge here the underlying tax_liability for her taxable_year in the case at docket no 5829-06l with respect to her taxable years and at issue here in anderson v commissioner supra the court reviewed on a de novo basis the underlying tax_liability of ms latos and mr anderson for each of their taxable years and and held that their arguments with respect to those liabili- ties were without substance and constitute nothing more than mere protester type arguments which are not worthy of further analysis or review nonetheless ms latos continues to advance here essentially the same arguments with respect to her taxable years and that she and mr anderson advanced in anderson v commissioner supra with respect to their taxable years and dollar_figure we believe that ms latos instituted and maintained each of the instant cases primarily for delay and that her position with respect to each of her taxable years through is frivo- lous and or groundless although we shall not impose a penalty under sec_6673 on ms latos in the instant cases we 22we found above that ms latos may not challenge the under- lying tax_liability for each of her taxable years and caution her that she may be subject_to such a penalty if in the future she institutes or maintains a proceeding in the court primarily for delay and or her position in any such proceeding is frivolous or groundless see 82_tc_403 72_tc_1126 we have considered all of the contentions and arguments of ms latos that are not discussed herein and we find them to be without merit irrelevant and or moot to reflect the foregoing decision will be entered for respondent in the case at docket no 16522-02l and an appropriate decision will be entered for respondent in the case at docket no 5829-06l


internal_revenue_service department of the treasury number release date index number u i l washington dc person to contact telephone number refer reply to cc fip plr-144081-02 date date legend taxpayer state a date a year a dear this is in reply to your letters dated date and date requesting consent to taxpayer’s revocation of its election under sec_831 of the internal_revenue_code to be taxed on only its investment_income taxpayer is a small_mutual insurance_company organized under the laws of state a on or around date a the principal activity of the taxpayer is that of a small_mutual insurance_company selling fire wind and inland marine insurance taxpayer is subject_to federal_income_tax as an insurance_company under sec_831 taxpayer made the sec_831 election in the first year it was allowed taxpayer’s business has changed significantly since year a first state a has been plagued with very unusual weather in the past five or six years the amount of wind and other weather related claims has dramatically increased second contractors have raised their fees with the increase in properties in need of repair third reinsurers have significantly increased their premiums for taxpayer based on past experience although the costs of the underwriting business are increasing the premiums taxpayer charges its policyholders have remained relatively level due to the highly competitive market sec_831 of the code imposes a tax for each taxable_year on the taxable_income of every insurance_company other than a life_insurance_company sec_831 provides an alternative_tax that applies to an insurance_company other than a life_insurance_company if i the company’s net written premiums or if greater direct written premiums for the taxable_year exceed dollar_figure but do not exceed dollar_figure and ii the company elects the application of sec_831 the alternative_tax for the taxable_year sec_831 provides that for purposes of part ii of subchapter_l except as provided in sec_844 a net_operating_loss as defined in sec_172 shall not be carried a to or from any taxable_year for which the insurance_company is not subject_to the tax imposed by sec_831 or b to any taxable_year if between the taxable_year from which such loss is being carried and such taxable_year there is an intervening taxable_year for which the insurance_company was not subject_to the tax imposed by sec_831 sec_831 further provides the following regarding the effect of making the election the election shall apply to the taxable_year for which made and for all subsequent taxable years for which the requirements are met such an election once made may be revoked only with the consent of the secretary the two sentences quoted above from sec_831 were not in sec_831 as originally added to the code by sec_1024 of the tax_reform_act_of_1986 pub_l_no these sentences were added to the code by section f of the technical_and_miscellaneous_revenue_act_of_1988 tamra pub_l_no the change to sec_831 of the code was retroactively effective for tax years beginning after date the same effective date as applicable to the rest of sec_831 see sec_1019 of tamra and sec_1024 of the tax_reform_act_of_1986 the senate_finance_committee offered the following explanation for the two sentences added to sec_831 by section f of tamra the bill clarifies that the election to be taxed only on investment_income once made and so long as the requirements for the election are meet may be revoked only with the consent of the secretary this clarification reflects congress’ intent that the election not be used as a means of eliminating tax_liability eg by making the election only for years when the taxpayer does not have net operating losses but rather as a simplification for small companies s rep no 100th cong 2d sess as indicated above the character of taxpayer’s business has changed significantly in several ways weather related claims have dramatically increased repair costs now likewise increased reinsurance premiums have increased and due to competition premiums have necessarily remained level in view of the foregoing taxpayer requests that consent be granted to revoke its sec_831 election taxpayer represents that it will not make an election under sec_831 to be taxed only on its investment_income for any of the first five taxable years following the year to which the consent relates taxpayer also represents that it will not claim a net_operating_loss relating to the years it was subject_to sec_831 accordingly consent is hereby granted to taxpayer to revoke its sec_831 election effective for it sec_2002 tax_year no opinion is expressed under other sections of the code and income_tax regulations the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by the appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification and examination a copy of this letter should be attached to the federal_income_tax returns to be filed by taxpayer with respect to the taxable_year with respect to which consent is granted and the next succeeding five taxable years pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative this ruling is directed only to the taxpayer s requesting it sec_6110 of the code provides that it may not be used or cited as precedent sincerely yours s mark s smith chief branch office of associate chief_counsel financial institutions products


internal_revenue_service number release date index number ------------------------------------------------------------ -------------- ------------------------------------------------------ ------------------------------------------- ------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------------- id no ------------- ----------------- telephone number ---------------------- refer reply to cc psi plr-108805-17 date date legend x y z prs state date date date date date ----------------------------------------------------------------------------------------------- --------------------------------------------------- ----------------------------------------------------------------------------------------------- ----------------------------------------------------------------- ----------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------- -------------------------------------- ----------------------------------------------------------------------------------------------- ------------------------------- -------------- ---------------------------- ---------------------- ------------------------ ----------------- ----------------- dear ------------------ this letter responds to a letter dated date submitted on behalf of x requesting a ruling under sec_301_7701-3 and sec_301_9100-3 of the procedure and administration regulations specifically your letter requests the service's consent to change x's classification from an association_taxable_as_a_corporation to a disregarded_entity effective date the information submitted states that on date x was formed as a limited_liability_company under the laws of state at the time of formation x was a wholly- facts plr-108805-17 owned subsidiary of prs and was treated as a disregarded_entity for federal tax purposes prs was formed as a limited_partnership under the laws of state and was a wholly-owned subsidiary of y and was treated as a disregarded_entity for federal tax purposes y is a reit for federal tax purposes x filed form_8832 entity classification election to be classified as an association effective date because y is a reit x’s election to be classified as an association caused x to be treated as a qualified_reit_subsidiary of y in a taxable spin-off transaction on date prs became a wholly-owned subsidiary of z and was treated as a disregarded_entity for federal tax purposes x represents that z is a reit for federal_income_tax purposes effective date x represents that it became a qualified_reit_subsidiary of z on date prs issued profits interests to certain individuals providing services to prs effective date prs became a partnership for federal_income_tax purposes thereby terminating x’s status as a qualified_reit_subsidiary in conjunction with this change in the ownership of x x desires to change its federal tax classification since the sixty month post-election period under sec_301 c iv had not expired x submitted this ruling_request seeking the commissioner’s consent to make an elective change in classification furthermore x intended to make the elective change in entity classification effective date however x can no longer timely file a form_8832 entity classification election to make the election effective as of date law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes elections are necessary only when an eligible_entity does not want to be classified under the default classification or when an eligible_entity chooses to change its classification sec_301_7701-3 provides that except as provided in sec_301 b unless the entity elects otherwise a domestic eligible_entity is i a partnership if it has two or more members or ii disregarded as an entity separate from its owner if it has a single owner sec_301_7701-3 provides that except as provided in sec_301 c iv and v an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 or to change its classification by filing form_8832 entity classification election with the service_center designated on form_8832 plr-108805-17 sec_301_7701-3 provides that an election made under sec_301 c i will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified on the election form the effective date specified on form_8832 cannot be more than days prior to the date on which the election is filed and cannot be more than months after the date on which the election is filed if an election specifies an effective date more than days prior to the date on which the election is filed it will be effective days prior to the date it was filed sec_301_7701-3 provides that if an eligible_entity makes an election under sec_301_7701-3 to change its classification the entity cannot change its classification by election again during the sixty months succeeding the effective date of the election however the commissioner may permit the entity to change its classification by election within the sixty months if more than fifty percent of the ownership interests in the entity as of the effective date of the subsequent election are owned by persons that did not own any interests in the entity on the filing_date or on the effective date of the entity's prior election sec_301_9100-1 provides that the commissioner in exercising the commissioner's discretion may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but not more than months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-2 provides the standards the commissioner will use to determine whether to grant an automatic_extension of time for making certain elections sec_301_9100-3 provides the guidelines for granting extensions of time for making elections that do not meet the requirements of sec_301_9100-2 sec_301 a provides that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely on the information submitted and the representations made we consent to x changing its classification for federal tax purposes less than months after its previous classification change further we conclude that x has satisfied the requirements of sec_301_9100-1 and sec_301_9100-3 as a result x is granted an extension of time of days from the date of this letter to file form_8832 with the appropriate service_center to elect to be classified as a disregarded_entity for federal tax purposes effective date a copy of this letter should be attached to the form_8832 plr-108805-17 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any transaction or item discussed or referenced in this letter specifically no opinion is expressed or implied regarding whether x is otherwise eligible to make the election further no opinion is expressed with regard to whether y or z qualifies as a reit under subchapter_m of the code or whether x was a qualified_reit_subsidiary of y or z this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent sincerely associate chief_counsel passthroughs special industries laura c fields by laura c fields senior technician reviewer branch passthroughs special industries enclosures copy of letter copy for sec_6110 purposes


id office uilc cca_2010082311311937 ---------- number release date from ------------------- sent monday date am to -------------------- cc ---------------------------------------- subject re aar reallocation extended need to extend the tmp would need to execute the form_9248 in order to extend his right to enforce the issuance of refunds the extension of the section period would extend the period under section d for us to voluntarily issue such refunds but the tmp would have no right to enforce the issuance after the two year period under section a expires ------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- ------------------------------


internal_revenue_service department of the treasury index no number release date p o box ben franklin station washington dc person to contact telephone number refer reply to cc dom p si - plr-112014-99 date legend taxpayer state city project corp corp lp1 lp2 agency state law program department agreement release b c d plr-112014-99 dear this letter responds to a letter dated b requesting a ruling on behalf of taxpayer under sec_42 of the internal_revenue_code regarding the proposed redemption of tax-exempt_bonds issued for the project facts taxpayer a state limited_liability_company was formed for the purpose of acquiring constructing owning and operating a project consisting of c dwelling units in city the current members of taxpayer are corp corp lp1 and lp2 a portion of the development costs for the project will be financed by tax-exempt_bonds which were issued by agency under the volume_cap imposed by sec_146 the bond resolution requires that the proceeds of the bond issuance be used to make a mortgage loan for the purpose of financing the construction of the project under local law an additional incentive exists for the development of housing projects qualifying for sec_42 tax_credits real_property tax relief is made available under state law and the program the form of property_tax relief used for the project is the issuance by the department of non-interest bearing certificates which may be sold to owners of other real_property who may use them to secure property_tax relief on their properties under the terms of a program agreement entered into on d between the department and taxpayer the certificates are issuable upon the issuance by the department of a release which the department is required to issue upon its receipt of a certificate of occupancy and its determination that the project’s rehabilitation is completed in accordance with certain standards and regulatory requirements one of the regulatory requirements for the issuance of the certificates is that the project be debt-free this requirement has been incorporated into the program agreement between the department and taxpayer accordingly pursuant to the requirements of the program the sale of the certificates will require an immediate application of the proceeds thereof to redeem the bonds tax-exempt_bond proceeds representing percent or more of the aggregate basis of the project building and the land on which the project is located will be spent on or before the date on which the project is placed_in_service the tax-exempt_bonds will be redeemed on or after the date that the project is placed_in_service for all purposes under sec_42 ruling requested provided the requirements of sec_42 are otherwise satisfied with respect to the project the redemption of the tax-exempt_bonds at any time on or after the date on plr-112014-99 which the project is placed_in_service for all purposes under sec_42 will not in and of itself permit a determination that the project was not financed with the tax-exempt_bonds under sec_42 law and analysis sec_42 provides a tax_credit for investment in low-income_housing buildings placed_in_service after date sec_42 provides that the amount of credit determined under sec_42 for any taxable_year with respect to any building shall not exceed the housing_credit_dollar_amount allocated to such building under sec_42 sec_42 provides that an allocation generally shall be taken into account under sec_42 only if it is made not later than the close of the calendar_year in which the building is placed_in_service sec_42 provides that the aggregate housing_credit_dollar_amount which a housing_credit_agency may allocate for any calendar_year is the portion of the state housing_credit ceiling allocated under sec_42 for such calendar_year to such agency sec_42 provides that sec_42 does not apply to any portion of the credit otherwise allowable under sec_42 which is attributable to eligible_basis financed by any obligations the interest on which is exempt from tax under sec_103 if -- i such obligation is taken into account under sec_146 and ii principal payments on such financing are applied within a reasonable period to redeem obligations the proceeds of which were used to provide such financing sec_42 provides that if percent or more of the aggregate basis of any building and the land on which the building is located is financed with such tax- exempt obligations described in sec_42 sec_42 does not apply to any portion of the low-income_housing_credit allowable under sec_42 with respect to such building in the present case the taxpayer represents that tax-exempt_bond proceeds representing percent or more of the aggregate basis of the project building and the land on which the project is located will be spent on or before the date on which the project is placed_in_service taxpayer further represents that the tax-exempt_bonds will be redeemed on or after the date that the project is placed_in_service for all purposes under sec_42 plr-112014-99 accordingly based solely on the representations and relevant law as set forth above we conclude that the redemption of the tax-exempt_bonds at any time on or after the date when the project is placed_in_service for all purposes under sec_42 will not in and of itself result in a determination that the project was not financed with the tax- exempt bonds under sec_42 no opinion is expressed or implied regarding the application of any other provision of the code or income_tax regulations specifically we express no opinion on whether the project qualifies for the low-income_housing tax_credit under sec_42 nor the validity of the project's costs included in eligible_basis further we express no opinion on whether the project is a qualified_low-income_housing_project in accordance with the power_of_attorney filed with the ruling_request we are sending a copy of the letter_ruling to taxpayer’s authorized representatives this letter_ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours harold e burghart assistant to the chief branch office of the assistant chief_counsel passthroughs and special industries enclosure copy for purposes


internal_revenue_service number release date index numbers ---------------------------------- ----------------------------------------------- -------------------------------------- ------------------------------ department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ---------------- telephone number -------------------- refer reply to cc psi b03 plr-114630-14 date date legend ------------------------------------------------------------------------------------------------ ------------------------ ------------------------ ------------------------------------------------------------------------------------------------ -------------------------------- --------------- ------------------- ----------------- ------------------ ------ x a b state date date date year dear ---------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x by x’s authorized representative requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_754 of the internal_revenue_code facts plr-114630-14 x was formed as a limited_liability_company under state law on date on date a a partner of x died at that time a’s interest in x transferred to b x filed its income_tax return year for year x relied on its tax advisor when preparing that return and the advisor did not inform x as to the availability of an election under sec_754 in date x became aware of its failure to make an election under sec_754 x now requests an extension of time under sec_301_9100-1 and sec_301_9100-3 to make a sec_754 election to adjust the basis of its assets law and analysis sec_743 provides in pertinent part that in the case of a transfer of an interest in a partnership by sale_or_exchange or upon the death of a partner a partnership with respect to which an election provided in sec_754 is in effect will increase the adjusted_basis of the partnership property by the excess of the basis to the transferee partner of his interest in the partnership over his proportionate share of the adjusted_basis of the partnership property or decrease the adjusted_basis of the partnership property by the excess of the transferee partner’s proportionate share of the adjusted_basis of the partnership property over the basis of his interest in the partnership sec_743 further provides that such increase or decrease shall constitute an adjustment to the basis of partnership property with respect to the transferee partner only sec_743 provides that the allocation_of_basis among partnership properties where sec_743 is applicable shall be made in accordance with the rules provided in sec_755 sec_754 provides that if a partnership files an election in accordance with regulations prescribed by the secretary the basis of partnership property is adjusted in the case of a distribution_of_property in the manner provided in sec_734 and in the case of a transfer of a partnership_interest in the manner provided in sec_743 such an election shall apply with respect to all distributions of property by the partnership and to all transfers of interests in the partnership during the taxable_year with respect to which the election was filed and all subsequent taxable years a transfer of an interest in a partnership on the death of a partner is eligible for the sec_754 election the value of the partnership_interest reported on the estate_tax_return including discounts is the value used to determine the basis of the partnership_interest and the adjustments to basis under sec_743 and sec_754 see generally sec_1_1014-3 of the income_tax regulations sec_1_754-1 of the income_tax regulations provides that an election under sec_754 to adjust the basis of partnership property under sec_734 and sec_743 with respect to a distribution_of_property to a partner or a transfer of an interest in a plr-114630-14 partnership is made in a written_statement filed with the partnership return for the taxable_year during which the distribution or transfer occurs for the election to be valid the return must be filed not later than the time prescribed by sec_1_6031_a_-1 including extensions thereof for filing the return for that taxable_year under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose deadline is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to make an election under sec_754 effective for its year taxable_year and thereafter the election should be made in a written_statement filed with the appropriate service_center for association with x’s year tax_return a copy of this letter should be attached to the sec_754 election this ruling is contingent on x adjusting the basis of its properties to reflect any sec_734 or sec_743 adjustments that would have been made if the sec_754 election had been timely made these basis adjustments must reflect any additional_depreciation that would have been allowable if the sec_754 election had been timely made regardless of whether the statutory period of limitation on assessment or filing a claim_for_refund has expired for any year subject_to this grant of late relief any depreciation deduction allowable for an open_year is to be computed based upon the remaining useful_life and using property basis as adjusted by the greater of any depreciation deduction allowed or plr-114630-14 allowable in any prior year had the sec_754 election been timely made additionally the partners of x must adjust the basis of their interests in x to reflect what that basis would be if the sec_754 election had been timely made regardless of whether the statutory period of limitation on assessment or filing a claim_for_refund has expired for any year subject_to this grant of late relief specifically the partners of x must reduce the basis of their interests in x in the amount of any additional_depreciation that would have been allowable if the sec_754 election had been timely made except as expressly provided herein we express or imply no opinion concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the ruling_request it is subject_to verification on examination sincerely associate chief_counsel passthroughs special industries by ______________________________________ holly porter chief branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index numbers ------------------------------------------------------- ------------------------------------------------------------ ------------------------------------------------- -------------------------------------------------- -------------------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------- id no ------------------ telephone number ---------------------- refer reply to cc psi b01 plr-140085-12 date february legend x ----------------------------------------------------- ------------------------------------------------------- d country ------------------------ ----------------------- dear ------------- this is in response to a letter dated date submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a partnership for federal tax purposes facts according to the information submitted x was formed on d under the laws of country x intended to be treated as a partnership for federal tax purposes effective d however x inadvertently failed to timely file form_8832 entity classification election to be treated as a partnership for federal tax purposes law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with at least two members can elect to be classified as either an association or a partnership plr-140085-12 sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association if all members have limited_liability unless the entity makes an election to be treated otherwise a foreign eligible_entity with two or more members having limited_liability may elect to be treated as a partnership pursuant to the rules of sec_301 c sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date the form is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards that the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides rules for requesting extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion based solely on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to make an election to be treated as a partnership for federal tax purposes effective d x should make the election by filing a properly executed form_8832 with the appropriate service_center a copy of this letter should be attached to the form 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 plr-140085-12 this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely curt g wilson associate chief_counsel passthroughs special industries by david r haglund david r haglund branch chief branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc