department of the treasury employer_identification_number contact person - id number contact telephone number uil internal_revenue_service p o box cincinnati oh number release date date date legend fellowship name fellowship name country b c d e university g language ww number range x number range y number range z dollar amount dear you asked for advance approval of your scholarship grant procedures under internal_revenue_code sec_4945 this approval is required because you are a private_foundation that is exempt from federal_income_tax you requested approval of your scholarship program to fund the education of certain qualifying students our determination we approved your procedures for awarding scholarships based on the information you submitted and assuming you will conduct your program as proposed we determined that your procedures for awarding scholarships meet the requirements of code sec_4945 as a result expenditures you make under these procedures won't be taxable also awards made under these procedures are scholarship or fellowship grants and are not taxable to the recipients if they use them for qualified_tuition_and_related_expenses subject_to the limitations provide in code sec_117 letter catalog number 58263t description of your request your letter indicates you will operate one program comprised of two different fellowships one is called the b and the other is called the c both fellowships are administered identically with the same application criteria screening process and procedures recipients are selected from the same pool of applicants for each the only difference between the fellowships is the eligibility requirement explained below the purpose of your program is to award fellowships enabling recipients to pursue graduate-level research or study at universities generally applicants must be students from united_states universities to study at d universities or vise versa to be eligible applicants must complete and meet the following minimum requirements e e submit and application packet be admitted to a graduate program as a degree_candidate at an accredited institution_of_higher_education in the united_states or d have a well-defined research or scholarly project that necessitates an exchange to the host country but the applicant’s course of study is not limited to any particular area except that the fellowship_grant may not be used to support elementary or introductory study of either g or english as a language be proficient in the english language and have completed an undergraduate bachelor’s degree by the start of the fellowship e e of these applicants to be eligible for the c recipients must be either a graduate student from d going to study at e or a graduate student from e going to study in d applicants who are disqualified_person s within the meaning of internal_revenue_code sec_4946 or who are related to a screening committee member are not eligible to receive fellowships from your foundation applications will be screened by a committee of individuals with diverse academic backgrounds the screening committee will evaluate the applicants and forward recommendations to your board_of trustees the committee will be selected and approved by your board_of trustees trustees may serve on your screening committee one of the screeners serves as the committee chair screeners read the applications and assign a score to each scores are based on the following academic performance three reference letters validity of the proposal importance of the proposed research more weight is given to graduate students further along in their programs and research financial need will not be considered applications will be considered without regard to age race color religion gender national origin sexual orientation and or physical disability letter catalog number 58263t the screeners send their scores to the chair who compiles them into a grid and averages the three scores for each applicant the chair rearranges the grid in declining order of average score and sends the grid to the other two screeners for approval once all three screeners approve the grid the chair forwards it along with a one-paragraph synopsis of each applicant’s proposal to the board secretary the board discusses the recommendations and makes the final decisions no political influence is allowed the board members may not correspond with the screeners about candidates nor do the screeners consider materials outside the application if the screening committee’s ranking of applicants shows an imbalance in the number of applicants studying in each country the board may designate the next-highest ranked if any applicant studying in the country that is less represented as a specific alternate selected applicant did not accept the fellowship then the board will award the fellowship to the specific alternate final recipients will be chosen by the board_of trustees your fellowships are publicized through announcements mailed to various universities and your website approximately w applications are expected annually you will award between x fellowships annually with intent to increase this number to y in subsequent years each recipient may receive up to z all fellowships are non-renewable but recipients may reapply in consecutive years as long as they meet the eligibility requirements the number and amount of fellowships to be offered is determined each year by your board_of trustees depending on your income all fellowship awards are paid directly to the recipient awards may be used to pay research and study costs including tuition and qualified_educational_expenses and travel to and from the research or study site awards may not be used to pay for travel or costs of spouses or partners of recipients recipients are required to submit reports at least annually describing the progress of their research or study and accounting for_the_use_of the funds a faculty_member supervising the recipient or another appropriate university official must approve the report recipients are required to submit a final report to you upon completion of their research or study your board_of trustees shall be responsible for the following publicizing the availability of the program and make the application materials available receive acknowledge and process all fellowship application verify eligibility of applicants select and notify recipients for awards notify non-recipients confirm enrollment of recipients a the approved institution_of_higher_education keep permanent records of the meetings and actions of the screening committee account for all funds disburse the funds on behalf of your foundation receive and review progress and final reports received from recipients on their progress and use of grant funds investigate any diversions of funds from their intended purpose and take all reasonable and appropriate steps to recover diverted funds if any you will arrange to receive and review grantee reports annually and upon completion of the purpose for which the grant was awarded investigate diversion of funds from their intended purposes and take all reasonable and appropriate steps to recover the letter catalog number 58263t diverted funds ensure other grant funds held by a grantee are used for their intended purposes and withhold further payments to grantees until you obtain grantees’ assurances that future diversions will not occur and that grantees will take extraordinary precautions to prevent future diversion from occurring you will maintain all records relating to individual grants including information obtained to evaluate grantees identify a grantee is a disqualified_person establish the amount and purpose of each grant and establish that you undertook the supervision and investigation of grants described above basis for our determination the law imposes certain excise_taxes on the taxable_expenditures of private_foundations code sec_4945 a taxable_expenditure is any amount a private_foundation pays as a grant to an individual for travel study or other similar purposes however a grant that meets all of the following requirements of code sec_4945 is not a taxable_expenditure e e the foundation awards the grant on an objective and nondiscriminatory basis the irs approves in advance the procedure for awarding the grant the grant is a scholarship or fellowship subject_to the provisions of code sec_117 the grant is to be used for study at an educational_organization described in code sec_170 other conditions that apply to this determination e e e this determination only covers the grant program described above this approval will apply to succeeding grant programs only if their standards and procedures don't differ significantly from those described in your original request this determination applies only to you it may not be cited as a precedent you cannot rely on the conclusions in this letter if the facts you provided have changed substantially you must report any significant changes to your program to the cincinnati office of exempt_organizations at internal_revenue_service exempt_organizations determinations p o box cincinnati oh e you cannot award grants to your creators officers directors trustees foundation managers or members of selection committees or their relatives letter catalog number 58263t e e all funds distributed to individuals must be made on a charitable basis and further the purposes of your organization you cannot award grants for a purpose that is inconsistent with code sec_170 you should keep adequate_records and case histories so that you can substantiate your grant distributions with the irs if necessary we’ve sent a copy of this letter to your representative as indicated in your power_of_attorney please keep a copy of this letter in your records if you have questions please contact the person listed at the top of this letter sincerely holly o paz director exempt_organizations rulings and agreements enclosures notice redacted copy of letter letter catalog number 58263t


t c memo united_states tax_court theodore major green and jacqueline green petitioners v commissioner of internal revenue respondent docket no filed date theodore major and jacqueline green pro sese gavin l greene for respondent memorandum opinion swift judge this matter is before us on respondent’s motion for summary_judgment under rule unless otherwise indicated all section references are to the internal_revenue_code in effect for and all rule references are to the tax_court rules_of_practice and procedure the issues for decision are whether taxable social_security_benefits petitioner jacqueline green received in should be treated as nontaxable workmen’s compensation benefits and whether petitioners may deduct from income dollar_figure relating to a dollar_figure damage award judgment that jacqueline green never received and that has now been discharged in bankruptcy hereinafter references to petitioner in the singular are to petitioner jacqueline green background at the time the petition was filed petitioners resided in moorpark california from to date mr green worked as a tax_auditor for respondent petitioner’s social_security_benefits prior to date petitioner worked on a general motors assembly line in november of petitioner was injured while shopping for groceries this was unrelated to her employment at general motors corporation general motors the injury was caused by a shopping cart under the control of another person injuries petitioner sustained therefrom apparently prevented petitioner from further assembly line work at general motors petitioner continued to work for general motors but as a decal assembler on date petitioner filed a lawsuit for personal injury damages against the person who was pushing the shopping cart on or about date petitioner was involved in another accident this time while at work at general motors as a result of which petitioner sustained additional injuries petitioner’s injuries required surgery and left her unable to work on date petitioner filed a claim for social_security disability benefits and on date petitioner began receiving social_security disability benefits in addition to her claim for social_security disability benefits petitioner filed a claim for california workmen’s compensation benefits the record does not reflect that petitioner ever received any benefits under her workmen’s compensation claim on date petitioner obtained a dollar_figure default judgment for personal injury damages against the person who was pushing the shopping cart that injured petitioner in on or about date in a bankruptcy proceeding the person against whom petitioner obtained the default judgment was discharged of liability to pay the dollar_figure judgment petitioner had obtained and petitioner never collected anything on the judgment petitioner never included any portion of the dollar_figure judgment in taxable_income and the record does not establish that petitioner had any_tax basis in the uncollected judgment on their joint federal_income_tax return filed with respondent petitioners reported as taxable dollar_figure of the social_security_benefits petitioner received in and petitioners claimed a dollar_figure casualty_loss deduction relating to the above dollar_figure uncollected judgment petitioners also attached to their tax_return a statement that they intended to deduct the balance of the dollar_figure uncollected judgment over the course of the next years -- dollar_figure in each year -- as a loss carryforward under sec_172 for the year at issue herein petitioners filed a joint federal_income_tax return reported thereon dollar_figure as the taxable_portion of the social_security_benefits petitioner received and claimed the dollar_figure loss carryforward mentioned above relating to petitioner’s dollar_figure uncollected judgment after an audit of petitioners’ federal_income_tax return on date respondent mailed to petitioners a notice_of_deficiency reflecting a dollar_figure tax_deficiency for based on a recalculation of the portion of social_security disability benefits petitioner received in that was taxable on date petitioners timely mailed and postmarked a petition disputing the dollar_figure tax_deficiency respondent had determined on the ground that the entire amount petitioner received in as social_security disability benefits should be treated as nontaxable workmen’s compensation benefits under sec_104 on date respondent filed an answer alleging an increase to dollar_figure in the tax_deficiency determined against petitioners for on the ground that the dollar_figure loss deduction petitioners claimed relating to petitioner’s uncollected judgment was not allowable based on the disallowance of the dollar_figure loss deduction and the resulting increase in petitioners’ income respondent also recalculated and increased the portion of the social_security disability benefits petitioner received in that was taxable also in his answer respondent asserted a dollar_figure sec_6662 accuracy-related_penalty against petitioners for on date respondent filed under rule c a motion for entry of order that undenied allegations in answer be deemed admitted petitioners did not file a reply to respondent’s answer or a response to respondent’s rule c motion and on date we granted respondent’s rule c motion on date respondent filed the instant motion for summary_judgment discussion summary_judgment when no material fact remains at issue we may grant summary_judgment as a matter of law rule b fla country clubs inc v commissioner 122_tc_73 affd on other grounds 404_f3d_1291 11th cir because of the parties’ admissions and deemed admissions as to material facts no material fact remains at issue social_security_benefits generally taxpayers who file a joint_return and receive social_security_benefits and whose modified_adjusted_gross_income plus half of social_security_benefits received in a year exceeds dollar_figure are to include in taxable_income a portion of the social_security_benefits received in a year sec_86 b and c b generally social_security disability benefits are taxed in the same manner as social_security_benefits sec_86 joseph v commissioner tcmemo_2003_19 benefits received under a workmen’s compensation statute or other statute authorizing benefits in the nature of workmen’s compensation may not be included in income see sec_104 mcdowell v commissioner tcmemo_1997_500 a statute providing for payment of benefits that are not related to an injury incurred in the course of employment is not considered to be a statute in the nature of workmen’s compensation 804_f2d_553 9th cir affg 82_tc_630 and tcmemo_1985_388 the social_security act provides for disability benefits for an injury regardless of whether the injury occurred in the course of employment see u s c sec_423 petitioner’s social_security disability benefits received in were provided to petitioner under the social_security act because the social_security act is not a statute in the nature of workmen’s compensation petitioners must include in gross_income for dollar_figure of the dollar_figure in social_security disability benefits that petitioner received in as per the calculation provided under sec_86 sec_165 deduction sec_165 provides a deduction from income for taxpayers who incur an uncompensated loss relating to a trade_or_business to a transaction entered into for profit or to a casualty resulting in an uncompensated loss of property petitioner’s dollar_figure uncollected judgment involving the shopping cart was personal in nature and had no connection with petitioner’s trade_or_business or with a transaction entered into for profit petitioner may not deduct under sec_165 or any portion of petitioner’s uncollected judgment further the amount of a casualty_loss deduction under sec_165 which applies to property is limited to the lesser_of the reduction in fair_market_value as a result of the casualty or the property’s adjusted tax basis godwin v commissioner tcmemo_2003_289 affd 132_fedappx_785 11th cir sec_1_165-7 income_tax regs generally adjusted_basis refers to the amount_paid for property increased and decreased by various adjustments such as cost of improvements and depreciation sec_165 sec_1011 sec_1016 sec_1_1011-1 a income_tax regs the above tax basis limitation set forth in the regulations prevents petitioners herein from obtaining a casualty_loss deduction relating to petitioner’s uncollected judgment petitioner did not include any portion of the dollar_figure uncollected judgment in income and did not establish any_tax basis therein no sec_165 loss deduction is allowable with respect thereto in consolidated docket nos and petitioners litigated before us for and the same issues raised herein we held that petitioner’s social_security disability benefits are taxable and that petitioners may not deduct under sec_165 or any portion of the dollar_figure uncollected judgment see green v commissioner tcmemo_2006_39 petitioners’ appeal thereof is currently pending in the u s court_of_appeals for the ninth circuit accuracy-related_penalty under sec_6662 and b a taxpayer who has an underpayment_of_tax may be liable for a penalty of percent of the underpayment_of_tax attributable to negligence or disregard of the federal_income_tax rules or regulations d isregard of rules and regulations includes careless reckless or intentional_disregard_of_rules_and_regulations sec_6662 respondent bears the burden_of_proof in connection with the sec_6662 penalty rule a respondent has met his burden_of_proof in light of mr green’s work as a tax_auditor for respondent and in light of the relatively straightforward adjustments we sustain herein we sustain respondent’s imposition of the dollar_figure accuracy-related_penalty for the reasons stated we shall grant respondent’s motion for summary_judgment an appropriate order and decision will be entered for respondent


a signiticant index no 06-u0 department of the treasury internal_revenue_service washington d c tax exempt and os government entities division sep company dear this letter constitutes notice that your request for a waiver of the minimum_funding_standard for the plan for the plan_year ending subject_to the condition that the company makes sufficient contributions to meet the minimum_funding_standard for the plan for the plan years ending through standard by without requesting a waiver of the minimum_funding respectively has been granted through you agreed to this condition in a letter dated date if the condition is not met the waiver for the plan_year ending is retroactively null and void this conditional waiver has been granted in accordance with sec_412 of the code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa’ ‘the amount for which this conditional waiver has been granted is equal to the contribution that would otherwise be required to reduce the balance it in the funding_standard_account to zero as of the company received a waiver of the minimum_funding_standard for the plan for the plan_year ending required to satisfy the minimum_funding_standard for the plan for the plan years ending subject_to the condition that contributions and be timely made documentation provided with the _ current request shows full compliance with this condition the company is a manufacturer of narrow fabric products both elastic and non-elastic primarily for the intimate apparel industry its major customers are multinational apparel companies the current financial hardship was brought on by a decline during the last decade in demand by the intimate apparel market for domestically produced textiles from increased from dollar_figure company's sales volume fell from to two customers in to dollar_figure the due in part to the bankruptcy of in in order to affect a recovery_of its business the company has taken a number of steps to improve its financial condition these steps included - a reduction in production personnel and expenses estimated to save more than on an annual basis a broadening of its product mix new marketing initiatives aimed toward new medical and industrial markets a widening of its customer base and the amendment of the plan to cease benefit accruals as of the company's cash-flow projections show stabilized sales and a positive net_income in future years the company believes it has a reasonable plan in place for keeping the business successful furthermore current economic conditions in the u s where the dollar is at historic lows relative to foreign_currencies should improve the marketability of products manufactured domestically _lt is obvious from the financial information provided by the company that it has experienced a substantial business hardship while it is not clear that a financial turnaround will take place it is clear that the company will not be able to meet the minimum_funding_standard for the plan_year ending without compromising its ability to maintain ongoing operations because the company’ ss financial recovery is not certain and because the plan is only funded ona current_liability basis the request for a waiver of the minimum_funding_standard for the plan for the plan_year ending condition described above your attention is called-to sec_412 of the code and sec_304 of erisa which describe the consequences that would result in the event the plan is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived funding deficiencies remain unamortized please note that any amendment to a profit sharing plan or any other retirement plans covering employees covered by the plan maintained by the company to increase the liabilities of those plans would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa similarly the establishment of has been granted subject_to the _ a new profit sharing plan or any other retirement_plan by the company covering employees covered by the plan would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa this ruling j is directed only to the taxpayer that requested it sec_6110 kx3 of the code provides that it may not be used or cited by others as precedent when filing form_5500 for the plan_year ending september letter should be entered on schedule b actuarial information for this reason we suggest that you furnish a copy of this letter to the enrolled_actuary who is responsible for the completion of the schedule b the date of this ' we have sent a copy of this letter to the manager ‘to the manager _ and to your authorized representative pursuant to a power_of_attorney on file in this offi ice if you require further assistance in this matter please contact ’ sincerely yours lan david m ziegler manager ep actuarial group


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi 1-plr-151813-02 date dec legend x d1 dear this responds to a letter dated date together with subsequent correspondence submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts x was incorporated on d1 x intended to be treated as an s_corporation for federal_income_tax purposes effective on d1 but the s election was not timely filed law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective if an s election is made within the first two and one-half months of a corporation’s taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made if the election is made after the first two and one-half months of a corporation’s taxable_year then the corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made plr-151813-02 sec_1362 provides that if no election is made pursuant to sec_1362 or if made the election is made after the date prescribed for making such an election and the secretary determines there was reasonable_cause for the failure to timely make the election then the secretary may treat such an election as timely made for such taxable_year and effective as of the first day of that tax_year x did not file a timely election to be treated as an s_corporation under sec_1362 effective on d1 x has however established reasonable_cause for not making a timely election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and representations made and provided that x otherwise qualifies as a subchapter_s_corporation we conclude that x will be recognized as an s_corporation effective d1 within days from the date of this letter x should submit a properly completed form_2553 with a copy of this letter attached to the relevant service_center except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer 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 representative s dianna k miosi sincerely dianna k miosi chief branch associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes original form_2553


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi b03-plr-155917-01 date date legend p q a d1 d2 d3 dear this letter responds to a letter dated date and subsequent correspondence requesting a ruling under sec_301_9100-3 of the procedure and administration regulations that p be granted an extension of time to elect to treat q as a qualified_subchapter_s_subsidiary qsub effective d2 facts according to the information submitted p elected on d1 to be treated as a s_corporation under sec_1362 of the internal_revenue_code on d2 p formed q for the purpose of carrying on the business of a an unrelated corporation that p intended to acquire on d3 p caused q to acquire all of the assets of a p intended to elect effective d2 to treat q as a qsub under sec_1361 however the parties responsible for filing the election failed to designate which of the parties would file the election and inadvertently the election was not filed timely law sec_1362 generally provides that a small_business_corporation may elect to be an s_corporation sec_1361 defines a qsub as a domestic_corporation which is not an ineligible_corporation if percent of the stock of the corporation is owned by the s_corporation and the s_corporation elects to treat the corporation as a qsub sec_1_1361-3 prescribes the time and manner for making an election to be classified a qsub sec_1_1361-3 provides that an election to treat an eligible subsidiary as a qsub may be effective up to two months and days prior to the date the election is filed or not more than months after the election is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except 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 sec_301_9100-3 provides 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 representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied accordingly p is granted an extension of time of days from the date of this letter to file form_8869 qualified_subchapter_s_subsidiary with the appropriate service_center to elect effective d2 to treat q as a qsub a copy of this letter should be attached to the form_8869 except for the specific rulings above we neither express nor imply any opinion concerning the federal_income_tax consequences of the facts of this case under any other provision of the internal_revenue_code this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent sincerely s william p o’shea acting associate chief_counsel passthroughs and special industries enclosures copy for sec_6110 purposes copies of this letter cc


department of the treasury internal_revenue_service washington d c tax_exempt_and_government_entities_division apr uniform issue list tep ba attn legend taxpayer a taxpayer b ira w ira x roth_ira y roth_ira z company q dear -_ this is in response to a ruling_request dated date in which you request relief under sec_301_9100-3 of the procedure and administration regulations the following facts and representations support your ruling_request taxpayers a and b maintained iras w and x respectively traditional individual_retirement_arrangements described in sec_408 of the internal_revenue_code code with company q in date following the advice of a company q financial advisor taxpayers a and b converted iras w and x into roth iras y and z respectively also with company q company q advised taxpayer a and b that these conversions had to be done by the end of calendar_year even though calculations had not been completed to assure eligibility per the dollar_figure big_number adjusted_gross_income agi requirement at this time company q stated that if taxpayer a and b’s joint agi should total greater than dollar_figure big_number recharacterization could be easily accomplished via submission of a form available from company q upon request neither company q nor company q’s recharacterization form mentioned a deadline on date taxpayer a and b received approval for a four-month extension to file their federal_income_tax return the tax_return submitted on date reflected an agi in excess of dollar_figure big_number taxpayer a and b reasoned that they had until the end of the year in which they submitted their tax_return to perform the required recharacterization back from roth iras to traditional iras taxpayers a and b filed a joint calendar_year federal form_1040 is not a closed tax_year during the first week of november via telephone contact with a representative of company q taxpayer a and b obtained forms for recharacterization of roth_ira y and z back to traditional iras respectively subsequently upon telephone contact with company q for clarification of information requested in the recharacterization forms taxpayers a for - their recharacterization s and company q could not provide assistance in the matter deadline advised passed were they and had the b as of the date of this ruling_request taxpayers a and b have not recharacterized their roth iras y and z as traditional iras based on the above you request the following letter_ruling that taxpayer a and b are granted a period not to exceed sixty days from the date of this ruling to recharacterize their respective roth iras y and z as traditional iras with respect to your request for relief under sec_301_9100-3 of the regulations sec_408a of the code and sec_1_408a-5 of the income_tax regulations provide that except as otherwise provided by the secretary a taxpayer may elect to recharacterize an ira contribution made to one type of ira as having been made to another type of ira by making a trustee-to-trustee transfer of the ira contribution plus earnings to the other type of ira a recharacterization the ira contribution is treated as having been made to the transferee ira and not the transferor ira under sec_408a and sec_1_408a-5 this recharacterization election generally must occur on or before the date prescribed by law including extensions for filing the taxpayer's federal_income_tax return for the year of contribution in sec_1_408a-5 of the regulations question and answer-6 describes how a taxpayer makes the election to recharacterize the ira contribution to recharacterize an amount that has been converted from a traditional_ira to a roth_ira the taxpayer must notify the roth_ira trustee of the taxpayer's intent to recharacterize the amount the taxpayer must provide the trustee and the transferee trustee if different from the transferor the recharacterization and the trustee must make the transfer information sufficient specified trustee effect with that to is sec_1_408a-4 q a-2 provides in summary that an individual with modified_adjusted_gross_income in excess of dollar_figure big_number for a taxable_year is not permitted to convert an amount to a roth_ira during that taxable_year sec_1_408a-4 q a-2 further provides in summary that an individual and his spouse must file a joint federal tax_return to convert a traditional_ira to a roth_ira and that the modified_adjusted_gross_income subject_to the dollar_figure big_number limit for a taxable_year is the modified agi derived from the joint_return using the couple's combined income sec_301_9100-1 and of the procedure and administration regulations in general provide guidance concerning requests for relief submitted to the service on or after date sec_301_9100-1 of the regulations provides-that-the commissioner of the internal_revenue_service in his discretion may grant a reasonable extension of the time fixed by a regulation a revenue_ruling a ‘revenue procedure a notice or an announcement published in the internal revenue bulletin-for the making of an election or application_for relief in respect of tax under - among others subtitle a of the code sec_301_9100-2 lists certain elections for which automatic extensions of time to file are granted sec_301_9100-3 of the regulations generally provides guidance with respect to the granting of relief with respect to those elections not referenced in sec_301_9100-2 the relief requested in this case is not referenced in sec_301_9100-2 sec_301_9100-3 of the regulations provides that applications for relief that fall within sec_301_9100-3 will be granted when the taxpayer provides sufficient evidence including affidavits described in sec_301 -9100-3 e to establish that the taxpayer acted reasonably and in good_faith and granting relief would not prejudice the interests of the government sec_301_9100-3 of the regulations provides that a taxpayer will be deemed to have acted reasonably and in good_faith i if its request for sec_301_9100-1 relief is filed before the failure to make a timely election is discovered by the service ii if the taxpayer inadvertently failed to make the election because of intervening events beyond the taxpayers control iii if the taxpayer failed to make the election because after exercising reasonable diligence the taxpayer was unaware of the necessity for the election iv the taxpayer reasonably relied upon the written advice of the service or v the taxpayer reasonably relied tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election tax professional including qualified on a a sec_301_9100-3 of the regulations provides that ordinarily the interests of the government will be treated as prejudiced and that ordinarily the service will not grant relief when tax years that would have been affected by the election had it been timely made are closed by the statute_of_limitations before the taxpayer’s receipt of a letter_ruling granting relief under this section in this case taxpayers a and b were ineligible to convert iras w and x to roth iras y and z also company q was aware that taxpayers a and b were potentially subject_to the dollar_figure agi limit and might be required to recharacterize their conversion s but failed to inform taxpayer a and b of the deadline to do this therefore it is necessary to determine whether under this set of facts taxpayers a and taxpayer b are eligible for relief under the provisions of sec_301_9100-3 of the regulations with respect to your request for relief we believe that based on the information _ submitted and the representations contained herein the requirements of sec_301_9100-1 and sec_301_9100-3 of the regulations have been met and that you have acted reasonably and in good_faith with respect to making the election to recharacterize your roth iras-as traditional iras specifically the service has concluded that you have met the requirements of clauses i and v of section b of the regulations therefore you are granted an extension of sixty days from the date of the - issuance of this letter_ruling to so recharacterize ‘ o - no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations that may be applicable thereto _ this letter is directed only to the taxpayer who requested it sec_61 k of the code provides that it may not be used or cited as precedent ' this letter_ruling assumes that of the iras referenced herein will meet the requirements of either code sec_408 or code sec_408a to the extent applicable at all times relevant thereto all note in order to effectuate any recharacterization s taxpayers a and b must file an amended calendar_year federal form_1040 consistent with this letter_ruling if they have not already done so s should you have any concerns with this letter please contact t ep ra t3 badge id at sincerely frau v ‘bar rances v sloan manager employee_plans technical group tax_exempt_and_government_entities_division enclosures deleted copy of this letter notice of intention to disclose notice


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 b6 plr-135547-11 date date legend --------------------------------------------------------- -------------------------------- taxpayer -------------------------------------------------- company -------------------------------------------------- developer member a member b member c member d state a state b state c state d state e state f state g state h state i date date date date date date ----------------------------------- -------------------------------------------------- ---------------------------- ----------------------------- ---------------------------------------------------- ------------- ------------ ------------------ ------------------ ------------ ------------- ------ -------- ------------- ------- ------- ------------------- -------------------------- ----------------- ------------------- plr-135547-11 ------------------ date ---------------- date ---------------------- date -------------------------- date -------------------------- lessor -------------------------------- lessor ------------------------------ lessor -------------------------------------- lessor ----------------------------------------------- lessor ------------------------------------- power plant ------------------------------------ power plant --------------------------------- power plant -------------------------------------------- power plant ---------------------------------------- power plant ---------------------------------- utility a ------------------------------------------------------------------------------------------ utility b --------------------------------------- utility c -------------------------------- utility d ------------------------------- operator ---------------------------------- operator ----------------------------------- operator ----------------------------------- manager --------------------- licensor -------- dollar_figurexx -------- dollar_figureyy --------------------- additive ----------------------- additive center ------------------------------------------------------------------------------------------ test rep ----------------------------------------------------------------------------------------- test rep ----------------------------------------------------------------------------------------- test rep ----------------------------------------------------------------------------------------- test rep ------------------------------------------------------------------------------------------ test rep ----------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------ letter ------ x ---- y source region a source region b source region c source region d ----------------------------- --------------------------- --------------- ---------------------- ------------------------------------ ------------------------------------- ------------ ---------------------- plr-135547-11 source region e -------------------------- dear ------------------ this is in response to your request for rulings submitted by your authorized representative concerning the federal_income_tax consequences of the transaction described below facts a taxpayer information taxpayer a state a corporation is a calendar_year taxpayer and employs the accrual_method of accounting for both book and tax purposes taxpayer is publicly traded and conducts a global financial services business_company is a state a limited_liability_company that is wholly owned by taxpayer company is disregarded as a separate_entity from taxpayer for federal tax purposes developer is a state a limited_liability_company that is classified as a partnership for federal tax purposes developer is owned by member a member b member c and member d the principal owners of these entities have worked and invested together in various projects since at least date some of their prior projects included the development construction and operation of synthetic_fuel production facilities and waste coal processing facilities commencing in date the principal owners of developer agreed to develop a new refined_coal business including the facilities described herein on date and date company entered into a participation_agreement with developer pursuant to which the company agreed to enter into facility lease agreements with respect to four facilities designed to produce refined_coal the four facilities are owned by lessor lessor lessor and lessor respectively each of the lessor entities is a state a limited_liability_company that is owned by an affiliate of developer the facility owned by lessor is located at power plant which is owned by utility a the facility owned by lessor is located at power plant which is owned by utility a the facility owned by lessor was constructed at power plant which is owned by utility b the facility owned by lessor was constructed at power plant which is owned by utility c the company and developer also intend to enter into a separate facility lease agreement with respect to a facility constructed by lessor at power plant which is owned by utility d in connection with each facility lease agreement the applicable lessor will assign to the company the project agreements with the applicable utility in addition plr-135547-11 the company entered into operation and maintenance agreements with operator operator and operator each of which is a state a limited_liability_company and affiliate of developer pursuant to those agreements the applicable operator will operate repair and maintain the facilities in accordance with an agreed operating plan will make arrangements to coordinate delivery of spare parts and supplies will coordinate deliveries of coal feedstock purchases and sales of refined_coal and will perform certain administrative functions in support thereof in addition the applicable operator will arrange for testing of refined_coal as described below with respect to each facility company will purchase coal feedstock from the applicable utility the coal supply agreements do not prohibit the company from purchasing feedstock coal from third parties and do not prohibit the company from purchasing more feedstock coal than the applicable utility would expect to buy from the company in the form of refined_coal the feedstock coal purchased by the company typically will be coal that the applicable utility itself purchased from third party vendors or in the case of utility b acquired from affiliates consistent with its coal specifications at each facility the company will buy feedstock coal and use the process as described below to produce refined_coal that it will sell to the applicable utility pursuant to a refined_coal sales agreement all of the refined_coal produced in the facilities is expected to be used as a fuel at the applicable power plant to produce steam for the generation of electricity however any refined_coal not purchased by the applicable utility can be sold to one or more third parties the company has no employees rather it entered into a refined_coal management services agreement with manager a state a limited_liability_company and affiliate of developer with respect to certain management responsibilities relating to the company’s refined_coal business pursuant to that agreement subject_to the provision of funds by the company and subject further to the limitations on its authority as specified in the agreement with respect to certain major decisions that require the company’s approval the manager is responsible for the operation of the facilities and the company’s refined_coal business b the refined_coal production proce sec_1 description of the process the process at issue for production of refined_coal currently employed at the facilities involves the adding of proprietary chemicals additives to feedstock coal prior to combustion the process the patent for the process is owned by licensor and is licensed to the lessors and sublicensed to the company licensor is entitled to certain per ton royalties based on production for_the_use_of its technology specifically company will make royalty payments to licensor equal to dollar_figurexx per ton of coal feedstock plr-135547-11 subjected to the process which royalties will increase to dollar_figureyy per ton of coal feedstock subjected to the process on the date specified in each license agreement test results have shown that when mixed with coal the proprietary additives result in reduced nox so2 and mercury emissions during combustion different chemicals are targeted at specific pollutants based on the characteristics of the feedstock coal burned at the power plants company has chosen a combination of additives that target the reduction of nox and mercury in the case of nox company understands that additive is believed to cause a portion of the nox to adhere to or react with the additive so that it can be captured and is not emitted in the case of mercury company understands that additive is believed to react with the elemental mercury in the feedstock coal so that it is converted into a chemical species of mercury mercury oxide that can be effectively captured by particulate control devices a by- product of the process is a valuable fly ash that can be used in a diverse array of applications in the steel mining and cement industries emissions reduction testing for purposes of determining emissions reductions under sec_45 company will arrange for pilot-scale combustion testing and will not rely on any continuous emissions monitoring system or other field testing developer engaged the research center of a prominent university the center to conduct tests on behalf of the lessors at its pilot- scale combustion test facility ctf to determine the emission reductions associated with burning the refined_coal compared to the feedstock coal center reports described below state the ctf has been extensively used to research and investigate sox and nox emissions and the transformation of toxic trace metals hg mercury as and pb during the combustion of coal and other fuels or waste materials the ctf is capable of producing gas and particulate samples that are representative of those produced in industrial- and full-scale pulverized coal pc -fired boilers for purposes of qualifying the refined_coal produced at the facility located at power plant center conducted pilot- scale combustion tests at its ctf on date on the blend of feedstock coals of the type typically burned at power plant similar tests were conducted by center at its ctf on date on the blend of feedstock coals of the type typically burned at power plant on date on the blend of feedstock coals of the type typically burned at power plant on date on the blend of feedstock coals of the type typically burned at power plant and on date on the blend of feedstock coals of the type typically burned at power plant the center reports explain that combustion gas analysis is provided by continuous emissions monitors cems at two locations the furnace exit which is used to monitor and maintain a specified excess air level for all test periods and the outlet of the particulate control device which is used to assess any air inleakage that may have occurred so that emissions of interest sampled at the back end of the system can be corrected for the dilution caused by the inleakage flue gas analyses were obtained plr-135547-11 from the duct at the outlet of the electrostatic precipitator esp flue gas mercury measurements were obtained separately by a continuous mercury monitor located at the flue gas ducting at the exit of the particulate control device center conducted a series of tests on the feedstock and refined_coal blends measuring the emissions with these devices test rep states that the test results indicate that the blend of coal and additives achieved the required reductions in both nox and total mercury emissions both determined on a lb btu basis to satisfy the requirements of at least nox reduction and at least mercury reduction test rep states that it is expected the emissions reduction reported would be achieved at full scale using the additive levels tested similar conclusions are reached by center in test rep test rep test rep and test rep tested coal power plant currently burns bituminous coals from a number of mines in source region a located in state b state c and state d the coal rank of all of the source region a coal burned at power plant is classified by the american society of testing materials astm as bituminous coal with a gross calorific value of big_number to big_number btu lb power plant currently burns bituminous coals from a number of mines in source region b located in state c state d and state e the coal rank of all of the source region b coal burned at power plant is classified by the astm as bituminous coal with a gross calorific value of big_number to big_number btu lb power plant currently burns lignite from a two mines in source region c located in state f the coal rank of all of the source region c coal burned at power plant is classified by the astm as lignite with a gross calorific value of big_number to big_number btu lb power plant currently burns coals from several mines in source region d located in state g the coal rank of approximately x of the blend of the source region d coal burned at power plant is classified by the astm at bituminous coal with a gross calorific value of big_number to big_number btu lb and the coal rank of approximately y of the blend of the source region d coal burned at power plant is classified by the astm as subbituminous coal with a gross calorific value of big_number to big_number btu lb power plant currently burns a blend of coal from several mines in source region e located in state i and lignite from several mines in source region c located in state h the coal rank of all of the source region c coal burned at power plant is classified by the astm as lignite with a gross calorific value of big_number to big_number btu lb and the coal rank of all of the source region e coal burned at power plant is classified by the astm as subbituminous coal with a gross calorific value of big_number to big_number btu lb plr-135547-11 for each of its tests center tested blends of coal that represent the range of coal blends to be used at the respective power plant the tested coal the reports issued by center state that the emission reduction requirements outlined in sec_45 for nox and mercury were satisfied when comparing the results of burning the endpoint fuels to the results of burning the feedstock coal center further reports that it analyzed the variability of fuel n2 and fuel hg contents between coals of the rank and from the source regions used at each of the power plants because nox and hg emissions are of primary concern in each case center states that it is expected that higher fuel n2 and hg contents will lead to higher emissions of both nox and hg respectively center concluded that the n2 and hg levels from the many samples tested appear typical for many of the tested coals and would not be expected to change dramatically from one shipment to another after reviewing the average levels of n2 and hg against the combustion test results center concluded that any fuel blend tested would represent the range of fuels commonly fired by the respective power plant and could be expected to achieve the required reductions the company expects to continue to operate with the blends and additive levels discussed in the center reports which would be consistent with long-term patterns for coal consumed at the power plants if so samples will be taken for redetermination testing within six months after the last emissions test satisfying the qualified_emission_reduction requirement thereafter within six months after such date another set of samples will be taken for redetermination testing in each case samples will be collected and prepared in accordance with astm guidelines for sampling coal if center is not able to deliver a written report on a redetermination test before the six month date it will deliver a letter confirming the results of its redetermination testing and will deliver the detailed written report upon completion for example letter was issued on date because center was not able to complete a detailed written report on redetermination testing for location d before the applicable six month date although the company does not currently anticipate making changes to its coal feedstock or additive levels additional testing will be conducted prior to acquiring coal feedstock from a different coal source region or of a different rank than reflected in the tested coal in the case of a change in the additive levels tests will also be run at the new minimum levels of additive as the qualified expert advises is necessary to conclude that a qualified emissions reduction will be expected for the new levels of additive rulings requested based on the foregoing taxpayer has requested that we rule as follows plr-135547-11 the refined_coal produced by using the process constitutes refined_coal within the meaning of sec_45 of the code provided that such refined_coal is produced from feedstock coal that is the same source or rank as the tested coal and provided further that the refined_coal satisfies the qualified_emission_reduction test stated in sec_45 of the code provided that the feedstock coals used to produce refined_coal during any determination_period are from the same coal source regions and of the same rank as the tested coal all feedstock coal that satisfies that criteria shall be treated as feedstock coal of the same source and rank for purposes of section dollar_figure of notice_2010_54 regardless of the mine from which such feedstock coal is purchased testing by center for qualified emissions reduction as set forth in its test reports satisfies the requirements of notice_2010_54 taxpayer may rely on the pilot scale testing conducted at center to satisfy the qualified_emission_reduction test of sec_45 of the code regardless of subsequent normal fluctuations in operating conditions and emissions at the power plants law and analysis sec_45 of the code generally provides a credit against federal_income_tax for_the_use_of renewable or alternative resources to produce electricity or fuel for the generation of steam sec_45 of the code provides that in the case of a producer of refined_coal the credit available under sec_45 of the code for any taxable_year shall be increased by an amount equal to dollar_figure5 per ton of qualified refined_coal i produced_by_the_taxpayer at a refined_coal_production_facility during the 10-year period beginning on the date that the facility was originally placed_in_service and which is ii sold by the taxpayer to an unrelated_person during such 10-year period and such taxable_year for purposes of sec_45 of the code section dollar_figure of notice_2010_54 provides that the term refined_coal means a fuel which - i is a liquid gaseous or solid fuel including feedstock coal mixed with an additive or additives produced from coal including lignite or high carbon fly ash including such fuel used as a feedstock ii is sold by the taxpayer with the reasonable expectation that it will be used for the purpose of producing steam and iii is certified by the taxpayer as resulting when used in the production of steam in a qualified_emission_reduction section dollar_figure of the notice provides that the term qualified_emission_reduction means in the case of refined_coal produced at a facility placed_in_service after date a reduction of at least twenty percent of the emissions of nitrogen oxide and at least forty percent of the emissions of either sulfur dioxide or mercury released when burning the refined_coal excluding any dilution caused by materials combined or added during the production process as compared to the emissions released when burning the plr-135547-11 feedstock coal or comparable coal predominantly available in the marketplace as of date sec_45 of the code generally provides that the term refined_coal_production_facility means a facility which is placed_in_service after date and before date section dollar_figure of notice_2010_54 generally provides that a qualified emissions reduction does not include any reduction attributable to mining processes or processes that would be treated as mining as defined in sec_613 a c or i if performed by the mine owner or operator accordingly in determining whether a qualified_emission_reduction has been achieved the emissions released when burning the refined_coal must be compared to the emissions that would be released when burning the feedstock coal feedstock coal is the product resulting from processes that are treated as mining and are actually applied by a taxpayer in any part of the taxpayer’s process of producing refined_coal from coal sec_613 of the code describes treatment processes that are not considered as mining unless they are provided for in sec_613 or are necessary or incidental to a process provided for in sec_613 any cleaning process such as a process that uses ash separation dewatering scrubbing through a centrifugal pump spiral concentration gravity concentration flotation application of liquid hydrocarbons or alcohol to the surface of the fuel particles or to the feed slurry provided such cleaning does not change the physical or chemical structure of the coal and drying to remove free water provided such drying does not change the physical or chemical identity of the coal will be considered as mining section of the notice provides in part that emissions reduction may be determined using continuous emission monitoring system cems field testing section a provides in part that cems field testing is testing that meets all the following requirements i the boiler used to conduct the test is coal-fired and steam-producing and is of a size and type commonly used in commercial operations ii emissions are measured using a cems iii if epa has promulgated a performance standard that applies at the time of the test to the pollutant emission being measured the cems must conform to that standard iv emissions for both the feedstock coal and the refined_coal are measured at the same operating conditions and over a period of at least hours during which the boiler is operating at a steady state at least percent of full load and v a qualified_individual verifies the test results in a manner that satisfies the requirement of section b section of the notice provides that methods other than cems field testing may be used to determine the emission reduction the permissible methods include a testing using a demonstration pilot-scale combustion furnace if it establishes that the method accurately measures the emission reduction that would be achieved in plr-135547-11 a boiler described in section a i and a qualified_individual verifies the test results in a manner that satisfies the requirements of section c i ii v and vi of the notice and b a laboratory analysis of the feedstock coal and the refined_coal that complies with a currently applicable epa or astm standard and is permitted under section b i or ii section of the notice provides that a taxpayer may establish that a qualified_emission_reduction determined under section dollar_figure applies to production from a facility by a determination or redetermination that is valid at the time the production occurs a determination or redetermination is valid for the period beginning on the date of the determination or redetermination and ending with the occurrence of the earliest of the following events i the lapse of six months from the date of such determination or redetermination ii a change in the source or rank of the feedstock coal that occurs after the date of such determination or redetermination or iii a change in the process of producing refined_coal from the feedstock coal that occurs after the date of such determination or redetermination section of the notice provides that in the case of a redetermination required because of a change in the process of producing refined_coal from the feedstock coal the redetermination required under section dollar_figure must use a method that meets the requirements of section in any other case the redetermination requirement may be satisfied by laboratory analysis establishing that - a the sulfur s or mercury content of the amount of refined_coal necessary to produce an amount of useful energy has been reduced by at least percent percent in the case of facilities placed_in_service after date in comparison to the s or mercury content of the amount of feedstock coal necessary to produce the same amount of useful energy excluding any dilution caused by materials combined or added during the production process b the s or mercury content of both the feedstock coal and the refined_coal do not vary by more than percent from the s and mercury content of the feedstock coal and refined_coal used in the most recent determination that meets the requirements of the notice finally section dollar_figure of the notice provides that the certification requirement of sec_3 c of the notice is satisfied with respect to fuel for which the refined_coal credit is claimed only if the taxpayer attaches to its tax_return on which the credit is claimed a certification that contains the following a statement that the fuel will result in a qualified emissions reduction when used in the production of steam a statement indicating whether cems field testing was used to determine the emissions reduction if cems field testing was not used to determine the emissions reduction a description of the method used a statement that the emissions reduction was determined or redetermined within the six months preceding the production of the fuel and that there have been no changes in the source or rank of the feedstock coal used in the process of producing refined_coal from feedstock coal since the emissions reduction was most recently determined or redetermined and a declaration signed by the plr-135547-11 taxpayer in the following form under penalties of perjury i declare that i have examined this certification and to the best of my knowledge and belief it is true correct and complete with respect to the first issue the process starts with several chemical additives being added to the feedstock coal prior to its combustion in a furnace the additives provide the chemical structure that results in the reduction of emissions of nitrogen oxide and mercury during combustion section dollar_figure of the notice provides generally that a qualified emissions reduction does not include any reduction attributable to mining processes or processes that would be treated as mining if performed by the mine owner or operator in the instant case the process is not a mining process further section dollar_figure of the notice clarifies sec_45 of the code and specifically provides that refined_coal includes feedstock coal mixed with additives thus additive processes that mix certain chemicals or other additives with the coal in order to achieve emissions reductions may qualify for the refined_coal production_tax_credit additionally section dollar_figure defines comparable coal as coal that is of the same rank as the feedstock coal and that has an emissions profile comparable to the emissions profile of the feedstock coal accordingly we conclude that the coal produced by using the process constitutes a refined_coal within the meaning of sec_45 of the code provided that the refined_coal i is produced from feedstock coal that is the same source or rank as the tested coal and ii satisfies the qualified_emission_reduction test stated in sec_45 of the code with respect to the second issue the emissions profile of the refined_coal product is compared to the emissions profile of either the feedstock coal or a comparable coal predominantly available in the marketplace as of date section dollar_figure of the notice provides that a comparable coal is defined as coal that is of the same rank as the feedstock coal and that has an emissions profile comparable to the emissions profile of the feedstock coal section dollar_figure provides that a determination or redetermination of a qualified emissions reduction is valid until the occurrence of the earliest of the following events i the lapse of six months from the date of such determination or redetermination ii a change in the source or rank of the feedstock coal that occurs after the date of such determination or redetermination or iii a change in the process of producing refined_coal from the feedstock coal that occurs after the date of such determination or redetermination accordingly we conclude that provided that the feedstock coals during any determination_period are from the same coal source regions and of the same rank as the tested coal all feedstock coal that satisfies that criteria shall be treated as feedstock coal of the same source and rank for purposes of section dollar_figure of notice_2010_54 regardless of the mine from which such feedstock coal is purchased with respect to the third issue section of the notice provides that any permissible testing method provided for in the notice can be used in emission testing for any pollutant that is a taxpayer can use different testing methods for each of nitrogen plr-135547-11 oxide sulfur dioxide or mercury provided the method used for any pollutant is a permissible method section provides that an emission test establishing a qualified_emission_reduction qualifies the refined_coal for a six-month period provided there is no change in the process for producing the refined_coal or in the source or rank of the feedstock coal therefore a taxpayer must redetermine the emission reductions to qualify for the succeeding six-month period using one or more approved methods in the instant case the company will arrange for pilot-scale combustion testing and will not rely on any continuous emissions monitoring system or other field testing which is permitted under section dollar_figure of the notice specifically the company will arrange with the center to conduct testing including redetermination testing at its ctf to determine the emissions reductions associated with burning the refined_coal product compared to the feedstock for purposes of qualifying the refined_coal produced at the facilities the center has conducted pilot-scale combustion tests at its ctf as documented in test rep test rep test rep test rep and test rep in conducting such tests the center conducted tests on the feedstock and then mixed a separate sample of the feedstock with the additives so that it could conduct tests on the refined_coal product in each of its reports the center reported that the test results indicated that the blend of coal and additives achieved the required emissions reductions if a redeterimination test is conducted before the six month anniversary date but a final report is not received before such date center provides interim results that are certified as required by notice_2010_54 and agrees to deliver a final report upon completion based on the foregoing we conclude that testing by the center for qualified emissions reductions as set forth in its test reports including interim reports satisfies the requirements of notice_2010_54 the taxpayer may establish a qualified emissions reduction through testing by the center at its combustion research facility or similar pilot-scale combustion testing facilities under notice_2010_54 regardless of subsequent normal fluctuations in operating conditions and emissions at the power plants where the refined_coal is burned no opinion is expressed regarding any other issue not specifically addressed in this ruling letter specifically no opinion is expressed whether company or taxpayer is the producer of refined_coal in accordance with the power_of_attorney on file with this office we are sending a copy of this letter to your authorized representatives a copy of this ruling must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling plr-135547-11 this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides it may not be used or cited as precedent we are sending a copy of this letter_ruling to the industry director sincerely peter c friedman senior technician reviewer branch office of associate chief_counsel passthroughs special industries


internal_revenue_service number release date index number department of the treasury washington dc person to contact telephone number refer reply to cc psi - plr-143798-02 date date legend x a b c d d1 dear this letter responds to a letter date submitted on behalf of x requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated on d1 a b c and d are the shareholders of x a x’s president represents that x was intended to be an s_corporation effective d1 however no form_2553 election by a small_business_corporation was timely filed for x sec_1362 of the code provides that if -- a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election the secretary may treat such an election as timely made for such taxable_year plr-143798-02 based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation effective d1 accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 effective d1 along with a copy of this letter with the appropriate service_center within days from the date of this letter then such election will be treated as timely made for d1 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being forwarded to x’s authorized representative sincerely yours carolyn hinchman gray senior counsel branch associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number info 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 genin-126301-12 date date re --------------------------- dear ---------------- this letter responds to your letter dated date submitted on behalf of the above named taxpayer with regard to retroactive revocation of an s election according to the facts submitted the company captioned above currently has a valid s election we believe that you would like to revoke the election retroactive to its effective date although we are unable to respond to your request as submitted this letter provides information relating to your request sec_1362 of the internal_revenue_code provides that an election to be an s_corporation under sec_1362 may be terminated by revocation this election may be revoked only if the shareholders holding more than one-half of the shares of stock of the corporation on the day on which the revocation is made consent to the revocation under sec_1362 if the revocation specifies a date for revocation which is under sec_1362 a revocation made during the taxable_year and on or before the 15th day of the 3rd month thereof shall be effective on the 1st date of such taxable_year and a revocation made during the taxable_year but after such 15th day shall be effective on the 1st day of the following taxable_year on or after the day on which the revocation is made the revocation shall be effective on and after the date so specified more specifically under sec_1_1362-2 of the income_tax regulations if a corporation specifies a date for revocation and the date is expressed in terms of a stated day month and year that is on or after the date the revocation is filed the revocation is effective on and after the date so specified genin-126301-12 therefore if a revocation of the company's s election is filed by the end of this year the revocation can be effective either on the first day of the next year or on the specified date that must be on or after the date the revocation is filed date there is currently no provision which allows such action relief through the private_letter_ruling process is not available for an earlier date if you have any further questions please contact us at -------------------- not a toll-free number with respect to the request to retroactively revoke the s election to its effective please keep this letter with your tax records we hope this information is helpful sincerely laura c fields laura c fields senior technician reviewer branch office of associate chief_counsel passthroughs and special industries


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 tege eb hw plr-151402-05 date march ------------------------------------------------------------------ --------------------------------------------------------------------- legend company x -------------------------------------------------------------- company y dear ------------- this is in response to your letter dated date requesting a ruling concerning the federal_income_tax treatment of benefits received under a life_insurance_contract rider you represent that company x is a stock_life_insurance_company and a calendar-year taxpayer that is subject_to tax under sec_801 of the internal_revenue_code the code company x is a member_of_an_affiliated_group of corporations filing life nonlife consolidated federal_income_tax returns the parent of this affiliated_group is company y an individual is considering purchasing a term life_insurance_policy issued by company x with a critical illness rider attached neither the policy nor the critical illness rider has any cash_value the critical illness rider will pay a one-time lump sum benefit critical illness rider benefit of up to dollar_figure to the policy owner during the insured’s life time if the insured is diagnosed by a physician as having a qualifying covered condition only one critical illness rider benefit payment is permitted during the insured’s lifetime the critical illness rider benefit will be reduced by when the insured reache sec_65 benefits plr-151402-05 paid under the critical illness rider will reduce the death_benefit payable under the policy by an equal amount the covered conditions are defined in the critical illness rider to include only cancer heart attack myocardial infarction kidney failure loss of limb s major organ transplant paralysis and stroke cerebrovascular accident sec_104 of the code provides that except in the case of amounts attributable to and not in excess of deductions allowed under sec_213 relating to medical etc expenses for any prior taxable_year gross_income does not include amounts received through accident_or_health_insurance or through an arrangement having the effect of accident_or_health_insurance for personal injuries or sickness other than amounts received by an employee to the extent such amounts a are attributable to contributions by the employer which were not includible in the gross_income of the employee or b are paid_by the employer sec_105 of the code provides that except as otherwise provided in sec_105 amounts received by an employee through accident_or_health_insurance for personal injuries or sickness shall be included in gross_income to the extent such amounts are attributable to contributions by the employer which were not includible in the gross_income of the employee or are paid_by the employer sec_105 of the code provides that except in the case of amounts attributable to and not in excess of deductions allowed under sec_213 for any prior year gross_income does not include amounts referred to in sec_105 if such amounts are paid to the taxpayer to reimburse the taxpayer for expenses_incurred by him for the medical_care of the taxpayer his spouse and dependents sec_105 of the code provides that gross_income does not include amounts referred to in sec_105 to the extent such amounts constitute payments for the permanent loss or loss of use of a member or function of the body or the permanent disfigurement of the taxpayer his spouse or a dependent and are computed with reference to the nature of the injury without regard to the period the employee is absent from work the critical illness rider will be treated as accident_or_health_insurance for purposes of sec_104 and sec_105 of the code accordingly based on the representations made and the authorities cited above we conclude as follows benefits received under the critical illness rider will be excludable from the recipient's gross_income under sec_104 of the code to the extent they are attributable to the recipient’s after-tax contributions plr-151402-05 benefits payable under the critical illness rider are neither reimbursements of medical_expenses of the recipient nor computed with reference to the nature of the recipient's injury accordingly benefits received by an employee under the critical illness rider are includible in the employee's gross_income under sec_105 of the code to the extent that they are attributable to contributions of his or her employer that were not includible in his or her gross_income or are paid_by the employer except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely harry beker chief health welfare branch office of division counsel associate chief_counsel tax exempt government entities


t c summary opinion united_states tax_court thomas a and vernester o johnson petitioners v commissioner of internal revenue respondent docket no 29866-07s filed date thomas a johnson and vernester o johnson pro sese matthew d carlson for respondent dean special_trial_judge this case was heard pursuant to the provisions of sec_7463 of the internal_revenue_code in effect when the petition was filed pursuant to sec_7463 the decision to be entered is not reviewable by any other court and this opinion shall not be treated as precedent for any other case unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year in issue and all rule references are to the tax_court rules_of_practice and procedure respondent determined for a deficiency in petitioners’ federal_income_tax of dollar_figure and an accuracy-related_penalty under sec_6662 of dollar_figure the parties agree that dollar_figure of petitioner vernester o johnson’s income reported on form 1099-misc miscellaneous income from red gum tic is properly reportable on schedule c profit or loss from business rather than as wages salaries tips etc on line of petitioners’ return the issues remaining for decision1 are whether petitioners are entitled to a home mortgage interest_deduction entitled to deduct expenses for supplies and legal and professional services on schedule c entitled to charitable_contribution deductions and liable for the accuracy-related_penalty under sec_6662 background some of the facts have been stipulated and are so found the stipulation of facts and the exhibits received in evidence are incorporated herein by reference petitioners resided in california when the petition was filed 1adjustments to petitioners’ self-employment_income and self-employment_income tax deduction are computational and will be resolved consistent with the court’s decision see sec_1401 sec_164 in date maury and pelipa power one-third joint_tenants trenton and elvia shultz one-third joint_tenants and roman hernandez and refugio perez one-third joint_tenants granted a deed to property property to diversified unlimited inc doing business as united investments diversified diversified purchased the property subject_to a first note and deed_of_trust in favor of knutson mortgage corp knutson securing a note of dollar_figure in date petitioners entered into an executory_contract for the purchase of the property from diversified in date the parties entered into an agreement for the sale of real_property by diversified according to the latter agreement petitioners agreed to purchase the property subject_to the first note and deed_of_trust in favor of knutson petitioners also agreed to pay diversified dollar_figure by date attached to the sale contract is an affidavit in which petitioners acknowledge their awareness that a they are purchasing the property subject_to the encumbrance b that diversified asks that petitioners assume the loan or refinance the property after a 6-month period had expired and c they will be the owner of title on record of the property diversified subsequently issued to petitioners a corporation grant deed and petitioners issued to diversified a deed_of_trust to secure a promissory note for dollar_figure in favor of diversified the property was used as petitioners’ primary residence petitioners provided as evidence of interest payments copies of cashier’s checks drawn on washington mutual bank wamu to countrywide or countrywide home loans a for dollar_figure dated date bearing the handwritten notation oct nov dec jan f illegible the space showing the remitter is blank b for dollar_figure dated date bearing the handwritten notation feb the remitter is listed as thomas a johnson jr c for dollar_figure dated date bearing no notation as to month nor the name of a remitter and d for dollar_figure dated date bearing no notation as to month nor the name of a remitter petitioners also provided a copy of a fedex tracking update for a fedex standard overnight envelope shipped date by vanessa johnson to countrywide home loans petitioners submitted copies of other checks drawn on wamu that show that they had made payments in and to guaranty residential lending the last of which for dollar_figure was a cashier’s check dated date countrywide home loans sent a form_1098 mortgage interest statement to maury and pelipa power care of vernester johnson reporting paid mortgage interest of dollar_figure for new century mortgage sent petitioners a form_1098 reporting paid mortgage interest of dollar_figure for discussion generally the commissioner’s determinations in a notice_of_deficiency are presumed correct and the taxpayer has the burden of proving that those determinations are erroneous see rule a 290_us_111 in some cases the burden_of_proof with respect to relevant factual issues may shift to the commissioner under sec_7491 petitioners did not present evidence or argument that they satisfied the requirements of sec_7491 therefore the burden_of_proof does not shift to respondent mortgage interest_deduction sec_163 allows a deduction for interest_paid or accrued within the taxable_year on indebtedness the indebtedness for purposes of sec_163 must in general be an obligation of the taxpayer and not an obligation of another 604_f2d_34 9th cir affg tcmemo_1976_150 84_tc_889 affd without published opinion 805_f2d_1073 d c cir individuals are allowed a deduction for qualified_residence_interest sec_163 qualified_residence_interest includes interest_paid to acquire the principal_residence of the taxpayer or certain indebtedness secured_by a personal_residence sec_163 respondent however argues that petitioners have failed to provide adequate substantiation for their claimed mortgage interest_deduction petitioners have not shown that they were directly liable on the mortgages for which they claimed a mortgage interest_deduction in fact the form_1098 from countrywide home loans indicates that the mortgage was in the names of former owners of an interest in petitioners’ residence maury and pelipa power but sec_1_163-1 income_tax regs provides in pertinent part interest_paid by the taxpayer on a mortgage upon real_estate of which he is the legal or equitable owner even though the taxpayer is not directly liable upon the bond or note secured_by such mortgage may be deducted as interest on his indebtedness respondent did not assert that petitioners were not the beneficial owners of their personal_residence and the evidence shows that they were the legal owners of the property the court assumes that the date cashier’s check to countrywide was for the october november and date mortgage payments and the date payment and that about one-fourth of the total was for date likely penalty fees would have been included in this apparently late payment if the january payment is added to the march july and date payments the total approximates the amount for which countrywide issued its form_1098 the form_1098 new century mortgage issued reporting dollar_figure of interest was sent in the name of petitioner vernester johnson while the financing arrangements of petitioners’ home purchase are less than clear the preponderance_of_the_evidence leads the court to conclude that petitioners were the legal and equitable owners of the property and did make mortgage interest payments to countrywide home loan and new century as claimed on their return for schedule c expenses respondent disallowed petitioners’ deductions of dollar_figure for supplies and dollar_figure for legal and professional services because petitioners neither substantiated the expenses nor showed them to be ordinary and necessary expenses paid during in carrying_on_a_trade_or_business sec_162 generally allows a deduction for ordinary and necessary expenses paid_or_incurred during the taxable_year in carrying_on_a_trade_or_business generally no deduction is allowed for personal living or family_expenses sec_262 where a taxpayer has established that he has incurred a trade_or_business expense failure to prove the exact amount of the otherwise deductible item may not always be fatal generally unless precluded by sec_274 the court may estimate the amount of an expense and allow a deduction to that extent see 255_f2d_128 10th cir affg 27_tc_413 39_f2d_540 2d cir in order for the court to estimate the amount of an expense however there must be some basis upon which an estimate may be made 85_tc_731 without such a basis an allowance would amount to unguided largesse 245_f2d_559 5th cir petitioners claimed the deductions for supplies and legal and professional services as expenses that thomas johnson paid in connection with his consulting business at trial however petitioners offered no evidence to substantiate the deductions since the court has no basis on which to estimate the expenses respondent’s determination is sustained charitable_contributions respondent disallowed for lack of substantiation petitioners’ deduction of dollar_figure for cash gifts to charity sec_170 allows a taxpayer to deduct a charitable_contribution only if verified under regulations prescribed by the secretary the regulations which require substantiation of the taxpayer’s contribution provide that if a taxpayer makes a charitable_contribution of money the taxpayer shall maintain for each contribution one of the following i a cancelled check ii a receipt from the donee charitable_organization showing the name of the donee the date of the contribution and the amount of the contribution a letter or other communication from the donee charitable_organization acknowledging receipt of a contribution and showing the date and amount of the contribution constitutes a receipt for purposes of this paragraph a iii in the absence of a canceled check or receipt from the donee charitable_organization other reliable written records showing the name of the donee the date of the contribution and the amount of the contribution sec_1_170a-13 income_tax regs petitioners allege that their contribution was in cash and they did not provide a canceled check to substantiate their contribution petitioners provided a copy of a letter dated date from the continentals of omega boys and girls club club that acknowledged a dollar_figure donation but failed to provide a date for petitioners’ contribution the letter was signed by pelton stewart executive director respondent called as a witness richard wright wright currently president of the board_of directors of the club wright was also president during wright’s duties as president include reviewing the club’s financial information and selecting and hiring the club’s chief professional officer executive director wright identified petitioner thomas johnson as having provided volunteer accounting services for the club and as having known or been a friend and possibly a fraternity brother of pelton stewart the person who signed petitioners’ donation letter wright testified that the club maintained a list of donors on spreadsheets that were updated monthly by a bookkeeper who then provided them to the board wright who brought the records with him to court testified that neither petitioner was listed as a donor of any amount in wright further supplied an example of what a letter to a donor would have looked like in wright testified that the letter petitioners supplied as substantiation of their alleged donation differs in several respects from the typical donor letter of and is not characteristic of a letter that the club would have sent to a donor in the court finds that petitioners’ letter fails to meet the substantiation requirements of sec_1_170a-13 income_tax regs it is not a receipt as defined by sec_1 170a- a ii income_tax regs because it does not show the date of the contribution the letter does not qualify as other reliable written records either because it lacks a donation date in addition the records of the donee fail to reflect the fairly sizeable donation petitioners claimed and is at variance 2wright testified that upon the removal of pelton stewart as executive director in petitioner thomas johnson notified wright by letter that he would no longer serve as a volunteer to the club with the form of letters sent to other donors of similar size donations in accordingly petitioners are not entitled to the claimed deduction sec_6662 accuracy-related_penalty sec_7491 imposes on the commissioner the burden of production in any court_proceeding with respect to the liability of any individual for penalties and additions to tax 116_tc_438 trowbridge v commissioner tcmemo_2003_164 affd 378_f3d_432 5th cir in order to meet the burden of production under sec_7491 the commissioner need only make a prima facie case that imposition of the penalty or addition_to_tax is appropriate higbee v commissioner supra pincite respondent determined that petitioners are liable for the accuracy-related_penalty under sec_6662 for sec_6662 imposes a 20-percent penalty on the portion of an underpayment attributable to any one of various factors including negligence or disregard of rules or regulations and a substantial_understatement_of_income_tax see sec_6662 and negligence includes any failure to make a reasonable attempt to comply with the provisions of the internal_revenue_code including any failure to keep adequate books_and_records or to substantiate items properly see sec_6662 sec_1_6662-3 income_tax regs a substantial_understatement_of_income_tax exceeds the greater of percent of the tax required to be shown on the return or dollar_figure see sec_6662 sec_1_6662-4 income_tax regs sec_6664 provides that the penalty under sec_6662 shall not apply to any portion of an underpayment if it is shown that there was reasonable_cause for the taxpayer’s position and that the taxpayer acted in good_faith with respect to that portion the determination of whether a taxpayer acted with reasonable_cause and in good_faith is made on a case-by-case basis taking into account all the pertinent facts and circumstances sec_1_6664-4 income_tax regs the most important factor is the extent of the taxpayer’s effort to assess his proper tax_liability for the year id petitioners failed to substantiate business_expense deductions for supplies and legal and professional services petitioners also failed to properly substantiate their cash charitable_contributions and to properly report self-employment taxes they offered no evidence of reasonable_cause or good_faith with respect to their treatment of these items the accuracy-related_penalty under sec_6662 is sustained on account of negligence to reflect the foregoing decision will be entered under rule