internal_revenue_service number info release date index number ------------------------------------------ ---------------------------------------------------- --------------------------- ---------------------------- - department of the treasury washington dc person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi b03 - genin-156430-03 date date dear ---------------------------- this is in response to a letter dated date submitted on your behalf by your authorized representative requesting relief in order to establish date as the effective date for your election to be treated as a corporation for federal tax purposes an automatic_extension for filing your election is unavailable under revproc_2003_43 2003_23_irb_998 because more than months have passed since the election was due although we are unable to respond to your request as submitted this letter provides information relating to your request generally to request relief for a late regulatory election you must request a private_letter_ruling from the national_office the information forwarded to our office is insufficient for us to process a private_letter_ruling request the procedures for requesting a private_letter_ruling are set forth in revproc_2003_1 2003_1_cb_1 copy enclosed in addition taxpayers must submit a user_fee along with their ruling_request the standard user_fee for a private_letter_ruling is dollar_figure however taxpayers with gross_income of less than dollar_figure million on their tax_return for the most recent 12-month taxable_year qualify for a reduced user_fee in the amount of dollar_figure if you qualify for the reduced fee you must include a statement claiming that your gross_income for the last 12-month taxable_year was less than dollar_figure million if you decide to submit a formal request for a private_letter_ruling please follow the sample format provided in appendix b of revproc_2003_1 your request should include all required procedural statements a check for the user_fee and any documents genin-156430-03 that substantiate your intent to be taxed as a corporation from inception specific information required for extensions of time for making regulatory elections include certain affidavits and statements showing reasonable action and good_faith see sec_301_9100-3 of the procedure and administration regulations please keep this letter with your tax records and feel free to provide a copy of it to your authorized representative we hope that the above information proves helpful sincerely s james a quinn senior counsel branch office of the associate chief_counsel passthroughs and special industries enclosures revproc_2003_1


internal_revenue_service number release date index number 468a ------------------------ ------------------------------------ ----------------------------- ---------------------------- ---------------------------------- 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-151927-09 date date ----------------------------- ein ---------------- ----------------------- ein ---------------- ------------------------------------------------------------------------------------------ legend taxpayer parent plant ------------------------------------------------------------------------------------------------------------- state x location funds -------- --- --------------------- -------------------------------------------- dear ------------ this letter is in response to your request for a ruling dated -------------------------- under sec_468a of the code and the regulations thereunder confirming that the nuclear decommissioning funds that the taxpayer established for plant may be used for the removal of ----------------------- and ---------------------------------------- that have been replaced while the plant continues to operate taxpayer represents the facts and information relating to its request for rulings as follows taxpayer a partnership indirectly owned entirely by parent is engaged in the business of generating and selling electric power in state parent files a consolidated federal_income_tax return with its affiliated entities including taxpayer taxpayer owns an undivided x percent interest in each unit of plant plant is situated at location taxpayer has incurred costs to remove ----------------------- and -------------------- ------------------------------ collectively components that previously have been replaced at plant taxpayer is not in the process of final decommissioning of plant and the replacement of the components is meant to extend the life of plant not to conclude that life plr-151927-09 each unit at plant consists of ----------------------- and --------------------- the ------------------ -------- contains the fuel assemblies that heat and pressurize the water used as the primary coolant this water then passes through the ------------------------------ where it converts a bath of secondary water into -------- which is used to push the ------------------- --------- as the ------------------------------------------------------------------------------------------------ --------------------------- accordingly the ----------------------- perform a separate but integrated function within each nuclear unit in the production of electricity further taxpayer treats the ----------------------- as separate assets for regulatory and financial_accounting purposes the ---------------------------- serve a different function from the ------------------------------------ --------------- the ------------------- plays a passive role as the ----------------------- within which the ----------------------------------------------------------------------- the ------------------------ ------- on the other hand is a ----------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------- ------------------------ further the ---------------------------- have a shorter useful_life than the -------------------- as evidenced by the fact that they needed to be replaced while the ------ -------------------- were still in operation accordingly the --------------------------- perform a separate but integrated function within each nuclear unit in the production of electricity taxpayer treats the --------------------------- as separate assets for regulatory and financial_accounting purposes law and analysis sec_468a allows owners operators of nuclear power plants to currently deduct the future costs of decommissioning a nuclear power plant by making contributions to a fund prior to when economic_performance occurs sec_468a generally requires the owner operator to include in gross_income amounts that are distributed from a fund in addition to any deduction under sec_468a for contributions to a fund sec_468a recognizes that an owner operator may deduct otherwise deductible nuclear decommissioning costs such as under sec_162 for which economic_performance within the meaning of sec_461 occurs during a taxable_year sec_1_468a-1t b of the temporary income_tax regulations provides that the term nuclear decommissioning costs or decommissioning costs means all otherwise deductible expenses_incurred in connection with the entombment decontamination dismantlement removal and disposal of the structures systems and components of a nuclear power plant that has permanently ceased the production of electric energy that section further provides that the term nuclear decommissioning costs is defined broadly to include expenses_incurred before during and after the actual decommissioning process of the nuclear power plant that has ceased operations plr-151927-09 the costs incurred to remove the components are incurred in connection with the entombment decontamination dismantlement removal and disposal of the structures systems and components of a nuclear power plant the components taken from plant are not being reused and are therefore irrevocably committed to the process of decommissioning taxpayer represents that the costs incurred to remove the components are otherwise currently deductible under sec_165 because the components are separate assets that have been permanently removed from taxpayer’s trade_or_business based upon this representation and our conclusion that the costs incurred to remove the components are incurred in connection with the entombment decontamination dismantlement removal and disposal of the structures systems and components of a nuclear power plant we find that these costs are decommissioning costs within the meaning of sec_1_468a-1 consequently taxpayer may use amounts in its funds to pay for the costs incurred to remove the components at plant except as specifically determined above no opinion is expressed or implied concerning the federal_income_tax consequences of the transaction described above specifically no determination is made whether the costs incurred to remove the components are currently deductible under sec_165 or any other section of the code 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 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative we are also sending a copy of this letter_ruling to the director pursuant to sec_1_468a-7t a a copy of this letter must be attached with the required election statement to taxpayer's federal_income_tax return for each tax_year in which taxpayer claims a deduction for payments made to the fund sincerely peter c friedman senior technician reviewer branch passthroughs special industries


department of the treasury internal_revenue_service te_ge eo examinations commerce street mc dal dallas tx tax_exempt_and_government_entities_division date number release date legend org - organization name xx - date address - address org address certified mail dear taxpayer_identification_number person to contact identification_number contact telephone number this is a final adverse determination regarding your exempt status under sec_501 of the internal_revenue_code the code our favorable determination_letter to you dated june 19xx is hereby revoked and you are no longer exempt under sec_501 of the code effective january 20xx the revocation of your exempt status was made for the following reason s you are not operating exclusively for any charitable purpose educational purpose or any other exempt_purpose our examination reveals that you are not engaged primarily in activities which accomplish charitable educational or other exempt purposes as required by sec_1_501_c_3_-1 your activities including your financial transactions more than insubstantially furthered non-exempt purposes you failed both of the tests required by sec_1_501_c_3_-1 contributions to your organization are no longer deductible under sec_170 after january 20xx you are required to file income_tax returns on form_1120 these returns should be filed with the appropriate service_center for the tax_year ending december 20xx and for all tax years thereafter in accordance with the instructions of the return processing of income_tax returns and assessments of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the internal_revenue_code if you decide to contest this determination under the declaratory_judgment provisions of sec_7428 of the code a petition to the united_states tax_court the united_states claims_court or the district_court of the united_states for the district of columbia must be filed before the ' day after the date this determination was mailed to you please contact the clerk of the appropriate court for rules regarding filing petitions for declaratory judgments by referring to the enclosed publication you may write to these courts at the following addresses you also have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter enclosure publication sincerely nanette m downing director eo examinations letter catalog number 34198j internal_revenue_service date date org address department of the treasury ms dal commerce street dallas tx taxpayer_identification_number form tax_year s ended person to contact iid number contact numbers telephone fax certified mail - return receipt requested dear we have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the internal_revenue_code code is necessary if you accept our findings take no further action we will issue a final revocation letter if you do not agree with our proposed revocation you must submit to us a written request for appeals_office consideration within days from the date of this letter to protest our decision your protest should include a statement of the facts the applicable law and arguments in support of your position an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in publication if we issue a determination_letter to you based on technical_advice no further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice letter rev catalog number 34809f if we do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the code you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a substitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition ina united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at if you have any questions please call the contact person at the telephone number shown in the heading of this letter if you write please provide a telephone number and the most convenient time to call if we need to contact you thank you for your cooperation sincerely nanette m downing director eo examinations enclosures publication publication report of examination letter rev catalog number 34809f form_886 a name of taxpayer explanation of items department of the treasury - internal_revenue_service org schedule no or exhibit year period ended december 20xx legend org - organization name state - state company xx - date president - president address - address ra-1 - ra city - city co-1 - issue whether org qualifies for exemption as a public charity under sec_501 facts during the initial interview president current president of the organization and the representative ra-1 both stated that the organization’s sole purpose is to hold title to the co-1 building located at address city state the organization has no charitable purpose of any type at the time of the initial interview it was determined that during the year under examination no charitable activities were performed by the organization and in fact the organization only held title to property and collected rent from the property during the examination the organization’s restated articles of incorporation dated july 19xx were inspected the organization is a state non-profit corporation the articles of incorporation state that the corporate purpose is to exclusively hold title to real and personal_property for the co-1 the by-laws of the organization state in article ii that the exclusive purpose of the organization is to hold title to property collect rent and turn the entire amount of rent collected less expenses to the co-1 law sec_501 states corporations and any community chest fund or foundation organized and operated exclusively for religious charitable scientific testing for public safety literary or educational_purposes or to foster national or international amateur sports competition but only if no part of its activities involve the provision of athletic_facilities or equipment or for the prevention of cruelty to children or animals no part of the net_earnings of which inures to the benefit of any private_shareholder_or_individual no substantial part of the activities or which is carrying on propaganda or otherwise attempting to influence legislation except as otherwise provided in subsection h and which does not participate in or intervene in including the publishing or distributing of statements any political campaign on behalf of or in opposition to and candidate for public_office sec_1 c - a clarifies the organizational and operational requirements of sec_501 organizations and states in part in order to be exempt as an organization described in form 886-a rev department of the treasury - internal_revenue_service page -1- form_8 a name of taxpayer explanation of items department of the treasury - internal_revenue_service schedule no or exhibit year period ended december org 20xx sec_501 an organization must be both organized and operated exclusively for one or more of the purposes specified in such section if the organization fails to meet either the organizational_test or the operational_test it is not exempt sec_1 c - b states an organization is organized exclusively for one or more exempt purposes only if its articles of organization as defined in subparagraph of this paragraph a limit the purposes of such organization to one or more exempt purposes and b do not expressly empower the organization to engage otherwise than as an insubstantial part of its activities in activities which in themselves are not in furtherance of one or more exempt purposes taxpayer’s position the taxpayer’s representative ra-1 stated that the organization will agree with the revocation in the past the organization has wondered if it was correctly classified as a 501_c_3_organization but never pursued the matter government’s position in order to be exempt under sec_501 an organization must be organized and operated exclusively for one or more exempt purposes provided by sec_501 to be organized and operated it must pass both the organizational_test and the operational_test an organization is not exempt if it fails either test in this case it is clear that the organization fails both the organizational and operational tests the articles of incorporation and by-laws hold that the organization has the sole purpose of holding title to property and during the year under examination the organization had no activities other than holding the property and collecting rent an organization must pursue one or more in addition to be exempt under sec_501 of the exempt purposes provided in that code section this organization is not pursuing any of the exempt purposes conclusion org does not qualify for exemption under sec_501 and should be revoked effective january 20xx because it is not organized and operated exclusively for any of the exempt purposes required by sec_501 and fails both of the tests required by sec_1 c - a this excludes the organization from exemption form 886-a crev department of the treasury - internal_revenue_service page -2- form_886 a name of taxpayer explanation of items department of the treasury - internal_revenue_service schedule no or exhibit year period ended december org 20xx please file us corporate_income_tax return form_1120 for the tax periods ending december 20xx december 20xx and december 20xx contributions to your organization are not deductible under sec_170 please note that this is not a final report the draft report is subject_to review and modification by our mandatory review staff you will receive a final report from mandatory review form 886-arev department of the treasury - internal_revenue_service page -3-


department of the treasury int ernal revenue service washington d c date o f f i c e o f c h i e f c o u n s e l number release date cc psi b01 spr-119900-01 uilc memorandum for rod oakes from associate chief_counsel passthroughs special industries subject this chief_counsel_advice responds to your facsimile dated date chief_counsel_advice is not binding on examination or appeals and is not a final case determination this document is not to be used or cited as precedent disclosure statement chief_counsel_advice and is open to public inspection pursuant to the provisions of sec_6110 the provisions of sec_6110 require the service to remove taxpayer identifying information and provide the taxpayer with notice of intention to disclose before it is made available for public inspection sec_6110 and i sec_6110 also authorizes the service to delete information from chief_counsel_advice that is protected from disclosure under u s c sec_552 b and c before the document is provided to the taxpayer with notice of intention to disclose only the national_office function issuing the chief_counsel_advice is authorized to make such deletions and to make the redacted document available for public inspection accordingly the examination appeals or counsel recipient of this document may not provide a copy of this unredacted document to the taxpayer or their representative the recipient of this document may share this unredacted document only with those persons whose official tax_administration duties with respect to the case and the issues discussed in the document require inspection or disclosure of the chief_counsel_advice legend a b c d state date date a b c d e f g h i j k l issue under the facts presented below should the service invoke the sec_1_701-2 anti-abuse rule to recast the transaction and subsequent basis allocation conclusion yes where a transaction is set up solely to take advantage of the basis rules under sec_732 in an inappropriate manner the transaction will be recast facts on date a wholly owned by b transferred all of its assets to c in exchange for the stock in c the assets transferred to c consisted of inventory ab dollar_figurea prepaid expenses ab dollar_figureb security deposits ab dollar_figurec trademarks ab dollar_figured fixed assets ab dollar_figuree customer lists ab dollar_figuref and goodwill ab dollar_figureg on date just days after date a sold its h interest in c to d a newly formed state corporation for approximately dollar_figurei including dollar_figurej and the assumption_of_liabilities pursuant to sec_732 b and c d allocated basis equal to c’s basis to the inventory prepaid expenses and security deposits and allocated the balance to other assets in proportion to c’s basis in those assets as a result the basis in the trademarks was increased to dollar_figurek and the basis in fixed assets depreciable over years was increased to dollar_figurel law and analysis sec_1_701-2 provides that where a partnership is formed_or_availed_of in connection with a transaction a principal purpose of which is to reduce substantially the present_value of the partners’ aggregate federal tax_liability in a manner that is inconsistent with the intent of subchapter_k the commissioner can recast the transaction for federal tax purposes here the partnership was formed and terminated for no other purpose than to take advantage of the rules under sec_732 so the application of the sec_1_701-2 anti-abuse rule is appropriate in this case sec_732 was enacted for taxpayer convenience for the distribution from a partnership with an operating history it is clear that under these facts the creation and termination of the partnership in ten days was a deliberate plan to use sec_732 for an inappropriate tax_accounting therefore the service will recast this transaction as a sale of h of a’s assets to d and the subsequent creation of the partnership c please call if you have any further questions this writing may contain privileged information any unauthorized disclosure of this writing may have an adverse affect on privileges such as the attorney client privilege if disclosure becomes necessary please contact this office for our views david r haglund senior technician reviewer


t c memo united_states tax_court thor and marilyn solberg petitioners v commissioner of internal revenue respondent docket no filed date thor and marilyn solberg pro sese christopher a pavilonis for respondent memorandum findings_of_fact and opinion goeke judge respondent determined a deficiency of dollar_figure in petitioners’ federal_income_tax after a concession the sole issue to be decided is whether this court has jurisdiction to find an overpayment of dollar_figure for the deficiency year based 1respondent concedes the dollar_figure deficiency on the basis of a computational math error for the taxable_year on alleged overpayments from prior years as decided hereinafter we do not have jurisdiction findings_of_fact some of the facts have been stipulated and are so found at the time the petition was filed petitioners resided in florida petitioners maintain that they are entitled to a tax_refund based on an overpayment for generated by the carryforward of overpayments from and other years before respondent claims pursuant to sec_6214 b that this court lacks jurisdiction to determine an overpayment for any year besides the year properly at issue which is respondent argues further that this court cannot go back and redetermine the potential refunds that petitioners claim they are entitled to for any year except determination of an overpayment for would necessitate the determination of overpayments for and other prior years and respondent claims this to be outside of the court’s jurisdiction opinion this court is one of limited jurisdiction and it may exercise its jurisdiction only to the extent authorized by statute sec_7442 see 114_tc_519 our jurisdiction to redetermine the amount 2all section references are to the internal_revenue_code as amended of a deficiency is premised on the issuance of a valid notice_of_deficiency followed by a timely filing of a petition id once validly exercised our jurisdiction extends to the entire subject matter of the correct_tax for the taxable_year 85_tc_527 including the taxpayer’s claim of an overpayment_of_tax see sec_6512 in determining the correct_tax for the taxable_year sec_6214 allows us to consider such facts with relation to the taxes for other years as may be necessary but explicitly deprives us of jurisdiction to determine whether or not the tax for any other year has been overpaid or underpaid we have previously construed sec_6214 as granting us the authority for computing as distinguished from ‘determining ’ the correct_tax liability for a year not in issue when such a computation is necessary to a determination of the correct_tax liability for a year that has been placed in issue 61_tc_436 affd without published opinion 510_f2d_970 3d cir petitioners have asked us to do much more than merely compute the correct_tax liability for a nondeficiency year petitioners exhort us to determine an overpayment for the deficiency year based on crediting overpayments from nondeficiency years to we read sec_6214 as preventing us from doing so see 320_us_418 porter v commissioner tcmemo_2010_154 petitioners have not been issued a notice_of_deficiency of which the court is aware for tax_year or any of the prior years the only tax_year before the court is petitioners make no argument about the notice_of_deficiency at issue this court lacks jurisdiction to make the determinations that are prerequisites for ruling favorably on petitioners’ claim for an overpayment for the court has considered all of petitioners’ contentions arguments requests and statements to the extent not discussed herein we conclude that they are meritless moot or irrelevant to reflect the foregoing an appropriate decision will be entered


t c memo united_states tax_court jeffrey c woody petitioner v commissioner of internal revenue respondent docket no 29992-14l filed date jeffrey c woody pro_se kimberly a daigle for respondent memorandum opinion pugh judge this case is before us on respondent’s motion to dismiss for lack of jurisdiction on the ground that the petition was not filed within the time prescribed by sec_6330 or sec_7502 unless otherwise indicated all section references are to the internal_revenue_code in effect at all relevant times background respondent’s motion asserts that the notice_of_determination giving rise to this case was mailed to petitioner on date by certified mail and that the 30-day period for filing a petition challenging the notice_of_determination expired on date respondent therefore argues that the petition was filed late and we lack jurisdiction petitioner argues that he did not receive the notice_of_determination until an internal_revenue_service irs representative provided an undated and unsigned copy to him by letter dated date which he attached to his petition the court received and filed his petition on date the postmark reflects that petitioner mailed the petition on date he therefore argues that his petition was timely filed because he mailed it to the court on date the parties do not dispute that we would have jurisdiction if the mailing date of the date letter is the date that triggered the running of the 30-day period for filing a petition in addition they do not dispute that the address on the notice_of_determination is petitioner’s last_known_address thus the only issue for purposes of determining our jurisdiction is the date the notice was mailed in the light of the dispute we conducted an evidentiary hearing on respondent’s motion to develop the record as to the mailing of the notice_of_determination respondent was unable to find an original dated copy of the notice_of_determination sent to petitioner and states that the original file was destroyed therefore respondent attached declarations from the appeals settlement officer e a stewart so stewart and the processing team manager kerrin d rooney to establish the facts surrounding the preparation and mailing to petitioner of the notice_of_determination and so stewart testified at the hearing so stewart was the settlement officer assigned to petitioner’s appeal of the collection action giving rise to the notice_of_determination a case activity record print activity record bearing a work unit identification_number wuno of summarizes so stewart’s activities relating to petitioner’s appeal the activity record includes an entry by so stewart under the name so dandridge indicating that she submitted the notice_of_determination to the appeals team manager for closing and transmission to the processing team on date an entry for date indicates that marilyn arroyo the tax examining technician in holtsville new york then processed the case under the supervision of ms rooney ms arroyo was responsible for mailing ms rooney’s declaration attaches a certified mail return receipt approval form prepared by ms arroyo and signed by ms rooney attached to that form is a u s postal service usps form_3800 certified mail receipt bearing a usps stamp dated jan petitioner’s name and address and a certified mail number of ms rooney’s declaration explains that the form_3800 was used to confirm mailing of the notice_of_determination to petitioner by certified mail and that on the day that ms arroyo mailed the notice_of_determination to petitioner she recorded the mailing in the appeals centralized database acds which tracked petitioner’s appeal while it was pending in respondent’s office of appeals the case activity summary card summary card from the acds shows that a document was mailed by certified mail to petitioner’s address on date and includes the certified mailing number shown on the form_3800 the summary card includes the same wuno number as the activity report indicates cdp and shows a sndate of petitioner does not dispute that a document was mailed but challenges whether the document mailed was the notice_of_determination he now seeks to challenge he did not identify what other correspondence the irs might have been sending on that day nor did he identify any other matter pending with the irs at that time ms rooney’s declaration states that notices of determination are the only documents mailed by certified mail in a collection case discussion the tax_court is a court of limited jurisdiction and we may exercise our jurisdiction only to the extent authorized by congress see sec_7442 142_tc_183 sec_6330 provides that an aggrieved taxpayer in a lien levy case may within days of a determination under this section appeal such determination to the tax_court and the tax_court shall have jurisdiction with respect to such matter we have held that this day period is jurisdictional and we dismiss for lack of jurisdiction cases in which petitions are not filed within this 30-day period see eg 138_tc_295 the question we must resolve then is when the 30-day period began for petitioner we recently considered this question in detail in a case bearing certain similarities to the facts here in bongam v commissioner 146_tc_52 after an administrative hearing the irs sent the taxpayer by certified mail a notice_of_determination denying relief the notice was mailed to the taxpayer at what the parties agreed was an incorrect address and was returned to the irs as undeliverable without revising the date on the notice_of_determination the irs then remailed the notice to the taxpayer by regular mail the taxpayer received this copy and petitioned us within days of the remailing and his actual receipt which was more than days after the date on the notice after reviewing the jurisdictional requirements and the wording of sec_6330 we held that the notice as originally mailed was invalid because it was not mailed to the taxpayer at his last_known_address we further held that the notice subsequently remailed to the taxpayer was valid because the taxpayer received it in time to file a timely petition we treated the date the notice was remailed to or received by the taxpayer as the critical date rather than the date shown on the notice itself by contrast in 122_tc_258 we concluded that we lacked jurisdiction because the irs was able to establish that a notice_of_determination was sent by certified or registered mail to the taxpayer at the taxpayer’s last_known_address although the notice was unclaimed by the taxpayer we further held that it was immaterial that the taxpayer did not receive the notice_of_determination before the expiration of the 30-day filing period id pincite we also declined to allow the late mailing of a courtesy copy to revive the 30-day filing period even though the taxpayer filed his petition within days of receiving that courtesy copy id in the case before us the parties do not dispute that respondent was using petitioner’s last_known_address following the reasoning of bongam and weber if we conclude that respondent properly mailed the notice to petitioner at that address on date rather than on date the date that the irs representative mailed to petitioner the unsigned and undated copy of the notice we would lack jurisdiction as his petition would be untimely respondent bears the burden of proving that the notice was properly mailed on date see 94_tc_82 respondent was unable to provide a dated and signed copy of the notice or a certified mailing list as the original file was destroyed but did produce a usps form_3800 bearing the same certified mail number as that in respondent’s computerized records in other cases where the taxpayer disputed the mailing and the irs records were incomplete we have allowed testimony by irs employees and usps employees to fill the gap in those cases the testimony regarding mailing was consistent with and was supported by other evidence of mailing see figler v commissioner tcmemo_2005_230 concluding that the preponderance_of_the_evidence showed that a notice_of_deficiency was mailed to taxpayer based on testimony by the irs employee responsible for mailing that corroborated information on the form_3877 and additional corroborating testimony by the employee’s reviewer and by a usps employee as to procedures see also weiss v commissioner t c slip op pincite date citing testimony and documentary_evidence that supported a settlement officer’s determination of the date of mailing of a notice_of_intent_to_levy where we identified inconsistencies between the testimony and the documents by contrast we have concluded that the irs failed to meet its burden see dorsey v commissioner tcmemo_1993_182 concluding that irs did not satisfy burden_of_proof because of inconsistencies between control card and testimony of employees responsible for mailing here respondent’s computer records and the usps form_3800 support the testimony and declarations by respondent’s employees so stewart’s testimony was very helpful in explaining the computer records that respondent has regarding respondent’s processing of the notice_of_determination and petitioner did not dispute that something was mailed to him that day and did not suggest what other document might have been mailed instead of the notice_of_determination although we do not have testimony from the employee responsible for the mailing ms arroyo we do not require irs employees to recall a specific mailing we simply require the irs to establish its procedure for mailing and to introduce evidence showing that the procedure was followed in the case before us 60_tc_522 aff’d 499_f2d_550 2d cir we therefore hold that respondent has carried his burden of showing that the notice was properly mailed to petitioner on date and as we held in weber once respondent establishes that the notice was mailed it is immaterial that petitioner did not receive it within the 30-day filing period because petitioner did not mail the petition to the court within that period we lack jurisdiction any contentions we have not addressed are irrelevant moot or meritless to reflect the foregoing an order of dismissal for lack of jurisdiction will be entered


internal_revenue_service number release date index number -------------------------------------- --------------------------------------- ------------------------------- --------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ------------- telephone number --------------------- refer reply to cc psi b02 plr-151412-08 date date x ------------------------------------------------------------------------------------------------------ ----------------------- state -------- d1 ------------------------- dear -------------- this responds to a letter dated date submitted on behalf of x by x's authorized representative requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated in state on d1 it was intended that x elect s_corporation treatment effective on d2 however x's internal_revenue_service center has no record of form_2553 election by a small_business_corporation being timely filed for x accordingly x requests a ruling that it will be treated as an s_corporation effective d1 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 generally 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 sec_1362 provides that if an s 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-151412-08 sec_1362 provides that if an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making the election for the taxable_year or no sec_1362 election is made for any taxable_year and the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for such taxable_year and sec_1362 shall not apply 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 with the appropriate service_center effective d1 within days following the date of this letter then such election will be treated as timely made for x's taxable_year beginning d1 a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed or implied as to the federal_income_tax consequences of the transaction described above under any other provision of the code specifically no opinion is expressed concerning whether x is in fact an s_corporation for federal tax purposes 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 pursuant to the power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely melissa c liqureman chief branch associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index number --------------------------------- ------------------------------ ---------------------------- in re ------------------------------------------------ --------------------------------------- -------------------------------------- ----------------------------------- --------------------- - department of the treasury washington dc person to contact --------------------------- id no ------------- telephone number --------------------- refer reply to cc psi b04 plr-121832-06 date july legend legend old trust ------------------------------------------------ husband ---------------------------------------------------------------------------- wife ----------------------------- date --------------------------- country ----- country --------------- x ----- y ---------------- son ---------------------------------------------------- son ------------------------------------------------------------ son --------------------------------------------------------- daughter ------------------------- son -------------------------- country ------------- trust ----------------------------------------- trust ------------------------------------------- state ------------- state statute ------------------------------------------------------------------------------------ state statute ---------------------------------------------------------------------------------- date -------------------------- new trust ------------------------------------------------ this is in response to a letter dated date and prior correspondence company ------------------------------------------------------ z --------------- foundation ----------------------------------------- state ------------- individual --------------------------- state statute ---------------------------------------------------------------------- state statute ---------------------------------------------------------------------- state statute ---------------------------------------------------------------------- state statute ------------------------------------------------------------------- plr-121832-06 dear ------------------ requesting rulings regarding the estate gift and generation-skipping_transfer gst tax consequences of a proposed transfer of assets from old trust to new trust and the termination of old trust facts husband and wife settlors established an irrevocable_trust old trust for the benefit of their children son son son and daughter settlors have another child son son and his descendants are expressly excluded as beneficiaries of old trust at the time settlors created old trust settlors were citizens of country and residents of country settlors initially funded old trust with dollar_figurex and later with dollar_figurey from funds that were located in country which is outside of the united_states it is represented that no additional transfers have been made to old trust since its creation the current trustees of old trust are son son and son the facts submitted and representations made are as follows on date under sec_1 of article first of old trust son son son and daughter are the initial beneficiaries beneficiaries of the trust during the lives of beneficiaries the trustees may distribute in their sole and absolute discretion at any time any amount of net_income and principal to or for the benefit of any beneficiaries and their descendants including all to one to the exclusion of the others under sec_1 of article first at the death of the last surviving beneficiary the trustees will divide the remaining trust into equal shares one share with respect to each beneficiary who has descendants then living each share will be held in a separate trust trust for descendant beneficiaries if no descendants of any beneficiary are then living the principal of the trust will be distributed to one or more charities selected by the trustees under sec_2_1 of article second the trustees of each trust for descendant beneficiaries may distribute in their sole and absolute discretion at any time any plr-121832-06 amount of net_income and principal to or for the benefit of descendant beneficiaries of that trust including all to one to the exclusion of the others under sec_2 of article second all trusts created under old trust terminate years after the death of the survivor of the issue of settlors’ parents who are living at the time old trust was executed however with respect to any property that may be transferred to old trust from trust or trust if the law of country so requires the respective portions of old trust holding such property will terminate years from the date trust or trust was executed under sec_5 of article fifth the trustees may appoint other co-trustees other than settlors under sec_5 if a trustee dies resigns or otherwise ceases to act the then acting trustees shall have a right to appoint a successor trustee if at any time no trustee is acting and none is so appointed the majority of eligible adult beneficiaries at such time shall appoint a successor trustee if none is so appointed a specified bank shall be appointed section dollar_figure of article fifth provides that subject_to the limitations of article sixth and any effective delegation made by any trustee if more than one trustee is acting as to any trust hereunder they shall act by unanimous decision of the trustees or if such trustees cannot reach a unanimous decision then by decision of son article sixth provides that if any trustee at any time acting hereunder is a person in whose favor a discretionary power over income or principal may be exercised or is a parent of any such person then such trustee shall be precluded from participating in any exercise of such discretionary power to or for the benefit of himself or any person whom he or she is obligated to support and any such power shall be exercised by the other trustees then acting hereunder the law of state governs old trust under state statute a trustee who is section b of state statute provides that unless the terms of the also a beneficiary cannot participate in distributions to himself instrument expressly provide otherwise a trustee who has the absolute discretion under the terms of a testamentary instrument or irrevocable inter_vivos_trust agreement to invade the principal of a_trust for the benefit of one or more proper objects of the exercise of the power may exercise such discretion by appointing all or part of the principal of the trust in favor of a trustee of a_trust under an instrument other than that under which the power to invade is created or under the same instrument provided however that the exercise of such discretion does not reduce any fixed income_interest of any income_beneficiary of the trust is in favor of the proper objects of the exercise of the power and does not violate the limitations of section -------- on date settlors established another irrevocable_trust new trust for the under article first paragraph the trustees may distribute in their sole and plr-121832-06 benefit of son son son and daughter at the time settlors created new trust settlors were citizens of country and residents of country new trust was funded with dollar_figurez from funds that were located outside of the united_states the trustee of new trust is company under article first paragraph of new trust when property is contributed to new trust the trustees will divide that property into equal shares one share each for son son son and daughter if living at that time if anyone of these beneficiaries is deceased then one share will be set_aside for the collective living descendants of the deceased beneficiary each share set_aside for the collective descendants will be further divided into per stirpital parts for such descendants son son son daughter or the living descendant of a deceased beneficiary for whom a per stirpital part is set_aside are referred to as the initial beneficiaries absolute discretion at any time any amount of net_income and principal of each separate share to or for the benefit of any initial beneficiary for whom the share is set_aside and his or her descendants including all to one to the exclusion of the others under article first paragraph upon the death of an initial beneficiary the remaining assets of that deceased initial beneficiary’s share will be divided into equal shares one share for each then living child of the deceased initial beneficiary and one share for the then living descendants of each then deceased child of the deceased initial beneficiary the share for descendants of a deceased child of a deceased initial beneficiary will be further divided into per stirpital parts each part to be held as a separate share for such descendants all such beneficiaries for whom shares are then set_aside will also be initial beneficiaries and payments from their shares will be made under article first paragraph if no descendant of the deceased initial beneficiary is then living the remaining assets of the trust directed to be disposed of under article first paragraph will be divided into per stirpital shares for and may be added to any share already held for the then living descendants of the closest lineal ancestor of the deceased initial beneficiary who is or was a descendant of the settlors or was a settlor each descendant for whom such a per stirpital share is held will be an initial beneficiary for purposes of article first if no descendant of the settlors is then living the remaining assets of the trust directed to be disposed of will be distributed under the conditions of article third determined as of the death of the initial beneficiary under article first paragraph on the death of the last to survive of son son son and daughter after dividing each share under article first paragraph the trustees will administer each separate share of new trust as a separate trust under article second and the initial beneficiary of each such share will be known as the primary beneficiary of each such separate trust under article first paragraph son and his descendants are expressly under article second paragraph any unappointed part of the remaining under article second paragraph at the death of a primary beneficiary the plr-121832-06 excluded as beneficiaries of new trust under article second paragraph the trustees may distribute in their sole and absolute discretion at any time any amount of net_income and principal of each separate trust to or for the benefit of any primary beneficiary for whom the trust is set_aside and his or her descendants including all to one to the exclusion of the others deceased primary beneficiary has a testamentary special power to appoint the remaining assets of the trust to any of settlors’ descendants except the deceased beneficiary that beneficiary’s creditors or estate the creditors of that beneficiary’s estate and son and his descendants assets of the deceased primary beneficiary’s trust will be divided into equal shares one share for each then living child of the deceased primary beneficiary and one share for the then living descendants of each then deceased child of the deceased primary beneficiary the share for descendants of a deceased child of a deceased primary beneficiary will be further divided into per stirpital parts each part to be held as a separate share for such descendants all such shares will be held as separate trusts the beneficiaries for whom these trusts are set_aside will also be primary beneficiaries and payments from their shares will be made under article second if no descendant of the deceased primary beneficiary is then living the remaining assets of the trust directed to be disposed of under article second paragraph will be divided into per stirpital shares for and may be added to any share already held for the then living descendants of the closest lineal ancestor of the deceased primary beneficiary who is or was a descendant of the settlors or was a settlor each descendant for whom such a per stirpital trust is held will be a primary beneficiary for purposes of article second if no descendant of the settlors is then living the remaining assets of the trust directed to be disposed of will be distributed under the conditions of article third article second paragraph provides that it is the settlors’ intent that on the death of a primary beneficiary of any generation except to the extent that beneficiary exercises his or her power_of_appointment the beneficiary’s trust will be divided among the beneficiary’s surviving descendants per stirpes with each descendant becoming a primary beneficiary through all succeeding generations in perpetuity to the maximum extent permitted under state law article third provides that any property to be disposed of under that article will be distributed on a per stirpital basis to the then living descendants of settlors but if none under article fifth the settlors authorize but do not direct the trustees to under article sixth a trustee who is also a current beneficiary of a_trust cannot plr-121832-06 to foundation or if foundation is not then in existence to a charity selected by the trustees appoint the primary beneficiary of each trust as cotrustee of his or her trust and to appoint at any time any other individual or bank or trust company as cotrustee as the trustees in their sole and absolute discretion may select however the settlors cannot be trustees and no beneficiary and no persons related or subordinate to any beneficiary within the meaning of sec_672 may be a sole trustee unless the trustees have changed the situs of new trust from state at least one of the trustees must be an individual bank or trust company domiciled in state the trust_protector may remove and replace any trustee provided that any trustee removed by the trust_protector may not be replaced with the settlors a beneficiary or a person related or subordinate within the meaning of sec_672 to any beneficiary participate as trustee of that trust in decisions regarding distributions to any beneficiary to exercise powers conferred on trustees under specified provisions of article fourth regarding change_of situs and cannot participate in the exercise of any general_power_of_appointment over that trust no trustee can participate in decisions regarding distributions from any trust to dependents he is legally obligated to support_trust created under new trust the trust_protector may prohibit the trustees from exercising any power conferred by law or new trust and may require the trustees to give advance notice of any proposed exercise of a power the trust_protector may remove and replace any trustee but must replace the trustee with a person who is not related or subordinate within the meaning of sec_672 to a beneficiary the trust_protector may remove and replace an investment_advisor while new trust is administered under article first the trust_protector committee by majority vote will replace a_trust protector who has ceased to serve while new trust is administered under article second the adult primary beneficiary or parent or guardian of a minor primary beneficiary of a_trust will replace a_trust protector who has ceased to serve the initial trust_protector committee will be son son son and daughter any member of the committee who ceases to serve will be replaced by the majority vote of the members eighth paragraph provides that during any period that there is an investment_advisor in office the trustees shall sell vote and take any_action with respect to the investment of the trust property upon the direction of the investment_advisor and shall take no such action with out such direction during the period that there is an under article eighth son is the initial investment_advisor of new trust article article seventh provides that individual will be the initial trust_protector of every plr-121832-06 investment_advisor in office the trustees shall have no duty to review or make recommendations with respect to any investment decisions and shall not be liable for any act or failure to act by the investment_advisor during any period that there is no investment_advisor in office all of the rights and powers conferred upon the investment_advisor pursuant to this article shall be conferred upon the trustees the investment_advisor shall act in a fiduciary capacity under article eighth paragraph any investment_advisor has the power to appoint his or her successor investment_advisor during any period when no investment_advisor is serving the trust_protector has the power to appoint an investment_advisor and may remove and replace such investment_advisor participating in any exercise of power that the trustee is prohibited from exercising to vote shares of stock in a company the investment_advisor controls within the meaning of sec_2036 that would be an incident_of_ownership within the meaning of sec_2042 or that would render any portion of trust property includible in his gross_estate under article eighth paragraph the investment_advisor is prohibited from under article ninth paragraph the law of state governs new trust under article ninth paragraph with respect to any property that may be transferred to new trust from trust or trust if the law of country so requires the respective portions of new trust holding such property will terminate years from the date trust or trust was executed further if any other trust created under new trust is deemed to be subject_to the law of a jurisdiction other than state that trust will terminate under the rule_of perpetuities of the governing jurisdiction upon termination of a_trust under article ninth paragraph the trust property will be distributed to those persons eligible to receive the income of that trust in such amounts and proportions as the trustees in their sole discretion determine including all to one to the exclusion of others capacity as trustees of old trust will exercise their sole and absolute discretion to distribute all of the principal of old trust to new trust and terminate old trust proposed transaction pursuant to section b of state statute son son and son in their section f of state statute provides that the exercise of the power to invade the principal of the trust under section b shall be considered the exercise of a special_power_of_appointment and is subject_to state statute sec_2 and rule_against_perpetuities principal of the trust under section b shall be by an instrument written signed and under section d of state statute the exercise of the power to invade plr-121832-06 acknowledged by the trustee and filed with the court having jurisdiction over the trust a copy of the writing must be served on all persons interested in the trust son son and son as the trustees of old trust will submit filing pursuant the taxpayers old trust son son son and new trust have requested to section d of state statute to court the filing states that the trustees of old trust are exercising their absolute discretion under sec_1 of article first to invade the principal of old trust and distribute all the assets of old trust to new trust thereby terminating old trust the filing further states that such distribution shall be subject_to any and all limitations liabilities obligations and encumbrances of any and every kind or nature now in existence in connection with the assets so transferred shall be enforceable with respect to new trust on the terms and conditions set forth in old trust including without limitation the state rule_against_perpetuities as provided by state statute state statute and state statute and the provisions of sec_2 of old trust the following rulings the reciprocal_trust doctrine does not apply to old trust none of the individual taxpayers holds a general_power_of_appointment as defined in sec_2041 of the internal_revenue_code with respect to old trust or new trust consequently upon the death of any of the individual taxpayers prior to or after the proposed transaction neither the property of old trust nor of new trust will be included in the gross_estate of such taxpayer under sec_2041 none of the individual taxpayers holds a general_power_of_appointment under sec_2514 with respect to old trust or new trust and consequently engaging in the proposed transaction will not be considered a taxable gift under sec_2514 distributions from and terminating distributions from old trust and new trust pursuant to the proposed transaction will not be subject_to federal generation-skipping_transfer gst tax law and analysis ruling_request in 395_us_316 the u s supreme court held that where donors create reciprocal trusts which do not change the economic position of each donor with respect to the property while avoiding the literal terms of the predecessor to sec_2036 the trust will be includible in that donor's gross_estate at death in grace the donor created a_trust providing for payment of income to his plr-121832-06 spouse for her life and payment of principal at the discretion of the trustees the spouse was granted a testamentary special power to appoint the property to the donor and their children shortly thereafter the spouse created a virtually identical trust naming the donor as life_beneficiary the court held that the trusts were interrelated since they were substantially identical and were part of a single transaction designed by the donor the transfers left each party in the same effective economic position as if they had created trusts naming themselves as life beneficiaries the court stated that application of the reciprocal_trust doctrine is not dependent on a finding that each trust was created as a quid pro quo for the other estate of grace supra pincite see also 109_f2d_99 2d cir cert_denied 310_us_637 in 69_tc_32 the tax_court held that the supreme court's decision in grace did not limit the application of the reciprocal_trust doctrine to situations where there exists the crossing of substantial economic interests and held that the doctrine also applies to the crossing of powers in bischoff each spouse within a very short time period created identical trusts for their grandchildren naming each other as trustee the court uncrossed the trust powers and held that the value of the property held in the trust created by each spouse was includible in his or her respective gross_estate under sec_2036 and sec_2038 a contra 68_f3d_151 6th cir settler trustee retained fiduciary powers to reinvest income and to time income and corpus distributions did not constitute retained economic benefit generally the reciprocal_trust doctrine applies to a situation in which x and y each establish a_trust x creates x trust to benefit y and y’s children y creates y trust to benefit x and x’s children even though x and y have not retained a life interest in the trust each established x and y are still in the same economic position as if they had created trusts naming themselves as life beneficiaries the courts have applied the reciprocal_trust doctrine to this situation this doctrine is also applied where the settlors hold trustee powers see bischoff settlors established one trust old trust for the benefit of their issue settlors did not retain any life interest in old trust accordingly the situation in grace is not present further the settlors do not hold trustee powers in old trust accordingly the situation in bischoff is not present the reciprocal_trust doctrine applies under sec_2036 and sec_2038 in order for those sections to apply the transferors in this case the settlors would have had to retain some interest in old trust in this case the settlors did not retain any interest in old trust as settlors or trustees with or without application of the reciprocal_trust doctrine therefore based on the facts submitted and the representations made we conclude that the reciprocal_trust doctrine does not apply to old trust the instant case is distinguishable from these situations in this case the plr-121832-06 ruling requests sec_2041 provides that the value of the gross_estate shall include the value of all property to the extent of any property with respect to which the decedent has at the time of his death a general_power_of_appointment created after date or with respect to which the decedent has at any time exercised or released such a power_of_appointment by a disposition which is of such nature that if it were a transfer of property owned by the decedent such property would be includible in the decedent's gross_estate under sec_2035 to inclusive sec_2041 provides that the term general_power_of_appointment means a power which is exercisable in favor of the decedent his estate his creditors or the creditors of his estate sec_20_2041-1 of the estate_tax regulations provides that a power_of_appointment exercisable for the purpose of discharging a legal_obligation of the decedent or for his pecuniary benefit is considered a power_of_appointment exercisable in favor of the decedent and his creditors under sec_2514 the exercise or release of a general_power_of_appointment created after date is a transfer of property by the individual possessing such power under sec_2514 a general_power_of_appointment is defined as a power which is exercisable in favor of the individual possessing the power his estate his creditors or creditors of his estate sec_25_2514-1 of the gift_tax regulations provides that a power_of_appointment exercisable for the purpose of discharging a legal_obligation of the possessor or for his pecuniary benefit is considered a power_of_appointment exercisable in favor of the possessor and his creditors in the present case son son and son are trustees and beneficiaries of old trust with discretionary powers as trustees to distribute any amounts in any proportions of net_income and principal to beneficiaries of old trust article sixth of old trust prohibits son son and son from making distributions from old trust to themselves or to dependents they are legally obligated to support further state statute prohibits son son and son from making distributions from old trust to themselves as beneficiaries accordingly son son and son do not hold general powers of appointment with respect to old trust for purposes of sec_2041 and sec_2514 son is the initial investment_advisor of trust there are no restrictions to son son and son are beneficiaries of new trust but are not named as individual is the initial trust_protector son son and son are members of plr-121832-06 trustees of new trust and cannot be appointed to act as trustees the current trustee of new trust is company and at all times that state law governs new trust there must be one bank or trust company acting as trustee accordingly son son and son do not hold any power to make distributions from new trust to themselves or to any person they are obligated to support prevent son and son from being appointed as a successor investment_advisor the investment_advisor directs the trustee with respect to selling voting and taking any_action with respect to the investment of trust property however the investment_advisor does not hold any power to make distributions from new trust to himself or to any person he is legally obligated to support accordingly an individual taxpayer in his capacity as investment_advisor would not hold a general_power_of_appointment the trust_protector committee and may replace the trust_protector with anyone of them the trust_protector may remove and replace a trustee of new trust however the trust_protector cannot appoint a successor trustee who is related or subordinate within the meaning of sec_672 to any beneficiary thus the trust protector’s power to replace a trustee is not a general_power_of_appointment over the assets of new trust for purposes of sec_2041 and sec_2514 further the trust_protector may remove and replace the investment_advisor however as stated above the investment_advisor cannot exercise any powers of distribution to beneficiaries of new trust accordingly a beneficiary in his capacity as trust_protector would not hold a general_power_of_appointment conclude that none of the individual taxpayers holds a general_power_of_appointment as defined in sec_2041 with respect to old trust or new trust consequently upon the death of any of the individual taxpayers prior to or after the proposed transaction neither the property of old trust nor of new trust will be included in the gross_estate of such taxpayer under sec_2041 we also rule that none of the individual taxpayers holds a general_power_of_appointment under sec_2514 with respect to old trust or new trust and consequently engaging in the proposed transaction will not be considered a taxable gift under sec_2514 ruling_request each calendar_year by an individual resident or nonresident under sec_2501 a tax is imposed on the transfer of property by gift during accordingly based on the facts submitted and the representations made we under sec_2511 the tax imposed by sec_2501 shall apply whether the transfer is in sec_2601 imposes a tax on every generation-skipping_transfer gst made sec_26_2652-1 provides that for gst purposes a transfer is subject_to plr-121832-06 trust or otherwise whether the gift is direct or indirect and whether the property is real or personal tangible or intangible but in the case of a nonresident_not_a_citizen_of_the_united_states the gift_tax shall apply to a transfer only if the property is situated within the united_states sec_25_2511-3 provides that for purposes of applying the gift_tax to the transfer of property owned and held by a nonresident_not_a_citizen_of_the_united_states at the time of the transfer real_property and tangible_personal_property constitute property within the united_states only if they are physically situated therein by a transferor to a skip_person a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip in general under sec_2652 and sec_26 a of the generation-skipping_transfer_tax regulations the individual with respect to whom the property was last subject_to federal estate or gift_tax is the transferor of the property for gst tax purposes federal gift_tax if a gift_tax is imposed under sec_2501 without regard to exemptions exclusions deductions and credits a transfer is subject_to federal estate_tax if the value of the property is includible in the decedent's gross_estate as determined under sec_2031 or sec_2103 be necessary or appropriate to carry out the purposes of chapter including regulations consistent with the principles of chapter sec_11 and sec_12 providing for the application of the gst tax in the case of transferors who are nonresidents not citizens of the united_states sec_26_2663-2 provides rules for applying the gst tax to transfers by a transferor who is a nonresident_not_a_citizen_of_the_united_states nra transferor sec_26_2663-2 provides that the gst tax applies to a taxable_distribution or a taxable_termination to the extent that the initial transfer of property to the trust by a nra transferor whether during life or at death was subject_to the federal estate or gift_tax within the meaning of sec_26_2652-1 settlors were citizens of country and residents of country when new trust was established on date and when settlors funded new trust settlors were citizens of country and residents of country consequently for purposes of the gst tax settlors were nonresident_aliens not citizens of the united_states at the time each trust was established and funded old trust and new trust were funded with cash when old trust was established on date and when settlors funded old trust sec_2663 provides that the secretary shall prescribe such regulations as may plr-121832-06 transferred from settlors’ accounts located outside the united_states thus although settlors nonresident_aliens transferred cash which is tangible_personal_property for purposes of sec_2501 the cash was not physically situated within the united_states prior to the transfer therefore pursuant to sec_25_2511-3 the transfer of cash was not a transfer that was subject_to the gift_tax under sec_2501 because the initial transfers of property to old trust and new trust by settlors were not subject_to gift_tax and because settlors are nonresidents not citizens of the united_states at the time of the initial transfers to each trust the gst tax does not apply to distributions from old trust or new trust accordingly based on the facts submitted and representations made we conclude that distributions from and terminating distributions from old trust and new trust pursuant to the proposed transaction to the extent attributable to settlors’ transfers of dollar_figurex and dollar_figurey to old trust and dollar_figurez to new trust will not be subject_to federal generation-skipping_transfer_tax the rulings contained in this letter are based upon information and except as specifically ruled herein we express no opinion on the federal tax in accordance with the power_of_attorney on file with this office a copy of this representations submitted by the taxpayers and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification in an examination consequences of the proposed transaction under the cited provisions or under any other provisions of the code letter is being sent to your authorized representative this ruling is directed only to the taxpayer who requested it sec_6110 plr-121832-06 provides that it may not be used or cited as precedent senior counsel branch office of associate chief_counsel enclosure copy for sec_6110 purposes lorraine e gardner _________________________ sincerely yours passthroughs and special industries


t c summary opinion united_states tax_court thomas j sweeney petitioner v commissioner of internal revenue respondent docket no 6331-05s filed date thomas j sweeney pro_se robert w dillard for respondent couvillion special_trial_judge this case was heard pursuant to sec_7463 in effect when the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority 1unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year at issue respondent determined a deficiency of dollar_figure in petitioner’s federal_income_tax for the sole issue for decision is whether petitioner under sec_1366 is required to include as income on hi sec_2002 federal_income_tax return his proportionate share of undistributed_income from an s_corporation in which he was a shareholder with his former wife some of the facts were stipulated those facts with the exhibits annexed thereto are so found and made part hereof petitioner’s legal residence was seminole florida at the time the petition was filed petitioner was married to cheryl l sweeney during the year at issue during the year petitioner and his wife incorporated lake vista billing services inc petitioner was the registered agent for the corporation his wife was the president and petitioner was vice president and a stockholder the stated purpose for the corporation was medical billing for 2at trial petitioner conceded the following adjustments in the notice_of_deficiency disallowance of a dependency_exemption deduction for a child disallowance of a child_and_dependent_care_credit under sec_21 disallowance of the child_tax_credit under sec_24 and a computational disallowance of miscellaneous_itemized_deductions 3under sec_7491 where a taxpayer introduces credible_evidence with respect to any factual issue relevant to ascertaining the liability of the taxpayer the burden_of_proof shifts to the commissioner there are no factual issues in this case the sole issue is a question of law consequently this case is decided without regard to the burden_of_proof physicians’ practices petitioner and his spouse each owned percent of the corporation the activity of the corporation was simply collection of fees charged by doctors to their patients for medical services petitioner’s spouse performed all the activities of the corporation by visiting doctors’ offices weekly picking up their billing invoices collecting payment of these invoices from primary and secondary insurers and collecting directly from each patient the portions not covered by insurance petitioner was not involved in this activity petitioner was employed as an insurance instructor for an unrelated employer there is no evidence in the record as to the corporation’s business activity for the years and however for the year the year at issue in this case a form_1120s u s income_tax return for an s_corporation was filed on that return the corporation’s taxable_income was dollar_figure the return reflected issuance to the shareholders of the corporation schedules k-1 shareholder’s share of income credits deductions etc although a copy of the schedule_k-1 issued to petitioner was not offered into evidence at trial respondent’s official records were offered into evidence which reflected a schedule_k-1 for petitioner in the amount of dollar_figure which is one-half of the corporation’s net_income of dollar_figure rounded on his federal_income_tax return for petitioner did not include any income from the corporation petitioner and his spouse each filed federal_income_tax returns for as married_filing_separately respondent’s records reflect that petitioner’s spouse reported on her return dollar_figure or one-half of the taxable_income of the s_corporation in the notice_of_deficiency respondent determined a deficiency against petitioner for the unreported dollar_figure in flow-through income from lake vista billing services inc petitioner contends he never received any of the proceeds of the corporation’s profitable activity for the year at issue he and his wife had serious problems between them during the year which he described at trial as follows this is my whole argument your honor during the second week of date my wife proceeded to throw me out of my home which is where the business was located she changed the locks she stripped our corporate bank accounts our personal bank accounts charged up all the cash she could on my credit cards to over dollar_figure dollar_figure and she physically lock stock and barrel locked me out of the corporation although petitioner engaged the services of an attorney in connection with his marital problems no evidence was offered to show what was resolved between petitioner and his wife regarding the corporation the notice_of_deficiency was ultimately issued to petitioner in which a deficiency was determined based on the inclusion in income of petitioner’s share of the s corporation’s income for the year pursuant to the information_return filed by the corporation for that year sec_1362 allows a small_business_corporation to elect to be governed by the provisions of subchapter_s for its taxable years such an election allows the income expenses and credits of the corporation to flow through to the corporation’s shareholders sec_1366 as required by sec_1362 the election must be made by all shareholders and the election is effective and continues for all succeeding taxable years unless terminated under sec_1362 such an election was made in this case and there was no termination of that election as to the year at issue petitioner did not include on hi sec_2002 federal_income_tax return his distributive_share of the taxable_income reported by the corporation as an s_corporation for that year although it is obvious to the court that petitioner and his spouse had serious differences between them this court is not the proper forum for the resolution of these differences all formalities of the internal_revenue_code were followed with respect to the s_corporation for the year and the distributive_share of that income to petitioner constitutes taxable_income to him the court therefore sustains respondent reviewed and adopted as the report of the small_tax_case division decision will be entered for respondent


internal_revenue_service number info release date index number ----------------------------------------- ----------------------------------- --------------------------------- --------------------------- - department of the treasury washington dc person to contact -------------------- id no telephone number --------------------- refer reply to cc psi - genin-169583-03 date january dear --------------- we are answering correspondence submitted by your representative requesting automatic relief in order to establish date as the effective date for your s_corporation_election based on the information provided a form_2553 was prepared but the internal_revenue_service failed to receive the election in a timely manner and instead granted the election for date automatic relief is unavailable under revproc_97_48 because your first form_1120s tax_return was filed late further relief is unavailable under revproc_98_55 superceded by rev_proc since your election was submitted past the window period although we are unable to respond to your request as submitted this letter provides information about rectifying your situation announcement copy enclosed provides guidance on seeking relief for late s_corporation elections generally to request relief for a late s_corporation_election you must request a private_letter_ruling from the national_office the information forwarded to our office is insufficient for us to process a private_letter_ruling request the procedures for requesting a private_letter_ruling are set forth in revproc_2003_1 copy enclosed in addition taxpayers must submit a user_fee along with their ruling_request the standard user_fee for a private_letter_ruling is dollar_figure however taxpayers with gross_income of less than dollar_figure million on their tax_return for the most recent 12-month taxable_year qualify for a reduced user_fee in the amount of dollar_figure if you qualify for the reduced fee you must include a statement claiming that your gross_income for the last 12-month taxable_year was less than one million dollars if you decide to submit a formal request for a private_letter_ruling please follow the sample format provided in appendix b of revproc_2003_1 your request should include all required procedural statements a check for the user_fee and any documents direct to cc psi room in addition the irs has developed two new cd-roms to help educate small internal_revenue_service attn cc pa t p o box ben franklin station washington dc genin-169583-03 that substantiate your intent to be an s_corporation from inception please refer your request to our office by adding the following to the address business owners on their tax responsibilities introduction to federal taxes for small_business self-employed and a virtual small_business workshop these two cd- roms are free and can be ordered by calling the irs also provides a special website www irs gov businesses small which is dedicated to providing information to small_business taxpayers please keep this letter with your tax records and feel free to provide a copy of it to your authorized representative we hope that the above information proves helpful s dianna k miosi dianna k miosi chief branch associate chief_counsel passthroughs and special industries enclosures announcement revproc_2003_1 sincerely yours


internal_revenue_service number release date index number ------------------------ --------------------------------------------- ------------------------------- ----------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------- id no ------------- telephone number --------------------- refer reply to cc psi b01 plr-101311-08 date july legend x ------------------------ ------------------------------------------------------------ year year state date ------- ------- ------------- ---------------------- business ---------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------- dollar_figurem dollar_figuren dear ------------- ------------------ ------------------ this letter is in response to your letter on behalf of x dated date requesting a ruling that x’s income from business is not passive_investment_income within the meaning of sec_1362 of the internal_revenue_code and that the activity of business is not a rental_activity within the meaning in sec_469 facts plr-101311-08 the information submitted states that x was incorporated in year in accordance with the laws of state x elected to be an s_corporation on date x is engaged in business an activity in which x receives payments principally for_the_use_of tangible_property x through its employees provides certain services with respect to business these services involve pick up and delivery of equipment loading and unloading of equipment equipment maintenance replacement and repair both at x’s place of business and those of its customers customer training and demonstration and safety and maintenance inspections of equipment in year x received approximately dollar_figurem in relevant gross_income and incurred approximately dollar_figuren in relevant operating_expenses law and analysis sec_1361 defines an s_corporation as a small_business_corporation for which an election under sec_1362 is in effect for the taxable_year sec_1362 provides that an s_corporation_election shall be terminated whenever the corporation i has accumulated earning and profits at the close of each of consecutive taxable years and ii has gross_receipts for each of such taxable years more than percent of which are passive_investment_income the termination is effective on and after the first date of the first taxable_year beginning after the third consecutive taxable_year referred to in sec_1362 sec_1362 except as otherwise provided in sec_1362 sec_1362 provides that the term passive_investment_income means gross_receipts derived from royalties rents dividends interest annuities and sales or exchanges of stock_or_securities sec_1375 imposes a tax on the income of an s_corporation if the s_corporation has accumulated_earnings_and_profits at the close of such taxable_year and gross_receipts more than percent of which are passive_investment_income sec_1362 provides that except as otherwise provided the term apassive investment_income means gross_receipts derived from royalties rents dividends interest annuities and sales or exchanges of stock_or_securities sec_1_1362-2 defines arent as amounts received for_the_use_of or right to use property whether real or personal of the corporation sec_1_1362-2 provides that the term arents does not include rents derived in the active trade_or_business of renting property rents are derived in an active trade_or_business of renting property only if based on all the facts and plr-101311-08 circumstances the corporation provides significant services or incurs substantial costs in the rental business generally significant services are not rendered and substantial costs are not incurred in connection with net leases whether significant services are performed or substantial costs are incurred in the rental business is determined based upon all the facts and circumstances including but not limited to the number of persons employed to provide the services and types and amounts of costs and expenses_incurred other than depreciation sec_469 provides for the disallowance of passive_activity_losses sec_469 defines a passive_activity_loss as the amount by which the aggregate losses from all passive activities for the taxable_year exceed the aggregate income from all passive activities for that year sec_469 provides that except as provided in sec_469 the term passive_activity includes any rental_activity sec_469 provides that the term rental_activity means any activity where payments are principally for_the_use_of tangible_property similarly sec_1_469-1t generally includes a rental_activity in the definition of a passive_activity sec_1_469-1t provides that an activity generally is a rental_activity for a taxable_year if the gross_income attributable to the conduct of the activity for the year represents amounts paid or to be paid principally for_the_use_of tangible_property in addition an activity may be a rental_activity if tangible_property in the activity is held for rent and the expected gross_income from the activity will represent payments principally for_the_use_of such property sec_1_469-1t provides that an activity involving the use of tangible_property is not a rental_activity if the average period of customer use for such property i sec_30 days or less and significant_personal_services within the meaning in sec_1_469-1t iv are provided by or on behalf of the owner of the property in connection with making the property available for use by customers sec_1_469-1t generally provides that personal services include only services performed by individuals and do not include excluded services within the meaning in sec_1_469-1t in determining whether personal services provided in connection with making property available for use by customers are significant all of the relevant facts and circumstances shall be taken into account relevant facts and circumstances include the frequency with which such services are provided the type and amount of labor required to perform such services and the value of such services relative to the amount charged for_the_use_of the property sec_1_469-1t provides that the term excluded services means with respect to any property made available for use by customers services necessary to permit the lawful use of the property and services performed in connection with the construction of improvements to the property or in connection with the performance of plr-101311-08 repairs that extend the property's useful_life for a period substantially longer than the average period for which such property is used by customers and services provided in connection with the use of any improved real_property that are similar to those commonly provided in connection with long-term rentals of high-grade commercial or residential_real_property eg cleaning and maintenance of common areas routine repairs trash collection elevator service and security at entrances or perimeters conclusion based solely on the facts and representations submitted we conclude that the income that x derives from business is not passive_investment_income as described in sec_1362 additionally we conclude that the activity of business is not a rental_activity within the meaning in sec_469 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically no opinion is expressed concerning whether x is a small_business_corporation eligible to make an s_corporation_election further no opinion is expressed whether any taxpayer materially participates in the activity of business for purposes of sec_469 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 pursuant to the power_of_attorney on file with this office a copy of this letter will be sent to the taxpayer’s representative sincerely dianna k miosi dianna k miosi chief branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes cc