internal_revenue_service department of the treasury washington dc person to contact telephone number refer reply to cc dom p si - plr-108116-99 date date index number number release date b c d trust a trustee trustee foundation state dear this letter responds to a letter dated date and subsequent correspondence submitted by you on behalf of a and b as a and b’s authorized representative requesting certain rulings under the internal_revenue_code the facts submitted state that a and b are wife and husband a intends to establish trust a charitable_lead_unitrust clut the grantor of trust will be a and the trustee will be trustee a and b intend to establish foundation which will be the initial charitable_beneficiary of trust the proposed directors of foundation are b c and d c and d are the children of a and b article of trust provides that trust and the trusts established under it are irrevocable and except as provided in paragraph unamendable paragraph provides that the charitable term of trust shall be for years from the date of trust paragraph provides that during the charitable term the trustee shall pay to foundation each year an amount of the trust equal to seven percent of the net fair_market_value of the trust property determined as of the date of trust or in subsequent years the first day of the calendar_year the unitrust_amount the unitrust_amount shall be payable to foundation in quarterly installments at the end of each quarterly period paragraph provides that if foundation is not in existence or is not an organization described in sec_170 and sec_2055 and the applicable subsection of sec_2522 of the internal_revenue_code at the time any property is distributable to it under trust the trustee shall instead distribute the trust property to one or more other organizations each of which is engaged in comparable activities and is then described in sec_170 and sec_2055 and the applicable subsection of sec_2522 as the trustee in its sole discretion selects paragraph provides that trust shall terminate at the end of the charitable term paragraph provides that on termination the trustee shall allocate the trust estate remaining after any prorated unitrust payment in shares of equal value for the descendants of a’s children grandchildren who are then living subject_to the grandchild’s separate trust withholding provisions and to the estate of any grandchild who is not then living article provides that on the death of the last to die of all beneficiaries of any trust the termination_date any of trust not otherwise distributable shall be divided into separate equal shares and distributed one share to each of a’s nieces and nephews and one share to b’s nieces and nephews if a niece or nephew fails to survive then to the niece’s or nephew’s descendants per stirpes if a deceased niece or nephew is not survived by any descendants then his or her share shall be equally divided between the other nieces and nephews or if any such niece or nephew failed to survive to such other nieces or nephews descendants per stirpes paragraph provides that a trustee may resign at any time by written notice to the co-trustees if any and to the income beneficiaries paragraph provides that each acting trustee unless limited in the instrument in which the trustee was designated may by signed instrument filed with the trust records a designate one or more qualified corporations to act with or to succeed the trustee consecutively or concurrently in any stated combination and on any stated contingency and b amend or revoke the designation before the designated trustee begins to act paragraph provides that if at any time no trustee is acting and no designated trustee is able and willing to act then trustee or its successor shall be the trustee paragraph provides in part that a corporate trustee may be removed at any time by a majority of the income beneficiaries or by the majority of a’s grandchildren but only if on or before the effective date of removal a qualified_corporation has been appointed corporate trustee in the same manner paragraph provides that in no event may b or b’s spouse be named as trustee for trust or any trust created therein paragraph dollar_figure provides that the trustee shall not use trust property to satisfy the legal obligations including the legal_obligation of support that a b or any other person may owe individually to a beneficiary of the trust paragraph dollar_figure provides that a intends that the income of trust shall not be taxable to a under sec_671 through notwithstanding any other provisions the trustee shall not lend trust property to a or b directly or indirectly and may not use the trust property to pay any premiums of life_insurance on the life of a or b article provides the express condition that the trustee shall neither possess nor exercise any power or discretion during the charitable term that would cause trust not to qualify as a charitable_lead_unitrust paragraph provides that mandatory income payments shall be made at least quarterly paragraph dollar_figure provides that notwithstanding any other provision an individual trustee shall have no incident_of_ownership or power or discretion with respect to any policy of insurance upon the trustee’s life b shall have no discretionary power to allocate or distribute assets to the extent that it would discharge the trustee’s legal_obligation to support any beneficiary c shall if the trustee has a beneficial_interest in a_trust have no discretionary power to allocate or distribute assets of trust directly or indirectly to or for any beneficiary including the trustee unless necessary for the beneficiary’s support in reasonable comfort health care or education at any level and d shall have no other power or discretion that would be deemed a general power of appointment under sec_2041 unless the trustee has the power in other than a fiduciary capacity paragraph dollar_figure provides that additional contributions may be made to trust paragraph dollar_figure provides that the unitrust_amount shall be paid from current income and to the extent current income is insufficient from principal including capital_gain for purposes of paragraph current income shall mean income from the current taxable_year any income in excess of the unitrust_amount shall be added to principal in the taxable_year received paragraph dollar_figure provides that a intends to create a charitable_lead_unitrust for which a deduction would be allowed under sec_2055 and sec_2522 for the unitrust_amount to foundation and trust shall be administered during the charitable term to so qualify trust and the trusts established under trust are unamendable except that during the charitable term the trustee may amend the terms of trust solely to ensure that trust qualifies and continues to qualify as a charitable_lead_unitrust the trustee is prohibited from engaging in any act of self-dealing as defined in sec_4941 and from making any taxable_expenditures as defined in sec_4945 the trustee shall make distributions at such times and in such a manner as not to subject trust to tax under sec_4942 unless permitted pursuant to sec_4947 the trustee shall not retain any excess_business_holdings as defined in sec_4943 that would subject trust to tax under sec_4943 nor make any investments that would subject trust to tax under sec_4944 nothing in this agreement shall be construed to restrict the trustee from investing the trust assets in a manner that could result in the annual realization of a reasonable amount of income or gain from the sale or disposition of trust assets the provisions specifically applicable to trust during charitable term shall prevail over any other provisions of trust inconsistent therewith article of the articles of incorporation of foundation provides that the directors of foundation are b c and d a represents that a will not be an officer nor director of foundation article provides that foundation is organized exclusively for charitable educational religious literary or scientific purposes and for the prevention of cruelty to children within the meaning of sec_501 and that also constitutes charitable purposes under state revised statutes it is intended to create a charitable_organization that will be exempt from federal_income_tax under sec_501 and that will qualify as a private_foundation as described in sec_509 paragraph provides that foundation is not authorized to engage or carry on any activity that is not in furtherance of the activities set forth in article furthermore foundation is prohibited from engaging in any political campaign activity or legislative activity paragraph provides that foundation shall undertake actions that are consistent with the following provisions a any income for each taxable_year is to be distributed at such time and in such manner as not to subject foundation to tax under sec_4942 b unless permitted by sec_4947 foundation shall not retain any excess_business_holdings as defined in sec_4943 that would subject foundation to tax under sec_4943 c to prohibit foundation from engaging in any act of self dealing as defined in sec_4941 d from making any investments in such manner as to subject foundation to tax under sec_4944 unless permitted by sec_4947 and e from making any taxable_expenditure as defined in sec_4945 references in paragraph shall be amended from time to time or pursuant to any corresponding provisions of any subsequent federal tax laws paragraph provides that foundation shall be dissolved at such time as the directors determine in their sole discretion that the purposes of foundation have been served upon dissolution and after payment of any provision for liabilities and claims of foundation the directors shall convey any remaining assets and income to such organization or organizations exempt under sec_501 as the directors shall select or as otherwise provided by the state revised statutes article iii section of the bylaws of foundation provides that all of the board_of directors shall constitute a quorum for the transaction of business at any meeting of the board_of directors provided that if less than all of the directors are present at said meeting a majority of the directors present may adjourn the meeting from time to time without further notice article iii section provides that the act of all of the directors present at a meeting of the directors of which a quorum is present shall be the act of the board_of directors article iii sec_12 provides that directors as such shall not receive any stated salaries for their services but reimbursement for ordinary and reasonable expenses may be allowed nothing therein contained shall be construed to preclude any director from serving foundation in any other capacity and receiving compensation therefor article x sec_1 provides that foundation shall have power to indemnify any person who was or is a party or is threatened to be made party to any threatened pending or completed action suit or proceeding whether civil criminal administrative or investigative other than an action by or in the right of foundation by reason of the fact that he or she is or was a director officer employee or agent of foundation or who is or was serving at the request of foundation as a director officer employee or agent of another corporation partnership joint_venture trust or other enterprise against expenses including attorneys’ fees judgments fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action suit or proceedings if such person acted in good_faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and with respect to any criminal action or proceeding had no reasonable_cause to believe his or her conduct was unlawful the termination of any_action suit or proceeding by judgment or settlement conviction or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that the person did not act in good_faith and in a manner which he or she reasonably believed to be in or not opposed to the best interest of the corporation or with respect to any criminal action or proceeding that the person had reasonable_cause to believe that his or her conduct was unlawful article x sec_2 provides that foundation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened pending or completed action or suit by or in the right of foundation to procure a judgment in its favor by reason of the fact that such person is or was a director officer employee or agent of foundation or is or was serving at the request of foundation as a director officer employee or agent of another corporation partnership joint_venture trust or other enterprise against expenses including attorneys’ fees actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good_faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of foundation provided that no indemnification shall be made in respect of any claim issue or matter as to which such persons shall have been adjudged to be liable for negligence or misconduct in the performance of his or her duty to foundation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that despite the adjudication of liability but in view of all the circumstances of the case such person is fairly and reasonably entitled to indemnity for such expenses as the court shall deem proper further such indemnification shall be in accordance with sec_53_4941_d_-2 of the income_tax regulations article x sec_3 provides that to the extent that a director officer employee or agent of a corporation has been successful on the merits or otherwise in defense of any_action suit or proceeding referred to in article x sec_1 and or in defense of any claim issue or matter therein such person shall be indemnified against expenses including attorneys’ fees actually and reasonably incurred by him or her in connection therewith article x sec_4 provides that any indemnification under article x sec_1 and unless ordered by a court shall be made by foundation only as authorized in the specific case upon a determination that indemnification of the director officer employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in article x sec_1 or such determination shall be made a by a majority vote of a quorum of the board_of directors who were not parties to such action suit or proceeding or b if such a quorum is not obtainable or even if obtainable a quorum of disinterested directors so directs by independent legal counsel in a written opinion or c by the directors entitled to vote if any article x sec_5 provides that expenses_incurred in defending a civil or criminal action suit or proceeding may be paid_by foundation in advance of the final disposition of such action suit or proceedings as authorized by the board_of directors in the specific case upon receipt of any undertaking by or on behalf of the director officer employee or agent to repay such amount unless it shall ultimately be determined that he or she is entitled to be indemnified by foundation as authorized in article x article x section provides that the indemnification provided by article x shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any contract agreement vote of directors or disinterested directors or otherwise both as to action in his or her official capacity and as to action in another capacity and as to action in another capacity while holding such office and shall continue as to a person who had ceased to be a director officer employee or agent and shall inure to the benefit of the heirs executor and administrators of such a person article x section provides that foundation shall have power to purchase and maintain insurance on behalf of any person who is or was a director officer employee or agent of foundation or is or was serving at the request of foundation as a director officer employee or agent of another corporation partnership joint_venture trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity or arising out of his status as such whether or not foundation would have the power to indemnify him or her against such liability under the provisions of article x this authorization shall be in accordance with sec_53 d - f article xi provides that foundation shall not undertake any_action that shall violate the following provisions a to acquire as income for each taxable_year to be distributed at such time and in such manner as not to subject foundation to tax under sec_4942 and b to prohibit foundation from engaging in any act of self dealing as defined in sec_4941 from retaining any excess_business_holdings as defined in sec_4942 from making any investments in such manner as to subject foundation to tax under sec_4944 and from making any taxable_expenditure as defined in sec_4945 article xii provides that foundation shall be dissolved at such time as the directors determine in their sole discretion that the purposes of foundation have been served upon dissolution and after payment of any provision for liabilities and claims of foundation the directors shall convey any remaining assets and income to such organization or organizations exempt under sec_501 as the directors shall select or as otherwise provided by the state revised statutes article xiv provides that foundation is organized exclusively for charitable educational religious literary or scientific purposes and for the prevention of cruelty to children within the meaning of sec_501 and that also constitutes charitable purposes under the state revised statutes it is intended to create a charitable_organization that will be exempt from the federal_income_tax under sec_501 and that will qualify as a private_foundation as described in sec_509 you have requested the following rulings trust is a charitable_lead_unitrust clut that will be allowed a deduction under sec_642 for amounts of gross_income paid to foundation or other charitable beneficiaries described in sec_170 during the taxable_year or by the close of the following year pursuant to an election under sec_1_642_c_-1 trust will not be a grantor_trust under sec_671 trust is a clut that will be allowed a gift_tax deduction under sec_2522 for the present_value of the charitable interest in trust a’s gift to trust will not be incomplete for purposes of sec_25_2511-2 of the gift_tax regulations because of the fact that b a’s spouse will serve as a director and officer of foundation the transfer to a’s grandchildren will be a gift in an amount equal to the remainder_interest remaining after the gift to trust a has not retained any interest in or power over trust that would cause trust property to be included in a’s gross_estate the service will provide the necessary factors pursuant to table d of sec_1_664-4 in order to determine the value of the various interests transferred by a trust meets the requirements of sec_4947 and as a split interest trust meets the requirements of sec_508 and contains the restrictions necessary to avoid the taxes imposed by sec_4941 through foundation contains the appropriate language that satisfies the requirements of sec_508 a’s transfer to trust constitutes a generation skipping tax transfer pursuant to sec_2601 to which the generation skipping transfer exemption may be applied issue sec_642 provides the general_rule that in computing its taxable_income a_trust is allowed a deduction for any amount of gross_income which pursuant to the terms of the governing instrument is paid during the taxable_year for a purpose specified in sec_170 determined without regard to sec_170 sec_642 provides that the deduction allowed for a_trust is subject_to sec_681 relating to unrelated_business_income sec_681 provides that no charitable deduction is allowable to a_trust under sec_642 for any amounts allocable to the trust’s unrelated_business_income for the taxable_year the term unrelated_business_income means an amount under sec_512 if the trust were exempt from tax under sec_501 by reason of sec_501 that would be computed as its unrelated_business_income under sec_512 issue sec_671 provides that where it is specified in subpart e that the grantor or another person shall be treated as the owner of any portion of a_trust there shall then be included in computing the taxable_income and credits of the grantor or the other person those items of income deductions and credits against tax of the trust which are attributable to that portion of the trust to the extent that such items would be taken into account under chapter in computing taxable_income or credits against the tax of an individual sec_673 through specify the circumstances under which the grantor is treated as the owner of a portion of a_trust under sec_675 and applicable regulations the grantor is treated as the owner of any portion of a_trust if under the terms of the trust agreement or circumstances attendant on its operation administrative control is exercisable primarily for the benefit of the grantor rather than the beneficiary of the trust sec_677 provides that the grantor shall be treated as the owner of any portion of a_trust whether or not the grantor is treated as the owner under sec_674 whose income without the approval or consent of any adverse_party is or in the discretion of the grantor or a nonadverse_party or both may be distributed to the grantor or the grantor’s spouse held or accumulated for future distribution to the grantor or the grantor’s spouse or applied to the payment of premiums on policies of insurance on the life of the grantor or the grantor’s spouse under sec_1_677_a_-1 the grantor shall be treated as the owner of the portion of a_trust whose income is or in the discretion of the grantor or a nonadverse_party or both may be applied in the discharge of a legal_obligation of the grantor issue sec_2501 imposes a tax on the transfer of property by gift sec_2511 provides that the gift_tax shall apply whether the transfer is in trust or otherwise whether the gift is direct or indirect and whether the property is real or personal tangible or intangible sec_2522 provides that in computing an individual’s taxable_gifts for the calendar_year a deduction shall be allowed for the amount of all gifts to or for_the_use_of certain governmental entities certain corporations organized and operated exclusively for religious charitable scientific literary or educational_purposes and certain other fraternal and veterans organizations sec_2522 provides that where a transfer is made to both a charitable and a noncharitable person or entity no deduction shall be allowed for the charitable portion of the gift unless in the case of an interest other than a charitable_remainder interest such interest is in the form of a guaranteed annuity or is a fixed percentage distributed yearly of the fair_market_value of the property to be determined annually sec_25_2522_c_-3 of the gift_tax regulations provides that if a donor transfers an interest in property for charitable purposes and an interest in the same property is transferred for private purposes no deduction is allowed under sec_2522 for the value of the interest which is transferred for charitable purposes unless the interest is a deductible_interest described in sec_25_2522_c_-3 sec_25_2522_c_-3 provides that an interest in property is deductible where the interest is a unitrust_interest whether or not such interest is in trust sec_25 c - c vii defines a unitrust_interest as an irrevocable right pursuant to the instrument of transfer to receive payment not less often than annually of a fixed percentage of the net fair_market_value determined annually of the property which funds the unitrust_interest issue sec_25_2511-2 of the gift_tax regulations provides in part that a gift is incomplete in every instance in which a donor reserves the power to revest the beneficial title to the property in himself a gift is also incomplete if and to the extent that a reserved power gives the donor the power to name new beneficiaries or to change the interests of the beneficiaries as between themselves sec_25_2511-2 provides that the relinquishment or termination of a power to change the beneficiaries of transferred property occurring otherwise than by the death of the donor the statute being confined to transfers by living donors is regarded as the event that completes the gift and causes the tax to apply issue under sec_2035 as amended by the taxpayer_relief_act_of_1997 if the decedent made a transfer by trust or otherwise of an interest in any property or relinquished a power with respect to any property during the 3-year period ending on the date of the decedent's death and the value of such property or an interest therein would have been included in the decedent's gross_estate under sec_2036 sec_2037 sec_2038 or sec_2042 if such transferred interest or relinquished power had been retained by the decedent on the date of his death the value of the gross_estate shall include the value of any property or interest therein which would have been so included sec_2036 provides that the value of the gross_estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer except in case of a bona_fide sale for an adequate_and_full_consideration in money or money’s worth by trust or otherwise under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death the possession or enjoyment of or the right to the income from the property or the right either alone or in conjunction with any person to designate the persons who shall possess or enjoy the property or the income therefrom sec_20_2036-1 of the estate_tax regulations provides that an interest or a right is treated as having been retained or reserved if at the time of the transfer there was an understanding express or implied that the interest or right would later be conferred sec_20_2036-1 provides that the phrase right to designate the person or persons who shall possess or enjoy the transferred property or the income therefrom includes a reserved power to designate the person or persons to receive the income from the transferred property during the decedent’s life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death with respect to such a power it is immaterial i whether the power was exercisable alone or only in conjunction with another person or persons whether or not having an adverse_interest ii in what capacity the power was exercisable by the decedent or by another person or persons in conjunction with the decedent and iii whether the exercise of the power was subject_to a contingency beyond the decedent’s control which did not occur before his death the phrase does not apply to a power held solely by a person other than the decedent but for example if the decedent reserved the unrestricted power to remove or discharge a trustee at any time and appoint himself as trustee the decedent is considered as having the powers of the trustee in revrul_72_552 1972_2_cb_525 the decedent prior to his death transferred property to a charitable corporation decedent was an officer of the corporation who had the discretionary power to select the charitable recipients of distributions from the organization the revenue_ruling concludes that as an officer of the corporation the decedent retained the power to determine the ultimate beneficiaries of the transferred property accordingly the transferred property was includible in his gross_estate under sec_2036 sec_2037 provides that the value of the gross_estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer except in case of a bona_fide sale for an adequate_and_full_consideration in money or money’s worth by trust or otherwise if possession or enjoyment of the property can through ownership of such interest be obtained only by surviving the decedent and the decedent has retained a reversionary_interest in the property and the value of such reversionary_interest immediately before the death of the decedent exceed sec_5 percent of the value of such property under sec_2037 the term reversionary_interest includes a possibility that property transferred by the decedent may return to him or his estate or may be subject_to a power of disposition by him sec_2038 provides that the value of the gross_estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer except in case of a bona_fide sale for an adequate_and_full_consideration in money or money’s worth by trust or otherwise where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power either by the decedent alone or in conjunction with any person to alter amend or revoke or where the decedent relinquished any such power during the 3-year period ending on the date of the decedent’s death sec_20_2038-1 states that sec_2038 does not apply to a power held solely by a person other than the decedent but for example if the decedent had the unrestricted power to remove or discharge a trustee at any time and appoint himself trustee the decedent is considered as having the powers of the trustee sec_2039 provides that the gross_estate shall include the value of an annuity_or_other_payment receivable by any beneficiary by reason of surviving the decedent under any form of contract or agreement entered into after date other than as insurance under policies on the life of the decedent if under such contract or agreement an annuity_or_other_payment was payable to the decedent or the decedent possessed the right to receive such annuity or payment either alone or in conjunction with another for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death under sec_2041 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_2042 provides that the proceeds of life_insurance are includible in the gross_estate in two instances first to the extent of the amount receivable by the executor as insurance under policies on the life of the decedent and second to the extent of the amount receivable by all other beneficiaries as insurance under policies on the life of the decedent with respect to which the decedent possessed at his death any of the incidents_of_ownership exercisable either alone or in conjunction with any other person issue with an adjusted payout rate of percent times or percent and with quarterly payments made at the end of each quarter for which they are paid the present worth of the remainder_interest in a unitrust which pays for years certain is dollar_figure796 for each dollar_figure on initial trust corpus the present worth of these payments is dollar_figure minus dollar_figure796 or dollar_figure204 for each dollar_figure of initial trust corpus these factors are based on an interest rate of percent issues and sec_508 provides that a private_foundation shall not be exempt under sec_501 unless its governing instrument includes provisions the effects of which are a to require its income for each taxable_year to be distributed at such time and in such manner as not to subject the foundation to tax under sec_4942 and b to prohibit the foundation from engaging in any act of self- dealing as defined in sec_4941 from retaining any excess_business_holdings as defined in sec_4943 from making any investments in such manner as to subject the foundation to tax under sec_4944 and from making any taxable_expenditures as defined in sec_4945 sec_4947 classifies trusts which are not exempt from tax under sec_501 not all of the unexpired interests in which are devoted to purposes described in sec_107 and which have amounts in trust for which a deduction was allowed under sec_170 sec_545 sec_556 sec_642 sec_2055 sec_2106 or as split-interest_trusts and provides with respect to such trusts that sec_507 sec_508 to the extent applicable and shall apply as if such trusts were private_foundations if trust is created and operated as described above it will be described in sec_4947 first it will not be exempt from tax under sec_501 second the trust instrument will provide for a remainder_interest that serves only a private interest third assuming that foundation applies for and receives a determination that it is described in sec_501 the trust instrument will provide for the payment of a guaranteed annual payment devoted exclusively to charitable purposes for which a charitable deduction would be allowable the governing instruments of both trust and foundation will contain provisions effectively prohibiting the organizations from engaging in transactions that could result in the imposition of excise_taxes under sec_4941 through issue sec_2601 imposes a tax on every generation-skipping_transfer made by a transferor under sec_2652 a transferor is defined generally as the last person with respect to whom the property was subject_to the estate or gift_tax sec_2611 defines the term generation-skipping_transfer as a taxable_distribution a taxable_termination and a direct_skip under sec_2612 the term taxable_termination means the termination by death lapse of time release of power or otherwise of an interest in property held in a_trust unless a immediately after such termination a non-skip_person has an interest in such property or b at no time after such termination may a distribution including distributions on termination be made from such trust to a skip_person under sec_2612 the term taxable_distribution means any distribution from a_trust to a skip_person other than a taxable_termination or a direct_skip under sec_2612 the term direct_skip means a transfer subject_to the estate_tax or the gift_tax of an interest in property to a skip_person under sec_2613 the term skip_person means -- a natural_person assigned to a generation that is two or more generations below the generation assignment of the transferor or a_trust -- skip persons or a if all interests in such trust are held by b if -- i there is no person holding an interest in such trust and ii at no time after such transfer may a distribution including distributions on termination be made from such trust to a non-skip_person sec_2631 provides that every individual shall be allowed a gst_exemption of dollar_figure which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor in calendar years after the dollar_figure amount will be adjusted for inflation the allocation once made is irrevocable accordingly we rule as follows except to the extent that trust has unrelated_business_income under sec_681 and except to the extent that contributions are nondeductible under sec_508 or sec_4948 trust will be allowed deductions in accordance with sec_642 for amounts of gross_income paid to foundation during that taxable_year or by the close of the following taxable_year if the trustees make an election under sec_1_642_c_-1 because the deduction under sec_642 is limited to amounts of gross_income no deduction will be allowed for a distribution of principal except to the extent that the amount distributed has been included in the gross_income of trust and provided no deduction was allowed for any previous taxable_year for the amount distributed our examination of the trust reveals none of the circumstances that would cause a to be treated as the owner of any portion of trust under sec_673 sec_674 or sec_676 our examination of the trust reveals none of the circumstances that would cause administrative controls to be considered exercisable primarily for the benefit of a under sec_675 thus the circumstances attendant on the operation of the trust will determine whether a will be treated as the owner of any portion of the trust under sec_675 this is a question of fact the determination of which must be deferred until the federal_income_tax returns of the parties involved have been examined by the office of the district_director with which the parties file their tax returns paragraph dollar_figure of trust specifically prohibits distributions to satisfy the legal obligations of a or b paragraph dollar_figure of trust specifically prohibits distributions to pay any premiums of life_insurance on the life of a or b based on all the facts and circumstances a will not be treated as the owner of any portion of trust under sec_677 in the present case under the terms of the trust the charitable_beneficiary is given the irrevocable right to receive during each year of the trust’s term percent of the net fair_market_value of the trust assets valued annually on the first day of the calendar_year therefore based on the facts submitted and representations made we conclude that a gift_tax_charitable_deduction will be allowed for the present_value of the charitable interest in the trust valued as of the date of transfer to the trust in the present case it is represented that a is not an officer or director of foundation based on the representations made we conclude that the gift to trust will be a completed_gift for purposes of sec_25_2511-2 the fact that b c and d will serve as directors and officers of foundation will not cause a’s gift to trust to be incomplete for purposes of sec_25_2511-2 in addition the transfer to the trust will be a completed_gift to a’s grandchildren the value of which will equal the value of the remainder_interest in the trust in the present case trust will be irrevocable a will retain no interest in or power over the trust and no right to alter amend or revoke the trust a has no right to receive an annuity_or_other_payment from the trust during a’s lifetime in addition a holds no general_power_of_appointment over the trust property accordingly based on the facts submitted and representations made and assuming there is no understanding express or implied between a and the officers and directors of the foundation regarding the distribution of payments to the foundation by the trust we conclude that the value of the trust will not be includible in a’s gross_estate based on the information submitted and the representations made the present worth of the remainder_interest in trust is dollar_figure796 for each dollar_figure on initial trust corpus the present worth of the unitrust_amount is dollar_figure204 for each dollar_figure of initial trust corpus trust will be a split-interest trust within the meaning of sec_4947 and will meet the requirements of sec_508 foundation’s governing document if drafted as described above will contain language that satisfies the requirements of sec_508 in the present case foundation will receive the unitrust_interest for years at the end of the 25-year period the gift of the remainder_interest will pass to a’s grandchildren and is a generation-skipping_transfer the termination of the unitrust_interest will be a taxable_termination within the meaning of sec_2612 and will be subject_to the tax imposed under sec_2601 therefore a may allocate all or a portion of a’s gst_exemption to the trust except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being forwarded to a and b sincerely yours j thomas hines acting branch chief branch office of the assistant chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


department of the treasury internal_revenue_service washington d c sep tllbn ts tax_exempt_and_government_entities_division urcs legend taxpayer a company m insurance_company n company o individual d individual e company p company q company r company s company t court cp state s state t date date date date page date date date month sec_1 and amount amount amount dear this is in response to a ruling_request dated to your individual_retirement_account ira the facts upon which you base your requests are as follows concerning the status of a contribution taxpayer a terminated employment with company m which sponsored one or more during retirement plans represented to be qualified within the meaning of sec_401 of the internal_revenue_code in which taxpayer a participated at his termination taxpayer a was entitled to receive distributions from said retirement plans taxpayer a is a resident of state t induced by representations made by employees of company p a licensed securities broker-dealer and company q a registered investment_advisor taxpayer a authorized companies p and q to manage the investment of his qualified retirement_funds upon the advice of representatives of companies p and q taxpayer a rolled over distributions received respectively from the qualified_retirement_plan s maintained by company m into an individual_retirement_annuity described in code sec_408 issued by insurance_company n taxpayer a rolled over amount on date of taxpayer a’s ira annuity had decreased significantly insurance_company n is a state s_corporation authorized to do business in state t insurance_company n sells financial products primarily to individuals most of its sales are made through independent financial advisors and other distribution channels including but not limited to investment firms and financial institutions as of date and date the value taxpayer a along with other similarly situated taxpayers filed a lawsuit on or about date in court cp state t a court of competent jurisdiction against insurance_company n company o the distributor of insurance_company n products company p company q company r company s individual d and individual e individuals d and e owned and operated companies p q r and page s the lawsuit alleged that individuals d and e and companies p through s sold and or recommended the ira annuity purchased by taxpayer a the lawsuit contains a factual allegation to the effect that each plaintiff signed a document captioned group annuity application_for participation for submission to insurance_company n these applications were either signed by individual d or individual e who was listed as agent along with a reference to company p as the agent’s firm the reference to either individual d or individual e as agent and to company p as firm on the application itself was intended to indicate that individual d and individual e also was acting simultaneously as an agent of insurance_company n in procuring the sale of the annuity a sample group annuity application_for participation attached to the copy of the lawsuit submitted with taxpayer a’s ruling_request indicates that qualified ira_annuities may be purchased from insurance_company n companies p through s and individuals d and e breached their the lawsuit alleged that fiduciary duty to taxpayer a by both advising him to purchase and selling him an ira annuity as a vehicle to receive distributions made from qualified_retirement_plans insurance_company n was vicariously liable for said breaches of fiduciary duty by its agents company p and individuals d and e companies p through s and individuals d and e defrauded taxpayer a by either intentionally misrepresenting or omitting material facts from him when they sold him his ira annuity furthermore taxpayer a relied upon said misrepresentations when he purchased his ira annuity finally company p and individuals d and e were acting within the scope of their duties as agents of insurance_company n when they made the fraudulent misrepresentations and omissions all of the named defendants committed constructive fraud against taxpayer a in selling him his ira annuity furthermore company p and individuals d and e were acting within the scope of their duties as agents of insurance_company n when they committed constructive fraud companies p through s and individuals d and e were negligent when they sold an ira annuity to taxpayer a which negligence caused the decline in value of taxpayer a’s ira annuity furthermore company p and individuals d and e were acting within the scope of their duties as agents of insurance_company n when they negligently recommended and sold the ira annuity to taxpayer a and companies p through s and individuals d and e negligently misrepresented and negligently failed to disclose material facts to taxpayer a when they sold him his ira annuity which negligence caused the decline in value of taxpayer a’s ira annuity furthermore company p and individuals d and e were acting within the scope of their duties as agents of insurance_company n when they made their negligent misrepresentations and when they negligently failed to disclose material facts _ taxpayer a entered into a settlement agreement with insurance_company in month sec_1 and n and company o pursuant to which insurance_company n agreed to pay taxpayer a a sum of money in exchange for his agreeing to the dismissal of the above-referenced date under the terms of the settlement taxpayer a received amount settlement provides that insurance_company n shall make separate transfers of the surrender amounts for each of the plaintiff's annuities to plaintiff's respective designees within seven business days after the processing of such paperwork in relevant part article of the lawsuit page from documentation contained in the file it appears that the above-referenced settlement was the result of arm’s-length negotiations between various parties with adverse interests pursuant to the settlement agreement the date company o companies p through s and individuals d and e was dismissed lawsuit against insurance_company n _the above referenced amount payment was made by check from on or about date insurance_company n to taxpayer a said check was deposited into a_trust account maintained by _acheck in the amount of amount was issued by taxpayer a’s counsel on or about date said counsel to taxpayer a amount represents amount less attorney’s fees said date contribution was made within days of date taxpayer a contributed amount into an ira set up and maintained in it has been represented that said contributory ira met the requirements on or about date his name with company t of code sec_408 the date amount was paid to taxpayer a it has been represented that pursuant to article of the settlement agreement the value of taxpayer a’s ira annuity which consisted of the ira annuity value exclusive of amounts received as a result of the settlement referenced herein less the applicable surrender charge was transferred by insurance_company n by means of a direct trustee to trustee transfer to the taxpayer’s ira account maintained with company t it has also been represented that the sum of the settlement proceeds paid to taxpayer a amount and of the amounts transferred to taxpayer a’s company t jra referenced in the paragraph immediately above did not exceed amount based upon the foregoing you request the following ruling that taxpayer a’s receipt of amount from insurance_company n pursuant to the above described settlement of a lawsuit and its subsequent contribution into an ira set up and maintained in his name with company t constitutes a valid rollover transaction within the meaning of sec_408 of the internal_revenue_code with respect to the requested letter_ruling sec_408 of the code provides that for purposes of this section the term individual_retirement_account means a_trust created or organized in the united_states for the exclusive benefit of an individual or his beneficiaries but only if the written governing instrument creating the trust meets certain requirements among these requirements is the one found in paragraph of sec_408 which states that except in the case of a rollover_contribution described in subsection d in sec_402 sec_403 sec_403 or sec_457 e no contribution will be accepted unless it is in cash and contributions will not be accepted for the taxable_year in excess of the amount in effect for such taxable_year under sec_219 on behalf of any individual sec_408 of the code provides the general_rule for the tax treatment of distributions from iras this section provides in pertinent part that except as otherwise provided in subsection d any amount_paid or distributed out of an individual_retirement_plan or under an individual_retirement_annuity shall be included in gross_income by the payee or distributee as the case may be in the manner provided under sec_72 page sec_408 of the code establishes an exception to the contribution rules of sec_408 and the income inclusion rule_of sec_408 for certain transactions characterized as rollover_contributions under sec_408 an amount is described in paragraph as a rollover_contribution if it meets the requirements of subparagraphs a and b subparagraph a of sec_408 of the code states in pertinent part that paragraph of sec_408 does not apply to any amount_paid or distributed out of an individual_retirement_account or individual_retirement_annuity to the individual for whose benefit the account or annuity is maintained if -- i the entire amount received including money and any other_property is paid into an individual_retirement_account or individual_retirement_annuity other than an endowment_contract for the benefit of such individual not later than the 60th day after the day on which he receives the payment or distribution subparagraph b of sec_408 in short provides that this paragraph does not apply to any amount described in subparagraph a i received by an individual from an ira account or annuity if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in that subparagraph from an ira account or annuity which was not includible in his gross_income because of the application of this paragraph with respect to the requested letter_ruling it has been represented that taxpayer a and other similarly situated taxpayers initiated a lawsuit in a court of competent jurisdiction against various defendants named in the lawsuit including insurance_company n relating to a significant loss in value of an ira annuity described in code sec_408 owned by taxpayer a the lawsuit alleged various causes of said loss of value relating to activities taken either by insurance_company n company o or other named parties allegedly acting as the agents of insurance_company n said lawsuit was settled pursuant to said settlement taxpayer a recovered after attorney’s fees were deducted amount which he subsequently rolled into an ira described in code sec_408 within days of receipt the above reference settlement proceeds were designed to replace a portion of taxpayer a’s ira annuity amounts lost due to alleged misconduct on the part of a number of defendants including insurance_company n no distribution occurred until the issuance of the check in amount by insurance_company n accordingly based on the specific facts and representations contained herein we hold that taxpayer a’s receipt of amount from insurance_company n as the replacement of a portion of his original ira annuity pursuant to the above-reference lawsuit settlement and the payment of this amount to the newly-established individual_retirement_account at company t represents a valid rollover thus with respect to your ruling_request we conclude as follows that taxpayer a’s receipt of amount from insurance_company n pursuant to the above described settlement of a lawsuit and its subsequent contribution into an ira set up and maintained in his name with company t constitutes a valid rollover transaction within the meaning of sec_408 of the internal_revenue_code this ruling letter is based on the assumption that taxpayer a’s ira annuity was described in code sec_408 as represented it also assumes that the contributory ira set up and maintained in page the name of taxpayer a described above meets the requirements of code sec_408 as represented respect thereto additionally it assumes the correctness of all facts and representations made with a copy of this letter has been sent to your authorized representatives in accordance with a power_of_attorney on file in this office if you have any questions concerning this letter_ruling please contact fax who may be reached at not a toll-free number or esquire sincerely yours frances v v so employee_plans technical group enclosures deleted copy of this letter notice of intention to disclose


internal_revenue_service number release date index number --------------------- ---------------------------------- ---------------------------------------------------------- --------------------------- --------------------------- in re request for extension of time under sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to file an election pursuant to sec_59 of the internal_revenue_code 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 b06 plr-139691-16 date date legend p s date a date b date c date d date e dear -------------- ---------------------------------------------------------------------------- ------------------------------------------------------------------------------------- ------------- --------------------------- --------------------------- --------------------------- --------------------------- --------------------------- this letter responds to a letter dated date and supplemental correspondence submitted by p on behalf of s hereinafter p and s will be collectively referred to as taxpayer requesting an extension of time pursuant to sec_301_9100-1 plr-139691-16 and of the procedure and administration regulations to make elections under sec_59 of the internal_revenue_code and sec_1_59-1 of the income_tax regulations to deduct ratably over a 60-month period its intangible_drilling_and_development_costs idc described in sec_263 for its taxable years ended date a date b date c date d and date e taxpayer represents that the facts are as follows facts taxpayer is an affiliated_group_of_corporations of which p is the common parent taxpayer uses the overall accrual_method of accounting and files a consolidated federal_income_tax return on the basis of a calendar_year taxpayer is primarily in the business of oil_and_gas exploration and production taxpayer timely filed its consolidated federal_income_tax returns for its taxable years ended date a date b date c date d and date e and intended to make elections under sec_59 and sec_1_59-1 to deduct ratably over a 60-month period its idc described in sec_263 taxpayer has made representations explaining why the statements required to make the elections under sec_59 and sec_1_59-1 were not timely filed taxpayer represents that granting the relief requested will not result in taxpayer having a lower tax_liability in the aggregate for the tax years affected by the elections than taxpayer would have had if the elections had been timely made taking into account the time_value_of_money taxpayer also represents that it acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government law sec_59 allows a taxpayer to deduct ratably over a specified period any qualified_expenditure to which an election under sec_59 applies sec_59 includes in the definition of qualified_expenditure any amount which but for an election under sec_59 would have been allowable as a deduction determined without regard to sec_291 for the taxable_year in which paid_or_incurred under sec_263 relating to idc sec_59 allows a taxpayer to deduct idc ratably over the 60-month period beginning with the month in which such expenditure was paid_or_incurred sec_59 specifically prohibits the deduction of the qualified_expenditures under any other section of the code if this option is elected sec_59 allows plr-139691-16 a taxpayer to make an election under sec_59 for any portion of any qualified_expenditure sec_1_59-1 prescribes the time and manner of making the election under sec_59 according to sec_1_59-1 an election under sec_59 shall only be made by attaching a statement to the taxpayer's income_tax return or amended_return for the taxable_year in which the amortization of the qualified_expenditures subject_to the sec_59 election begins the taxpayer must file the statement no later than the date prescribed by law for filing the taxpayer's original income_tax return including any extensions of time for the taxable_year in which the amortization of the qualified_expenditures subject_to the sec_59 election begins additionally the statement must include the taxpayer’s name address taxpayer_identification_number and the type and amount of qualified_expenditures identified in sec_59 that the taxpayer elects to deduct ratably over the applicable_period described in sec_59 under sec_301_9100-1 the commissioner in exercising the commissioner's discretion may grant a reasonable extension of time under the rules set forth in sec_301_9100-1 through to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 sec_301_9100-2 and sec_301_9100-3 provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-1 sec_301_9100-2 allows automatic extensions of time for making certain elections sec_301_9100-3 allows extensions of time for making elections that do not meet the requirements of sec_301_9100-2 the commissioner will grant requests for relief under sec_301_9100-3 when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government sec_301_9100-3 sec_301_9100-3 provides in part that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer requests relief under sec_301_9100-3 before the failure to make the regulatory election is discovered by the internal_revenue_service or the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election sec_301_9100-3 provides in part that a taxpayer is deemed to have not acted reasonably or in good_faith if the taxpayer seeks to alter a return position for plr-139691-16 which an accuracy-related_penalty has been or could be imposed under sec_6662 at the time the taxpayer requests relief taking into account any qualified_amended_return filed within the meaning of sec_1_6664-2 of this chapter and the new position requires or permits a regulatory election for which relief is requested the taxpayer was informed in all material respects of the required election and related tax consequences but chose not to file the election or the taxpayer uses hindsight in requesting relief sec_301_9100-3 provides in part that the government's interests are considered prejudiced if granting relief would result in a taxpayer having a lower tax_liability in the aggregate for all taxable years affected by the election than the taxpayer would have had if the election had been timely made taking into account the time_value_of_money additionally sec_301_9100-3 provides in part that the government's interests ordinarily are prejudiced if the taxable_year in which the regulatory election should have been made or any taxable years that would have been affected by the election had it been timely made are closed by the period of limitations on assessment under sec_6501 before the taxpayer's receipt of a ruling granting relief under sec_301_9100-3 conclusion based solely on the facts and representations submitted we conclude that the requirements of sec_301_9100-1 through have been satisfied accordingly the commissioner grants taxpayer an extension of time of calendar days from the date of this letter to make the elections under sec_59 and sec_1_59-1 to deduct ratably over a 60-month period its idc described in sec_263 for its taxable years ended date a date b date c date d and date e the sec_59 elections must comply with the manner-of-election requirements of sec_1_59-1 this extension of time allows taxpayer to make the elections as required by sec_1_59-1 it does not permit recalculation of those amounts unless otherwise permitted by applicable statutes of limitation in making the elections taxpayer must attach a copy of this letter_ruling to its amended consolidated federal_income_tax returns we have enclosed copies one for each election for that purpose alternatively if taxpayer files its amended consolidated federal_income_tax returns electronically it may satisfy this requirement by attaching a statement to its amended returns that provides the date and control number of the letter_ruling the rulings contained in this letter are based upon information and representations submitted by taxpayer and taxpayer’s representatives and accompanied by a penalties 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 a ruling it is subject_to verification on examination plr-139691-16 except as specifically set forth above we express no opinion concerning the federal tax consequences of the facts described above under any other provisions of the code and the regulations thereunder specifically we express or imply no opinion on whether taxpayer satisfies the requirements of sec_263 or sec_59 this letter_ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office we are sending a copy of this letter to taxpayer's authorized representatives we also are sending a copy of this letter to the appropriate director lb_i sincerely associate chief_counsel passthroughs special industries by _______________________________ patrick s kirwan chief branch office of associate chief_counsel passthroughs special industries enclosures copies of this letter copy for sec_6110 purposes cc


department of the treasury washington dc third party communication date of communication month dd yyyy person to contact -------------- id no ------------- telephone number fax number --------------------- --------------------- refer reply to cc ita plr-114374-10 date date internal_revenue_service number release date index number -------------------- ------------------------------ --------------------------------------- ------------------------------ -------------------------------- legend tin ---------------- year ------- dear ----- --------- this letter_ruling is in reference to taxpayer’s request that its form_1128 application to adopt change or retain a tax_year be considered timely filed under the authority in sec_301_9100-3 of the regulations on procedure and administration taxpayer filed a late form_1128 to change its accounting_period for federal_income_tax purposes from a taxable_year ending december to a taxable_year ending september effective september year revproc_2006_45 2006_45_cb_851 provides procedures for certain corporations to obtain automatic approval to change their annual_accounting_period under sec_442 of the internal_revenue_code a corporation complying with all the applicable provisions of this revenue_procedure has obtained the consent of the commissioner of the internal_revenue_service to change its annual_accounting_period section of revproc_2006_45 provides that a form_1128 filed pursuant to the revenue_procedure will be considered timely filed for purposes of sec_1_442-1 of the income_tax regulations only if it is filed on or before the time including extensions for filing the return for the short_period required to effectuate the change the information furnished indicates that taxpayer did not file its form_1128 by the due_date of the return for the short_period required to effectuate the change however taxpayer requested an extension of time to file its form_1128 under sec_301_9100-3 shortly the after the required time sec_301_9100-3 provides that requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 automatic extensions such as this case must be made under the rules of sec_301_9100-3 requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer establishes that the taxpayer plr-114374-10 acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government based on the facts and information submitted and the representations made we conclude that taxpayer has acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government accordingly taxpayer has satisfied the requirements of the regulations for the granting of relief and taxpayer's late filed form_1128 requesting to change to september effective september year is considered timely filed because a change in accounting_period under revproc_2006_45 is under the jurisdiction of the director internal_revenue_service center where the taxpayer’s returns are filed we are returning your application so that you may forward along with a copy of this letter it to the director --------- service_center within days of the date of this letter any further communication regarding this matter should be directed to the service_center this ruling is based upon facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for a ruling however as part of an examination process the service may verify the factual information representations and other data submitted this ruling addresses only the granting of sec_301_9100-3 relief we express no opinion regarding the tax treatment of the instant transaction under the provisions of any other sections of the code or regulations that may be applicable or regarding the tax treatment of any conditions existing at the time of or effects resulting from the instant transaction specifically we express no opinion as to whether the taxpayer is permitted under the code and applicable regulations to change to the tax_year requested in the form_1128 or whether the change may be effectuate under revproc_2006_45 a copy of this letter must be attached to any income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter_ruling 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 enclosed is a copy of the letter_ruling showing the deletions proposed to be made when it is disclosed under sec_6110 the taxpayer’s application_for a change in accounting_period will be processed under revproc_2006_45 plr-114374-10 in accordance with the power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative sincerely donna welsh senior technician reviewer income_tax accounting office_of_chief_counsel cc enclosures


department of the treasury internal_revenue_service washington d c date number info release date cc tege eoeg et1 - genin-137681-02 uilc memorandum for director internal_revenue_service center kansas city mo attn entity control from subject office of division counsel associate chief_counsel tax exempt and government entities cc tege eoeg et1 - genin-137681-02 railroad retirement act tax status in accordance with the coordination procedure established between the service and the railroad retirement board rrb the rrb has provided us with its opinion that one of the following businesses became an employer under the railroad retirement act and the railroad unemployment insurance act effective date and that the other business is not an employer under the acts we have reviewed the opinion of the rrb and based upon the information submitted to the rrb we also conclude that became an employer under the railroad_retirement_tax_act effective date and that is not an employer please take the appropriate action regarding these businesses will e mcleod cc