internal_revenue_service number release date index numbers ---------------------- --------------------------------- -------------------------------------- ------------------------- ---------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------- id no ----------------- telephone number --------------------- refer reply to cc corp b06 plr-133662-09 date date ty ------------ ty ------------ legend parent ------------------------------------------------------------------------------------ -------------------------------------------------- ------------------------------------------ target ---------------------------------------------------------- -------------------------------------------------- ---------------- oldco ---------------------------------------------------------- -------------------------------------------------- ------------------- newco state x business a business b ----------------------------------------------------- ------------ ----------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ ------------------- dollar_figurex --------------- plr-133662-09 dollar_figurey z effective time dear ------------- ------------------ ----- ------------------------------------------------------- this letter responds to your date letter from your authorized representatives requesting rulings on certain federal_income_tax consequences of a proposed transaction the information provided in this letter is summarized below parent is an exempt_organization described in sec_501 and is not a private_foundation by virtue of being described in sec_509 parent owns all of the outstanding shares of target common and preferred_stock collectively the target stock target has engaged in business a since target is a holding_company that owns joint ventures but has no domestic subsidiaries and thus files a stand-alone federal_income_tax return target expects to have approximately dollar_figurex of net_operating_loss nol carryovers as of the end of its taxable_year ending at the effective time parent also owns all the outstanding shares of oldco common_stock the oldco stock additionally parent holds a convertible debt obligation of oldco the oldco convertible debt oldco and its taxable subsidiaries engage in business b because parent is not an includible_corporation within the meaning of sec_1504 oldco files a consolidated federal_income_tax return as the common parent of the oldco group the oldco group expects to have approximately dollar_figurey of nol carryovers as of the end of its taxable_year ending at the effective time for what it represents to be valid business reasons parent proposes to combine business a and business b under the following integrated multi-step plan collectively the transactions in the order prescribed and with the intent to achieve a particular end result step sec_2 through will occur at the effective time step parent will incorporate newco step parent will contribute all of the oldco stock to newco step oldco will convert under state x law from a corporation into a limited_liability_company with a single member newco immediately thereafter newco will assume all of oldco’s obligations under the oldco convertible debt step parent will contribute all of the target stock to newco and newco will issue to parent additional shares of newco common_stock plr-133662-09 step target will convert under state x law from a corporation into a limited_liability_company with a single member newco there will be no dissenting shareholders to any step in the transactions oldco may transfer certain assets to a joint_venture or otherwise dispose_of these assets either prior to or subsequent to the effective time these assets are not critical to oldco’s continuing business operations such transfer or other_disposition would be unrelated to and not dependent on the transactions representations relevant to step sec_1 through as a single transaction constituting a sec_368 reorganization a b c in the transactions newco will acquire oldco’s assets in exchange for shares of the single class of newco common_stock outstanding and the assumption by newco of oldco’s liabilities including oldco’s obligations under the oldco convertible debt the number of shares of newco common_stock issued will equal the number of shares of oldco stock outstanding immediately before the acquisition and the rights and privileges of each share of newco common_stock received will be substantially the same as the rights and privileges of each common share of oldco stock surrendered therefor newco will issue only common_stock to parent and will issue no preferred_stock immediately following step sec_1 through of the transactions newco will own the same assets and have the same liabilities as oldco owned or had immediately before the transactions the newco stock received or deemed received by oldco will be distributed to the oldco shareholder parent in a complete_liquidation pursuant to a plan_of_reorganization d oldco will cease to exist for federal_income_tax purposes although it will continue to exist as a limited_liability_company for state x law purposes e f g the fair_market_value of newco stock received by the oldco shareholder parent will be equal to the fair_market_value of oldco stock surrendered in the transactions all the newco stock issued prior to step will be issued in respect of oldco stock except for a nominal number of shares issued to facilitate newco’s organization the stock ownership of newco following step sec_1 through of the transactions will be the same as the stock ownership of oldco prior to the transactions which is to say that parent will wholly own of oldco’s equity immediately before plr-133662-09 step sec_1 through of the transactions and will wholly own of newco’s equity after those steps at the effective time oldco will not have outstanding any warrants options convertible securities or any other type of right pursuant to which any person could acquire stock in oldco newco will not hold any property or have any_tax attributes including those specified in sec_381 immediately before the transactions except for i any nominal amount of assets held to facilitate newco’s organization or to preserve its existence as a corporation and ii tax_attributes related to holding such assets or proceeds at the effective time newco will have no plan or intention to sell or otherwise dispose_of any of oldco’s assets acquired in the transactions except for dispositions made in the ordinary course of business a potential transfer of assets representing less than ten percent of the fair_market_value of oldco’s total assets to a joint_venture or other party or transfers described in sec_1_368-2 oldco incurred the liabilities assumed by newco in the ordinary course of its business the liabilities will be associated with the assets transferred newco oldco and the oldco shareholder parent will pay their respective expenses if any incurred in connection with the transactions h i j k l m at the effective time oldco will not be under the jurisdiction of a court under title of the united_states_code a bankruptcy proceeding or a receivership foreclosure or similar proceeding in federal or state court within the meaning of sec_368 n at the effective time the fair_market_value of oldco’s assets transferred to newco will equal or exceed the sum of its liabilities plus the amount of liabilities if any to which its assets will be subject representations relevant to step sec_4 and as a single transaction the merger transactions constituting a sec_368 reorganization aa in the merger transactions newco will acquire target’s assets in exchange for newco common_stock and the assumption by newco of target’s liabilities newco will actually issue z shares of newco common_stock that is actual shares but newco target and parent agree to treat newco as issuing additional shares of its common_stock that is deemed shares such that the fair_market_value of such actual and deemed shares will be approximately equal to plr-133662-09 the net fair_market_value of target’s assets immediately before the acquisition and to account for the deemed shares for federal_income_tax purposes as if they were actual shares as described in the representations below bb the actual and deemed shares of newco stock received by target will be distributed to the target shareholder parent in a complete_liquidation of target pursuant to a plan_of_reorganization parent agrees to follow the methodology of sec_1_358-2 for purposes of determining its basis in its newco stock actually owned after the transactions to account for the actual and deemed shares received by target cc target will cease to exist for federal_income_tax purposes although it will continue to exist as a limited_liability_company for state x law purposes dd the fair_market_value of shares of newco stock received by the target shareholder parent will be approximately equal to the fair_market_value of target stock surrendered in the merger transactions ee neither newco nor any person related to newco within the meaning of sec_1_368-1 has a plan or intention to reacquire any of its stock issued in the merger transactions ff at least forty percent of the proprietary interest in target will be exchanged constructively for newco stock and will be preserved within the meaning of sec_1_368-1 gg during the five-year period ending at the effective time neither target nor any person related to target within the meaning of sec_1_368-1 will have acquired any target stock hh newco will acquire at least ninety percent of the fair_market_value of target’s net assets and at least seventy percent of the fair_market_value of target’s gross assets held by target immediately before the merger transactions for purposes of this representation amounts used by target to pay its reorganization expenses and amounts paid to shareholders with respect to target stock except for regular normal dividends made by target immediately before the merger transactions are included as target’s assets held immediately before the merger transactions ii jj after the merger transactions the target shareholder parent will be in control of newco within the meaning of sec_368 at the effective time and taking into account the oldco convertible debt it will assume newco will not have outstanding any warrants options convertible plr-133662-09 securities or any other type of right pursuant to which any person could acquire stock in newco that if exercised or converted would affect parent’s acquisition or retention of control of newco as defined in sec_368 kk at the effective time newco will have no plan or intention to sell or otherwise dispose_of any of target’s assets acquired in the merger transactions except for dispositions made in the ordinary course of business or transfers described in sec_1_368-2 ll target incurred the liabilities assumed by newco in the ordinary course of its business the liabilities will be associated with the assets transferred mm after the effective time newco or members of its qualified_group as defined in sec_1_368-1 will continue target’s historical business or use a significant portion of target’s historical business_assets in a business in particular newco will continue to operate business a through joint ventures in the same fashion as target operated through joint ventures nn newco target and the target shareholder parent will pay their respective expenses if any incurred in connection with the transactions oo at the effective time there will be no intercorporate indebtedness existing between target and newco that was issued acquired or will be settled at a discount pp at the effective time no party to the merger transactions will be an investment_company as defined in sec_368 and iv qq at the effective time neither newco nor target will be under the jurisdiction of a court under title of the united_states_code a bankruptcy proceeding or a receivership foreclosure or similar proceeding in federal or state court within the meaning of sec_368 rr at the effective time the fair_market_value of target’s assets transferred to newco will equal or exceed the sum of its liabilities plus the amount of liabilities if any to which its assets will be subject ss the fair_market_value of the assets of newco will exceed the amount of the liabilities of newco immediately after the merger transactions miscellaneous representations aaa i immediately before the effective time the net equity value of target stock will be greater than the net equity value of oldco stock ii immediately after the plr-133662-09 effective time more than fifty percent of the total fair_market_value of newco’s assets over the liabilities of newco and entities controlled by newco will be attributable to newco’s acquisition of target’s assets iii the target shareholder parent immediately before the effective time and as a result of owning target stock will own immediately after the effective time more than fifty percent of the fair_market_value of the outstanding_stock of newco bbb the includible corporations in the affiliated_group of which newco will be its common parent will properly elect to file a consolidated federal_income_tax return for its first taxable_year which will commence the day immediately following the effective time based upon the information submitted and the representations provided we rule as follows for federal_income_tax purposes step sec_1 through of the transactions will be viewed as if newco acquires oldco’s assets in exchange for stock of newco and the assumption of any liabilities of oldco by newco and then oldco distributes the newco stock to its shareholder in exchange for oldco stock in complete_liquidation so viewed the steps will qualify as a reorganization within the meaning of sec_368 revrul_87_27 1987_1_cb_134 oldco and newco will each be a party to reorganization within the meaning of sec_368 oldco will recognize no gain_or_loss on the transfer of its assets to newco in exchange for newco stock and the assumption by newco of oldco’s liabilities sec_361 and sec_357 oldco will recognize no gain_or_loss on the distribution of each share of newco stock to the oldco shareholder parent in exchange for each share of oldco stock sec_361 and c the oldco shareholder parent will recognize no gain_or_loss upon the receipt of newco stock in exchange for its oldco stock sec_354 the aggregate basis of the oldco shareholder parent in the shares of newco stock received as a result of step sec_1 through of the transactions will be the same as its aggregate basis in its shares of oldco stock surrendered in exchange therefor sec_358 and sec_1_358-2 the holding_period of the oldco shareholder parent in the shares of newco stock received will include the period during which it held the shares of oldco stock surrendered in exchange therefor provided that the oldco stock is held as a capital_asset on the date of the exchange sec_1223 plr-133662-09 newco will recognize no gain_or_loss on the receipt of oldco’s assets in exchange for newco stock and the assumption of oldco’s liabilities sec_1032 newco’s basis in each asset of oldco acquired will be the same as the basis of the asset in the hands of oldco immediately before the acquisition sec_362 newco’s holding_period for each asset of oldco acquired will include the period for which the asset was held by oldco sec_1223 as provided by sec_381 and sec_1_381_c_2_-1 newco will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of oldco as of the effective time any deficit in the earnings_and_profits of newco or oldco will be used only to offset the earnings_and_profits accumulated after that time pursuant to sec_381 and sec_1_381_a_-1 newco will succeed to and take into account the items of oldco described in sec_381 as of the effective time these items will be taken into account by newco subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 and the regulations thereunder for federal_income_tax purposes the merger transactions will be viewed as if newco acquires target’s assets in exchange for the actual and deemed shares of newco stock and the assumption of any liabilities of target by newco and then target distributes the actual and deemed shares of newco stock to the target shareholder in exchange for target stock in complete_liquidation so viewed the steps will qualify as a reorganization within the meaning of sec_368 revrul_2004_83 2004_2_cb_157 target and newco will each be a_party_to_a_reorganization within the meaning of sec_368 target will recognize no gain_or_loss on the transfer of its assets to newco in exchange for actual and deemed shares of newco stock and the assumption by newco of target liabilities sec_361 and sec_357 target will recognize no gain_or_loss on the distribution of actual and deemed shares of newco stock to the target shareholder parent as a result of the merger transactions sec_361 and c the target shareholder parent will recognize no gain_or_loss on the receipt of actual and deemed shares of newco stock in exchange for its target stock as a result of the merger transactions sec_354 plr-133662-09 the basis of the target shareholder parent in the actual and deemed shares of newco stock received in connection with the merger transactions will be the same as its basis in the shares of target stock surrendered in exchange therefore in connection with the merger transactions allocated in the manner described in sec_1_358-2 sec_358 and sec_1_358-2 the holding_period of the target shareholder in each share of newco stock received in connection with the merger transactions will include the period during which it held the share of target stock surrendered in exchange therefor provided that the target stock was held as a capital_asset on the date of the exchange sec_1223 newco will recognize no gain_or_loss on the receipt of target’s assets in exchange for newco stock and the assumption of target’s liabilities in connection with the merger transactions sec_1032 newco’s basis in each asset of target acquired will be the same as the basis of the asset in the hands of target immediately before the merger transactions sec_362 newco’s holding_period for each asset of target acquired in connection with the merger transactions will include the period for which the asset was held by target sec_1223 as provided by sec_381 and sec_1_381_c_2_-1 newco will succeed to and take into account the earnings_and_profits or deficit in earnings_and_profits of target as of the effective time any deficit in the earnings_and_profits of newco or target will be used only to offset the earnings_and_profits accumulated after that time pursuant to sec_381 and sec_1_381_a_-1 newco will succeed to and take into account the items of target described in sec_381 as of the effective time these items should be taken into account by newco subject_to the conditions and limitations specified in sec_381 sec_382 sec_383 and sec_384 and the regulations thereunder newco’s acquisition of target’s assets in connection with the merger transactions will constitute a reverse_acquisition within the meaning of sec_1_1502-75 with newco treated as the first_corporation and target as the second corporation rev ruls 1972_1_cb_287 and 1972_2_cb_315 as a result the consolidated_group of which oldco was the common parent will cease to exist as of the effective time and the members of the oldco plr-133662-09 consolidated_group will become members of a new consolidated_group with newco as the common parent sec_1_1502-75 all taxable years of the oldco consolidated_group ending on or before the effective time will be treated as separate_return limitation years srlys with respect to the newco consolidated_group the separate_return years of target will not be treated as srlys with respect to the newco consolidated_group thus any_tax attributes of target that carry over to a taxable_year of the newco consolidated_group beginning after the effective time will not be subject_to a srly limitation because they will not have arisen in a srly any_tax attributes of the oldco consolidated_group that carry over to a taxable_year of the newco consolidated_group beginning after the effective time will be subject_to a srly limitation because they will have arisen in a srly sec_1_1502-1 in the case of those tax_attributes of the oldco consolidated_group that carry over to a taxable_year of the newco consolidated_group beginning after the effective time and that are subject_to the srly rules of sec_1_1502-21 and other provisions that incorporate those rules the srly subgroup will be composed of each member of the oldco group that will carry part of such attributes to the newco group the loss member and each other member of the oldco group that will become a member of the newco group at the same time each other member of the srly subgroup will remain in the subgroup until it ceases to be affiliated with the loss member sec_1_1502-21 in particular the context requires that newco be included in the srly subgroup as the successor to oldco sec_1_1502-21 and sec_1_1502-1 the newco consolidated_group will compute the srly limitation by including in the cumulative srly register the relevant items of income gain loss and deduction of newco and each other member of the newco consolidated_group that was also a member of the oldco consolidated_group sec_1 c and in particular newco’s items properly accounted for after the effective time will be included in the register without regard to whether the items are attributable to business a or business b the context will require the register not to include the items of income gain loss or deduction of target properly accounted for on or before the effective time that is outside the newco consolidated_group the oldco consolidated_group will be treated as the terminating group within the meaning of sec_1_1502-13 thus the newco consolidated_group will be treated as the oldco consolidated_group for purposes of applying sec_1_1502-13 to the intercompany_transactions of the terminating group sec_1_1502-13 any intercompany items and corresponding items from intercompany_transactions between members of the oldco consolidated_group will be taken into account under sec_1_1502-13 by plr-133662-09 the newco consolidated_group similarly the oldco consolidated_group will be treated as the terminating group within the meaning of sec_1 c i thus the newco consolidated_group will be treated as the surviving group for purposes of applying sec_1_1502-19 to any excess_loss_account that a member of the oldco consolidated_group will have in the stock of another member if both such members are members of the newco consolidated_group immediately after the oldco consolidated_group ceases to exist that is the day immediately following the effective time no share of newco stock will be sec_306 stock in the hands of the newco shareholder parent sec_306 and revrul_76_387 1976_2_cb_96 the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office copies of this letter are being sent to your authorized representatives 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 sincerely virginia s voorhess virginia s voorhees senior technician reviewer branch office of associate chief_counsel corporate


internal_revenue_service number release date index numbers ------------------- ---------------------------------------- ----------------- ------------------- ---------------------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------- id no ----------------- ----------------------------------------------------- telephone number ------------------- refer reply to cc psi plr-121753-18 date date legend x y --------------------------------------------------------------------------------------------------- ------------------------------- -------------------- country --------------------- date1 ------------------------- date2 ----------------------- date3 ------------------------ date4 ------------------------ a ----- dear ----- ---------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_754 of the internal_revenue_code code plr-121753-18 facts x was formed under the laws of country on date1 and elected to be classified as a disregarded_entity as of date1 on date2 x added partners and became automatically classified as a partnership on date3 y became an indirect a partner in x and x and y intended to make a sec_754 election for x’s taxable_year ending date4 however x failed to timely file the election x now requests an extension of time under sec_301_9100-1 and sec_301_9100-3 to make a sec_754 election to adjust the basis of its property law and analysis sec_754 provides that a partnership may elect to adjust the basis of partnership property when there is a distribution_of_property or a transfer of a partnership_interest an election under sec_754 applies with respect to all distributions of property by the partnership and to all transfers of interests in the partnership during the taxable_year with respect to which the election was filed and all subsequent taxable years sec_1_754-1 of the income_tax regulations provides that an election under sec_754 to adjust the basis of partnership property under sec_734 and sec_743 with respect to a distribution_of_property to a partner or a transfer of an interest in a partnership must be made in a written_statement filed with the partnership return for the taxable_year during which the distribution or transfer occurs for the election to be valid the return must be filed not later than the time prescribed by sec_1 e including extensions for filing the return for such taxable_year under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards that the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides rules for requesting extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to plr-121753-18 the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely upon the facts submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to make a sec_754 election for its taxable_year ending date4 and thereafter the election should be made in a written_statement filed with the applicable service_center for association with x’s return for the taxable_year ending date4 a copy of this letter should be attached to the statement filed this ruling is contingent on x and its partners filing within days of this letter all required returns for all open years consistent with the requested relief any depreciation deduction allowable for an open_year is to be computed based upon the remaining useful_life and using property basis as adjusted by the greater of any depreciation deduction allowed_or_allowable in any prior year had the sec_754 election been timely made additionally as a condition of this ruling x must adjust the basis of its properties to reflect any sec_734 or sec_743 adjustments that would have been made if the sec_754 election had been timely made these basis adjustments must reflect any additional_depreciation that would have been allowable if the sec_754 election had been timely made regardless of whether the statutory period of limitation on assessment or filing a claim_for_refund has expired for any year subject_to this grant of late relief additionally the partners of x must adjust the basis of their interests in x to reflect what that basis would be if the sec_754 election had been timely made regardless of whether the statutory period of limitation on assessment or filing a claim_for_refund has expired for any year subject_to this grant of late relief specifically the partners of x must reduce the basis of their interests in x in the amount of any additional_depreciation that would have been allowable if the sec_754 election had been timely made plr-121753-18 except as specifically ruled upon above we express or imply no opinion concerning the tax consequences of any facts discussed or referenced in this letter this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent in accordance with a power_of_attorney on file with this office we are sending a copy of this letter_ruling to your authorized representatives sincerely associate chief_counsel passthroughs special industries by ___________________________________ richard t probst senior technician reviewer branch office of the associate chief_counsel passthroughs special industries


internal_revenue_service number release date index number ------------------------------------------------ ------------------------ ------------------------- ------------------------- -------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------------- id no ------------- ----------------- telephone number ---------------------- refer reply to cc psi plr-138152-14 date date legend x y country date date --------------------------------------------------------------------------------------------- ------------------- --------------------------------------------------------------------------------------------- ----------------------------------- ------------- ----------------- ---------------------- dear ---------------- this letter responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a partnership for federal tax purposes facts the information submitted states that x was formed under the laws of country on date y is the sole member of x x represents that as of date it was a foreign_entity eligible to elect to be disregarded as an entity separate from its owner however x failed to timely file a form_8832 entity classification election electing to treat x as a disregarded_entity for federal tax purposes effective date x represents that y consistently filed personal u s tax returns with the intent to treat x as a disregarded_entity x also represents that granting relief will not prejudice the interests of the government and that hindsight is not involved in seeking relief to file a late election x further represents that such relief will not lower x’s aggregate tax_liability for tax years affected by the election finally x represents that it acted reasonably and in good_faith law and analysis plr-138152-14 sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with at least two members can elect to be classified as either an association or a partnership and an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association if all members have limited_liability unless the entity makes an election to be treated otherwise a foreign eligible_entity with a single member having limited_liability may elect to be treated as a disregarded_entity pursuant to the rules of sec_301_7701-3 sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 by filing form_8832 with the appropriate service_center under sec_301_7701-3 this election will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified the date specified on form_8832 cannot be more than days prior to the date on which the election is filed and no more than months after the date the election is filed sec_301_7701-3 provides that if an eligible_entity classified as an association elects to be disregarded as an entity separate from its owner the following is deemed to occur the association distributes all of its assets and liabilities to its single owner in liquidation of the association sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 provides that the term regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic_extension of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for the regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when a taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonable plr-138152-14 and in good_faith and granting relief will not prejudice the interests of the government conclusions based solely on the facts submitted and representations made we conclude that x has satisfied the requirements of sec_301_9100-1 and sec_301_9100-3 accordingly x is granted an extension of time of one hundred twenty days from the date of this letter to file form_8832 with the appropriate service_center to elect to be treated as a disregarded_entity for federal tax purposes effective date a copy of this letter is attached for that purpose this ruling is contingent on the owner of x filing within days of this letter all required returns for all open years consistent with the requested relief these returns may include but are not limited to the following forms i forms information_return of u s persons with respect to certain foreign_corporations and ii forms information_return of u s persons with respect to foreign disregarded entities such that these forms reflect the consequences of the relief granted in this letter a copy of this letter should be attached to any such returns except as expressly set forth herein no opinion is expressed or implied concerning the federal tax consequences any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representatives sincerely associate chief_counsel passthroughs special industries by david r haglund david r haglund branch chief branch passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


department of the treasu internal_revenue_service washington d c contact person identification_number telephone number -t' er tax_exempt_and_government_entities_division uil number date may employer_identification_number legend trust founder y d a n o u m m t a t t s c t t m o a a h o n w a w w n o h dear sir or madam this is in response to your ruling_request dated date which requests an extension of the period within which you are permitted to dispose_of your excess_business_holdings under sec_4943 of the internal_revenue_code facts you are exempt under sec_501 of the code and are a private_foundation within the meaning of sec_509 of the code you were established by trust through the trust agreement dated d you were incorporated as a non-profit corporation on e upon the death of the founder of the trust you were the principal beneficiary of the trust you were funded through the assets of the founder that were passed from his estate to the trust with the residue of the trust passed to you among the assets that passed to you was f of the outstanding_stock of a a consists of three different clubs and various real_estate holdings adjacent to the i clubs on g you received h of the total outstanding common_stock of a in j you received additional shares of a which brought your ownership_interest to f you were successful in the disposition of two of the three clubs a few years ago however the remaining club the club has not been sold to date you have represented that you have made diligent and continuous efforts to dispose_of this remaining facility several years ago prior to you receiving any stock of a a entered into negotiations with b to sell the club but to no avail recently a attempted to sell the club to c which eventually declined to purchase the club you submitted the document indicating the declination of the offer you list various factors that have impeded your ability to sell the club the first factor is since the club has that the club’s facilities require substantial capital improvements incurred significant outlays toward remodeling and refixturing the most recent capital improvement program will not be completed until the second factor involves the club’s hardware and software along with the need to reorganize and restructure its bookkeeping department you state your computer hardware and software is inadequate and outdated this has resulted in unreliable accounting information and prevented you from presenting this information to a potential buyer you attempted to alleviate this deficiency by converting to a vendor’s software but this proved to be unsatisfactory you then purchased another system from the same vendor that purports to provide an integrated accounting system and enable a to collect and manage three years of financial_accounting and membership information that potential buyers require you indicate the primary factor for the sale of the club is based on at least a three-year multiple of earnings you represent the third factor that makes disposition of a more difficult is the real_estate holdings which are used in connection with the club you indicate that most club operators have a lack of interest in acquiring these holdings in addition to your facilities you also mention that the large quantity of club’s members has made the sale of the club difficult in light of current economic conditions you represent that without the extension period requested you will not be able to realize the true value of a’s stock based upon the capital improvements and software conversion mentioned above you have submitted to your state’s attorney_general plans for disposing of your holdings in the club and will forward any response law sec_501 of the code exempts from federal_income_tax organizations organized and operated exclusively for charitable or educational_purposes sec_509 of the code provides that unless specifically excepted a domestic or foreign organization described in sec_501 is a private_foundation and subject_to the excise_taxes of chapter sec_4943 of the code imposes a tax on the excess_business_holdings of any private_foundation in a business_enterprise during any taxable_year sec_4943 of the code defines the term excess_business_holdings as meaning with respect to the holding of any private_foundation in any business_enterprise the amount of stock or other interest in the enterprise which the foundation would have to dispose_of to a person other than a disqualified_person in order for the remaining holdings of the foundation in such enterprise to be permitted holdings sec_4943 of the code provides that a private_foundation shall not be treated as having excess_business_holdings in any corporation in which it together with all other private_foundations which are described in sec_4946 owns not more than percent of the voting_stock and not more than percent in value of all outstanding shares of all classes of stock sec_4943 of the code provides that with certain exceptions not applicable here if after may there is a change in the holdings in a business_enterprise other than by purpose by the private_foundation or by a disqualified_person which causes the private_foundation to have -- a excess_business_holdings in such enterprise the interest of the foundation in such enterprise immediately after such change shall while held by the foundation be treated as held by a disqualified_person rather than by the foundation during the 5-year period beginning on the date of such change in holdings or b an increase in excess_business_holdings in such enterprise determined without regard to subparagraph a subparagraph a shall apply except that the excess holdings immediately preceding the increase therein shall not be treated solely because of such increase as held by a disqualified_person rather than by the foundation sec_4943 of the code provides that the secretary may extend for an additional year period the period under subparagraph for disposing of excess_business_holdings in the case of an unusually large gift or bequest of diverse business holdings or holdings with complex corporate structures if -- a the foundation establishes that -- i diligent efforts to dispose_of such holdings have been made within the initial 5-year period and ii disposition within the initial 5-year period has not been possible except at a price substantially below fair_market_value by reason of such size and complexity or diversity of such holdings b before the close of the initial 5-year period -- i the private_foundation submits to the secretary a plan for disposing of all of the excess_business_holdings involved in the extension and ii the private_foundations submits the plan described in clause i to the attorney_general or other appropriate state official having administrative or supervisory authority or responsibility with respect to the foundation's disposition of the excess_business_holdings involved and submits to the secretary any response received by the private_foundation from the attorney_general or other appropriate state official to such plan during such 5-year period and c the secretary determines that such plan can reasonably be expected to be carried out before the close of the extension period sec_53_4943-6 of the foundation and similar excise_tax regulations provides that in the case of an acquisition of holdings in a business_enterprise by a private_foundation pursuant to the terms of a will or trust the five-year period described in sec_4943 of the code and in this section shall not commence until the date on which the distribution of such holdings from the estate_or_trust to the foundation occurs analysis you submitted information which shows the trust gave two large bequests totaling f of a’s stock to you at this point your interest in the a exceeded the amount of permitted holdings under sec_4943 of the code and initiated the five-year period allowed to dispose_of a bequest under sec_4943 and sec_53_4943-6 of the regulations in order to avoid the imposition of tax under sec_4943 without the five-year grace period you would - have excess_business_holdings pursuant to sec_4943 of the code you have represented that you have engaged in diligent efforts to dispose_of your excess_business_holdings within the initial five-year period within which you had to dispose_of these shares and were unable to do so by reason of the size complexity and diversity of your holdings in the corporation you have also indicated that if we extend the period within which you are to dispose_of your excess_business_holdings at the end of this extended period you will have disposed of your holdings of common shares of stock in a you state that the accounting department's reorganization and upgrade of computer systems will be complete by date you anticipate making various capital improvements through you expect to have a reliable track record of financial_accounting and membership information to present to buyers by date you indicate that after establishing a three year financial history you will be-in a position to aggressively market the sale of the club and secure a qualified buyer ruling accordingly based on the information submitted we rule as follows as provided in sec_4943 of the code an extension through date is granted to you to allow you to dispose_of your excess_business_holdings in a if at the end of this period your holdings in a have been reduced to under percent voting_stock and value of the common_stock in a you will come within the percent permitted holdings rule_of sec_4943 and will not have excess_business_holdings in a this ruling is based on the understanding that there will be no material_change in the facts upon which it is based any changes that may have a bearing on your tax status should be reported to the service this ruling does not address the applicability of any section of the code or regulations to the facts submitted other than with respect to the sections described this ruling is directed only to the organization that requested it sec_61 k of the code provides that it may not be used or cited as precedent because this letter could help resolve future questions about your income_tax responsibility please keep a copy of this ruling in your permanent records if you have any questions about this ruling please contact the person whose name and telephone number are shown in the heading of this letter - we have sent a copy of this letter to your authorized representative as indicated in your power_of_attorney sincerely qsioned revert c harper je pedic mumtnien tian robert c harper jr manager exempt_organizations technical group


department of the treasury internal_revenue_service washington d c oct uniform tssue list s qt ee ek t1 legan taxpayer a financial_institution b financial_institution c account d irax iray amount o n n a e e u dear this etter is in response to a request for a letter_ruling dated date in which you have applied for a waiver of the 60-day rollover requirement contained in sec_408 of the intermai revenue code the code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested ‘taxpayer a asserts that her failure to accomplish a rollover within the 60-day period prescribed by sec_408 of the code was due to her mental and physical conditions which impaired her ability to manage her financial affairs taxpayer a further asserts that amount has not been used for any other purpose taxpayer a age represents that she was the owner of ira x a qualified_individual retirement atrangement ira established and maintained at financial_institution under the rules of sec_408 of the code taxpayer a asserts that after the death of her husband in late she was challenged with understanding her finances because her deceased husband handled the financial affairs of the household taxpayer a represents that on date she received a distribution totaling amount from ira x with the intent of depositing the proceeds into ira y at financial_institution c on february in instead of depositing the distribution in ira y taxpayer a deposited amount account d a non- ra money market account during this period taxpayer a also had some ongoing medical issues that she had neglected because of the constant care required by her spouse prior to his death these health issues ultimately ted to hip replacement and open heart surgeries because her husband had handled the family finances and because of her ongoing medical issues taxpayer a was did not recognize that amount had been erroneously deposited into a non-ira money market account taxpayer a asserts that she did not realize her error until she began processing her federal_income_tax retum for taxpayer a further represents that amount remains in account d at financial_institution c and has not been used for any purpose based on the above facts and representations you request a ruling that the intemal revenue service service waive the 60-day rollover requirement contained in sec_408 of the code with respect to the distribution of amount sec_408 d1 of the code provides that except as otherwise provided in sec_408 any amount_paid or distributed out of an ira shall be included in gross_income by the payee or distriputee as the case may be in the manner provided under sec_72 of the code sec_408 d of the cade defines and provides the rules applicable to ira_rollovers sec_408 d '3x a of the code provides that sec_408 of the code does not apply to any amount_paid or distributed aut of an ira to the individual for whose benefit the ira is maintained if i the entire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the day after the day on which the individual receives the payment or distribution or i the entire amount received including money and any other_property is paid into an eligible_retirement_plan other than an ira for the benefit of such individual not later than the day after the date on which the payment or distribution is received ‘except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross_income determined without regard to sec_408 sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if af any time during the 1-year period ending on the day of such receipt such individual received any other amount described in sec_408 from an ira which was not includible in gross_income because of the application of sec_408 sec_408 of the code provides a similar 60-day rollover period for partial roliovers sec_408 e of the code provides that the rollover provisions of sec_408 do not apply to any amount required to be distributed under sec_408 sec_408 of the code provides that the secretary may waive the 60-day requirement under sec_408 a and d d of the code where the failure to waive such requirement would be against equity or good conscience including casualty disaster or other events beyond the reasonable control of the individual subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 3x1 of the code rev_proc r b date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 the service will consider all relevant facts and circumstances including errors committed by a financial_institution inability to complete a roliover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed far example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the information presented and the documentation submitted by taxpayer a is consistent with her assertion that her failure to accomplish a timely rollover of amount was due to her confusion regarding her financial affairs resulting from the recent death of her spouse and her ongoing medical conditions therefore pursuant to sec_408 3x of the code the service hereby waives the day rollover requirement with respect to the distribution of amount from ira x pursuant to this ruling letter taxpayer a is granted a period of days measured from the date of the issuance of this letter_ruling to make a rollover_contribution of an amount equal to amount to an ira or iras described in sec_408 of the cade provided all other requirements of sec_408 of the code except the 60-day requirement are met with respect to such ira contribution the contribution will be considered a rollover_contribution within the meaning of sec_408 d of the code no opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the code or regulations which may be applicabie thereto this letter is directed only to the taxpayer who requested it section k of the cade provides that it may not be used or cited as precedent if you wish to inquire about this ruling please contact xx xxxxxx x0000x government identification_number xx-xxxxx by phone at xxx xxx-xxxx or by fax at xxx xxx- xxxx please address all correspondence to se t ep rat1 sincerely c ey llio oc hte cartton a watkins manager employee_plans technical group enclosures deleted copy of ruling letter notice of intention to disclose


internal_revenue_service number release date index number --------------------------------- -------------------------------------------------- ---------------------------------- ------------------------------------- legend department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------------- --------------------------------------------------- telephone number ---------------------- refer reply to cc psi b01 plr-109049-17 date date x ------------------------------------------- --------------------------------------------------- a ---------------------- trust -------------------------------------------- state --------------- date1 --------------------- date2 ---------------------- date3 --------------------------- date4 ---------------------- date5 -------------------- dear ------------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x by x’s authorized representative requesting relief under sec_1362 of the internal_revenue_code the code facts according to the information submitted x was incorporated under the laws of state on date1 x elected to be treated as an s_corporation effective date2 on date3 stock in x was transferred to trust a the trustee of trust and x intended to treat and have plr-109049-17 always treated trust as an electing_small_business_trust esbt however an election to treat trust as a qualified_subchapter_s_trust qsst effective date4 was inadvertently filed on date5 trust did not act as a qsst consequently trust was an ineligible shareholder and as a result x’s s_corporation_election terminated on date3 x represents that the circumstances resulting in the termination of its s_corporation_election were inadvertent and not motivated by tax_avoidance or retroactive tax planning additionally x and its shareholders have filed their federal_income_tax returns consistent with having a valid s_corporation_election in effect x and its shareholders have agreed to make any adjustment consistent with the treatment of x as an s_corporation as may be required by the secretary with respect to the period specified by sec_1362 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_1361 provides that the term small_business_corporation means a domestic_corporation which is not an ineligible_corporation and which does not a have more than shareholders b have as a shareholder a person other than an estate a_trust described in sec_1361 or an organization described in sec_1361 who is not an individual c have a nonresident_alien as a shareholder and d have more than one class of stock sec_1361 provides that for purposes of sec_1361 a_trust all of which is treated under subpart e of part i of subchapter_j of chapter as owned by an individual who is a citizen or resident_of_the_united_states may be a shareholder sec_1361 provides that for purposes of sec_1362 an esbt is a permitted shareholder of a small_business_corporation sec_1361 provides that in the case of a qsst with respect to which a beneficiary makes an election under sec_1361 such trust shall be treated as a_trust described in sec_1361 and for purposes of sec_678 the beneficiary of such trust shall be treated as the owner of that portion of the trust which consists of stock in an s_corporation with respect to which the election under sec_1361 is made sec_1362 provides that except as provided in sec_1362 a small_business_corporation may elect in accordance with the provisions of sec_1362 to be an s_corporation sec_1362 provides in part that if an election under sec_1362 was not effective for the taxable_year for which made determined without regard to sec_1362 by reason of a failure to meet the requirements of sec_1361 or b was terminated under plr-109049-17 d or the secretary determines that the circumstances resulting in such ineffectiveness or termination were inadvertent no later than a reasonable period of time after discovery of the circumstances resulting in such ineffectiveness or termination steps were taken so that the corporation is a small_business_corporation and the corporation and each person who was a shareholder of the corporation at any time during the period specified pursuant to sec_1362 agrees to make such adjustments consistent with the treatment of the corporation as an s_corporation as may be required by the secretary with respect to such period then notwithstanding the circumstances resulting in such ineffectiveness or termination the corporation shall be treated as an s_corporation during the period specified by the secretary sec_1_1362-4 provides that the commissioner may require any adjustments that are appropriate in general the adjustments required should be consistent with the treatment of the corporation as an s_corporation during the period specified by the commissioner in the case of stock held by an ineligible shareholder that causes an inadvertent termination or invalid election for an s_corporation under sec_1362 the commissioner may require the ineligible shareholder to be treated as a shareholder of the s_corporation during the period the ineligible shareholder actually held stock in the corporation moreover the commissioner may require protective adjustments that prevent the loss of any revenue due to the holding of stock by an ineligible shareholder for example a nonresident_alien conclusion based solely on the information submitted and the representations made we conclude that x’s s election terminated on date3 when trust became a shareholder and that the termination was inadvertent within the meaning of sec_1362 therefore x will be treated as continuing to be an s_corporation from date3 and thereafter provided that x’s s_corporation_election was otherwise valid and was not otherwise terminated under sec_1362 this ruling is contingent upon x and all of its shareholders treated x as having been and s_corporation and trust as having been an esbt for the period beginning date3 and thereafter within days from the date of this letter the trustee of trust must file an election to treat trust as an esbt effective date3 with the appropriate service_center a copy of this letter should be attached to the election if these conditions are not met then this ruling is null and void accordingly x’s shareholders in determining their respective income_tax liabilities must include their pro_rata share of the separately and non-separately computed items of x as provided in sec_1366 make any adjustments to stock basis as provided in sec_1367 and take into account distributions made by x as provided by sec_1368 except as expressly provided herein no opinion is express or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in plr-109049-17 this letter specifically no opinion is express concerning whether x is otherwise eligible to be treated as an s_corporation or whether trust is eligible to be treated as an esbt this ruling is directed only to the taxpayer who requested it according to sec_6110 this ruling may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely laura c fields laura c fields senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this for sec_6110 purposes


internal_revenue_service number release date index number ------------------------------------------------------ ----------------------------------------------- ------------------ ---------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------------- id no ------------- telephone number --------------------- refer reply to cc psi b01 plr-111512-10 date date legend x ------------------------------------------------------ ---------------------------- d1 ------------------ dear ---------------- this responds to the letter dated ------------------- submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code facts the shareholders of x intended that x be treated as an s_corporation effective on d1 but the election to be treated as an s_corporation was inadvertently not filed accordingly x requests a ruling that it will be treated as an s_corporation effective d1 law and analysis sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective sec_1362 provides in relevant part that 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 under sec_1362 however if an s election is made after the first two and one-half months of a corporation's taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is filed plr-111512-10 sec_1362 provides that if 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 such election then the secretary may treat such an election as timely made for such taxable_year and sec_1362 shall not apply x did not timely file an election to be treated as an s_corporation under sec_1362 x has however established reasonable_cause for not making a timely s election and is entitled to relief under sec_1362 conclusion based solely on the facts submitted and the representations made and provided that x otherwise qualifies as an s_corporation we conclude that x will be treated as an s_corporation effective d1 within days from the date of this letter x should submit a properly completed form_2553 with a copy of this letter attached to the appropriate service_center except as specifically set forth above no opinion is expressed or implied as to the federal tax consequences of the facts 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 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 x's authorized representative sincerely s david r haglund chief branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index number -------------------------- -------------------------------- ----------------------------------------- ---------------------------------- department of the treasury washington dc person to contact -------------------------- id no ------------- telephone number --------------------- refer reply to cc fip b02 plr-141082-08 date date legend taxpayer ---------------------------------------------------------------------- -------------------------------- building s ---------------------------- op ----------------------------------------------------------------------- -------------------------------- date -------------------------- dear ------------ this is in reply to a letter dated date requesting rulings on behalf of taxpayer you have requested a ruling that the buildings described below including their structural_components constitute real_property for purposes of sec_856 and sec_856 of the internal_revenue_code you have also requested a ruling that the buildings including their structural_components constitute real_estate_assets for purposes of sec_856 and sec_856 additionally you have requested a ruling that the services furnished by taxpayer through op in connection with the leasing of the buildings will not cause amounts received from tenants of the buildings to be treated as other than rents_from_real_property under sec_856 facts taxpayer is a domestic_corporation that elected to be taxed as a real_estate_investment_trust reit for its tax_year ending date taxpayer is a fully integrated self-managed company that conducts substantially_all of its business through op a plr-141082-08 limited_partnership in which it will be the sole general_partner and a substantial limited_partner op acquires purchases develops and builds buildings and leases them to unrelated tenants tenants generally use the leased space to accommodate their communications computing and data storage equipment and personnel the leases generally have terms ranging from three to fifteen years and provide for a fixed_base rent plus in some cases the reimbursement of some or all operating_expenses incurred by op in operating the property under certain circumstances if op does not provide an uninterruptible stable source of power to the tenants’ space or does not maintain an environment within the tenants’ space at a specified temperature and humidity range the tenants are pursuant to the lease entitled to cancel their leases if the failure lasts for a negotiated period in addition most tenants may equitably abate their rental payments if op fails to deliver such services for a negotiated period of time within each building the tenant space is generally constructed on raised flooring to accommodate the telecommunications cables electric cables and heating ventilation and air conditioning hvac systems required by tenants in older buildings without raised flooring the hvac systems and other items described above are typically supported by overhead structures the buildings differ from other office buildings because of the magnitude and quality of the electrical power and air conditioning furnished to tenants and the redundancies built into the electrical and air conditioning systems the major structural_components of the buildings are the electrical distribution and redundancy system the electrical components heating ventilation and air conditioning system the hvac components humidification system the humidification components security system the security components the fire protection system the fire protection components and telecommunication infrastructure the telecommunication components each of these components is designed and constructed specifically for the particular building for which it is a part and is intended to remain permanently in place the electrical components are designed to provide an uninterrupted power supply to the property through redundancy the hvac components are designed to maintain a room temperature of typically between and degrees fahrenheit the humidification components are designed to maintain humidity levels in the tenant’s space in the range of percent the security components typically include controlled points of access to the buildings that are manned at all times by a security firm or by an employee of taxpayer the fire protection components typically include fire alarms and sprinkler systems the telecommunications components provide access for tenants to third-party telecommunications providers plr-141082-08 taxpayer represents that the buildings are inherently permanent structures taxpayer further represents that each of the structural_components described above are designed and constructed to remain permanently in place taxpayer represents that services that will be provided to tenants of the buildings consist of ordinary necessary usual and customary services that relate to the operation or maintenance of the buildings they will not include personal services rendered to a particular tenant any service that would constitute a personal service to a tenant would be provided either through an independent_contractor from which taxpayer does not derive or receive income or through a taxable_reit_subsidiary trs of taxpayer that is owned by op services that will be provided by taxpayer through op are utilities controlled humidity security as described above fire protection as described above common area maintenance including cleaning and maintenance of public areas landscaping and pest control additionally through op taxpayer will provide management operation maintenance and repair of the major building systems and components of the buildings including structural_components parking for tenants and their visitors including reserved and unreserved unattended parking and telecommunications infrastructure to allow tenants to connect to third-party telecommunication providers taxpayer represents that it has undertaken research regarding services furnished by other similarly situated owners in connection with similar buildings located in the same geographic markets and it has determined that the services are customarily rendered in connection with the rental of comparable buildings in the geographic market in which taxpayer’s buildings are located law and analysis a real_property issue sec_856 defines the term real_estate_assets in part to mean real_property including interests_in_real_property and interests in mortgages on real_property and shares or transferable certificates of beneficial_interest in other reits sec_856 provides that the term interests_in_real_property includes fee ownership and co-ownership of land or improvements thereon leaseholds of land or improvements thereon options to acquire land or improvements thereon and options to acquire leaseholds of land or improvements thereon but does not include mineral oil or gas royalty interests plr-141082-08 sec_1_856-3 provides that the term real_estate_assets means real_property interests in mortgages on real_property including interests in mortgages on leaseholds of land or other improvements thereon and shares in other qualified reits sec_1_856-3 provides that the term interests_in_real_property includes fee ownership and co-ownership of land or improvements thereon leaseholds of land or improvements thereon options to acquire land or improvements thereon and options to acquire leaseholds of land or improvements thereon sec_1_856-3 provides that the term real_property means land or improvements thereon such as buildings or other inherently permanent structures thereon including items that are structural_components of those buildings or structures in addition real_property includes interests_in_real_property local law definitions do not control for purposes of determining the meaning of the term real_property as used in sec_856 and the regulations thereunder the term includes for example the wiring of a building plumbing systems central heating or central air-conditioning machinery pipes or ducts elevators or escalators installed in the building or other items that are structural_components of a building or other permanent structure the term does not include assets accessory to the operation of a business such as machinery printing press transportation equipment that is not a structural_component of the building office equipment refrigerators individual air-conditioning units grocery counters furnishings of a motel hotel or office building etc even though those items may be termed fixtures under local law revrul_75_424 1975_2_cb_270 concerns whether various components of a microwave transmission system are real_estate_assets for purposes of sec_856 the system consists of transmitting and receiving towers built upon pilings or foundations transmitting and receiving antennae affixed to the towers a building equipment within the building and waveguides the waveguides are transmission lines from the receivers or transmitters to the antennae and are metal pipes permanently bolted or welded to the tower and never removed or replaced unless blown off by weather the transmitting multiplex and receiving equipment is housed in the building prewired modular racks are installed in the building to support the equipment that is installed upon them the racks are completely wired in the factory and then bolted to the floor and ceiling they are self-supporting and do not depend upon the exterior walls for support the equipment provides for transmission of audio or video signals through the waveguides to the antennae also installed in the building is a permanent heating and air conditioning system the transmission site is surrounded by chain link fencing the revenue_ruling holds that the building the heating and air conditioning system the transmitting and receiving towers and the fence are real_estate_assets the ruling holds further that the antennae waveguides transmitting receiving and multiplex plr-141082-08 equipment and the prewired modular racks are assets accessory to the operation of a business and therefore not real_estate_assets revrul_73_425 1973_2_cb_222 considers whether a mortgage secured_by a shopping center and its total energy system is an obligation secured_by real_property a total energy system is a self-contained facility for the production of all the electricity steam or hot water and refrigeration needs of associated commercial or industrial buildings building complexes shopping centers apartment complexes and community developments the system may be permanently installed in the building attached to the building or it may be a separate structure nearby the principal components consist of electric generators powered by turbines or reciprocating engines waste heat boilers heat exchangers gas-fired boilers and cooling units in addition each facility includes fuel storage tanks control and sensor equipment electrical substations and air handling equipment for heat hot water and ventilation it also includes ducts pipes conduits wiring and other associated parts machinery and equipment the revenue_ruling holds in part that a mortgage secured_by the building and the system is a real_estate asset regardless of whether the system is housed in the building it serves or is housed in a separate structure apart from the building it serves this is because the interest in a structural_component is included with an interest held in a building or inherently_permanent_structure to which the structural_component is functionally related similar to the properties or structural_components described in revrul_75_424 and revrul_73_425 that qualify as real_property for purposes of sec_856 the buildings and the structural_components described above are inherently permanent structures although the buildings and structures help to facilitate the technology businesses of tenants that occupy such buildings the buildings and structural_components themselves are not assets accessory to the operation of a business like the examples set forth in sec_1_856-3 accordingly based on the information submitted and representations made we conclude that taxpayer’s buildings including the structural_components as described above constitute real_property for purposes of sec_856 and sec_856 in addition because the buildings and the structural_components are real_property for purposes of sec_856 and sec_856 they constitute real_estate_assets for purposes of sec_856 and sec_856 b tenant services issue sec_856 provides that at least percent of a reit's gross_income must be derived from among other sources rents_from_real_property sec_856 provides that at least percent of a reit's gross_income must be derived from among other sources rents_from_real_property plr-141082-08 sec_856 provides that rents_from_real_property include subject_to exclusions provided in sec_856 a rents from interests_in_real_property b charges for services customarily furnished or rendered in connection with the rental of real_property whether or not such charges are separately_stated and c rent attributable to personal_property leased under or in connection with a lease of real_property but only if the rent attributable to the personal_property for the taxable_year does not exceed percent of the total rent for the tax_year attributable to both the real and personal_property leased under or in connection with the lease sec_1_856-4 provides that for purposes of sec_856 and c the term rents_from_real_property includes charges for services customarily furnished or rendered in connection with the rental of real_property whether or not the charges are separately_stated services rendered to tenants of a particular building will be considered customary if in the geographic market in which the building is located tenants in buildings of a similar class are customarily provided with the service in particular geographic areas where it is customary to furnish electricity or other utilities to tenants in buildings of a particular class the submetering of those utilities to tenants in the buildings will be considered a customary service sec_1_856-4 of the regulations provides that the trustees or directors of a reit are not required to delegate or contract out their fiduciary duty to manage the trust itself as distinguished from rendering or furnishing services to the tenants of its property or managing or operating the property thus the trustees or directors may do all those things necessary in their fiduciary capacities to manage and conduct the affairs of the trust itself sec_856 provides that any impermissible_tenant_service_income is excluded from the definition of rents_from_real_property sec_856 defines impermissible_tenant_service_income to mean with respect to any real or personal_property any amount received or accrued directly or indirectly by the reit for services furnished or rendered by the reit to tenants at the property or for managing or operating the property sec_856 provides that if the amount of impermissible_tenant_service_income exceeds one percent of all amounts received or accrued during the tax_year directly or indirectly by the reit with respect to the property the impermissible_tenant_service_income of the reit will include all of the amounts received or accrued with respect to the property sec_856 provides that the amounts treated as received by a reit for any impermissible tenant service shall not be less than percent of the direct_cost of the reit in furnishing or rendering the service plr-141082-08 sec_856 provides certain exclusions from impermissible_tenant_service_income sec_856 provides that for purposes of sec_856 services furnished or rendered or management or operation provided through an independent_contractor from whom the reit does not derive or receive any income or through a taxable_reit_subsidiary of the reit shall not be treated as furnished rendered or provided by the reit and there shall not be taken into account any amount which would be excluded from unrelated_business_taxable_income under sec_512 if received by an organization described in sec_511 sec_512 provides in part that there shall be excluded from the computation of unrelated_business_taxable_income all rents_from_real_property and all rents from personal_property leased with such real_property if the rents attributable to such personal_property are an incidental amount of the total rents received or accrued under the lease determined at the time the personal_property is placed_in_service sec_1_512_b_-1 provides that payments for the use or occupancy of rooms and other space where services are also rendered to the occupant such as for the use or occupancy of rooms or other quarters in hotels boarding houses or apartment houses furnishing hotel services or in tourist camps or tourist homes motor courts or motels or for the use or occupancy of space in parking lots warehouses or storage garages do not constitute rent from real_property generally services are considered rendered to the occupant if they are primarily for his convenience and are other than those usually or customarily rendered in connection with the rental of rooms or other space for occupancy only the supplying of maid service for example constitutes such service whereas the furnishing of heat and light the cleaning of public entrances exits stairways and lobbies and the collection of trash are not considered as services rendered to the occupant many of the services described above are usual or customary services that are rendered in connection with the operation or maintenance of the properties and are not rendered primarily for the convenience of tenants other services that may constitute personal services to a tenant will be provided through independent contractors from whom taxpayer will not receive or derive any income or through a taxable_reit_subsidiary owned by op accordingly the services furnished by taxpayer through op in connection with the leasing of the buildings will not cause any amounts received from tenants of the buildings to be treated as other than rents_from_real_property under sec_856 no opinion is expressed or implied concerning the federal tax consequences of this transaction under any provision not specifically addressed herein specifically no opinion is expressed or implied whether the structural_components of taxpayer’s buildings constitute real_property under any section of the code other than sec_856 plr-141082-08 for example no opinion is expressed or implied regarding whether the structural_components at issue constitute sec_1245 property or sec_1250 property furthermore no opinion is expressed concerning whether taxpayer otherwise qualifies as a reit under subchapter_m part ii of chapter of the code this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely yours thomas m preston thomas m preston senior counsel branch office of associate chief_counsel financial institutions products