office_of_chief_counsel internal_revenue_service memorandum number release date cc pa almielke posts-111474-11 uilc date date to benjamin j mower attorney denver large business international from julie c schwartz senior counsel procedure administration subject arra section compliance and ofas access to return_information this is in response to your request for advice on the captioned matter issue whether the department of the treasury’s office of the fiscal assistant secretary ofas has access to returns and return_information tax information in connection with administering the american_recovery_and_reinvestment_act_of_2009 section arra section program conclusion in appropriate circumstances and only where ofas’ duties in connection with administering the arra section program are related to tax_administration its officers and employees may have access to tax information as necessary for carrying out these functions for all other circumstances ofas may seek a consent to disclosure under which arra section applicants would agree to irs sharing tax information with ofas facts the american_recovery_and_reinvestment_act_of_2009 arra contains several provisions intended to provide incentives to developers and producers of renewable posts-111474-11 energy arra section allows applicants to elect to receive a grant rather than a tax_credit when specified energy_property is placed_in_service applicants can receive grants in the amount of either or of the basis of qualifying projects placed_in_service by the specified credit termination_date tax_credits for qualifying projects are available under sec_48 taxpayers cannot accept a grant and take a tax_credit for the same project under a compliance initiative project cip the irs will be examining a sampling of taxpayers that receive arra section grants examinations will focus on all aspects of tax compliance in this scenario including among other matters whether the taxpayer has claimed a tax_credit and received an arra section_1603_grant with respect to the same property whether the taxpayer appropriately reduced its basis by of the amount of the arra section_1603_grant and whether the taxpayer’s depreciable basis was appropriately stated in a date general_legal_advice_memorandum glam the office of the associate chief_counsel passthroughs and special industries addressed the issue of excessive grant payments under arra section the glam concluded that an excessive arra section_1603_grant payment is includible in income and the service has three years from the date the return was filed to assess the amount disallowed the irs has access to ofas’ arra section database which includes all arra section applications terms and conditions and the supporting documentation submitted with the applications ofas also provides the irs an annual list of arra section_1603_grant recipients as well as a quarterly list of those recipients who indicate to ofas on their annual reports that they have claimed a tax_credit with respect to applicable_property ofas can neither direct nor request the irs to examine a particular taxpayer but can provide information to the irs about particular taxpayers for the irs’ examination consideration the code does not contain authority for the irs to specifically recoup arra section_1603_grant overpayments but does allow the irs to avail itself of all compliance and enforcement provisions in connection with the examination of tax_credits including the ability to disallow or recapture the credit in addition the irs is also responsible for ensuring that grant recipients properly account for the grant payment in the calculation of their taxes ie recipients must reduce their basis by of the grant the irs also has an enforcement interest in ensuring that grant applicants have properly stated their basis on their grant applications because the amount of basis claimed on the grant application is also the amount of basis used for depreciation purposes the information gathered collected or created by the irs during its examination including the information leading to the conclusion that the taxpayer may not be entitled to all or part of the grant is tax information subject_to sec_6103 confidentiality sec_6103 while the irs can determine a grant overpayment occurred and take action authorized by the code such as including the overpayment in taxable_income ofas is responsible for recapture of any erroneously awarded grant overpayments ofas has six years posts-111474-11 from when the claim first accrues usually when the overpayment is discovered to seek recovery_of such erroneous amounts the irs through its cip is more likely than ofas to discover a grant overpayment ofas would like the irs to share this tax information with it so ofas can use it to take action on recapture as appropriate you have asked us to opine whether sec_6103 affords ofas access to tax information to conduct its recapture authority and if not whether ofas can obtain consents to disclosure from all arra section program applicants allowing the irs to share tax information with ofas law and analysis sec_6103 sec_6103 provides that tax information shall be confidential and may be disclosed only as expressly authorized under the code the code contains numerous exceptions to this confidentiality rule including sec_6103 which allows the inspection and disclosure of tax information to officers and employees of the department of the treasury where such inspection or disclosure is necessary for tax_administration_purposes this means treasury employees may have access to tax information if they have a need to know the information for tax_administration reasons tax_administration is defined in sec_6103 as a i the administration management conduct direction and supervision of the execution and application of the internal revenue laws or related statutes or equivalent law or statutes of a state and tax conventions to which the united_states is a party and ii the development and formulation of federal tax policy relating to existing or proposed internal revenue law related statutes and tax conventions and b includes assessment collection enforcement litigation publication and statistical gathering functions under such law statutes or conventions emphasis added courts have held that the meaning of tax_administration is sweeping 575_f2d_32 2nd cir cert_denied 439_us_931 tavery v united_states 32_f2d_1423 10th cir see also 796_f2d_356 10th cir the term related statute is not defined in the code whether or not a statute is related to the internal revenue laws within the meaning of sec_6103 depends on the nature and purpose of the statute and the facts and circumstances in which the statute is being enforced or administered given the interconnection between ofas’ responsibilities in the arra section program and the irs’ responsibilities under the code for the same projects some of posts-111474-11 ofas’ program responsibilities under the arra section statute are related to tax_administration the administration of the arra program established under sec_48 with the tax_credit and revised by the grant provisions that are not included in the code will unquestionably implicate and relate to the irs’s compliance activities under the code with respect to the tax_credit there is a division of responsibilities between the two agencies responsible for the program as noted earlier the irs enforces the prohibition against receiving a grant and a tax_credit for the same property and is also responsible for ensuring that grant recipients properly account for the grant payment in the calculation of their taxes ie recipients must reduce their basis by of the grant ofas supports the online application process reviews the application_for eligibility and awards grant funds and is responsible for recapture of erroneously awarded grant overpayments the irs’ examination assessment and collection authority and action taken will directly relate to and impact any_action ofas elects to take regarding the same project and grant particularly with regard to ofas’ post-award grant compliance responsibilities for example if ofas recaptures a grant overpayment and the service had not earlier required the taxpayer to include the overpayment in taxable_income the overpayment would have been treated by the taxpayer as a non-taxable grant under sec_48 and would not have been included in income thus the taxpayer's taxable_income would not be reduced by the grant recapture_amount if on the other hand the service had determined that all or a portion of a grant was an overpayment and had made an adjustment adding the overpayment amount to gross_income under the reasoning of the glam any repayment to ofas of the overpayment amount would then reduce the taxpayer's taxable_income by the amount repaid while ofas may like to know certain information in connection with its monitoring responsibilities it is unclear whether it would have a need to know there are certain compliance activities that ofas conducts under the arra program that are so inextricably intertwined with the irs’ tax compliance activities that these activities are related to tax_administration and officers and employees of ofas may have access to tax information as necessary for carrying out these functions while not free from doubt we believe that an argument can be made that ofas’ responsibility for monitoring grant compliance as opposed to its grant eligibility and award responsibilities is so inextricably intertwined with and related to the irs’ tax compliance responsibilities as to constitute tax_administration as such we believe that a reasonable argument may be made that arra section is a related statute with respect to the irs’s and ofas’s respective roles in ensuring that recipients do not accept grant funds and claim credits and in ensuring that recipients reduce their basis by of the grant amount in their tax filings accordingly ofas is authorized access to tax information under sec_6103 in connection with its compliance monitoring responsibilities only in keeping with this statutory authority access to tax information will be limited to those situations where ofas’ officers and employees have a need for the tax information in carrying out those official grant compliance monitoring responsibilities that arise out of and are related to the administration of the internal revenue laws ofas will have access only to that tax information it has a need to know posts-111474-11 to conduct these activities ofas may only use the tax information to which it has access in connection with its grant compliance monitoring responsibilities sec_6103 consents sec_6103 provides generally that subject_to the requirements and conditions set forth by the secretary in regulations tax information may be disclosed to persons designated by the taxpayer in a request for or consent to disclosure sec_301_6103_c_-1 et seq sets forth the relevant requirements for disclosures to designees according to sec_301_6103_c_-1 an authorization for disclosure must include the following items in a written document2 pertaining solely to the authorization the taxpayer’s identity name address taxpayer identifying number that enables the irs to clearly identify the taxpayer the identity of the person to whom disclosure is to be made the type of return or return_information to be disclosed and the taxable_year or years covered by the return or return_information sec_301_6103_c_-1 the regulations also require that the taxpayer sign and date the written document in addition the regulations bar disclosure of a return or return_information unless the written request for or written consent to disclosure is received by the irs or an agent or contractor of the irs within days following the date upon which the written request was signed and dated by the taxpayer sec_301_6103_c_-1 prop sec_301_6103_c_-1 sec_76 fed reg mar notice_2010_8 2010_3_irb_297 to date ofas has on an ad hoc basis asked grant applicants to agree to consent to irs sharing tax information compiled during examinations for those situations in which ofas’s non-tax administration responsibilities eg grant eligibility and award responsibilities would benefit from access to tax information ofas may seek a consent to disclosure from grant applicants as we understand it upon receipt of a consent ofas will verify the validity of the consent and upload the verified consent into the arra section database to which the irs has unfettered access in order to satisfy the requirement that the irs receive the consent within days following the date upon which the consent was signed and dated by the taxpayer grantee ofas must upload the consent into the arra section database within days of that date noting the upload date on the system prior to disclosing the authorized tax information to ofas irs will confirm a valid consent exists in the database ofas will be required to maintain the original consent whether in paper or electronic form for the time period specified by the irs the return_information in ofas’s possession remains confidential under sec_6103 an authorization for disclosure consent may be also be done electronically sec_301_6103_c_-1 posts-111474-11 for coordination of consent matters or for questions regarding consent procedures please contact tim christian disclosure manager disclosure program operations at -- --------------------or ----------------------------------- please call if you have any further questions


t c memo united_states tax_court jung sik lim bok s lim petitioners v commissioner of internal revenue respondent docket no filed date matthew j mccann for petitioners wendy l wojewodski for respondent memorandum findings_of_fact and opinion gerber judge respondent determined a deficiency in petitioners’ federal_income_tax of dollar_figure petitioners claim an overpayment of their federal_income_tax in the amount of dollar_figure respondent has conceded all adjustments determined in the notice_of_deficiency and the remaining issue concerns petitioners’ claim for an overpayment in order to address petitioners’ claim for an overpayment the parties have asked us to decide whether the interest_paid by petitioners is deductible as business_interest if the interest is deductible as business_interest petitioners would be entitled to certain deductions that were not originally claimed and in turn they would be entitled to an overpayment unless otherwise indicated section references are to the internal_revenue_code in effect for the year in issue and rule references are to the tax_court rules_of_practice and procedure findings of fact1 at the time their petition was filed petitioners resided in temple hills maryland during date petitioners and petitioner husband’s sister-in-law purchased real_property located pincite branch avenue temple hills maryland branch property although the sister-in-law was a named purchaser she was only nominally involved in the real_estate acquisition the improvements on the property were a two-story building branch building and a parking lot concurrent with the branch property purchase the shares of stock of volm’s enterprise corp volm’s were purchased from the seller of the real_estate volm’s a subchapter_c_corporation operated a liquor store on the first floor of the branch building under the name branch avenue the stipulations of fact and attached exhibits are incorporated herein by this reference liquors petitioners acquired percent and the sister-in-law the remaining percent of volm’s shares of stock after the purchases of the realty and corporate stock volm’s continued to use the ground floor of the branch building to operate a liquor store petitioners in addition to being the majority owners of the liquor business devoted the majority of their time to the operation of the branch building liquor store business petitioners and the sister-in-law used part of the second floor of the branch building as their personal_residence the first floor of the branch building which is big_number square feet is slightly larger than the second floor which is big_number square feet volm’s also used a 286-square-foot office on the second floor of the building overall percent of the branch building is used by volm’s to operate the liquor store and percent is used by petitioners and relatives as their personal_residence during the liquor store business did not make rental payments directly to petitioners for the business' use of the branch property although there was no written lease the liquor store business paid certain expenses_incurred in connection with the branch property in exchange for its use of the building volm’s paid the real_estate_taxes on the branch property of dollar_figure during volm’s also paid all of the utilities including the electric gas and sanitation costs incurred for the branch property the utility payments included the portion used by petitioners and others as a personal_residence petitioners did not report as rental income on their federal tax_return volm’s payments of utility expenses or the real_estate_taxes petitioners likewise did not claim the interest or depreciation paid_or_incurred in connection with the liquor store business' rental of the branch property other than the payment of utilities and taxes by volm’s rent payments were not made during the or tax years because of volm’s startup cash-flow problems beginning in volm’s began paying dollar_figure monthly rent payments to petitioners the purchase_price of the branch property was dollar_figure and petitioners incurred settlement costs of over dollar_figure the purchase_price of the property was allocated percent to the land and percent to the building petitioners obtained an dollar_figure small_business administration loan sba loan to purchase the branch property the seller of the branch property retained a security_interest in the property to secure seller- financed debt of dollar_figure although the sister-in-law was designated as a purchaser she did not contribute any money toward the purchase of the branch property and did not make any mortgage payments on the loans secured_by the property during petitioners made interest payments of dollar_figure and dollar_figure on the sba and seller-financed loans respectively opinion petitioners did not report income from rent or claim deductions for interest or depreciation in connection with volm’s use of the first floor and part of the second floor of the branch property petitioners claim an overpayment of the tax paid for based on the excess of deductions over the income that they did not report or claim with respect to the deficiency determined respondent concedes that petitioners would owe no additional tax for even if their overpayment was not allowed respondent does not dispute the fact that petitioners paid the interest totaling nearly dollar_figure we have found the allocable percentages of business and personal_use of the realty and the allocable percentages of the purchase_price attributable to the land and building the parties have couched the issue for our consideration solely in the context of whether petitioners rented a portion of the branch property to volm’s if we decide in the context of the taxable_year before the court petitioners’ failure to report income attributable to volm’s payments of taxes utilities and expenses does not preclude the possibility of an overpayment that is so because petitioners also failed to claim deductions in amounts far in excess of the amount of any unreported income attributable to volm’s payments accordingly unreported income would wash with the unclaimed deductions leaving sufficient amounts to generate the overpayment sought by petitioners although the fact pattern in this case could easily have generated issues concerning investment_interest passive loss continued that there was a valid rental agreement between petitioners and the liquor business then respondent agrees that petitioners would be entitled to interest and or depreciation_deductions on schedule e or schedule a as appropriate petitioners concede that they failed to report as income the payments made by the liquor business on the real_property and that they failed to claim any interest personal or business or depreciation deduction to which they may be entitled the parties agree that if we decide that petitioners are entitled to deduct the business_interest petitioners would be entitled to an overpayment to be computed by the parties continued activity and related matters the parties agreed that if we decide that volm’s and petitioners had a valid business rental arrangement then petitioners will be entitled to an overpayment to be computed by the parties if we decide otherwise petitioners will not be entitled to an overpayment or be liable for a deficiency accordingly the parties agreed at trial that the sole determinant to deductibility lies in the answer to the question of whether petitioners and the liquor business had a landlord and tenant relationship and whether rent was paid we note that the parties’ arguments were cryptic and difficult to follow for example even though respondent agreed that the outcome of this case depended solely on the whether a rental relationship existed between petitioners and the liquor business respondent argued that the limitations of sec_163 would apply to petitioners’ interest payments on the branch property because of the manner in which the issue was posed by the parties and the limited scope of our inquiry we must assume that respondent agrees that sec_163 would not limit petitioners’ deduction if we decide the issue as framed in petitioners’ favor respondent argues that the absence of a rental agreement between petitioners and the corporation is a factor that supports a finding that the property at issue did not produce rental income petitioners counter that rent payments were not made by the corporation for use of the branch property initially because of a lack of cash-flow instead of making rental payments to petitioners the corporation paid the utilities and other expenses_incurred in operating the building separate corporate_income_tax returns were filed by volm’s in which its income and expenses were reported by the third year after the purchase the year following the one in issue the corporation was able to and did pay a dollar_figure monthly rental to petitioners initially rent was paid for use of the building in the form of the payment of expenses although petitioners did not report volm’s payments of utilities and other expenses as rent they also did not claim the corresponding deductions for interest and depreciation attributable to volm’s usage of the branch property generally for purposes of deductibility a taxpayer may deduct reasonable rents paid for property used in a trade or respondent also referenced sub sec_1_469-1t vi and vii temporary income_tax regs fed reg date for his argument that volm’s and petitioners were in some type of joint_venture under which volm’s was allowed to operate the liquor business in the branch property because we find that there was a rental agreement between petitioners and the liquor business it is not necessary to further address this aspect business sec_162 165_f2d_483 5th cir affg 7_tc_1129 a taxpayer may rent property from a related_person or entity but the deduction is limited to an amount that would have been paid if the parties had dealt at arm’s length 458_f2d_631 9th cir affg tcmemo_1970_74 67_tc_694 34_tc_549 here however the amount of rent paid_by volm’s in the form of the payment of expenses on the branch property was less than the dollar_figure monthly rent that was paid when volm’s became liquid an oral lease between related parties has sufficed as the basis for rental deductions e g wy’east color inc v commissioner tcmemo_1996_136 here an established corporate entity was using petitioners’ real_property for business purposes our holding in response to the limited question posed by the parties is that a business rental relationship existed between petitioners and the liquor business volm’s accordingly petitioners are entitled to deduct business_interest in an amount attributable to the portion of the property used for the liquor business to the extent that the interest is attributable to petitioners’ personal residential use of the property it would be deductible subject_to the appropriate limitations to reflect the foregoing decision will be entered under rule


internal_revenue_service department of the treasury index number u i l no washington dc number release date legend person to contact telephone number refer reply to cc dom p si plr-106951-99 date date company state shareholders a dear this letter responds to a letter dated date requesting a ruling on behalf of company under sec_1362 of the internal_revenue_code the information submitted discloses that company was incorporated on a in state company has two shareholders shareholders it is represented that company has intended to be an s_corporation since its incorporation believing itself to be an s_corporation company has operated accordingly since a after the end of its taxable_year beginning on a however company discovered that its s election had not been timely filed company requests a ruling that its sec_1362 election will be treated as timely made for its taxable_year that begins on a sec_1362 provides that a small_business_corporation may elect to be an s_corporation plr-106951-99 sec_1362 explains when an s election will be effective generally if an s election is made within the first two and one half months of a corporation’s taxable_year then that corporation will be treated as an s_corporation for the year in which the election is made sec_1362 provides that if an s election is made after the first two and one half months of a corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year following the year in which the s election is made 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 applying the relevant law to the facts submitted and representations made we rule that company's sec_1362 election will be treated as timely made for its taxable_year that begins on a however this ruling is contingent on company filing form_2553 election by a small_business_corporation with an effective date of a with the appropriate service_center within days from the date of this ruling a copy of this letter should be attached to the form_2553 except as specifically set forth above we express no opinion concerning the federal tax consequences of the foregoing facts specifically we express no opinion on whether company otherwise qualifies as an s_corporation this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent sincerely yours william p o’shea chief branch office of the assistant chief_counsel passthroughs and special industries enclosure copy for sec_6110 purposes


t c memo united_states tax_court richard g and patricia a cook petitioners v commissioner of internal revenue respondent docket no filed date richard g cook pro_se david w sorensen for respondent memorandum opinion couvillion special_trial_judge this case was heard pursuant to sec_7443a and rule sec_180 sec_181 and sec_182 unless otherwise indicated section references are to the internal_revenue_code in effect for the years at issue all rule references are to the tax_court rules_of_practice and procedure the petition was filed pursuant to sec_7463 at the commencement of trial petitioners orally moved that the case be heard pursuant to sec_7443a the court granted continued respondent determined deficiencies in federal income taxes of dollar_figure and dollar_figure and accuracy-related_penalties of dollar_figure and dollar_figure under sec_6662 respectively for petitioners' and tax years the issues for decision are whether home_office expenses_incurred by richard g cook petitioner in a trade_or_business activity are allowable as deductions under sec_280a and if such expenses are not allowable whether petitioners are liable for the accuracy-related_penalties under sec_6662 if the court holds that the expenses at issue are not deductible pursuant to sec_280a the court must then consider petitioner's contention that the disallowance of the subject expenses as deductions constitutes invidious discrimination and a violation of due process under the u s constitution some of the facts were stipulated those facts with the exhibits attached thereto are so found and are incorporated herein by reference at the time the petition was filed petitioners' legal residence was salt lake city utah petitioner is an attorney at law and during the years at issue was engaged in the practice of law at salt lake city utah for the year and for the first months of continued petitioners' motion respondent thereafter filed an answer of general denial petitioner's law practice was conducted out of petitioners' personal_residence at salt lake city utah for the remaining months of petitioner conducted his law practice at a downtown salt lake city office the expenses at issue involve the home_office expenses_incurred by petitioner for the periods noted in and which petitioners deducted as trade_or_business_expenses on their and federal_income_tax returns respondent has not questioned the substantiation of these expenses respondent however has questioned the percentage amount petitioners claim constituted the portion of their home that was used for petitioner's law practice petitioners' home consisted of an upstairs and a downstairs totaling big_number square feet during petitioners and four children lived in the home during petitioners and three children lived in the home petitioners contend that percent of the total floor space of their home was used for the law practice however this space was used only two-thirds of the time for the law practice for the remainder of the time when the space was not used for law practice the space was available and was in fact used by petitioners and their children as their residence for personal purposes on their income_tax returns consistent with the recited percentages petitioners claimed percent of their home expenses as deductible home_office expenses x although respondent did not seriously dispute that percent of the home's floor space was used at some time for the law practice respondent questioned petitioners' contention that this floor space was used two-thirds of the time for the law practice as noted the facts necessary to decide this case are not in dispute--the principal_place_of_business for petitioner's law practice was petitioners' personal_residence and it was the place used by petitioner's clients in meeting or dealing with petitioner in the normal course of petitioner's trade_or_business as a lawyer petitioner's law practice therefore was carried on or conducted exclusively at his home petitioner was not an employee nor was his law practice conducted in a separate structure from petitioners' home a very crucial fact of this case however is that the portions of petitioners' home used for the law practice were not used exclusively for the law practice ie after business hours and presumably on weekends and holidays the portions of the home used for the law practice were also used by petitioners for their personal purposes generally under sec_280a no deduction otherwise allowable shall be allowed with respect to the use of a dwelling as an example the living room where petitioner's clients were interviewed or the kitchen table used for conferences was also used by the family as their residence during off-business hours unit that is used by a taxpayer as a residence during the taxable_year except under sec_280a for interest taxes and casualty losses which would otherwise be allowable sec_280a provides certain limited and specific exceptions to this general_rule which are in pertinent part as follows sec_280a exceptions for certain business or rental use limitation on deductions for such use -- certain business use --subsection a shall not apply to any item to the extent such item is allocable to a portion of the dwelling_unit which is exclusively used on a regular basis-- a as the principal_place_of_business for any trade_or_business of the taxpayer b as a place of business which is used by patients clients or customers in meeting or dealing with the taxpayer in the normal course of his trade_or_business or c in the case of a separate structure which is not attached to the dwelling_unit in connection with the taxpayer's trade_or_business in the case of an employee the preceding sentence shall apply only if the exclusive use referred to in the preceding sentence is for the convenience of his employer therefore for a deduction to be allowed under sec_280a the taxpayer must establish that a portion of the dwelling_unit is exclusively used on a regular basis for the purposes enumerated in subparagraphs a b or c of sec_280a and if the taxpayer is an employee the office is maintained for the convenience_of_the_employer see 94_tc_348 on the facts of this case the sole question is whether petitioner's home was used exclusively for his trade_or_business it was not so used even though petitioner's trade_or_business was exclusively conducted in his home the portion of his home in which he conducted his trade_or_business was not used exclusively for that purpose that factual circumstance precludes petitioners' entitlement to a deduction of the home_office expenses at issue this court has previously passed upon this same question in gomez v commissioner tcmemo_1980_565 this court stated exclusive use of a portion of a taxpayer's dwelling_unit means that the taxpayer must use a specific part of a dwelling_unit solely for the purpose of carrying on his trade_or_business the use of a portion of a dwelling_unit for both personal purposes and for the carrying on of a trade_or_business does not meet the exclusive use test thus for example a taxpayer who uses a den in his dwelling_unit to write legal briefs prepare tax returns or engage in similar activities as well for personal purposes will be denied a deduction for the expenses paid_or_incurred in connection with the use of the residence which are allocable to these activities emphasis added s rept no 1976_3_cb_49 h rept no vol joint_committee explanation 1976_3_cb_1 since petitioners' home or the portion thereof used for the law practice was not used exclusively for petitioner's trade_or_business it follows that the home_office expenses claimed for that home_office are not deductible under sec_280a respondent is sustained on this issue petitioners next contend that such an interpretation of sec_280a is unconstitutional petitioner argues that it is irrational not to allow the matching of costs against revenues as it not only deviates from generally_accepted_accounting_principles but it also requires taxpayers to pay taxes on gross_income with no benefit of the deduction for the expenses_incurred to produce that income such a result petitioners contend violates due process principles to the extent that petitioners' claim is based on the fourteenth amendment of the u s constitution this court has held that the fourteenth amendment does not apply to federal tax statutes 55_tc_6 affd per curiam 450_f2d_280 thus the equal protection and due process clauses of the fourteenth amendment do not operate as a limitation on the taxing power of the federal government 68_tc_603 in general a federal tax law is not violative of the due process clause of the fifth_amendment of the u s constitution unless the statute classifies taxpayers in a manner that is arbitrary and capricious hamilton v commissioner supra pincite shaffer v commissioner tcmemo_1994_618 here petitioners have not shown that sec_280a classifies taxpayer in a manner that is arbitrary and capricious in hamacher v commissioner supra pincite the court recited the background for the enactment of sec_280a's restriction upon deduction of home_office expenses and pointed out that one of the reasons for the enactment of sec_280a was a response by congress to numerous cases particularly those decided by this court which used a liberal standard to allow deduction of home_office expenses that were appropriate and helpful to the taxpayer's business under the circumstances congress was concerned that under such a standard personal_living_and_family_expenses attributable to the home that are not otherwise deductible were being allowed as deductions the purpose of sec_280a was to restrict what congress considered too liberal a standard in this area of tax law the restrictive provisions of sec_280a therefore apply to all taxpayers the court therefore rejects petitioners' contention that sec_280a violates the due process clause of the fifth_amendment respondent determined that petitioners were liable for penalties under sec_6662 for negligence or disregard of rules or regulations under sec_6662 sec_6662 provides that if it is applicable to any portion of an underpayment in taxes there shall be added to the tax an amount equal to percent of the portion of the underpayment to which sec_6662 applies under sec_6664 no penalty shall be imposed under sec_6662 with respect to any portion of an underpayment if it is shown that there was a reasonable_cause for such portion and that the taxpayer acted in good_faith with respect to such portion sec_6662 provides that sec_6662 shall apply to any underpayment attributable to negligence or disregard of rules or regulations sec_6662 provides that the term negligence includes any failure to make a reasonable attempt to comply with the provisions of the internal revenue laws and the term disregard includes any careless reckless or intentional disregard of rules or regulations negligence is the lack of due care or failure to do what a reasonable and ordinarily prudent person would do under the circumstances 85_tc_934 it is well established that the taxpayer bears the burden_of_proof on this issue 58_tc_757 petitioners have not met their burden_of_proof on this issue sec_280a explicitly provides that the deduction for home_office expenses applies only to a portion of a home used exclusively for a trade_or_business such expenses are not allowed if the portion of the home is used for any nonqualifying purpose several cases have interpreted sec_280a in this manner and have elaborated on differing factual situations that in some instances met the standards of sec_280a and in other cases did not satisfy those standards petitioners did not show any reasonable_cause as to how and why their factual situation was such that their expenses should be allowed the court therefore sustains respondent on this issue decision will be entered for respondent


internal_revenue_service department of the treasury number release date index no 2601-dollar_figure p o box ben franklin station washington dc person to contact telephone number refer reply to cc psi - plr-114058-00 date date re legend settlor child child child child trust agreement trust agreement trust agreement trust agreement trust agreement trust agreement trust agreement trust agreement trust agreement trust agreement trust agreement trust agreement x y company trustee plr-114058-00 trustee court dear this is in response to a letter dated date and subsequent correspondence requesting a ruling regarding the generation-skipping_transfer gst tax consequences of the trustees’ proposed renunciation and release of authority facts the facts submitted and representations made are as follows prior to date settlor executed trust agreements trust agreement sec_1 and creating four identical irrevocable trusts one for the benefit of each of settlor’s children child child child and child respectively and trust agreement sec_5 and creating four identical irrevocable trusts one for the benefit of each of child child child and child respectively the children’s trust agreements and trust agreements and creating four identical irrevocable trusts one for the benefit of the children of each of child child child and child respectively the grandchildren’s trust agreements the trusts created under trust agreements own in the aggregate x of the voting_stock and y of the nonvoting_stock of company no additions constructive or otherwise have been made to the trusts since date under article one of the grandchildren’s trust agreements the net_income of each trust is to be distributed in any proportions the trustees deem advisable among the then living children of settlor’s named child or if none among the then living children of settlor’s other children if the trustees determine that any payment of income to any beneficiary is insufficient to defray the beneficiary’s costs of any illness accident or other emergency or to provide for the beneficiary’s proper maintenance support or education the trustees may distribute principal to the beneficiary for those purposes under article two of the grandchildren’s trust agreements each trust must terminate years after the death of the last to die among child child child child and five named grandchildren of settlor article two provides for termination and distribution of each trust in whole or in part upon the deaths of the children of the named child and upon the death of the named child article two also provides that the trustees may terminate a_trust in whole or in part at any time they deem it to be in the best interest of the beneficiaries of the trust or advisable for any other reason upon such termination the trustees will distribute the remainder per stirpes to the then living children of settlor’s named child or if none in equal parts among the other three trusts with then living beneficiaries if none among any of these individuals is then living upon termination of a_trust for settlor’s grandchildren article two provides that plr-114058-00 t he trust property shall be transferred delivered and paid over to such charitable_organization or organizations as the trustees shall select provided that the organization or organizations shall be such that contributions to the same would qualify as charitable_contributions for a purpose specified in sec_170 of the internal_revenue_code of as the same may be amended or supplanted by future legislation article four of the grandchildren’s trust agreements provides that anything hereinbefore or hereinafter contained to the contrary notwithstanding the trustees shall have no power authority or discretion in the management or distribution of the trust property which would cause the net_income or the trust property to be taxable to the settlor for federal income or estate_tax purposes the trustees are authorized to disclaim renounce release or limit in whole or in part such power authority and discretion as they may deem advisable to accomplish such end or for any other reason article five of the grandchildren’s trust agreements provides the trustees with broad power including full power and authority without the necessity of obtaining the consent of any court to do all acts and to execute acknowledge and deliver all instruments which would be lawful for them were they in their own rights the actual owners of the trust property paragraph of article five of the grandchildren’s trust agreements authorizes the trustees to retain all of the investments or property real or personal which may become part of the trust property and in particular to retain without diversification the property initially received from the settlor and any property received in exchange for it the trustees are expressly given unlimited discretion to exercise this authority to retain in_kind investments and property especially investments or property in which settlor’s family maintains a substantial interest paragraph of article five of the grandchildren’s trust agreements authorizes the trustees to deal with any situation which may arise respecting the trust property or any part thereof in such manner as the trustees shall deem advisable and for the best interests of the trust the grant to the trustees of any specific power authority or discretion or the failure to grant specifically plr-114058-00 herein any other power authority or discretion shall not be construed to limit or curtail in any way or to any extent said full and complete power authority and discretion which it is intended and directed shall be exercisable at all times by the trustees respecting any and all matters of whatsoever character pertaining to the trust property or any part thereof but only in a fiduciary capacity and in the interest of the beneficiaries hereunder article four of the grandchildren’s trust agreements provides that n o trustee of this trust shall have any right or power of choice in any discretionary distribution of income or principal or the termination in whole or in part of this trust if such trustee benefits by any such distribution or termination the current trustees of the trusts established under the grandchildren’s trust agreements are trustee and trustee trustee is a director of company trustee is not related or subordinate to settlor within the meaning of sec_672 of the code the trustees of trust agreement propose to renounce and release their power under article two to distribute property to governmental entities described in sec_170 court has issued an order approving the renunciation the trustees have requested a ruling that the renunciation and release will not constitute an addition to the trust created under trust agreement within the meaning of b a of the tax_reform_act_of_1986 or otherwise cause the trust to lose exempt status for generation-skipping_transfer_tax purposes law sec_2601 imposes a tax on each generation-skipping_transfer made by a transferor to a skip_person under a of the tax_reform_act_of_1986 the generation-skipping_transfer_tax is generally applicable to generation-skipping transfers made after date however under b a of the tax reform act and sec_26_2601-1 of the generation-skipping_transfer_tax regulations the tax does not apply to a transfer from a_trust if the trust was irrevocable on date and no addition actual or constructive was made to the trust after that date under sec_26 b ii any trust in existence on date will be considered irrevocable unless the settlor had a power that would have caused inclusion of the trust in his or her gross_estate under sec_2038 or sec_2042 if the settlor had died on date plr-114058-00 sec_26_2601-1 provides rules for determining when a modification judicial construction settlement agreement or trustee action with respect to a_trust that is exempt from the generation-skipping_transfer_tax will not cause the trust to lose its exempt status sec_26_2601-1 provides that a modification will not cause an exempt trust to be subject_to the provisions of chapter if the modification does not shift a beneficial_interest in the trust to any beneficiary who occupies a lower generation as defined in sec_2651 than the person or persons who held the beneficial_interest prior to the modification and the modification does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided for in the original trust a modification of an exempt trust will result in a shift in beneficial_interest to a lower generation beneficiary if the modification can result in either an increase in the amount of a gst transfer or the creation of a new gst transfer analysis in the present case the trust established under trust agreement was irrevocable on date it is represented that no additions actual or constructive have been made to the trust after that date article two of trust agreement requires the trustees to select and transfer trust property to charities described in sec_170 if the trust has terminated and no individual beneficiaries are then living thus under article two the trustees have the power and authority to transfer trust property from the trust to charities described in sec_170 the trustees’ proposed renunciation and release will limit the charitable organizations that may receive trust distributions to those described in sec_170 other than sec_170 sec_26_2601-1 discusses certain actions taken with respect to a_trust which will not cause a_trust to lose its exempt status under sec_26_2601-1 a modification will not cause an exempt trust to lose its exempt status if the modification does not shift a beneficial_interest in the trust to any beneficiary in a generation lower than the persons who held the beneficial interests prior to the modification and the modification does not extend the time for vesting of any beneficial_interest in the trust beyond the period provided for in the original trust a modification that does not result in an increase in the amount of a gst transfer or the creation of a new gst transfer will not cause the trust to lose its exempt status in this case the proposed renunciation and release by the trustees will not result in a shift of any beneficial_interest in the trust to any beneficiary who occupies a generation lower than the persons holding the beneficial interests prior to the renunciation and release further the proposed renunciation and release will not extend the time for vesting of any beneficial_interest in the trust beyond the period plr-114058-00 provided for in the original trust further the proposed renunciation and release will not constitute an addition to the trust within the meaning of b a of the tax_reform_act_of_1986 accordingly based on the facts submitted and the representations made the proposed renunciation and release will not cause the trust established under trust agreement to lose its exempt status for generation-skipping_transfer_tax purposes except as specifically ruled herein we express no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions 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 george l masnik chief branch office of associate chief_counsel passthroughs and special industries sincerely yours enclosure copy for sec_6110 purposes


department of the treasury i n t e r n al r e v e n u e s e r v i c e w ashington d c date of f i c e of c h i ef c ou n sel number info release date conex-100410-09 uil the honorable judd gregg united_states senator hooksett road manchester nh attention ----------------------- dear senator gregg i am responding to your letter dated date on behalf of your constituent - ------------------------- ----- asked about possible relief from the mandatory replacement_period prescribed in sec_1031 of the internal_revenue_code the code ---------------may not be able to complete her like-kind_exchange within the statutorily mandated period because the business she used to facilitate her like-kind_exchange is in bankruptcy a taxpayer does not have to recognize gain_or_loss on the like-kind_exchange of property satisfying the requirements of sec_1031 sec_1031 requires a taxpayer to obtain the replacement_property by the earlier of days after the date the taxpayer transfers the relinquished_property or the due_date determined by extension of the taxpayer’s federal_income_tax return for the year in which the transfer of the relinquished_property occurs sec_1_1031_k_-1 of the regulations allows a taxpayer to use a qualified_intermediary qi to facilitate a like-kind_exchange when using a qi generally a taxpayer will transfer the relinquished_property to the qi who will sell the property to a buyer use the proceeds of the sale to purchase the replacement_property and transfer the replacement_property to the taxpayer if the taxpayer receives the replacement_property within the period prescribed in sec_1031 of the code and meets the other requirements of sec_1031 the taxpayer will not recognize gain_or_loss on the like-kind_exchange conex-100410-09 we are sympathetic to -----------------situation but lack the authority to extend the statutorily mandated replacement_period sec_7508a provides the only authority for extending a statutory deadline generally in the case of certain natural disasters terrorist acts or military actions unfortunately sec_7508a does not authorize an extension of the sec_1031 replacement_period due to bankruptcy or other economic factors amending sec_7508a to provide the relief ---------------requests would require congressional action i hope this information is helpful if we can assist you further please contact me or ------ ---------------------at ----- ------------- sincerely s george j blaine george j blaine associate chief_counsel income_tax accounting


internal_revenue_service number release date index number ------------------- -------------------- ------------------------------------- re ---------------------- legend department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------- id no ------------- telephone number --------------------- refer reply to cc psi plr-126137-11 date date ------------------------ ------------------------------------------------ ---------------------- --------------------------------------------------------------------------------- decedent spouse attorney residuary_trust ----------------------------------------------------- ----------------- date date ------------------- ------------------- date ----------------- date ------------------ date state ------------- ------------------------ court citation ----------------------------------------------------------------- dear ---------------- this letter responds to your authorized representative’s letter dated date requesting rulings on the federal gift and estate_tax consequences of a judicial reformation of a_trust the facts and representations submitted are as follows decedent died testate on date pursuant to the terms of decedent’s will will dated date upon the death of decedent the residue of decedent’s estate is to be distributed to a marital trust and residuary_trust article iv d residuary_trust provides as follows on the death of my wife on the death of my wife trustee shall distribute the principal free from this trust to such person or persons plr-126137-11 including my wife’s estate in such manner and amounts and on such terms whether in trust or otherwise as my wife effectively appoints by specific reference hereto in the last written instrument which she executes and delivers to trustee during her lifetime or failing any such instrument in her will emphasis added in the year preceding decedent’s death decedent had a serious health emergency that necessitated surgery on date the day before the surgery decedent and spouse asked attorney to prepare for their signature estate_planning documents including decedent’s will on the same day attorney drafted decedent’s will and other estate_planning documents and immediately delivered the documents to decedent’s and spouse’s home decedent and spouse signed the documents including decedent’s will the next day date decedent died the following year on date survived by spouse spouse is the trustee of the residuary_trust in the rush to finalize the documents attorney mistakenly included a power in the residuary_trust allowing spouse to appoint the principal to any person or persons including her own estate attorney contends in a sworn affidavit that to function correctly with respect to decedent’s and spouse’s estate plan the language in article paragraph d subparagraph should have provided that spouse could appoint the principal in whatever manner she desires except not to herself her estate or the creditors of her estate attorney further avers that limiting spouse’s power_of_appointment in such manner corresponds with decedent’s estate_tax planning goals as expressed in decedent’s will in order to correct the error in the will and to reflect accurately the intent of decedent on date spouse as the trustee of the residuary_trust filed a petition with state court seeking authorization to reform residuary_trust to correct the scrivener’s error in article paragraph d subparagraph of decedent’s will accordingly the petition requested that the existing language be struck in its entirety and replaced with the following language on the death of my wife on the death of my wife trustee shall distribute the principal free from this trust to such person or persons other than my wife my wife’s estate my wife’s creditors or the creditors of my wife’s estate in such manner and amounts and on such terms whether in trust or otherwise as my wife effectively appoints by specific reference hereto in the last written instrument which she executes and delivers to trustee during her lifetime or failing any such instrument in her will emphasis added plr-126137-11 on date the court issued an order granting the petition for reformation you have requested the following rulings the power_of_appointment granted under the residuary_trust as reformed by court does not constitute - and never did constitute at any time - a general_power_of_appointment under sec_2041 over the assets of residuary_trust and the assets of the residuary_trust will not be included in spouse’s gross_estate under sec_2041 the reformation of article paragraph d subparagraph of decedent’s will did not at any time result in the exercise or release of a general_power_of_appointment under sec_2514 so as to constitute a gift by spouse for federal gift_tax purposes ruling sec_1 and sec_2001 of the internal_revenue_code provides that a tax is imposed on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2031 provides that the value of the gross_estate of the decedent shall be determined by including to the extent provided for in sec_2031 through the value at the time of his death of all property real or personal tangible or intangible wherever situated sec_2041 provides that the value of the gross_estate includes the value of all property to the extent of any property with respect to which the decedent has at the time of his death a general_power_of_appointment created after date or with respect to which the decedent has at any time exercised or released such a power_of_appointment by a disposition which is of such nature that if it were a transfer of property owned by the decedent such property would be includible in the decedent’s gross_estate under sec_2035 to inclusive sec_2041 provides that for purposes of sec_2041 the term general_power_of_appointment means a power which is exercisable in favor of the decedent his estate his creditors or the creditors of his estate sec_2041 provides that the lapse of a power_of_appointment created after date during the life of the individual possessing the power shall be considered a release of such power sec_2501 imposes a gift_tax for each calendar_year on the transfer of property by gift during the year by an individual plr-126137-11 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_2514 provides that the exercise or release of a general_power_of_appointment created after date shall be deemed a transfer of property by the individual possessing such power sec_2514 provides that the term general_power_of_appointment means a power which is exercisable in favor of the individual possessing the power his estate his creditors or the creditors of his estate sec_2514 provides that the lapse of a power_of_appointment created after date during the life of the person possessing the power is considered a release of the power in 387_us_456 the supreme court considered whether a state trial court’s characterization of property rights conclusively binds a federal court or agency in a federal estate_tax controversy the court concluded that the decision of a state trial_court as to an underlying issue of state law should not be controlling when applied to a federal statute rather the highest court of the state is the best authority on the underlying substantive rule_of state law to be applied in the federal matter if there is no decision by that court then the federal authority must apply what it finds to be state law after giving proper regard to the state trial court’s determination and to relevant rulings of other courts of the state in this respect the federal_agency may be said in effect to be sitting as a state court under state law a reformation of written contracts on the grounds of mistake may be decreed upon a showing by evidence that is clear convincing and free from doubt that the instrument sought to be reformed does not because of mutual mistake properly record all of the material provisions of a prior definite and specific oral agreement by the parties citation where there is clear_and_convincing proof a unilateral mistake by the settlor is sufficient to warrant reformation id therefore based on the facts submitted and the representations made we conclude that the reformation of residuary_trust is consistent with applicable state law as applied by the highest court of state accordingly we conclude that the power_of_appointment granted under the residuary_trust as reformed by court does not constitute - and never did constitute at any time - a general_power_of_appointment under sec_2041 over the assets of residuary_trust and the assets of the residuary_trust will not be included in spouse’s gross_estate under sec_2041 and the reformation of article paragraph d subparagraph of decedent’s will did not at any time result in the exercise or release of a general_power_of_appointment under sec_2514 so as to constitute a gift by spouse for federal gift_tax purposes plr-126137-11 a copy of this letter should be attached to any gift estate or generation-skipping_transfer_tax returns that you may file relating to these matters except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative 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 sincerely leslie h finlow senior technician reviewer branch office of associate chief_counsel passthroughs special industries enclosures copy for sec_6110 purposes copy of this letter cc


signiticant index no department of the treasury internal_revenue_service washington d c aug t ep ra t a2 tax_exempt_and_government_entities_division number release date re dear company bank property a property b property c state state_agency federal_agency this letter constitutes notice that your requests for waivers of the minimum_funding_standard for the plan for the plan years ending august have been granted subject_to the following conditions and august in the plan’s funding_standard_account for within days from the date of this letter the company makes a contribution equal to the amount necessary under sec_412 of the internal_revenue_code code to amortize the waived_funding_deficiency for the plan_year ending august according to information received the plan_year ending august from the enrolled_actuary servicing the plan this amount is approximately _ this amount was due on date to satisfy the minimum dollar_figure funding standard for the plan_year ending august consideration the approval of a funding waiver for the same plan_year within days from the date of this letter the company files a form_5330 to for the report the accumulated_funding_deficiency of approximately dollar_figure and pays the excise_tax that is due plan_year ending august under sec_4971 of the code after taking into the company makes sufficient contributions to meet the minimum_funding_standard for the plan for the plan_year ending august may by date the company contributes sufficient funds from the proposed sales of properties a b and or c to fully fund the plan on a current_liability basis by the company provides details of any sale of properties a b or c within of this office by facsimile at days from the date of the sale to ' or to the followina address the information provided should include a the name of the property sold b the sale price c the amount of the sale proceeds used to satisfy the company's debt to the bank and d the amount of the sale proceeds contributed to the plan are retroactively null and void you agreed to these conditions in an e-mail sent to us on date if any one and of the conditions is not met the waivers for the plan years ending august august these conditional waivers have been granted in accordance with sec_412 of the code and sec_303 of the employee_retirement_income_security_act_of_1974 erisa the amounts for which these conditional waivers have been granted are equal to the contributions that would otherwise be required to reduce the balance in the funding_standard_account to zero as of august _and august the company is a not-for-profit organization in the state services for children and adults with disabilities throughout the state the company’s programs include childcare pediatric rehabilitation camping recreation health wellness vocational rehabilitation and placement and residential services the company serves over big_number children and adults with disabilities on a yearly basis a substantial portion of the company’s support is from government grants contracts and public contributions it provides programs and the current financial hardship was brought on by a significant increase in expenses due to a number of factors the renovation of a facility in the construction and start-up of a new facility in and the take-over of various programs in the western part of the state from the state_agency and exacerbated the financial hardship by a decline in public support during causing the company to operate with total net deficits for the fiscal years ending august raising independent auditors issuing a report for the fiscal_year ending august doubts about the company's ability to continue as a going concern shortly thereafter the company became unable to make required debt payments to its bank and other creditors _ these factors eventually led to the company’s and august _ as a consequence the company took a number of steps to improve its financial position the chief_executive_officer was replaced operations were restructured to optimize program effectiveness and financial performance bank debt was restructured steps were taken to restore donor confidence and - attempts are being made to sell certain of the company’s real_property while the operational improvements have enhanced the company's financial position the company continued to operate with a total net deficit and the company’s independent auditors again issued a report for the fiscal_year ending august raising doubts about the company's ability to continue as a going concern it is obvious from the financial information provided by the company that it has experienced a substantial business hardship starting in the fiscal ear ending expenses have greatly exceeded revenues resulting in a net august decrease of assets of over dollar_figure operated with a growing total net deficit since the fiscal_year ending august while the situation has somewhat improved for the fiscal_year ending august the fact remains that the company’s independent auditors have serious doubts about the company’s ability to continue as a going concern the company has through from and _ furthermore the company has recently received however the company has made some contributions to the plan for the plan years ending august appraisals for parcels of real_estate that it owns the company has indicated that it would use the proceeds of the sale of its real_estate to fully fund the plan the highest- valued property is currently subject_to a deed restriction by the federal_agency but the company expects this restriction to be lifted shortly while it is not clear that a financial turnaround will take place it is clear that the company will not be able to meet the minimum_funding_standard for the plan years and august without compromising its ability to ending august maintain ongoing operations moreover there is a significant possibility that the sale of real_estate could fully fund the plan because the company's financial recovery is not certain and because the plan is only funded on a current_liability basis the request for waivers of the minimum_funding_standard for the plan for the plan years ending august conditions described above have been granted subject_to the and august _ your attention is called to sec_412 of the code and sec_304 of erisa which describe the consequences that would result in the event the plan is amended to increase benefits change the rate in the accrual_of_benefits or to change the rate of vesting while any portion of the waived funding deficiencies remain unamortized please note that any amendment to a profit sharing plan or any other retirement plans covering employees covered by the plan maintained by the company to increase the liabilities of those plans would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa similarly the establishment of a new profit sharing plan or any other retirement_plan by the company covering employees covered by the plan would be considered an amendment for purposes of sec_412 of the code and sec_304 of erisa this ruling is directed only to the taxpayer that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent when filing form_5500 for the plan years ending august the date of this letter should be entered on schedule b actuarial information for this reason we suggest that you furnish a copy of this letter to the enrolled_actuary who is responsible for the completion of the schedule b and august we have sent a copy of this letter to the manager to the manager and to your authorized representative pursuant to a power_of_attorney on file in this office if you require further assistance in this matter please contact sincerely yours dap donna m prestia manager actuarial group


department of the treasury internal_revenue_service washington d c tax mxempt and government entities division uniform issue list dec 24v512028 se tep lat legend taxpayer bank m account a amount amount amount amount bank n bank o bank p dear this letter is in response to a ruling_request submitted by your authorized representative dated date as supplemented by additional information dated date in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code code the following facts and representations have been submitted under penalty of perjury in support of the ruling requested the taxpayer maintained account a an individual_retirement_account ira under sec_408 of the code with bank m the taxpayer is a widow who until her husband's death in depended on him to handle the family’s financial affairs the taxpayer went to bank m with the intention of closing account a and depositing the proceeds with another financial_institution in order to generate a greater rate of return the taxpayer was not aware that the withdrawal was being made from an ira and bank m did not make her aware of this fact on date the taxpayer withdrew amount from account a which represented a total_distribution bank m distributed the funds to the taxpayer in three checks on the same date the taxpayer deposited amount into a new account at bank n amount into a new account at bank o and amount into an existing account at bank p three accounts were non-ira accounts and remain intact at the banks where they were deposited all the taxpayer became aware of the mistake in date when during the preparation of her tax_return her form 1099-r was discovered by her account based on the above facts and representations you request that the internal_revenue_service the service waive the 60-day rollover requirement with respect to the distribution of amount because the failure to waive such requirement would be against equity or good conscience code sec_408 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 distributee as the case may be in the manner provided under sec_72 code sec_408 defines and provides the rules applicable to ira_rollovers code sec_408 provides that sec_408 does not apply to any amount_paid or distributed out 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 ii 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 code sec_408 provides that sec_408 does not apply to any amount described in sec_408 received by an individual from an ira if at 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 code sec_408 provides a similar 60-day rollover period for partial rollovers code sec_408 provides that the secretary may waive the 60-day requirement under sec_408 and sec_408 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 revproc_2003_16 r b 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 rollover due to death disability hospitalization incarceration restrictions imposed by a foreign_country or postal error the use of the amount distributed for example in the case of payment by check whether the check was cashed and the time elapsed since the distribution occurred the taxpayer intended to change investments by withdrawing the assets of account a the taxpayer was unaware that account a was an ira and was not informed of this fact by bank m the transferred assets have remained in the non-ira accounts since their deposit therefore pursuant to code sec_408 the service hereby waives the 60-day rollover requirement with respect to the distribution of amount from account a the taxpayer is granted a period of days from the issuance of this letter_ruling to rollover amount into an ira provided all other requirements of sec_408 except the 60-day requirement are met with respect to such contributions these amounts will be considered rollover_contributions within the meaning of sec_408 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 applicable thereto ‘ this letter is directed only to the taxpayer who requested it code sec_6110 provides that it may not be used or cited as precedent if you have any questions please contact iii a sincerely c bh wathen’ carlton a watkins manager employee_plans technical group enclosures deleted copy of this letter notice of intention to disclose notice


internal_revenue_service number release date index number --------------------------------- ------------------------------------ ------------------ ------------------ ---------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------- telephone number --------------------- refer reply to cc psi b1 plr-141085-08 date date legend x -------------------------------------------------- --------------------------------- country date ----------------- ------------------- dear --------------- this is in response to a letter dated date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to file an election to treat x as an entity disregarded as separate from its owner for federal tax purposes under sec_301_7701-3 facts according to the information submitted x is an entity organized under the laws of country x intended to make an election to be treated as a disregarded_entity effective date however due to an oversight form_8832 entity classification election was not timely filed law and analysis sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with a single owner can elect either to be classified as an association and thus a corporation under sec_301_7701-2 or to be disregarded as an entity separate from its owner plr-141085-08 sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally unless the entity makes an election to be treated otherwise a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability if a foreign eligible_entity has only one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 if a foreign eligible_entity has more than one owner it may elect to be treated as a partnership pursuant to the rules in sec_301_7701-3 sec_301_7701-3 further provides that an entity classification election must be filed on form_8832 entity classification election and can be effective up to days prior to the date the form is filed or up to months after the date on which the form is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as including an election with a deadline prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 conclusion based solely upon the information submitted we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result an extension of days from the date of this letter is granted to elect to treat x as a disregarded_entity for federal tax purposes effective date the entity classification election should be made by filing form_8832 with the appropriate service_center a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose plr-141085-08 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 s requesting it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives sincerely curtis g wilson curtis g wilson associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc