t c no united_states tax_court anthony g michael petitioner v commissioner of internal revenue respondent docket no 21341-07l filed date r assessed return_preparer_penalties of dollar_figure under sec_6694 i r c against p in date for taxable years and p paid dollar_figure the equivalent of percent of the assessed sec_6694 i r c penalties and r credited dollar_figure toward dollar_figure toward and nothing toward p filed a refund claim with the irs which was denied and then commenced a suit_for_refund in date the parties to the refund_suit reached a settlement agreement in which p agreed to pay dollar_figure in satisfaction of his liabilities minus the dollar_figure payments already made plus interest under the settlement p’s agreed liability for was dollar_figure p did not pay the amount due under the settlement agreement in date r issued a notice_of_intent_to_levy based on the assessment p requested and received a cdp hearing in which the settlement officer determined that p was entitled to a reduction in accordance with the settlement agreement on date r issued a notice_of_determination upholding the levy for taxable years and r has filed a motion for summary_judgment p alternatively argues this court lacks jurisdiction to sustain the levy r failed to make a valid assessment r failed to issue a notice_and_demand for payment for the settlement amount and a genuine issue of material fact exists held r’s determination to sustain the levy for was an abuse_of_discretion because the facts show that petitioner has overpaid his tax_liability for that year according to the terms of the settlement agreement held further r did not abuse his discretion with respect to the levy for the taxable years and and is entitled to summary_judgment for the taxable years and as a matter of law because a levy is a permissible means for r to collect the amount in the settlement agreement david a salim for petitioner a gary begun for respondent opinion goeke judge this matter is before the court on respondent’s motion for summary_judgment pursuant to rule the issue we must decide is whether respondent abused his discretion in sustaining a levy to collect tax preparer penalties under sec_6694 for and petitioner opposes respondent’s motion for summary_judgment and argues that the 1unless otherwise indicated all rule references are to the tax_court rules_of_practice and procedure and all section references are to the internal_revenue_code court should grant summary_judgment in his favor for the reasons set forth below we shall grant summary_judgment in petitioner’s favor for the taxable_year and grant respondent’s motion for summary_judgment for the taxable years and background at the time the petition was filed petitioner resided in michigan in date respondent assessed tax preparer penalties under sec_6694 against petitioner of dollar_figure per return for recklessly or intentionally disregarding rules and regulations with respect to returns as follows year returns at issue total penalty sec_6694 dollar_figure big_number big_number big_number respondent assessed the penalties with statutory interest and issued to petitioner statutory notices of assessment and demand for payment see sec_6303 petitioner paid dollar_figure or percent of the assessed sec_6694 penalties which he was required to pay to file a refund claim see sec_6694 the internal_revenue_service irs credited dollar_figure toward and dollar_figure toward the irs did not credit any portion of petitioner’s payment toward the irs’s crediting of petitioner’s dollar_figure payment did not reflect his intended allocation to the years at issue as reflected on form_6118 claim of income_tax return preparers petitioner filed a refund claim for each year at issue which respondent denied petitioner commenced a refund_suit in the district_court for the eastern district of michigan alleging that he was not liable for the sec_6694 penalty for any of the years at issue the united_states filed a counterclaim to collect the unpaid balance of the sec_6694 penalty assessments in date the parties reached a settlement in which petitioner agreed to pay the sec_6694 penalty for a portion of the returns and to pay a sec_6694 penalty of dollar_figure per return for the remainder of the returns for an understatement_of_tax liability due to a position that does not have a realistic possibility of being sustained on the merits in total petitioner agreed to pay dollar_figure in sec_6694 penalties minus any payments already made plus interest the settlement agreement allocated as follows no returns no returns subject_to subject_to penalties year sec_6694 sec_6694 sec_6694 sec_6694 dollar_figure big_number big_number -0- dollar_figure big_number the parties read the terms of the settlement into the court record at the final pretrial conference the district_court dismissed the complaint with prejudice the district court’s dismissal order stated that either party may reopen the matter within sixty days of the date of this order to enforce the settlement agreement petitioner did not pay the amount due under the settlement agreement and the government did not seek to reopen the case within the 60-day enforcement period on date respondent issued a notice_of_intent_to_levy for the years at issue to petitioner for amounts based on the original assessments the levy notice did not reflect the terms of the settlement agreement on date respondent received petitioner’s request for a collection_due_process_hearing cdp hearing at the cdp hearing petitioner argued that the assessments are invalid because the district_court dismissed the government’s counterclaim in the refund_suit with prejudice the parties did not enter a decision document in the refund_suit and respondent failed to issue to petitioner a notice_and_demand for payment that was based on the terms of the settlement agreement petitioner did not propose any collection alternatives during the cdp hearing following the cdp hearing the settlement officer determined that petitioner is entitled to a reduction in the amounts assessed against him in accordance with the terms of the settlement agreement the settlement officer incorrectly allocated the dollar_figure settlement agreement to the years at issue as follows year returns total penalty dollar_figure big_number big_number big_number the settlement officer requested an adjustment to the assessments against petitioner for and to reflect the settlement agreement the record establishes that petitioner’s payment credited to exceeds his agreed-upon penalty on date respondent issued a notice_of_determination for the taxable years and that granted relief from the levy in part and sustained the levy in part discussion summary_judgment is intended to expedite litigation and avoid unnecessary and expensive trials fla peach corp v commissioner 90_tc_678 the court may grant summary_judgment where there is no genuine issue of material fact and a decision may be rendered as a matter of law rule a and b 98_tc_518 affd 17_f3d_965 7th cir the moving party bears the burden of proving that there is no genuine issue of material fact and the court will view any factual inferences in a light most favorable to the nonmoving party 85_tc_812 under rule d where the moving party properly makes and supports a motion for summary_judgment an adverse_party may not rest upon the mere allegations or denials of such party’s pleading but must set forth specific facts by affidavits or otherwise showing that there is a genuine issue for trial respondent has conceded that petitioner is not liable for the amount of the original assessments in excess of the amount in the settlement agreement petitioner challenges respondent’s authority to collect the settlement amount by levy petitioner is not entitled to challenge the merits of his liability for the sec_6694 penalties because he had an opportunity to dispute his liability in the refund_suit see sec_6330 farley v commissioner tcmemo_2004_168 where the underlying tax_liability is not properly at issue the court reviews the administrative determination regarding the collection action for abuse_of_discretion 114_tc_604 114_tc_176 the abuse_of_discretion standard requires the court to decide whether the appeals officer’s determination was arbitrary capricious or without sound basis in fact or law 91_tc_1079 upon issuance of a notice_of_levy a taxpayer is entitled to an administrative hearing before an impartial officer_or_employee of the appeals_office sec_6330 at the hearing a taxpayer may raise any relevant issue regarding the collection action including possible collection alternatives sec_6330 following a cdp hearing the appeals officer must determine whether to proceed with the collection action after verification that the requirements of applicable law and administrative procedure have been met considering any relevant issues the taxpayer raised and whether the collection action balances the need for the efficient collection_of_taxes with the legitimate concern of the taxpayer that any collection action be no more intrusive than necessary sec_6330 the settlement officer assigned to petitioner’s case determined that all requirements of applicable law and administrative procedure were met including that respondent made the assessments pursuant to sec_6201 and mailed a notice_and_demand for payment to petitioner at his last_known_address within days of the assessments pursuant to sec_6303 petitioner argues that respondent abused his discretion in sustaining the levy for the years at issue petitioner argues the court lacks jurisdiction to sustain the levy respondent failed to make a valid assessment against petitioner respondent failed to issue a notice_and_demand for payment for the settlement amount and a genuine issue of material fact exists because respondent failed to provide the settlement agreement in support of his summary_judgment motion i jurisdiction argument petitioner argues that the court lacks jurisdiction to sustain respondent’s levy action because the district_court dismissed the government’s counterclaim for collection with prejudice and this court lacks jurisdiction to enforce the terms of the settlement agreement citing 511_us_375 in kokkonen the supreme court held that when a federal district_court dismisses a case with prejudice upon the basis of a settlement agreement in a nontax case the parties must bring an action for enforcement of the settlement in state court rather than resorting to the district_court for enforcement where the district_court did not retain jurisdiction to enforce the settlement id pincite the district_court in petitioner’s refund action limited the parties’ right to seek enforcement through the district_court to days sec_6330 grants this court exclusive jurisdiction to review appeals from all sec_6330 determinations made after date irrespective of the type of tax making up the underlying tax_liability sec_6330 pension_protection_act of publaw_109_280 120_stat_1019 see 130_tc_88 in a levy action under sec_6330 the court’s jurisdiction depends on the issuance of a notice_of_determination and the taxpayer’s timely filing of a petition see 117_tc_122 116_tc_263 the government’s counterclaim in the refund_suit does not preclude the court’s having jurisdiction to review sec_6330 determinations the statutory collection remedies available to the commissioner are separate from the government’s right to counterclaim for unpaid taxes in a refund action except as may be required by the application of estoppel principles the district court’s dismissal of the refund action with prejudice on the basis of the settlement agreement does not render the administrative statutory collection remedies unavailable see sec_6321 sec_6331 nor does the district court’s retention of jurisdiction for the 60-day enforcement period eliminate respondent’s right to statutorily created collection remedies such as a levy sec_6331 accordingly we hold that the court has jurisdiction to review respondent’s determination to sustain the levy and to determine whether respondent may collect the unpaid sec_6694 penalties by levy ii validity of assessment argument respondent’s levy notice was based on the original assessments petitioner argues that the levy is not based on a valid assessment according to petitioner the settlement agreement invalidated the original assessments and respondent did not make a new assessment to reflect the terms of the settlement agreement petitioner does not argue that the levy notice was otherwise invalid deficiency procedures do not apply to sec_6694 penalties sec_6696 the assessments at issue were valid when made petitioner does not argue that the original assessments were arbitrary or without sound basis in fact petitioner’s argument is unconvincing an assessment is not invalid because the liability is afterwards reduced by settlement sec_6404 authorizes the secretary to abate the unpaid portion of the assessment of any_tax to the extent the assessment may be excessive the reference in sec_6404 to abating a portion of an assessment implies that abatement is not an all-or-nothing proposition if a penalty under sec_6694 or b concerning a return or claim_for_refund has been assessed against a preparer and if it is established at any time in a final administrative determination or a final judicial decision that only a portion of the assessment is valid then the excess assessment must be abated if an amount of the abated assessed penalty was paid that amount must be refunded as if the payment were an overpayment_of_tax without consideration of any period of limitations sec_1_6694-1 income_tax regs sec_301_6325-1 proced admin regs provides that a lien shall be released when the entire liability has been satisfied and the lien has become legally unenforceable sec_6325 does not apply because petitioner’s liability has not been fully satisfied an incorrect assessment is not void when a court is faced with an incorrect but otherwise valid assessment the proper course is not to void the assessment but to determine what if anything the taxpayer owes the government see 293_us_507 as long as the assessment had any foundation the assessment would not be void see 974_f2d_1064 9th cir 900_f2d_1144 7th cir respondent was not required to issue a second or supplemental assessment based on the terms of the settlement agreement see sec_6204 granting the commissioner authority to issue supplemental assessments sec_6404 granting the commissioner authority to abate an assessment sec_1_6694-1 income_tax regs requiring abatement of the assessment of a sec_6694 penalty where it is established that there was no understatement_of_tax liability the statutory requirement that the commissioner abate the excessive_amount of the assessment clearly implies that the valid portion of the assessment will stand accordingly we hold that the assessments are valid and provide a basis for the levy action iii notice_and_demand argument petitioner argues that the irs failed to provide notice_and_demand for payment of petitioner’s agreed-upon tax_liability pursuant to the settlement agreement sec_6331 authorizes the irs to collect unpaid assessments by levy where the taxpayer fails to pay any_tax liability within days after notice_and_demand for payment the failure to provide the statutory notice_and_demand may bar administrative collection actions such as a levy 825_f2d_1053 6th cir see also 871_f2d_1015 11th cir sec_6303 requires the secretary to give notice and to demand payment within days of assessment by leaving the notice_and_demand at the taxpayer’s dwelling or usual place of business or mailing it to the taxpayer’s last_known_address see sec_1_6694-4 income_tax regs requiring notice_and_demand upon the assessment of sec_6694 penalties sec_1_6696-1 income_tax regs failure to provide notice_and_demand within the 60-day period does not invalidate an otherwise valid assessment sec_301_6303-1 proced admin regs respondent issued to petitioner the notice_and_demand for payment based on the original assessment as required by sec_6303 on date there is no requirement for respondent to issue a second notice_and_demand for payment based on the terms of the settlement agreement see sec_7122 relating to compromises of tax_liability petitioner was not prejudiced by not receiving a second notice_and_demand for payment because he had an opportunity to contest the assessments on the merits petitioner entered into the settlement agreement with full knowledge that his liability was reduced to dollar_figure because respondent satisfied the assessment and notice_and_demand requirements we reject petitioner’s argument that sec_6331 forbids respondent to collect the unpaid sec_6694 penalties by levy iv failure to provide settlement agreement argument petitioner argues that the court should deny respondent’s summary_judgment motion because respondent failed to provide a transcript of the settlement agreement creating a genuine issue of material fact for trial in support of the motion for summary_judgment respondent presented the district court’s transcript of the pretrial conference where the parties entered the terms of the settlement on the record we find this evidence sufficient to establish the terms of the settlement agreement petitioner has not set forth specific facts with respect to the terms of the settlement agreement that show a genuine issue of material fact exists for trial bare allegations will not avoid summary_judgment 119_tc_157 in addition petitioner’s allegations that respondent failed to provide his entire administrative file in response to his request under the freedom_of_information_act does not necessitate a denial of respondent’s summary_judgment motion since petitioner has not set forth specific facts that create a genuine issue of material fact for trial we hold that respondent’s determination to sustain the levy for was an abuse_of_discretion because the facts show that on the basis of the terms of the settlement agreement petitioner has overpaid his tax_liability for that year accordingly we shall deny respondent’s motion for summary_judgment for the 2the petition raised the statute_of_limitations as a defense however petitioner did not raise the statute_of_limitations in his response to respondent’s summary_judgment motion the commissioner may collect an unpaid tax_liability by levy within years after the assessment sec_6502 a cdp request suspends the running of the period of limitations for collection while the hearing and any appeals thereof are pending sec_6330 see also sec_6694 respondent assessed the sec_6694 penalties on date respondent received petitioner’s request for a cdp hearing on date suspending the 10-year limitations_period as of that date accordingly the statute_of_limitations does not bar respondent from collecting petitioner’s tax_liability petitioner’s filing of the refund action in district_court would also suspend the running of the period of limitations see sec_6694 taxable_year and grant summary_judgment in petitioner’s favor for the taxable_year we find that respondent did not abuse his discretion with respect to the levy for the taxable years and we hold that there is no dispute of material fact with respect to the taxable years and and respondent is entitled to summary_judgment for the taxable years and as a matter of law to reflect the foregoing an appropriate order and decision will be entered 3in petitioner’s response to respondent’s motion for summary_judgment petitioner contends that the court should grant costs and attorney’s fees to petitioner we shall deny this request


department of the treasury internal_revenue_service washington d c tax exempt ane government entities dec ulll hook hxxxx kxkak legend taxpayer a xxxxxxx irax ira y xxxxk xxkxk amount n xxxxx financial tnstitution c xxxxx financial_institution d xxx date xxxxk date 00k date xxkxx set ep rate dear xxxxx this is in response to a request submitted on your behalf by your authorized representative dated date as supplemented by correspondence dated date in which you request a waiver of the 60-day rollover requirement contained in sec_408 of the internal_revenue_code the code kk page the following facts and representations have been submitted under penalties of perjury in support of the ruling requested taxpayer a age maintained a simplified_employee_pension pian sep described in sec_408 of the code for employees of his small_business he maintained an sep-individual retirement arrangement ira x for purposes of participating in the sep as an owner-employee ira x was maintained by financial tnstitution taxpayer a intended to roll over the total account balance amount n of ira x into a new ira at financial_institution d and asserts that his failure to accomplish a rollover of amount n as intended within the 60-day period prescribed by sec_408 of the code was due to error by financial_institution d taxpayer a represents that prior to date he received instructions from financial_institution d on how te transfer funds from ira x to a new sep-ira to be opened at financial_institution d financial_institution d sent taxpayer a the appropriate forms to complete financial_institution c issued to taxpayer a a check dated date for amount n he in turn mailed a personal check dated date for amount n payable to financial_institution d together with a completed sep-ira plan authorization form and a completed sep-ira new account form documentation shows that the listing of taxpayer a’s business and the name of his spouse in addition to his name on the check made it unclear for whom an ira was being requested in addition documentation shows that one or more portions of the above-described documents was completed improperly it is represented that financial_institution d required that such document s ba determined acceptable under its sep-ira application procedures before financial_institution d would establish an ira as described in taxpayer a's name but that financial_institution d failed to inform taxpayer a that the documents were not completed properly in response to taxpayer a's application package financial_institution d mailed taxpayer a a letter dated date approximately days after date etter financial_institution d having determined taxpayer a’s check to be unacceptable as drafted retumed it to taxpayer a and requested that he reissue it the letter provided that upon receipt of detailed allocation instructions and identification of the tax_year of the contribution along with the reissued check financial_institution d would invest the assets amount n taxpayer a reissued the check for amount n and financial_institution d received such check within the 60-day rollover period in the the letter that retumed taxpayer a's check to him did not return the authorization form or the account form that taxpayer a had submitted with such check and did not make mention of either document having incorrectly completed fields mo it is represented that financial_institution d provided new application to taxpayer a prior to the expiration of the 60-day period for rolling over amount n into an ira but that financial_institution d did not provide adequate instructions as to why or how the application was to be completed and resubmitted as a result of the failure of financial_institution d to provide timely and sufficient information to taxpayer a the procedures necessary for the establishment of a sep-ira in the name of taxpayer a at financial_institution d were not completed until shortly after the expiration of the 60-day period for rolling over amount n into an ira documentation shows financial_institution d acknowledged that missteps in the processing of taxpayer a’s sep-ira application resulted in unreasonable delay in the approval of such application based on the facts and representations stated above you request a ruling that the internal_revenue_service waive the 60-day rollover requirement contained in sec_408 of the code regarding amount n sec_408 d 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 distributee as the case may be in the manner provided under sec_72 of the code sec_408 of the code defines and provides the rules applicable to ra rollovers sec_408 d a of the code provides that sec_408 d of the code 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 enfire amount received including money and any other_property is paid into an ira for the benefit of such individual not later than the 60' 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 wooo page sec_408 of the code provides that sec_408 does not apply to any amount described in sec_408 3a i 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 sec_408 of the code provides a similar 60-day rollover period for partial rollovers sec_408 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 day requirement under sec_408 and sec_408 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 individuat subject_to such requirement only distributions that occurred after date are eligible for the waiver under sec_408 of the code revproc_2003_18 2003_4_irb_359 date provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to sec_408 3x of the code 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 information presented and documentation you submitted is consistent with your assertion that your failure to accomplish a timely rollover of amount n of ira x was caused by errors made by financial_institution d therefore pursuant to sec_408 of the code the service hereby waives the 60-day rollover requirement with respect to the distribution of amount n from ira x you are granted a period of days from the issuance of this ruling letter to contribute amount n into a rollover ira provided all other requirements of sec_408 d of the code except the 60-day requirement are met with respect fo such contribution amount n will be considered a roilover contribution within the meaning of sec_408 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 kk page which may be applicable thereto this letter expresses no opinion as to whether ira x satisfied the requirements of sec_408 of the code this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides that it may not be used or cited as precedent pursuant to a power af attorney on file with this office a copy of this letter_ruling is being sent to your authorized representative if you wish to inquire about this ruling please contact x00 d 00x by telephone at xxxxx please address all correspondence to se t ep rat4 sincerely yours pba beta laura b warshawsky manager employee pians technical group enclosures deleted copy of ruling letter notice of intention to disclose co xxxkx xkakk okk


department of the treasury int ernal revenue service washington d c date o f f i c e o f c h i e f c o u n s e l number release date cc pa cbs br2 postn-145511-01 uilc memorandum for associate area_counsel sb_se area indianapolis from mitchel s hyman acting senior technician reviewer branch collection bankruptcy and summonses subject annual installment_agreement statements in bankruptcy this chief_counsel_advice responds to your memorandum dated date in accordance with sec_6110 this chief_counsel_advice should not be cited as precedent issue sec_1 whether the internal_revenue_service service must send annual installment_agreement statements statement pursuant to the internal_revenue_service restructuring and reform act of rra to taxpayers in bankruptcy whether sending the statement to a taxpayer in bankruptcy violates the automatic_stay conclusion sec_1 the service is not required to send annual installment_agreement statements to taxpayers in bankruptcy because the installment_agreement is not considered in effect while the bankruptcy case is pending sending the statement to a taxpayer in bankruptcy would not violate the automatic_stay facts sec_3506 of rra provides postn-145511-01 the secretary of treasury or the secretary’s delegate shall beginning not later than date provide each taxpayer who has an installment_agreement in effect under sec_6159 of the internal_revenue_code_of_1986 an annual_statement setting forth the initial balance at the beginning of the year the payments made during the year and the remaining balance as of the end of the year p l 112_stat_685 emphasis added the first of these statements were sent out a few months ago apparently these statements were also sent to some taxpayers in bankruptcy according to your memorandum such a statement termed an annual installment_agreement statement was sent to a chapter debtor with a confirmed plan attached to the statement is a payment detail page showing what payments have been received and where they had been applied as well as an installment_agreement activity page showing what taxes are owed including interest and penalties the statement goes on to say if you’d like to pay the full amount you owe please call us so we may give you a current payoff figure your future statements will be mailed to you annually for as long as you have installment_agreement activity as always we appreciate your timely payments although the statement contains a large notification this is not a bill and this is for your information the debtor’s attorney expressed concern because the statement lists penalties and interest that have accrued post-petition according to your memorandum local service personnel have received similar complaints from other debtors’ attorneys law and analysis in effect requirement rra requires that annual statements be sent to taxpayers with installment agreements that are in effect p l sec_3506 112_stat_685 neither rra nor its legislative_history define in effect however it seems that congress was prompted by concern that taxpayers making payments pursuant to an installment_agreement should be kept informed of how much they are paying and how much they still owe see senate committee on finance s rep no 105th cong 2nd sess in light of congress’ intent in effect seems to refer to active installment agreements pursuant to which taxpayers are making payments on outstanding tax debts postn-145511-01 generally once a taxpayer enters bankruptcy his or her installment_agreement is suspended the taxpayer usually does not continue making payments pursuant to the installment_agreement in this case the debtor is making payments through his confirmed chapter plan instead thus even though the installment_agreement is not terminated it should be regarded as suspended because the installment_agreement is suspended and payments are not being made pursuant to the agreement the installment_agreement is not in effect for purposes of sec_3506 the above analysis applies to pre-petition installment agreements nothing in this memorandum is meant to imply that notices should not be sent to taxpayers who enter into post-petition installment agreements according to our analysis those installment agreements would be considered in effect since the debtor continues to make payments pursuant to the agreement during the pending bankruptcy case the automatic_stay we conclude that sending an annual installment_agreement statement does not violate the automatic_stay the automatic_stay bars any act to collect pre-petition debts b c sec_362 the purpose of the automatic_stay is to prohibit attempts to compel a debtor to pay pre-petition debts outside of the bankruptcy process h_r rep no 95th cong 1st sess specifically sec_362 is designed to prevent creditors from harassing the debtor in attempts to collect on pre-petition debts see cong rec h11092 daily ed date s17409 daily ed date remarks of rep edwards and sen deconcini the annual installment_agreement statement is not an attempt to collect a pre- petition debt as noted above the statement contains conspicuous notification that it is not a bill and is for information purposes only the notice is intended to help the taxpayer by keeping him informed of the status of his account see senate committee on finance s rep no 105th cong 2nd sess similar notices have been held not to violate the automatic_stay for example reaffirmation letters sent to debtors do not violate subsection a matter of duke 79_f3d_43 7th cir brown v pennsylvania state employees credit sec_6159 of the internal_revenue_code says except as otherwise provided in this subsection any agreement entered into by the secretary under subsection a shall remain in effect for the term or the agreement this section deals with the termination of installment agreements thus we understand in effect here to be referring only to the events that can lead to termination of agreements in effect is not a term of art and is not defined in the code thus we emphasize that for purposes of rra sec_3506 an installment_agreement is not in effect in bankruptcy postn-145511-01 union 851_f2d_81 3d cir 189_br_195 e d mo the purpose of the automatic_stay is not to prevent all communication with a debtor but to protect the debtor from the threat of immediate action by creditors such as foreclosure or a lawsuit brown f 2d pincite see also 804_f2d_1487 9th cir cert_denied 482_us_929 finding a creditor did not violate the stay by presenting the bank with a promissory note signed pre-petition after the debtor had filed for bankruptcy thus the stay is not violated by sending the annual statements however because pre-petition installment agreements are not considered in effect during the bankruptcy case to avoid any litigation hazards we recommend against sending the statements to taxpayers in bankruptcy this writing may contain privileged information any unauthorized disclosure of this writing may have an adverse effect on privileges such as the attorney client privilege if disclosure becomes necessary please contact this office for our views if you have any further questions please call the attorney assigned to this matter at


internal_revenue_service number release date index number ------------------------ ------------------------ -------------------------------- ---------------------- ------------------------------------ ------------------------------------------------ year department of the treasury washington dc person to contact ----------------------- id no -------------- telephone number --------------------- refer reply to cc ita b04 - plr-144652-03 date date dear -------------- this is in reference to a form_1128 application to adopt change or retain a tax_year submitted on behalf of the taxpayer ---------------------- requesting permission to change its accounting_period for federal_income_tax purposes from a taxable_year ending april to a taxable_year ending february effective february year the taxpayer has requested that the form_1128 be considered timely filed under the authority contained in sec_301_9100-3 of the procedure and administration regulations revproc_2002_37 2002_1_cb_1030 provides procedures for certain corporations to obtain automatic approval to change their annual_accounting_period under sec_442 of the internal_revenue_code a corporation complying with all the applicable provisions of this revenue_procedure has obtained the consent of the commissioner of the internal_revenue_service to change its annual_accounting_period under sec_442 and the income_tax regulations thereunder section of revproc_2002_37 provides that a form_1128 filed pursuant to the revenue_procedure will be considered timely filed for purposes of sec_1_442-1 only if it is filed on or before the time including extensions for filing the return for the short_period required to effect such change the information furnished indicates that the taxpayer did not file its form_1128 by the due_date of the return for the short_period required to effect such change however the plr-144652-03 taxpayer requested an extension of time to file its form_1128 under sec_301_9100-3 soon thereafter sec_301_9100-3 provides that requests for extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 automatic extensions such as the instant case must be made under the rules of sec_301_9100-3 requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government based on the facts and information submitted and the representations made it is held that the taxpayer has acted reasonably and in good_faith and that the granting of relief will not prejudice the interests of the government accordingly the requirements of the regulations for the granting of relief have been satisfied in this case and the taxpayer's late filed form_1128 requesting permission to change to february effective february year is considered timely filed since a change in accounting periods under revproc_2002_37 is under the jurisdiction of the director internal_revenue_service center where the taxpayer’s returns are filed we have forwarded the application to the director philadelphia service_center any further communication regarding this matter should be directed to the service_center the ruling contained in this letter is based upon facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party this office has not verified any of the material submitted in support of the request for a ruling verification of the factual information representations and other data may be required as part of an examination process this ruling addresses the granting of sec_301_9100-3 relief only no opinion is expressed regarding the tax treatment of the instant transaction under the provisions of any other sections of the code or regulations that may be applicable thereto or regarding the tax treatment of any conditions existing at the time of or effects resulting from the instant transaction specifically no opinion is expressed as to whether the taxpayer is permitted under the code and applicable regulations to change to the tax_year requested in the subject form_1128 or whether the change may be effected under revproc_2002_37 the taxpayer’s application_for a change in accounting_period will be processed under revproc_2002_37 plr-144652-03 this ruling is directed only to the taxpayer that requested it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent sincerely robert a berkovsky branch chief office of associate chief_counsel income_tax and accounting enclosures copy of this letter copy for sec_6110 purposes cc -------------------------------------------------


department of the treasury internal_revenue_service appeals_office irs release number release date pate jul person to contact name employee 1d number telephone fax hours employer ip number uniform issue list uil certified mail dear this is final adverse determination that you do not qualify for exemption from federal_income_tax under internal_revenue_code the code sec_501 as an organization described in sec_501 of the code the adverse determiration for the following reasons we mace you are not organized for one or more exempt purposes as required for tax-exempt organizations described under sec_501 of the internal_revenue_code contributions to your organization are not deductible under sec_170 of the code you're required to file federal ncome tax returns on forms u s_corporation income_tax return mail your form to the appropriate internal_revenue_service center per the form's instructions you can get forms and instructions by visiting cur we site at www irs gov forms-pubs or by calling 800-tax-form we'll make this letter and the proposed adverse determination_letter available for public inspection under section of the code after deleting certain identifying information we provided to you ina separate mailing notice notice of intention to disclose please review the notice and the documents attached that sho w our proposed deletions if you disagree with our proposed deletions follow the instructions in notice if you decide to contest this deterraination you can file an action for declaratory_judgment under the provisions of sec_7428 of the code in either the united_states tax_court the united_states court of federal claims or the united_states district_court for the district of columbia letter rev catalog number 40683r you must file a petition or complaint in one of these three courts within days from the date we mailed this determination_letter to you contact the clerk of the appropriate court for rules and the appropriate forms for filing petitions for declaratory_judgment you can write to the courts at the following addresses united_states tax_court us court of federal claims us district_court for the district of columbia second street nw washington dc madison place nw washington dc constitution avenue nw washington dc note we will not delay processing income_tax returns and assessing any taxes due even if you file a petition for declaratory_judgment under sec_7428 of the code please refer to the enclosed publication how to appeal an irs determination on tax-exempt status for more information about the appeals process you also have the right to contact the taxpayer_advocate_service tas tas is an independent organization within the irs that can help protect your taxpayer rights tas can offer you help if your tax problem is causing a hardship or you've tried but haven't been able to resolve your problem with the irs if you qualify for tas assistance which is always free tas will do everything possible to help you visit www taxpayeradvocate irs gov or call tas assistance is not a substitute for established irs procedures such as the formal appeals process tas cannot reverse a legally correct_tax determination or extend the time fixed by law that you have to file a petition in a united_states court if you have questions contact the person at the top of this letter sincerely appeals team manager enclosures publication ce letter rev catalog number 40683r ‘ yf y department of the treasury internal_revenue_service p o box cincinnati oh oo q - date jul fi legend b date c state d organization e date dear employer id number contact person id number contact telephone number contact fax number vil we considered your application_for recognition of exemption from federal_income_tax under sec_501 of the internal_revenue_code the code based on the‘information provided we determined that you don’t qualify for exemption under sec_501 of the code this letter explains the basis for our conclusion please keep it for your records issues do you qualify for exemption under sec_501 of the code no for the reasons stated below facts you were formed on b in the state of c your incorporation document states that you are a professional_service_corporation formed to practice the profession of medicine and you have the authority to issue shares of stock you were formed and are controlled by d a sec_501 public charity your incorporation document is silent regarding the disposition of your assets upon your dissolution you subrhitted an unfiled certificate of amendment to your incorporation document signed by your sole shareholder this proposed amendment includes a statement that you are organized exclusively for c purposes and that upon your dissolution your assets will be distributed to organizations that are qualified under sec_501 you also indicated that the certificate of amendment had been submitted to be filed with the licensing authority for all professional corporations that engage in the practice of medicine in the state of c we requested a copy of the certificate of amendment that shows proof of filing from you twice you stated you are still working on the filing of the amendment and you expect to have the proof of filing by e you did not provide any specific reason why it takes an extended period of time to obtain an approval for the certificate of amendment from state of c you have a sole shareholder an individual employed and selected by d the relationship between you and the sole shareholder is subject_to a shareholders’ agreement the agreement provides that the sole shareholder he shall ho d the shares solely for the benefit of d and exclusively in furtherance of the charitable purposes of d d shall retain ultimate control_over your activities and finances and shall retain sole power and discretion law sec_501 of the code provides for the recognition of exemption of organizations that are organized and operatec exclusively for religious charitable or other purposes as specified in the statute no part of the net_earnings may inure to the benefit of any private_shareholder_or_individual sec_1_501_c_3_-1 states that in order to be exempt as an organization described in sec_501 of the code an organization must be both organized and operated exclusively for one or more of the purposes specified in such section if an organization fails to meet either the organizational_test or the operational_test it is not exempt sec_1_501_c_3_-1 provides that an organization is organized exclusively for one or more exempt purposes only if its articles of organization a limit the purposes of such organization to one or more exempt purposes and b do not expressly empower the organization engage otherwise than as an insubstantial part of its activities in activities that in taemselves are not in furtherance of one or more exempt purposes sec_1_501_c_3_-1 holds that an organization is not organized exclusively for one or more exempt durposes unless its assets are dedicated to an exempt_purpose an organization’s assets will be considered dedicated to an exempt_purpose for example if upon dissolution such assets would by reason of a provision in the organization’s articles or operation of law be distributed for one or more exempt purposes revenuc procedure i r b sec_3 states that a determination_letter or ruling on exempt status is issued based solely upon the facts and representations contained in the administrative record the applicar t is responsible for the accuracy of any factual representations contained in the application section and its predecessors provides that a favorable determination_letter or ruling will be issued to an organization only if i s application and supporting documents establish that it meets the particular requirements of the section under which exemption from federal_income_tax is claimed in 372_fsupp_770 e d cal the court concluded that one seeking a tax exemption has the burden of establishing his right to a tax-exempt status 70_fedclaims_782 was an action for declaratory_judgment that the petitioner brought to challenge the denial of his application_for exempt status the court in finding that the actu l purposes displayed in the adrainistrative record supported the service’s denial stated it is well- acceptec that in initial qualification cases such as this gaps in the administrative record are resolved against the applicar t the court noted that if the petitioner had evidence that contradicted these findings it should have submitted it as part of the administrative process the court also highlighted the principle that exemptions from income ax are matters of legislative grace application of law letter rev catalog number 47630w as stated in sec_1_501_c_3_-1 to qualify for exemption under sec_501 of the code an organizztion must be both organized and operated exclusively for purposes described in sec_501 your incorporation document states that you were formed for the business_purpose of practicing medicine your formation document does not limit your purposes to one or more exempt purposes as required by sec_1_501_c_3_-1 causing you to fail the organizational_test additionally your incorporation docume 1t does not have a dissolution provision as required by sec_1_501_c_3_-1 which also causes you to fail the organizational_test your certificate of amendment does not show proof of filing with state of c leaving us to rely on the original incorporation document your original incorporation document lacks a purpose and dissolution clause that meets tte requirements under sec_501 of the code as in universal life church you have the burden of estab ishing that you qualify for tax exemption as explained in new dynamics foundation an organization must establish through its administrative record that it meets the requirements for exemption you have failed to provie sufficient documentation to establish that you are exempt from taxation as required by revproc_2018_5 conclusion based the information submitted you have failed to establish that you are organized exclusively for exempt_purpose within the meaning of sec_501 of the code and the related_income tax regulations therefo -e based on the administrative record you fail to qualify for exemption under sec_501 if you don’t agree you have a right to file a protest if you don’t agree with our proposed adverse determination to do so you must send a statement to us within days of the date of this letter the statement must include e e e e e he law or authority if any you are relying on a copy of this letter highlighting the findings you disagree with an explanation of why you disagree including any supporting documents ‘four name address eraployer identification_number ein and a daytime phone number ‘he signature of an officer director trustee or other official who is authorized to sign for the organization or your authorized representative l‘or an officer director trustee or other official who is authorized to sign for the organization jnder penalties of perjury i declare that i examined this protest statement including ccompanying documents and to the best of my knowledge and belief the statement contains all 1elevant facts and such facts are true correct and complete letter rev catalog number 47630w ne of the following declarations lor authorized representatives e under penalties of perjury i declare that i prepared this protest statement including accompanying documents and to the best of my knowledge and belief the statement contains all relevant facts and such facts are true correct and complete your representative attorney certified_public_accountant or other individual enrolled to practice_before_the_irs mst file a form_2848 power_of_attorney and declaration of representative with us if he or she hasn’t already jone so you can find more information about representation in publication practice_before_the_irs and power_of_attorney we'll review your protest statement and decide if you provided a basis for us to reconsider our determination if so we’l continue to process your case considering the information you provided if you haven’t provided a basis for reconsideration we’ll forward your case to the office of appeals and notify you you can find more informa‘ion about the role of the appeals_office in publication how to appeal an irs decision on tax- exempt status if you don’t file a protest within days you can’t seek a declaratory_judgment in court at a later date because the law sequires that you use the irs administrative process first sec_7428 of the code where send your protest please sec_2nd your protest statement form_2848 if needed and any supporting documents to the applicable address vj s mail street address for delivery service internal_revenue_service 1o determinations quality assurance room p o box cincinnati oh internal_revenue_service eo determinations quality assurance main street room cincinnati oh you car also fax your statement and supporting documents to the fax number listed at the top of this letter if you fax your statement please contact the person listed at the top of this letter to confirm that he or she received it if you agree if you azree with our proposed adverse determination you don’t need to do anything if we don’t hear from you within days we’ll issue a final adverse determination_letter that letter will provide information on your income ax filing_requirements letter rev catalog number 47630w io you car find all forms and publications mentioned in this letter on our website at www irs gov formspubs if you have questions you can contact the person listed at the top of this letter we sent a copy of this letter to your representative as indicated in your power_of_attorney sincerely stephen a martin director exempt_organizations rulings and agreements enclosure publication letter rev catalog number 47630w


internal_revenue_service number release date index number ----------------------------------- ------------------------------------------------- -------------------- ---------------------- ------------------------------------- re ------------------------------ 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 b04 plr-103008-16 date date legend decedent spouse date date ----------------------------------------------- --------------------- -------------------------- --------------------- dear ---------------- this letter responds to your personal representative’s letter of date requesting an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to make the election under sec_2010 of the internal_revenue_code portability election to allow a decedent’s surviving_spouse to take into account that decedent’s deceased spousal unused exclusion dsue amount the facts and representations are as follows decedent died on date survived by spouse date is a date after the effective date of the amendment to sec_2010 which provides for portability of a dsue amount to a surviving_spouse to obtain the benefit of portability of decedent’s dsue amount to spouse decedent’s estate was required to file form_706 united_states estate and generation-skipping_transfer_tax return on or before the date that is nine months after decedent’s date of death or the last day of the period covered by an extension decedent’s form_706 was due on date but the estate did not file a form_706 to make the portability election the estate discovered its failure to elect portability after the due_date for making the election plr-103008-16 it is represented that the value of decedent’s gross_estate is less than the basic exclusion amount in the year of decedent’s death including any taxable_gifts made during his lifetime you request an extension of time pursuant to sec_301_9100-3 to elect portability of decedent’s dsue amount pursuant to sec_2010 law and analysis sec_2001 imposes a tax on the transfer of the taxable_estate of every decedent who is a citizen or resident_of_the_united_states sec_2010 provides that a credit of the applicable credit_amount shall be allowed to the estate of every decedent against the tax imposed by sec_2001 sec_2010 provides that the applicable credit_amount is the amount of the tentative_tax that would be determined under sec_2001 if the amount with respect to which such tentative_tax is to be computed were equal to the applicable_exclusion_amount on date congress amended sec_2010 effective for estates of decedents dying and gifts made after date to allow portability of a decedent’s unused applicable_exclusion_amount between spouses tax relief unemployment insurance reauthorization and job creation act of pub_l_no sec_303 124_stat_3296 sec_2010 provides that the applicable_exclusion_amount is the sum of the basic exclusion amount and in the case of a surviving_spouse the dsue amount sec_2010 generally provides that the basic exclusion amount is dollar_figure to be adjusted for inflation annually after calendar_year sec_2010 defines the dsue amount to mean the lesser_of a the basic exclusion amount or b the excess of -- i the applicable_exclusion_amount of the last deceased spouse of the surviving_spouse over ii the amount with respect to which the tentative_tax is determined under sec_2001 on the estate of such deceased spouse sec_2010 provides that a dsue amount may not be taken into account by a surviving_spouse under sec_2010 unless the executor of the estate of the deceased spouse files an estate_tax_return on which such amount is computed and makes an election on such return that such amount may be so taken into account the election once made shall be irrevocable no election may be made if such return is filed after the time prescribed by law including extensions for filing such return plr-103008-16 sec_2010 provides that the secretary shall prescribe regulations as may be necessary or appropriate to implement sec_2010 sec_20_2010-2t a of the estate_tax regulations as in effect on date provides that to allow a decedent’s surviving_spouse to take into account that decedent’s dsue amount the executor of the decedent’s estate must elect portability of the dsue amount on a timely-filed form_706 under sec_20_2010-2t a the due_date of an estate_tax_return required to elect portability is nine months after the decedent’s date of death or the last day of the period covered by an extension if an extension of time for filing has been granted under sec_20_2010-2t a the portability election is made by timely filing a complete and properly prepared estate_tax_return unless the executor satisfies the requirements for the election not to apply in sec_20_2010-2t a i sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than six months except in the case of taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that the term statutory election means an election whose due_date is prescribed by statute the term regulatory election means 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_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute a request for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner 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 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer failed to make the election because after exercising reasonable diligence taking into account the taxpayer’s experience and the complexity of the return or issue the taxpayer was unaware of the necessity for the election the due_date for the portability election is prescribed by statute in the case of an estate required to file an estate_tax_return under sec_6018 see sec_2010 sec_6075 and sec_6018 in the case of an estate that is not required to file an estate_tax_return under sec_6018 the due_date is prescribed by regulation see sec_20_2010-2t a plr-103008-16 see also sec_20_2010-2 and revproc_2014_18 2014_7_irb_513 sec_2 accordingly in the latter case a taxpayer may seek an extension of time to elect portability under the provisions of sec_301_9100-3 sec_6018 requires the filing of an estate_tax_return in all cases where the gross_estate exceeds the basic exclusion amount in effect under sec_2010 for the calendar_year which includes the date of death for purposes of this determination under sec_6018 the basic exclusion amount is reduced but not below zero by the sum of -- a the amount of the adjusted_taxable_gifts within the meaning of sec_2001 made by the decedent after date plus b the aggregate amount allowed as a specific exemption under sec_2521 as in effect before its repeal by the tax reform act of with respect to gifts made by the decedent after date it is represented that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is not required to file an estate_tax_return under sec_6018 under these facts the commissioner has discretionary authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly we grant an extension of time of days from the date of this letter in which to elect portability under sec_2010 the election should be made by filing a complete and properly-prepared form_706 and a copy of this letter within days from the date of this letter to the cincinnati service_center at the following address internal_revenue_service cincinnati service_center stop cincinnati oh for purposes of electing portability a form_706 filed by decedent’s estate within days from the date of this letter will be considered to be timely filed 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 if it is later determined that based on the value of the gross_estate and taking into account any taxable_gifts decedent’s estate is required to file an estate_tax_return pursuant to sec_6018 the commissioner is without authority under sec_301_9100-3 to grant to decedent’s estate an extension of time to elect portability and the grant of the extension referred to in this letter is deemed null and void this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent plr-103008-16 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 associate chief_counsel passthroughs special industries by lorraine e gardner lorraine e gardner senior counsel branch passthroughs special industries enclosures copy of this letter copy 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 corp plr-140281-11 date date legend taxpayers ---------------------------------------------------- ----------------------------------------------- ---------------------------------------------------- ------------------------------------------------ ---------------------------------------------------- -------------------------------------- ----------------------------------------------------------------------- ----------------------------------------------------------------- ---------------------- corporation -------------------------------------------------- father child child state date aa bb ---------------------------------- --------------------------------- ------------------------ ------------------- ---------------------- --------- -------- plr-140281-11 cc dd ee ff gg --------- --------------- --------------- --- -------------- dear ------------------ this letter responds to your letter dated date in which you requested rulings under sec_302 of the internal_revenue_code code the information submitted in that letter and subsequent correspondence is summarized below the rulings contained in this letter are based upon information and representations submitted by taxpayers and accompanied by a penalty of perjury statement executed by the appropriate parties while this office has not verified any of the material submitted in support of your request for rulings it is subject_to verification on examination summary of facts corporation was incorporated under the laws of state on date corporation has one class of issued and outstanding aa shares of voting common_stock all of which father owns father is the father of child and child father is a director and president of corporation child and child are directors of corporation father wants to retire and cede the management and control of corporation to child and child as a result father proposes to give to child and child bb shares each of corporation stock the gifts immediately after the gifts corporation will redeem father’s remaining cc shares of corporation stock in exchange solely for dd in cash and a promissory note promissory note for a total redemption price of ee the redemption the gifts and the redemption constitute the proposed transactions the promissory note issued to father will provide ff monthly installments of principal and interest the monthly installments will begin within one month after the redemption and will continue on the first day of each month thereafter taxpayers represent that the stated_interest rate on the promissory note will be no lower than the mid-term applicable_federal_rate in effect as of the day on which the note is issued compounded monthly taxpayers further represent that the stated principal_amount of the note is less than or equal to its imputed_principal_amount the redemption price as plr-140281-11 determined by a third-party appraisal is based on a per share price of gg of corporation stock following the proposed transactions the only outstanding shares of corporation stock will be owned by child and child each owning bb shares representations taxpayers make the following representations in connection with the proposed transactions a there are no outstanding options or warrants to purchase corporation stock nor are there any outstanding debentures or other obligations that are convertible into corporation stock or would be considered corporation stock b in no event will the last payment of the promissory note be made more than years after the date_of_issuance of the promissory note c the promissory note will neither be subordinated to the claims of general creditors of corporation nor is there any plan or intent for the promissory note to be subordinated to any creditor d none of the consideration from corporation including interest consists entirely or partly of corporation’s promise to pay an amount that is based or contingent on future earnings_of corporation or an amount that is contingent on working_capital being maintained at a certain level or other similar contingency e in the event of a default on the promissory note no shares will revert to or be received by father or any entity related to him nor will father or any entity related to him be permitted to purchase the stock at public or private sale f no shareholder of corporation has been or will be obligated to purchase any of father’s shares of stock to be redeemed g the redemption is related to the gifts otherwise the redemption is an isolated transaction not related to any other past or future transactions h there have been no redemptions issuances or exchanges by corporation of its stock in the past years i except for the redemption corporation has no plan or intention to issue redeem or exchange any shares of stock plr-140281-11 j none of the stock to be redeemed was acquired by father within the 10-year period preceding the redemption from a person whose stock would be attributed under sec_318 of the code to father at the time of the redemption k without regard to the gifts no person whose stock would be attributed to the father under sec_318 of the code will own stock of corporation after the redemption if the stock was acquired by that person from father within the year period preceding the redemption l after the redemption no redeemed shareholder will have any interest in corporation including an interest as officer director or employee other than an interest as a creditor as described in sec_1_302-4 and constructive_ownership under sec_318 of the code m father will execute and file the agreement required by sec_302 with respect to the acquisition of any interest in corporation within years from the date of redemption n throughout the 10-year period following the redemption i father will at no time hold any note or other obligation of corporation except for promissory note and ii father will not enter into any contract or agreement or have any other business relationship with corporation o there are no declared but unpaid dividends or funds set apart for dividends on any of the stock to be redeemed p none of the stock to be redeemed is sec_306 stock within the meaning of sec_306 q at the time of the redemption the fair_market_value of the consideration to be received by father will be approximately equal to the fair_market_value of corporation stock to be surrendered by father in exchange therefor r the price to be paid for corporation’s stock to be redeemed will not result in a loss with respect to those shares of stock s_corporation stock is not a marketable_security as defined by sec_453 t the redemption is i not a disposition of personal_property on the installment_plan by a person who regularly sells or otherwise disposes of personal_property on the installment_plan and ii is not a disposition of personal_property of a kind to be included in the inventory of any redeemed shareholder at the close of the taxable_year the promissory note to be issued to the redeemed shareholder will plr-140281-11 not be issued in any form designed to render it readily_tradable on an established_securities_market u the promissory note is not and will not be a self-cancelling promissory note rulings based on the information and the representations submitted by taxpayers we rule as follows the gifts do not have as one of their principal purposes the avoidance of federal_income_tax within the meaning of sec_302 of the code see revrul_77_293 1977_2_cb_91 provided that father files the agreement described in sec_302 in accordance with sec_1_302-4 and the conditions stated in sec_302 and ii are satisfied sec_318 will not apply and the redemption will be a complete termination of father’s interest in corporation within the meaning of sec_302 the amount distributed in the redemption will be treated as a distribution in full payment in exchange for the stock surrendered as provided in sec_302 as provided in sec_1001 father will realize and recognize gain on the redemption for each share of stock surrendered the gain will be measured by the difference between the redemption price received in the exchange and the adjusted_basis of such share as determined under sec_1011 provided the corporation stock is a capital_asset in the hands of father the gain will constitute capital_gain subject_to the conditions and limitations of subchapter_p of chapter of the code pursuant to sec_267 no loss will be allowed father will qualify to report gain on the redemption using the installment_method under sec_453 in the event the promissory note is cancelled or otherwise becomes unenforceable the promissory note will be treated as if it were disposed of for fair_market_value which will be treated as not less than its face_amount under sec_453b and corporation will not recognize gain_or_loss on the distribution of the promissory note in redemption of its stock under sec_311 provided the redemption is not performed in satisfaction of a primary and unconditional obligation of either child or child to acquire the corporation stock held by father the redemption will not cause any dividend income to be constructively received by child or child see revrul_58_614 1958_2_cb_920 and revrul_69_608 1969_2_cb_42 plr-140281-11 the interest_paid by corporation on the promissory note received by father in redemption of his stock is deductible under sec_163 subject_to any limitations on such deduction including those described in but not limited to sec_163 and sec_267 there is no imputed_interest under sec_1274 sec_483 and sec_7872 with respect to the promissory note caveat 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 including the tax consequences of any transactions for gift_tax purposes in addition no opinion is expressed regarding whether the promissory note is bona_fide debt or whether the stated_interest is qualified_stated_interest within the meaning of sec_1_1273-1 sincerely joanne m fay assistant branch chief branch office of associate chief_counsel corporate cc


internal_revenue_service number release date index number - --------------------------------------- ----------------------------------------------- ----------- ------------------ ------------------------------ - department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------- telephone number --------------------- refer reply to cc tege eoeg teb presp-143641-06 date date dear ----------------- pursuant to sec_54 of the internal_revenue_code the code and notice_2005_98 2005_52_irb_1211 and after review of your application submitted on date including supplements thereto we have determined that the projects described in appendix a attached hereto are qualified for purposes of sec_54 and will be owned by one or more qualified borrowers we allocate authority to ----------------- ------------------------------ the issuer a qualified issuer under sec_54 to issue up to dollar_figure-- ----------------of clean renewable energy bonds crebs bonds issued pursuant to this allocation must be designated by the issuer as bonds for purposes of sec_54 for the projects described in appendix a up to the amount allocated for each project described in appendix a bonds so designated must be issued on or before date please be aware that in order for bonds to be crebs the applicable_requirements of the code including without limitation sec_54 notice_2005_98 and notice_2006_7 2006_10_irb_559 must be met please note that creb proceeds may be used to reimburse capital expenditures paid_by qualified borrowers for qualified projects only if the provisions of sec_54 are met if you have any questions with respect to this allocation please contact --------------------- -------- or -----------------------------of the office of division counsel associate chief_counsel tax-exempt and government entities on --------------------- not a toll-free call 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 presp-143641-06 for purposes of the renewable_electricity_production_credit under sec_45 of the code no inference may be drawn from this allocation that any project listed in appendix a is a qualified_facility or that electricity to be produced at such project s is electricity from a qualified_energy resource at a qualified_facility within the meaning of sec_45 this determination is directed only to the applicant named above sec_6110 of the code provides that it may not be used or cited as precedent a copy of this letter must be attached to any form 8038-g information_return for tax- exempt governmental obligations filed for bonds issued pursuant to this allocation the allocation contained in this letter is based upon information and representations submitted by the applicant for the creb allocation 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 application_for an allocation it is subject_to verification on examination sincerely assistant chief_counsel exempt_organizations employment_tax government entities tax exempt government entities by timothy l jones senior counsel tax-exempt_bonds branch presp-143641-06 borrower name appendix a project type project location ------------------------------- ------------ ------------------------------- ------------ ------------------------------- ------------ ------------------------------- ------------ solar_energy_facility solar_energy_facility solar_energy_facility solar_energy_facility ------------------------------- ------------ ------------------------------- ------------ solar_energy_facility solar_energy_facility -------------------------------- ------------- -------------------------------- -------------------- -------------------------------- --------------------- -------------------------------- -------------------------------- ------- -------------------------------- ----------------- -------------------------------- ------------- total amount allocated dollar_figure----------- dollar_figure----------- dollar_figure----------- dollar_figure----------- dollar_figure----------- dollar_figure------------- dollar_figure----------------