internal_revenue_service number release date index number ----------------------------------- -------------------------- ------------------------ in re private_letter_ruling request - 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 b09 plr-136122-04 date date legend taxpayer year year year year year year year year year irrevocable_trust date dollar_figurea date -------------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- --------------------------------------------------- ----------------------- ----------- -------------------------- this is in response to your authorized representative’s letter dated june dear ------------------ and subsequent correspondence requesting an extension of time pursuant to sec_2642 of the internal_revenue_code and sec_301_9100-3 of the procedure and administration regulations to make allocations of taxpayer’s generation-skipping_transfer gst tax exemption to the year year year year year year year year and year transfers to irrevocable_trust taxpayer created irrevocable_trust a_trust with gst potential from year through year taxpayer transferred dollar_figurea annually to irrevocable_trust taxpayer died on date taxpayer’s estate now requests that an extension of time be granted under sec_2642 and sec_301_9100-3 to make allocations of taxpayer’s the facts and representations submitted are summarized as follows on date sec_2631 in effect at the time of the transfer provides that for purposes of sec_2601 imposes a tax on every generation-skipping_transfer a generation- sec_2632 provides that any allocation by an individual of his or her gst sec_2602 provides that the amount of the tax is the taxable_amount multiplied plr-136122-04 gst_exemption with respect to the year year year year year year year year and year transfers to irrevocable_trust skipping transfer is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip by the applicable_rate sec_2641 defines applicable_rate as the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer sec_2642 provides the method for determining the inclusion_ratio determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure that may be allocated by such individual or his executor to any property with respect to which such individual is the transferor exemption under sec_2631 may be made at any time on or before the date prescribed for filing the estate_tax_return for such individual's estate determined with regard to extensions regardless of whether such a return is required to be filed within the time prescribed in sec_2632 is allocated automatically sec_2632 provides that if an individual makes an indirect_skip during such individual’s lifetime any unused portion of such individual’s gst_exemption shall be allocated to the property transferred to the extent necessary to make the inclusion_ratio for such property zero if the amount of the indirect_skip exceeds such unused portion the entire unused portion shall be allocated to the property transferred provides that an allocation of gst_exemption to property transferred during the transferor’s lifetime other than in a direct_skip is made on form_709 united_states gift and generation-skipping_transfer_tax return an allocation of gst_exemption to a_trust is void to the extent the amount allocated exceeds the amount necessary to obtain a zero inclusion_ratio with respect to the trust sec_2642 provides that except as provided in sec_2642 if the allocation of the gst_exemption to any transfers of property is made on a gift_tax_return filed on or before the date prescribed by sec_6075 for such transfer or is deemed to be made under sec_2632 or c the value of such property for purposes of determining the inclusion_ratio shall be its value for purposes of chapter within the meaning of sec_2001 and such allocation shall be effective on and after the date of such transfer sec_26_2632-1 of the generation-skipping_transfer_tax regulations under sec_2632 any portion of an individual's gst_exemption not allocated sec_2642 provides that in determining whether to grant relief the notice_2001_50 2001_2_cb_189 provides that under sec_2642 the time sec_2642 provides generally that the secretary shall by regulation plr-136122-04 prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of sec_2642 which was enacted into law on date secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant for purposes of determining whether to grant relief the time for making the allocation shall be treated as if not expressly prescribed by statute for allocating the gst_exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust as a generation-skipping_trust are to be treated as if not expressly prescribed by statute the notice further provides that taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 sec_301_9100-1 provides that the commissioner has discretion to 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 months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-3 provides the standards used 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 under sec_301_9100-1 a regulatory election includes an election whose due_date is prescribed by a notice published in the internal_revenue_bulletin in accordance with sec_2642 and notice_2001_50 taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 provides the 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 reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election sec_301_9100-3 provides that a taxpayer is deemed to have acted requests for relief under sec_301_9100-3 will be granted when the taxpayer based on the facts submitted and the representations made with respect to the plr-136122-04 transfers made by taxpayer to irrevocable_trust in year through year we conclude that the requirements of sec_301_9100-3 have been satisfied therefore we grant an extension of time of days from the date of this letter for taxpayer’s estate to allocate dollar_figurea of taxpayer’s gst_exemption to the transfers to irrevocable_trust in each of year through year the allocations will be effective as of the dates of the transfers to irrevocable_trust the allocations of taxpayer’s gst_exemption to the year through year transfers should be made on supplemental form sec_709 and filed with the internal_revenue_service center cincinnati oh copies of this letter should be attached to each supplemental form_709 copies are enclosed for this purpose the allocation to the year transfer should be made on a form_709 and filed with the internal_revenue_service center cincinnati oh a copy of this letter should be attached to the form_709 a copy is enclosed for this purpose no extension of time is granted with respect to the year year and year transfers to irrevocable_trust because taxpayer’s gst_exemption has already been allocated to those transfers pursuant to the automatic allocation rules set forth in sec_2632 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 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 plr-136122-04 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 heather c maloy associate chief_counsel passthroughs and special industries enclosures cc copy of letter for purposes copy of letter


internal_revenue_service number release date index number ---------------------------------- --------------------- --------------------- ----------------------------- department of the treasury washington dc person to contact ------------------- id no ------------- telephone number --------------------- refer reply to cc psi b04 - plr-132964-06 date date re----------------------- re----------------------- legend decedent ----------------------- ---------------------------------- executor ------------------------ accountant ------------------------ date ------------------------- date ---------------------------------- date -------------------------------------- dear --------------- requesting an extension of time under sec_301 of the procedure and administration regulations to make an alternate_valuation election under sec_2032 of the internal_revenue_code this is in response to a letter from your authorized representative dated june the facts and representations submitted are summarized as follows decedent died on date and the executor of decedent’s estate timely filed form_706 united_states estate and generation-skipping_transfer_tax return on date the executor hired accountant to prepare form_706 form_706 was prepared by accountant without consideration of the alternate_valuation election accountant recomputed values using the alternate_valuation_date and on date executor filed a supplemental form_706 making that election in the case of property distributed sold exchanged or otherwise sec_2032 provides that the value of the gross_estate may be determined if plr-132964-06 the executor so elects by valuing all the property included in the gross_estate as follows disposed of within months after the decedent’s death such property shall be valued as of the date of distribution sale exchange or other_disposition in the case of property not distributed sold exchanged or otherwise_disposed_of within months after the decedent’s death such property shall be valued as of the date months after the decedent’s death any interest or estate that is affected by mere_lapse_of_time shall be included at its value as of the time of death instead of the later date with adjustment for any difference in its value as of the later date not due to mere_lapse_of_time sec_2032 provides that no election may be made under sec_2032 with respect to an estate unless such election will decrease the value of the gross_estate and the sum of the tax imposed under chapter of the code and the tax imposed by chapter with respect to property includible in the decedent’s gross_estate reduced by credits allowable against such taxes sec_2032 provides that an election under sec_2032 shall be made by the executor on the return of tax imposed by sec_2001 under sec_2032 no election may be made under sec_2032 if such return is filed more than year after the time prescribed by law including extensions for filing such return time to make a regulatory election or statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i if the taxpayer demonstrates to the satisfaction of the commissioner that the taxpayer has acted reasonably and in good_faith and granting relief will not prejudice the interests of the government commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-1 the commissioner may grant a reasonable extension of sec_301_9100-2 provides automatic_extension of time for making certain sec_301_9100-1 through provide the standards the plr-132964-06 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the 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 reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election based on the facts submitted and the representations made we conclude that the standards of sec_301_9100-1 and sec_301_9100-3 have been satisfied consequently the executor is granted an extension of time to date for making the alternate_valuation election under sec_2032 a copy of this letter should be forwarded to the cincinnati service_center at the following address internal_revenue_service cincinnati service_center - stop cincinnati oh tax consequences of the transaction under the cited provisions or under any other provisions of the code except as specifically ruled herein we express or imply no opinion on the federal this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely william o’shea associate chief_counsel passthroughs and special industries enclosures copy for sec_6110 purposes copy of this letter cc


tax exempt and government entities department of the treasury internal_revenue_service te_ge eo examinations commerce street mc dal dallas tx division date re l ease number re l ease date legend org organization xx - date address name address org address person to contact identification_number contact telephone number refer reply to tel ge review staff ein certified mail - return receipt requested dear this is a final revocation letter as to your exempt status under section sol c of the internal_revenue_code the internal revenue service's recognition of your organization as an organization described in section sol c is hereby revoked effective january 20xx we have made this detennination for the following reasons sec_50 i c organizations described you have not demonstrated that you are operated exclusively for charitable educational or other exempt purposes within the meaning of lr c sec_501 and exempt under sec_501 must be organized and operated exclusively for an exempt_purpose you have provided no infonnation regarding your receipts expenditures or activities you have not established that you have operated exclusively for an exempt_purpose in as such you failed to meet the requirements of sec_501 c and sec_1 c -l d in that you failed to establish that you were operated exclusively for an exempt_purpose contributions to your organization are no longer deductible under sec_170 of the internal_revenue_code effective january 20xx you are required to file federal_income_tax returns on form_1120 these returns should be filed with the appropriate service_center for the year ending december 20xx and for all years thereafter processing of income_tax returns and assessment of any taxes due will not be delayed should a petition for declaratory_judgment be filed under sec_7428 of the internal_revenue_code if you decide to contest this determination in court you must initiate a suit for declaratory_judgment in the united_states tax_court the united_states oaim court or the district_court of the united_states for the district of columbia before the sl day after the date this determination was mailed to you contact the clerk of the appropriate court for the rules for initiating suits for declaratory_judgment you also have the right to contact the office_of_the_taxpayer_advocate however you should first contact the person whose name and telephone number are shown above since this person can access your tax information and can help you get answers you may call and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at taxpayer_advocate assistance cannot be used as a substitute for established irs procedures formal appeals processes etc the taxpayer_advocate is not able to reverse legal or technically correct_tax determinations nor extend the time fixed by law that you have to file a petition in the united_states tax_court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling if you have any questions please contact the person whose name and telephone number are shown in the heading of this letter sincerely yours nanette m downing director eo examinations internal_revenue_service date date org address department of the treasury tax exempt govt entities division fulton street brooklyn new york j i taxpayer_identification_number fonn tax_year s ended person to contact id number contact telephone number contact fax number certified mail - return receipt requested dear we have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under sec_501 of the internal_revenue_code code is necessary if you accept our findings please sign and return the enclosed form_6018 consent to proposed action sec_7428 if you have already given us a signed form_6018 you need not repeat this process we will issue a final revocation letter if you do not agree with our proposed revocation you must submit to us a written request for appeals_office consideration within days from the date of this letter to protest our decision your protest should include a statement of the facts the applicable law and arguments in support of your position an appeals officer will review your case the appeals_office is independent of the director eo examinations the appeals_office resolves most disputes informally and promptly the enclosed publication the examination process and publication exempt_organizations appeal procedures for unagreed issues explain how to appeal an internal_revenue_service irs decision publication also includes information on your rights as a taxpayer and the irs collection process you may also request that we refer this matter for technical_advice as explained in publication ifwe issue a determination_letter to you based on technical_advice no further administrative appeal is available to you within the irs regarding the issue that was the subject of the technical_advice if we do not hear from you within days from the date of this letter we will process your case based on the recommendations shown in the report of examination if you do not protest this proposed determination within days from the date of this letter the irs will consider it to be a failure to exhaust your available administrative remedies sec_7428 of the code provides in part a declaratory_judgment or decree under this section shall not be issued in any proceeding unless the tax_court the claims_court or the district_court of the united_states for the district of columbia determines that the organization involved has exhausted its administrative remedies within the internal_revenue_service we will then issue a final revocation letter we will also notify the appropriate state officials of the revocation in accordance with sec_6104 of the code in lieu of letter you have the right to contact the office_of_the_taxpayer_advocate taxpayer_advocate assistance is not a s ubstitute for established irs procedures such as the formal appeals process the taxpayer_advocate cannot reverse a legally correct_tax detemlination or extend the time fixed by law that you have to file a petition in a united_states court the taxpayer_advocate can however see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling you may call toll-free and ask for taxpayer_advocate assistance if you prefer you may contact your local taxpayer_advocate at if you have any questions please call the contact person at the telephone number shown in the heading of this letter if you write please provide a telephone number and the most convenient time to call if we need to contact you thank you for your cooperation sincerely nanette m downing acting director eo examinations enclosures publication publication report of examination in lieu of letter fom1886a department of the treasury - internal_revenue_service ex lallation of items name of taxpayer org schedule no or exhibit year period ended 20xxi2 legend org organization name xx date state sta t e issue should the tax exempt status of org be revoked as of january i 20xx for failing to file the annual form_990 facts the org was incorporated in the state of state on april 20xx in july of 20xx the organization filed a form_1023 with the internal_revenue_service requesting tax exempt status under sec_501 of the internal_revenue_code according to the articles of incorporation which were filed with internal_revenue_service as part of the form_1023 application_for exemption the purpose of the organization is to encourage and support the development of quality child care in city through provision of technical assistance and training programs to family day care providers group family day care providers and day care center staff to provide technical assistance to other organizations working with child care providers and to conduct any and all lawful activities which may be useful in accomplishing the foregoing purposes on august 20xx the organization was granted tax exemption as an organization described under intell1al revenue code sec_50 i c the determination_letter further stated that the organization was determined to be a public charity under sec_170 a vi we received information from the social_security administration that your organization paid wages during the tax_year ending december 20xx your organization issued form w-2's but failed to file a fonn to report the wages paid federal_income_tax withheld both the employer's and employee's share of social_security and medicare taxes in addition it was also noted that the organization had not filed a form_990 since their tax_year ending december 20xx for the tax years ending december 20xx and 20xx the gross revenue reported by the organization was dollar_figure and dollar_figure respectively a letter concerning your form_941 and filing requirement was sent via certified mail to the organization on december 20xx the letter was never claimed by the organization a second requested was sent via certified mail on january 20xx again this letter was never claimed by the organization a tinalletter was sent via regular mail on january 20xx to date we have not received a response or any contact from the organization law sec_501 c of the internal_revenue_code exempts from federal_income_tax organizations organized and operated exclusively for charitable educational and other exempt purposes provided that no part of the organization's net_earnings inures to the benefit of any private_shareholder_or_individual form 886-a rev service_department of the treasury - internal revenue page -1 form 886a department of the treasury - internal_revenue_service ex lanation of items name of taxpayer org schedule no or exhibit year period ended 20x sec_1 c -i a provides that in order to be exempt as an organization described in sec_501 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 lntemal revenue code sec_6033 i provides except as provided in sec_6033 every organization exempt from tax under sec_501 shall file an annual return stating specifically the items of gross_income receipts and disbursements and such other information for the purposes of can-ying out the internal revenue laws as the secretary may by form or regulations prescribe and keep such records render under oath such statements make such other returns and comply with such rules and regulations as the secretary may from time to time prescribe sec_1_6033-1 h provides that every organization which has established its right to exemption from tax whether or not it is required to file an annual return of information shall submit such additional information as may be required by the district_director for the purpose of enabling him to inquire further into its exempt status and to administer the provisions of subchapter_f sec_501 and the following chapter of the code and sec_6033 sec_1_6033-2 provides that every organization which is exempt from tax whether or not it is required to file an annual information_return shall submit such additional information as may be required by the internal_revenue_service for the purpose of inquiring into its exempt status and administering the provisions of subchapter_f chapter of subtitle a of the code sec_6033 and chapter of subtitle d of the code revrul_59_95 cb concerns an exempt_organization that was requested to produce a financial statement and statement of its operations for a certain year however its records were so incomplete that the organization was unable to furnish such statements the service held that the failure or inability to file the required infolmation return or otherwise to comply with the provisions of sec_6033 and the regulations which implement it may result in the termination of the exempt status of an organization previously held exempt on the grounds that the organization has not established that it is observing the conditions required for the continuation of exempt status taxpayer's position the taxpayer's position is not known govern men ts position it is the government's position that the tax exempt status of the org under sec_501 of the internal_revenue_code should be revoked for failing to file their annual form_990 when required to do so form 886-a rev service_department of the treasury - internal revenue page -2 fonn 886a department of the treasury - internal_revenue_service ex lanation of items name of taxpayer org schedule no or exhibit year period ended 20xxj2 internal_revenue_code sec_6033 states in part that except as provided in paragraph every organization_exempt_from_taxation under sec_501 shall file an annual return the organization did not meet any of the exceptions stated in sec_6033 of the internal_revenue_code for the tax years ending december 20xx and 20xx the gross revenue reported by the organization was dollar_figure and dollar_figure based on this information it has been determined that the organization exceeded the dollar_figure exclusion for not filing an annual form_990 revrul_59_95 held that failure or inability to file the required inforn1ation return or otherwise to comply with the provision of sec_6033 of the internal_revenue_code and the regulations which implement it may result in the termination of the exempt status of an organization previously held exempt on the grounds that the organization has not established that it is observing the conditions required for the continuation of an exempt status using this revenue niling as precedent it is the government's position that the tax exempt status of the org under sec_501 c of the internal_revenue_code should be revoked conclusion the tax exempt status oforg under sec_501 of the internal_revenue_code should be revoked because the organization has not established that it is observing conditions required for the continuation of exempt status such as filing annual form_990 infom1ation returns and failing to provide information that was requested from them by the internal_revenue_service the effective date of revocation is january 20xx the first day of the tax_year under examination the organization will be required to file form_1120 beginning in 20xx for all tax periods subsequent to the revocation of their tax exempt status a report addressing your employment_tax liability will be issued under separate cover form 886-a rev service_department of the treasury - internal revenue page -3


internal_revenue_service number release date index number --------------------- ------------------------------------------------- ---------------------------- ----------------------------------- -------------------------------------- in re section_9100_request department of the treasury washington dc third party communication date of communication month dd yyyy person to contact ------------------------------ id no ------------ ------------------ telephone number --------------------- refer reply to cc intl br5 plr-138467-08 date date ---------------------------- ---------------------------------- taxpayer cfc corporation x ------------ tax_year a day c year b firm ------------------------------------------------- -------- -------------------------------------------- --------------- dear ------------- this replies to your date letter as supplemented by information provided on january 23rd march 31st and april 2nd of requesting an extension of time under sec_301_9100-3 to file a sec_1_954-2 foreign_currency_gain_or_loss election on behalf of a cfc for tax_year a the regulatory election facts taxpayer a u s_corporation is the ultimate parent of a large group of domestic and foreign_corporations in tax_year a taxpayer formed cfc a controlled_foreign_corporation for u s tax purposes under sec_957 of the internal_revenue_code i r c taxpayer represents that due to a corporate restructuring which it began in year a it inadvertently failed to make the regulatory election taxpayer explains that the corporate restructuring split its tax department into two locations and caused it to lose key staff including its international tax manager as part of the restructuring taxpayer completely disposed of corporation x and its affiliates which included cfc as of day c of year b as part of an audit of the year b financial statements of corporation x plr-138467-08 firm discovered that taxpayer had failed to make the regulatory election for cfc in tax_year a taxpayer asserts the following reasons show it acted reasonably and in good_faith under sec_301_9100-3 and should therefore be granted an extension of time to file the sec_1_954-2 election on behalf of cfc for tax_year a i ii iii iv it requested relief before its failure to make the election was discovered by the service it is not seeking to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 no alteration to the returns are necessary it did not affirmatively choose not to file the regulatory election after having been informed in all material respects of the required election and related tax consequences and it has not used hindsight in requesting relief no facts have changed since the due_date for making the election that make the election more advantageous to taxpayer taxpayer further asserts that granting the extension will not prejudice the interests of the government because it will not result in taxpayer an affiliate former affiliate or the consolidated_group as a whole having a lower tax_liability in the aggregate for all taxable years affected by the election than they would have had if the election had been timely made taking into account the time_value_of_money in addition taxpayer represents that the taxable_year in which the regulatory election should have been made or any taxable years that would have been affected by the election had it been timely made are not closed by the period of limitations on assessment under sec_6501 finally taxpayer represents it has satisfied the procedural requirements of sec_301_9100-3 law sec_1_954-2 provides that a controlled_foreign_corporation may elect for taxable years beginning on or after date to exclude certain foreign_currency_gain_or_loss from foreign_personal_holding_company_income and instead include such foreign_currency_gain_or_loss in the category or categories of subpart_f_income described in sec_952 or in the case of foreign_base_company_income described in sec_1_954-1 or to which such gain_or_loss relates plr-138467-08 sec_1_954-2 provides that the controlling united_states_shareholders as defined in sec_1_964-1 make the election on behalf of the controlled_foreign_corporation by filing a statement with their original income_tax returns for the taxable_year of such united_states_shareholders ending with or within the taxable_year of the controlled_foreign_corporation for which the election is made clearly indicating that such election has been made an election made pursuant to sec_1_954-2 is effective for the taxable_year of the controlled_foreign_corporation for which it is made and all subsequent taxable years of such corporation unless revoked by or with the consent of the commissioner see sec_1_954-2 sec_301_9100-1 defines a regulatory election as an election whose due_date is prescribed by a regulation revenue_ruling revenue_procedure notice or announcement sec_301_9100-3 sets forth the conditions that must be satisfied to obtain an extension of time to make a non-automatic regulatory election that is a regulatory election that is not listed in sec_301_9100-2 sec_301_9100-1 provides that the commissioner has discretion to grant a taxpayer a reasonable extension of time under the rules set forth in sec_301_9100-3 to make a regulatory election under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-3 provides that requests for such relief will be granted when the taxpayer provides evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government sec_301_9100-3 provides that except as provided in sec_301_9100-3 through iii a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer requests relief under this section before the failure to make the regulatory election is discovered by the internal_revenue_service sec_301_9100-3 provides that a taxpayer is deemed to have not acted reasonably and in good_faith if the taxpayer i seeks to alter a return position for which an accuracy-related_penalty has been or could be imposed under sec_6662 at the time the taxpayer requests relief and the new position requires or permits a regulatory election for which relief is requested plr-138467-08 ii iii was informed in all material respects of the required election and related tax consequences but chose not to file the election or uses hindsight in requesting relief in this regard if specific facts have changed since the due_date for making the election that make the election advantageous to a taxpayer the internal_revenue_service will not ordinarily grant relief unless the taxpayer provides strong_proof that the taxpayer's decision to seek relief did not involve hindsight sec_301_9100-3 provides that the interests of the government are prejudiced if granting relief would result in a taxpayer having a lower tax_liability in the aggregate for all taxable years affected by the election than the taxpayer would have had if the election had been timely made taking into account the time_value_of_money in addition sec_301_9100-3 states that if the tax consequences of more than one taxpayer are affected by the election the government's interests are prejudiced if extending the time for making the election may result in the affected taxpayers in the aggregate having a lower tax_liability than if the election had been timely made sec_301_9100-3 provides that the interests of the government are ordinarily prejudiced if the taxable_year in which the regulatory election should have been made or any taxable years that would have been affected by the election had it been timely made are closed by the period of limitations on assessments under sec_6501 before the taxpayer’s receipt of a ruling granting relief analysis in this case sec_1_954-2 prescribes the time for making the election therefore it is a regulatory election pursuant to sec_301_9100-1 it is not however listed as an automatic election in sec_301_9100-2 as a non-automatic regulatory election the commissioner has discretionary authority under sec_301_9100-3 to grant taxpayer a reasonable extension of time to make the election provided taxpayer satisfies the standards set forth in sec_301_9100-3 based upon the facts and representations of taxpayer and the accompanying affidavits we conclude that taxpayer satisfies the requirements set forth in sec_301_9100-3 conclusion taxpayer is granted an extension of time until ninety days from the date of this ruling letter to file the a sec_1_954-2 election on behalf of cfc for tax_year a plr-138467-08 no ruling has been requested and none is expressed or implied regarding the application of any other section of the code or regulations to the facts presented as provided in sec_301_9100-1 the granting of an extension of time is not a determination that taxpayer is otherwise eligible to file the election statement the extension of time granted in this letter is a letter_ruling pursuant to sec_301_9100-3 this ruling is based upon the information and representations submitted by 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 ruling_request it is subject_to verification upon examination this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent a copy of this ruling letter should be associated with the election statement in accordance with a power_of_attorney on file in this office a copy of this ruling letter is being sent to you and your authorized representative sincerely jeffrey l dorfman chief branch associate chief_counsel international


internal_revenue_service number release date index number 2055-dollar_figure ----------------------------- ------------------------------------ --------------------------- ---------------- ---------------------------- in re ------------------------------------ department of the treasury washington dc person to contact ------------------------------ id no ------------ -------- telephone number --------------------- refer reply to cc psi b09 - plr-127891-03 date april -------------------------------------------------------------------------- ------------------------ ------------------------ ---------- ---------------------------------------- ---------------------------------------- ------------------------------------------------ ------------------- ------------------ -------------------------- ------------------ ----------------------- ------------- ----------- ----- ----------- ------- ------ ---- ----------- legend trust decedent spouse state state code foundation remainder trust date date date date date a b c d e f g h dear sir this is in response to a letter dated date and subsequent correspondence requesting a ruling regarding the reformation of a testamentary_trust under ' e of the internal_revenue_code plr-127891-03 on date decedent executed a will that provided in article two that the residue of his estate was to be held in a charitable_trust trust article three of the will set forth trust s terms in five paragraphs numbered a through e paragraph a of article three provides that trust s property is to he held for ascientific recreation and educational_purposes for tours soil and water protection as an open space and for the growing of forest species indigenous to this region of southwest state paragraph b provides that the trustees are granted all of the powers set forth in state code and that the trustees have the authority to appoint substitute or successor trustees in case of death disability or resignation paragraph d provides that the trustees are to lease without consideration decedent s personal_residence and curtilage to spouse for her lifetime and maintain the same when spouse dies the lease is to terminate paragraph e provides that spouse is to receive distributions of income and principal from trust’s marketable_securities and cash at least quarterly to enable her to live according to her station in life and in the manner in which she had been accustomed upon spouse’s death the funds are to remain in trust on date approximately one month after executing his will decedent died and was survived by spouse the residue of decedent s estate consisted of approximately dollar_figurea of marketable_securities cash and personality dollar_figureb representing the value of decedent’s one-half interest in marketable_securities and bank accounts that decedent and spouse held as joint_tenants and c acres of land on which three residential dwellings and three log cabins are situated one of the residences is decedent and spouse s personal_residence it has been represented that this residence had a fair_market_value of approximately dollar_figured as of decedent’s death and that dollar_figuree a year is required to maintain the residence on date spouse disclaimed her survivorship interest in all but one of the joint accounts held by decedent and spouse as joint_tenants and her right to receive distributions of principal from trust’s marketable_securities and cash as provided under article three paragraph e of decedent’s will as a result of the disclaimer the estate s interest in marketable_securities and cash increased to approximately dollar_figuref as drafted trust does not qualify for the federal estate_tax charitable deduction under ' a in order to qualify trust for the estate_tax charitable deduction on date the estate commenced a judicial proceeding to reform trust under the provisions of state law and ' e under the proposed reformation trust’s property is to be divided in the following manner with the exception of the personal_residence and curtilage decedent’s real_property interests comprising approximately g acres are plr-127891-03 transferred to a newly created private_foundation foundation the personal_residence and curtilage are removed from trust and the marketable_securities and cash are to fund a charitable_remainder_annuity_trust remainder trust with respect to foundation the governing terms of foundation incorporate the requirements of ' e on date the service issued a determination_letter to foundation in which the service concluded that foundation is a private_foundation within the meaning of c and ' with respect to the personal_residence and curtilage spouse will receive a legal_life_estate in both and the remainder will pass to foundation spouse and foundation will receive their interests in the residence and curtilage under a recorded deed finally with respect to remainder trust this trust will provide spouse with an annuity amount equal to h percent of the initial net fair_market_value of the trust for her lifetime to be paid in equal quarterly installments this annuity will replace spouse’s income_interest in the marketable_securities and cash as provided in article three paragraph e of decedent’s will and spouse’s right to dollar_figuree per year to maintain the personal_residence upon spouse s death remainder trust s principal is to be distributed to foundation the terms of remainder trust incorporate the provisions of ' d and section of revproc_90_32 it is represented that the reformations to trust as proposed will be effective as of decedent's date of death the estate has requested the following rulings the disclaimer filed by spouse of her right to the survivorship interests in the joint accounts held by spouse and decedent and her right to receive discretionary distributions of principal from the assets described in article three paragraph e of decedent’s will is a qualified_disclaimer under ' b the proposed reformation of trust will result in a qualified_reformation under ' e a federal estate_tax charitable deduction under ' a will be allowed for the present_value of the remainder_interest in remainder trust as reformed the present_value of the remainder_interest in the personal_residence and the value of the real_property held by foundation a federal estate_tax_marital_deduction under ' b will be allowed for the present_value of spouse’s right to receive annuity payments from remainder trust as reformed plr-127891-03 law and analysis ruling sec_2046 provides that disclaimers of property interests passing upon death are treated as provided in ' sec_2518 provides that if a person makes a qualified_disclaimer with respect to any interest in property the disclaimed interest is treated as if it had never been transferred to the person making the qualified_disclaimer for purposes of the federal estate gift and generation-skipping_transfer_tax provisions sec_2518 provides that a qualified_disclaimer means an irrevocable and unqualified refusal by a person to accept an interest in property but only if the disclaimer is in writing the writing is received by the transferor of the interest his legal_representative or the holder of the legal_title to the property to which the interest relates not later than months after the date on which the transfer creating the interest in the person making the disclaimer is made or the date on which the person making the disclaimer attains age the person making the disclaimer has not received the interest or any of its benefits and as a result of the disclaimer the interest passes without any direction on the part of the person making the disclaimer to the decedent's spouse or to a person other than the person making the disclaimer sec_2518 provides that a disclaimer of an undivided portion of an interest that meets the requirements of ' b is treated as a qualified_disclaimer of such portion of the interest sec_25_2518-2 of the gift_tax regulations provides that in the case of a transfer to a joint bank brokerage or other investment account eg an account held at a mutual_fund if a transferor may unilaterally regain the transferor's own contributions to the account without the consent of the other cotenant such that the transfer is not a completed_gift under ' h the transfer creating the survivor's interest in the decedent's share of the account occurs on the death of the deceased cotenant accordingly if a surviving joint tenant desires to make a qualified_disclaimer with respect to funds contributed by a deceased cotenant the disclaimer must be made within months of the cotenant's death the surviving joint tenant may not disclaim any portion of the joint account attributable to consideration furnished by that surviving joint tenant sec_25_2518-3 provides that if the requirements of ' b are satisfied the disclaimer of all or an undivided portion of any separate interest in property may be a qualified_disclaimer even if the disclaimant has another interest in the same property in general each interest in property that is separately created by the transferor is treated as a separate interest in the same property for example if an income_interest in plr-127891-03 securities is bequeathed to a for life then to b for life with the remainder_interest in the securities bequeathed to a's estate and if the remaining requirements of ' b are satisfied a can make a qualified_disclaimer of either the income_interest or the remainder in the present case spouse disclaimed her survivorship interest in all but one of the joint accounts held by decedent and spouse as joint_tenants she also disclaimed her right under article three paragraph e of decedent’s will to receive distributions of principal from trust’s marketable_securities and cash the right to receive distributions of principal is a separate interest in property from the right to receive distributions of income that may be disclaimed sec_25_2518-3 based upon the facts submitted and the representations made spouse’s disclaimer satisfies the requirements of ' b accordingly we conclude that based on the facts submitted and representations made spouse’s disclaimer is a qualified_disclaimer under ' ruling sec_2 and sec_170 provides that in the case of a contribution not made by a transfer in trust of an interest in property which consists of less than the taxpayer’s entire_interest in such property an income_tax charitable deduction shall be allowed only to the extent that the value of the interest contributed would be allowable as a deduction if such interest had been transferred in trust sec_170 provides that ' f a shall not apply to a contribution of a remainder_interest in a personal_residence or farm sec_2055 provides that for purposes of the federal estate_tax the value of the taxable_estate shall be determined by deducting from the value of the gross_estate the amount of all bequests legacies devises and transfers to or for a corporation or certain other organizations organized and operated exclusively for religious charitable scientific literary or educational_purposes sec_2055 provides that where an interest in property other than an interest described in ' f b passes or has passed_from_the_decedent to a person or for a use described in ' a and an interest other than an interest which is extinguished upon the decedent's death in the same property passes or has passed for less than an adequate_and_full_consideration in money_or_money's_worth from the decedent to a person or for a use not described in ' a no deduction shall be allowed under ' for the interest that passes or has passed to the person or for the use described in ' a unless in the case of a remainder_interest such interest is in a_trust which is a charitable_remainder_annuity_trust or a charitable_remainder_unitrust described in ' or a pooled_income_fund described in ' c sec_2055 provides in general that a deduction shall be allowed under ' a in respect of any qualified_reformation plr-127891-03 sec_2055 provides that the term qualified_reformation means a change_of a governing instrument by reformation amendment construction or otherwise which changes a reformable_interest into a qualified_interest but only if-- i any difference between-- i the actuarial value determined as of the date of the decedent's death of the qualified_interest and ii the actuarial value as so determined of the reformable_interest does not exceed percent of the actuarial value as so determined of the reformable_interest ii in the case of-- i a charitable_remainder interest the nonremainder interest before and after the qualified_reformation terminated at the same time or ii any other interest the reformable_interest and the qualified_interest are for the same period and iii such change is effective as of the date of the decedent's death sec_2055 provides that the term reformable_interest means any interest for which a deduction would be allowable under ' a at the time of the decedent's death but for ' e prior to the enactment of ' e under ' a of the estate_tax regulations if a_trust was created or property was transferred for both a charitable and a private purpose a deduction was allowed for the value of the charitable interest if the charitable interest was presently ascertainable and hence severable from the noncharitable interest sec_2055 provides that the term reformable_interest does not include any interest unless before the remainder vests in possession all payments to persons other than an organization described in ' a are expressed either in specified dollar amounts or a fixed percentage of the fair_market_value of the property sec_2055 provides however that ' e c ii shall not apply to any interest if a judicial proceeding is commenced to change such interest into a qualified_interest not later than the 90th day after- i if an estate_tax_return is required to be filed the last date including extensions for filing such return or ii if no estate_tax_return is required to be filed the last date including extensions for filing the income_tax return for the first taxable_year for which such a return is required to be filed by the trust sec_2055 provides that the term qualified_interest means an interest for which a deduction is allowable under ' a sec_2055 provides that the deduction referred to in ' e a shall not exceed the amount of the deduction which would have been allowable for the reformable_interest but for ' e sec_20_2055-2 provides in pertinent part that where an interest in property passes or has passed_from_the_decedent for charitable purposes and an interest other than an interest that is extinguished upon the decedent’s death in the same property plr-127891-03 passes or has passed_from_the_decedent for private purposes for less than an adequate_and_full_consideration in money or money’s worth no deduction is allowable under ' for the value of the interest that passes or has passed for charitable purposes unless the interest in property is a deductible_interest described in ' e sec_20_2055-2 provides that a deductible_interest is a charitable interest in property where the charitable interest is a remainder_interest not in trust in a personal_residence thus for example if the decedent devises to charity a remainder_interest in a personal_residence and bequeaths to his surviving_spouse a life_estate in such property the value of the remainder_interest is deductible under ' revrul_76_357 1976_2_cb_285 provides that no charitable deduction is allowable under ' for the value of a remainder_interest in a decedent's personal_residence passing to charity where the residence is to be held in trust until the death of a life_tenant the ruling indicates that under the regulations the statutory exception for remainder interests in personal residences is not applicable if the personal_residence is placed in trust by the decedent in the present case article three of decedent’s will created trust for both charitable and private purposes the private purposes are the provisions for spouse a life_estate in the personal_residence and curtilage payments by the trustees for the maintenance of the personal_residence and curtilage during spouse’s life and the right to distributions of income and principal from the marketable_securities and cash held in trust pursuant to article three paragraph e of decedent’s will in order to enable her to live according to her station in life and in the manner to which she had become accustomed as discussed above spouse made a qualified_disclaimer of her right to receive distributions of principal from trust the charitable interest in trust before reformation is a reformable_interest under ' e c i because at the date of the decedent’s death the value of spouse’s life_estate in the personal_residence and curtilage the amount of money needed to maintain the personal_residence and curtilage during spouse’s life and the amount of money necessary to enable spouse to live according to her station in life and in the manner to which she had become accustomed could be determined and subtracted from the full value of trust to arrive at the value of the charitable interest hence the charitable interest is a reformable_interest within the meaning of ' e c i spouse’s interests in trust are not expressed in a specified dollar amount or a fixed percentage of the fair_market_value of the property the estate however commenced a judicial proceeding to reform trust before the 90th day after the last date including extensions for filing decedent’s estate_tax_return therefore pursuant to ' e c iii ' e c ii does not apply plr-127891-03 based upon the facts submitted and the representations made trust as reformed will meet the requirements of ' e d and therefore will be a qualified_interest remainder trust will be a qualified_interest because the trust will be a charitable_remainder_annuity_trust remainder trust will be funded with the assets provided for in article three paragraph e of decedent’s will spouse will receive an annuity amount equal to h percent of the initial net fair_market_value of remainder trust for her lifetime to be paid in equal quarterly installments at spouse’s death the remainder of remainder trust will pass to foundation moreover remainder trust incorporates the provisions of ' d and qualifies as a charitable_remainder_annuity_trust under that section the terms of remainder trust also incorporate the provisions of section of revproc_90_32 foundation’s and spouse’s interests in the personal_residence and curtilage will be a qualified_interest because under the proposed reformation a legal remainder_interest not in trust in the personal_residence will be conveyed for charitable purposes an estate_tax charitable deduction is allowed for a charitable_remainder interest not in trust in a personal_residence under ' e which references ' f b and under ' e ii decedent’s real_property interests contributed to foundation are qualified interests because the service has determined that foundation is a private_foundation within the meaning of c and the proposed reformation satisfies the requirements of ' e b because the difference between the actuarial value of the qualified interests and the actuarial value of the reformable_interest does not exceed percent of the actuarial value of the reformable_interest both before and after the proposed reformation spouse’s interest will terminate at her death it is represented that the proposed reformation will be effective as of the decedent’s date of death finally the requirements of ' e e are satisfied because as a result of the reformation the deduction referred to in ' e a does not exceed the amount of the deduction that would have been allowable but for ' e accordingly based on the facts submitted and representations made we conclude that provided the proposed reformations are made and comply with state law the proposed reformation of trust will result in a qualified_reformation under ' e further we conclude that based on the facts submitted and representations made and provided the proposed reformations are made and comply with state law a federal estate_tax charitable deduction under ' a will be allowed for the present_value of the remainder_interest in remainder trust as reformed the present_value of the remainder_interest in the personal_residence and the value of the real_property funding foundation plr-127891-03 ruling sec_2056 allows an estate_tax deduction for the value of any interest in property that passes or has passed from a decedent to a surviving_spouse to the extent that the interest is included in the decedent's gross_estate sec_2056 provides that a deduction is not allowed under ' a where on the lapse of time on the occurrence of an event or contingency or on the failure of an event or contingency to occur the interest passing to the surviving_spouse will terminate or fail and a an interest in the property passes from the decedent to any person other than the surviving_spouse or the estate of such spouse and b by reason of such passing the person or his heirs or assigns may possess or enjoy any part of the property after the termination or failure of the interest passing to the surviving_spouse sec_2056 provides generally that if the surviving_spouse of the decedent is the only noncharitable beneficiary of a qualified_charitable_remainder_trust ie a_trust described in ' ' b will not apply to any interest in the trust which passes or has passed_from_the_decedent to the surviving_spouse sec_20_2056_b_-8 provides that subject_to ' d if the surviving_spouse of the decedent is the only noncharitable beneficiary of a charitable_remainder_annuity_trust or a charitable_remainder_unitrust described in ' qualified_charitable_remainder_trust ' b does not apply to the interest in the trust that is transferred to the surviving_spouse thus the value of the annuity or unitrust_interest passing to the spouse qualifies for a marital_deduction under ' b and the value of the remainder_interest qualifies for a charitable deduction under ' if an interest in property qualifies for a marital_deduction under ' b no election may be made with respect to the property under ' b for purposes of this section the term non-charitable beneficiary means any beneficiary of the qualified_charitable_remainder_trust other than an organization described in '170 c in this case spouse is the only noncharitable beneficiary of remainder trust as reformed accordingly the value of the annuity interest in remainder trust as reformed passing_to_spouse will qualify for the federal estate_tax_marital_deduction under ' b these rulings are expressly contingent on the issuance of a court order authorizing the proposed except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter specifically no opinion is expressed or implied regarding the value of trust’s property for federal transfer_tax purposes plr-127891-03 this ruling is directed only to the taxpayer s requesting it sec_6110 provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the taxpayer 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 james f hogan acting branch chief branch passthroughs and special industries enclosure copy for ' purposes cc copy of letter


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to plr-113793-00 cc intl b1 date ty a date b country c date d year e this is in response to a letter from your power_of_attorney dated requesting a ruling under sec_877 of the internal_revenue_code_of_1986 code that a’s loss of long-term_resident status did not have for one of its principal purposes the avoidance of u s taxes under subtitle a or subtitle b of the code the information submitted for consideration is substantially as set forth below 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 a is a long-term permanent resident_of_the_united_states within the meaning of sec_877 who relinquished his u s lawful permanent resident status on date d expatriated a has been a citizen of country c for all his life by reason of his birth on date b in country c a became a permanent resident_of_the_united_states and obtained his green card in year e a expatriated to country c the country of his birth on date d on the date of a’s expatriation his net_worth exceeded the net_worth required under sec_877 sec_877 generally provides that a citizen who loses u s citizenship or a u s long-term_resident who ceases to be taxed as a lawful permanent resident individuals who expatriate within the 10-year period immediately preceding the close of the taxable_year will be taxed under sec_877 and the special rules of sec_877 for such taxable_year unless such loss did not have for one of its principal purposes the avoidance of u s taxes sec_2107 and sec_2501 provide special estate and gift_tax regimes respectively for individuals who expatriate with a principal purpose to plr-113793-00 avoid u s taxes a former citizen or former long-term_resident will be treated as having expatriated with a principal purpose to avoid u s taxes for purposes of sec_877 sec_2107 and sec_2501 if the individual’s average income_tax_liability or the individual’s net_worth on the date of expatriation exceed certain thresholds see sec_877 sec_2107 and sec_2501 a former citizen or former long-term_resident whose net_worth or average tax_liability exceeds these thresholds however will not be presumed to have a principal purpose of tax_avoidance if that person is described within certain statutory categories and submits a request for a ruling within one year of the date of loss of u s citizenship for the secretary’s determination as to whether such loss had for one of its principal purposes the avoidance of u s taxes see sec_877 sec_2107 and sec_2501 a c under notice_98_34 1998_2_cb_29 modifying notice_97_19 1997_1_cb_394 a former long-term_resident whose net_worth or average tax_liability exceeds the applicable thresholds will not be presumed to have a principal purpose of tax_avoidance if that former resident is described within certain categories and submits a complete and good_faith request for a ruling as to whether such loss had for one of its principal purposes the avoidance of u s taxes notice_98_34 requires that certain information be submitted with a request for a ruling that an individual’s expatriation did not have for one of its principal purposes the avoidance of u s taxes a is eligible to request a ruling pursuant to notice_98_34 because a has become not later than the close of a reasonable period after his expatriation a resident fully liable to income_tax in country c the country where a was born a submitted all the information required by notice_98_34 including additional information requested by the service after review of the submission accordingly based on the facts submitted and the representations made we conclude that a has made a complete and good_faith submission in accordance with sec_877 and notice_98_34 and therefore a will not be presumed to have expatriated with a principal purpose of tax_avoidance because the information submitted does not clearly establish the existence or lack of a principal purpose to avoid taxes under subtitle a or b of the code however no opinion is expressed as to whether a’s expatriation had for one of its principal purposes the avoidance of such taxes while this ruling rebuts the presumption of tax_avoidance under sec_877 it is not conclusive as to whether a subsequently may be found to have a principal purpose of tax_avoidance under sec_877 plr-113793-00 a and a a based on all the facts and circumstances see sec_877 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any transaction or item discussed or referenced in this letter in addition no opinion is expressed as to a’s u s tax_liability for taxable periods prior to his loss of permanent resident status or for taxable periods after his loss of permanent residence status under sections of the code other than sec_877 sec_2107 and sec_2501 a copy of this letter must be attached to a’s u s income_tax return for the year in which a obtained the ruling whether or not a is otherwise required to file a return 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 sincerely w edward williams senior technical reviewer branch office of the associate chief_counsel international


internal_revenue_service department of the treasury number release date index number u i l no washington dc person to contact telephone number refer reply to cc psi plr-118623-00 date date legend company state shareholders a dear this letter responds to a letter dated date and subsequent correspondence 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 four shareholders shareholders it is represented that company has intended to be an s_corporation since a however company discovered that its s election had not been timely filed company requests a ruling under sec_1362 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 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 plr-118623-00 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 under a power_of_attorney on file with this office a copy of this letter is being sent to company’s authorized representative 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 mary beth collins assistant to the chief branch office of the associate chief_counsel passthroughs and special industries enclosure copy for sec_6110 purpose


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 ------------------------- ------------------- --- telephone number -------------------- refer reply to cc psi b2 plr-144519-11 date date legend x ------------------------------------------------------------------------------------------------------ ----------------------- state ------ d1 ---------------------- dear -------------------- this responds to the letter dated date and subsequent correspondence submitted on behalf of x by x’s authorized representative requesting a ruling under sec_1362 of the internal_revenue_code the information submitted states that x was incorporated in state on d1 it was intended for x to be an s_corporation effective d1 however no form_2553 election by a small_business_corporation was timely filed for x accordingly x requests a ruling that it will be treated as an s_corporation effective d1 sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective generally if an s election is made within the first two and one-half months of a corporation's taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made sec_1362 provides that if an s election is made after the first two and one-half months of a corporation's taxable_year then the corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is made plr-144519-11 sec_1362 provides that if a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making the election for the taxable_year or no sec_1362 election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make the election then the secretary may treat the election as timely made for such taxable_year and sec_1362 shall not apply based solely on the facts and the representations submitted we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation effective d1 accordingly provided that x makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective d1 within days following the date of this letter then such election will be treated as timely made for x’s taxable_year beginning d1 a copy of this letter should be attached to the form_2553 except as specifically set forth above no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 this ruling is directed only to the taxpayer who requested it sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely melissa liquerman branch chief branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index number 468a - ------------------------------------ ---------------------------- ------------------------ ----------------------------- - department of the treasury washington dc person to contact ------------------------------------------------- telephone number --------------------- refer reply to cc psi b06 - plr-169207-03 date date re -------------------------------------------------- ------------------------------------------------------------------- legend taxpayer parent plant location method commission fund dear ------------- ----------------------------------------------------- ------------------------------------------- ----------------------- ------------------------ ------------------------------------------------------------------- --------------------------------------- --------------------------------------------------------- ------------------------------------------------- ------------------------------------------- this letter responds to your request submitted on behalf of taxpayer dated ------ -------------------------- for a revised schedule of ruling amounts pursuant to ' 468a-3 i of the income_tax regulations taxpayer was previously granted revised schedules of ruling amounts on ------------------------- and -------------------------- information was submitted pursuant to ' 468a-3 h taxpayer now seeks a mandatory review of the prior revised schedule of ruling amounts taxpayer represents the facts and information relating to its request for a revised schedule of ruling amounts as follows plr-169207-03 taxpayer is a subsidiary of parent taxpayer has a direct ownership_interest in the plant of-----percent as a tenant in common the plant is situated at location plant s operating license expires in ------ the estimated base cost for decommissioning plant is based on an independent study and the proposed method of decommissioning the plant is method taxpayer is subject_to the jurisdiction of commission in decision -------------- effective ---------------------- commission modifying a prior order authorized nuclear decommissioning costs to be included in the taxpayer s cost of service for ratemaking purposes for plant in the amount of dollar_figure--------------for ------- and dollar_figure--------------for ------- through ------ the commission estimated an after-tax rate of return on the assets of ----- -------percent through ---------------percent for ---------------percent for --------------------------- -----------------------------------------------------------------------------------------------percent for ------ ---------------percent for ------- and -------for ------- and later commission estimated the total cost on a system basis of decommissioning taxpayer s interest in plant to be dollar_figure----- -------------------in ------- dollars this base cost of decommissioning plant is escalated using rates determined by an economic forecasting company and adopted by the commission for labor contract labor materials and other costs and an escalation rate determined by the commission of -----percent for low level radioactive waste burial costs using these factors the total future cost of decommissioning taxpayer’s interest in plant is estimated to be dollar_figure--------------------in ------- dollars the funding_period for the plant extends from ------- through ------- and the level_funding limitation period for the plant extends from ------- through -------- the estimated period for which the fund will be in effect is ----years ------- through ------ the estimated_useful_life of the plant is --- years ------- through ------ thus the taxpayer has calculated its qualifying percentage to be ------percent sec_468a provides that a taxpayer may elect to deduct the amount of there are no proceedings pending before commission that may result in a change to the amount of decommissioning costs for the plant to be included in the taxpayer s cost of service for ratemaking purposes payments made to a qualified decommissioning fund however ' 468a b limits the amount_paid into such fund for any taxable_year to the lesser_of the amount of nuclear decommissioning costs allocable to this fund which is included in the taxpayer's cost of service for ratemaking purposes for the tax_year or the ruling_amount applicable to this year sec_468a provides that no deduction shall be allowed for any payment to the nuclear decommissioning fund unless the taxpayer requests and receives from the secretary a schedule of ruling amounts the ruling_amount for any_tax year is plr-169702-03 defined under ' 468a d as the amount which the secretary determines to be necessary to fund that portion of nuclear decommissioning costs which bears the same ratio to the total nuclear decommissioning costs with respect to the nuclear power plant as the period for which the nuclear decommissioning fund is in effect bears to the estimated_useful_life of the plant this term is further defined to include the amount necessary to prevent excessive funding of nuclear decommissioning costs or funding of these costs at a rate more rapid than level_funding taking into account such discount rates as the secretary deems appropriate sec_468a provides that a taxpayer shall be deemed to have made a payment to the nuclear decommissioning fund on the last day of a taxable_year if the payment is made on account of such taxable_year and is made within months after the close of the tax_year sec_1_468a-1 provides that an eligible_taxpayer may elect to deduct nuclear decommissioning costs under sec_468a of the code an eligible_taxpayer as defined under ' 468a-1 b of the regulations is a taxpayer that has a qualifying interest in among other things a direct ownership_interest sec_1_468a-1 provides that the term qualifying interest means a leasehold interest in any portion of a nuclear power plant if a the holder of the leasehold interest is subject_to the jurisdiction of a public_utility commission with respect to such portion of the nuclear power plant b the holder of the leasehold interest is primarily liable under federal or state law for decommissioning such portion of the nuclear power plant and c no other person establishes a nuclear decommissioning fund with respect to such portion of the nuclear power plant sec_1_468a-2 provides that the maximum amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year shall not exceed the lesser_of the cost of service amount applicable to the nuclear decommissioning fund for such tax_year or the ruling_amount applicable to the nuclear decommissioning fund for such tax_year sec_1_468a-3 provides that in general a schedule of ruling amounts for a nuclear decommissioning fund is a ruling specifying annual payments that over the tax years remaining in the funding_period as of the date the schedule first applies will result in a projected balance of the nuclear decommissioning fund as of the last day of the funding_period equal to and in no event more than the amount of decommissioning costs allocable to the fund sec_1_468a-3 provides that to the extent consistent with the principles and provisions of this section each schedule of ruling amounts shall be based on the reasonable assumptions and determinations used by the applicable public_utility plr-169702-03 commission in establishing or approving the amount of decommissioning costs to be included in the cost of service for ratemaking purposes under ' 468a-3 a the internal_revenue_service shall provide a schedule of ruling amounts identical to the schedule proposed by the taxpayer but no such schedule shall be provided by the service unless the taxpayer's proposed schedule is consistent with the principles and provisions of that section sec_1_468a-3 provides that in general the amount for any_tax year in the level_funding limitation period shall not be less than the ruling_amount for any earlier tax_year under ' 468a-3 b the level_funding limitation period begins on the first day of the first tax_year for which a deductible payment is made to the nuclear decommissioning fund and ends on the last day on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes sec_1_468a-3 provides that the amount of decommissioning costs allocable to a nuclear decommissioning fund is the taxpayer's share of the total estimated cost of decommissioning the nuclear power plant multiplied by the qualifying percentage sec_1_468a-3 provides that in general the total estimated cost of decommissioning a nuclear power plant is the reasonably estimated cost of decommissioning used by the applicable public_utility commission in establishing or approving the amount of these costs to be included in cost of service for ratemaking purposes sec_1_468a-3 provides that a taxpayer's share of the total estimated cost of decommissioning a nuclear power plant equals the total estimated cost of decommissioning such plant multiplied by the taxpayer's qualifying interest in the plant under ' 468a-3 d the qualifying percentage for any nuclear decommissioning fund is equal to a fraction the numerator of which is the number of tax years in the estimated period for which the nuclear decommissioning fund is to be in effect and the denominator of which is the number of tax years in the estimated_useful_life of the applicable plant sec_1_468a-3 provides that the estimated period for which a nuclear decommissioning fund is to be in effect begins on the later of the first day of the first taxable_year for which a deductible payment is made to the nuclear decommissioning fund or deemed made or the first day of the taxable_year that includes the date that the nuclear power plant begins commercial operations as determined by the applicable public_utility commission at the time the plant was first included in the taxpayer's rate base and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes according to ' 468a-3 e the plr-169702-03 estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes is determined under the ratemaking assumptions used by the applicable public_utility commission in establishing or approving rates during the first ratemaking proceeding in which the nuclear power plant was included in the taxpayer's rate base sec_1_468a-3 provides that the estimated_useful_life of a nuclear power plant begins on the first day of the taxable_year that includes the date that the plant begins commercial operations as determined by the applicable public_utility commission at the time the plant was first included in the taxpayer's rate base and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes according to ' 468a-3 e the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes is determined under the ratemaking assumptions used by the applicable public_utility commission in establishing or approving rates during the first ratemaking proceeding in which the nuclear power plant was included in the taxpayer's rate base sec_1_468a-3 provides that the internal_revenue_service shall not provide a taxpayer with a schedule of ruling amounts for any nuclear decommissioning fund unless the public_utility commission that establishes or approves the rates for electric energy generated by the plant has determined the amount of decommissioning costs to be included in the taxpayer's cost of service for ratemaking purposes and has disclosed the after-tax rate of return and any other assumptions and determinations used in establishing or approving the amount sec_1_468a-3 enumerates the information required to be contained in a request for a schedule of ruling amounts filed by a taxpayer in order to receive a ruling_amount for any taxable_year sec_1_468a-3 provides that any taxpayer that has previously obtained a schedule of ruling amounts can request a revised schedule of ruling amounts such a request must be made in accordance with the rules of ' 468a-3 h the internal_revenue_service shall not provide a revised schedule of ruling amounts applicable to a taxable_year in response to a request for a schedule of ruling amounts that is filed after the deemed payment deadline date for such taxable_year sections a and c of the energy act of eliminated for taxable years after date the investment restrictions contained in ' 468a e c sections b and c of the energy act of revised ' 468a e by lowering the tax_rate applicable to a nuclear decommissioning fund for taxable years beginning after date plr-169702-03 we have examined the representations and information submitted by the taxpayer in relation to the requirements set forth in ' 468a and the regulations thereunder based solely upon these representations of the facts we reach the following conclusions taxpayer has a qualifying interest in the plant and is therefore an eligible_taxpayer under ' 468a-1 b of the regulations commission has determined the amount of decommissioning costs to be included in the taxpayer's cost of service for ratemaking purposes as required by ' 468a-3 g of the regulations taxpayer as owner of the plant has calculated its share of the total decommissioning costs under ' 468a-3 d of the regulations taxpayer has determined that pursuant to ' 468a-3 d of the regulations the qualifying percentage is ------percent taxpayer has proposed a schedule of ruling amounts which meets the requirements of 468a-3 a and of the regulations the annual payments specified in the proposed schedule of ruling amounts are based on the reasonable assumptions and determinations used by commission and will result in a projected fund balance at the end of the funding_period equal to or less than the amount of decommissioning costs allocable to the fund the maximum amount of cash payments made or deemed made to the fund during any_tax year is restricted to the lesser amount of the decommissioning costs applicable to the fund or the ruling applicable to the fund as set forth under ' 468a- b of the regulations taxpayer has calculated its share of the total decommissioning costs as required by ' 468a- f of the regulations based solely on the determinations above we conclude that the taxpayer's proposed schedule of ruling amounts satisfies the requirements of ' 468a of the code plr-169702-03 approved schedule of ruling amounts for taxable years --------- year ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- through ------- amount --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- approval of the schedule of ruling amounts is contingent on there being no change in the facts and circumstances known or assumed at the time the current ruling is issued if any of the events described in ' 468a-3 i iii occur in future years the taxpayer must request a review and revision of the schedule of ruling amounts generally the taxpayer is required to file such a request on or before the deemed payment deadline date for the first taxable_year in which the rates reflecting such action became effective when no such event occurs the taxpayer must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline of the tenth taxable_year following the close of the tax_year in which the most recent schedule of ruling amounts was received except as specifically determined above no opinion is expressed or implied concerning the federal_income_tax consequences of the transaction described above the approved schedule of ruling amounts is relevant only to those payments made to the fund payments allocable to any funds other than the fund cannot qualify for purposes of the deduction under the provisions of ' 468a of the code payments made to such fund can qualify only to the extent that they do not exceed the lesser_of the decommissioning costs applicable to such fund or the ruling amounts applicable to this fund in the tax_year this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to the plr-169702-03 taxpayer we are also sending a copy of this letter_ruling to the industry director natural_resources and construction lm nrc pursuant to ' 468a-7 a a copy of this letter must be attached with the required election statement to the taxpayer's federal_income_tax return for each tax_year in which the taxpayer claims a deduction for payments made to the fund sincerely yours peter c friedman senior technician reviewer branch office of the associate chief_counsel passthroughs and special industries cc