internal_revenue_service department of the treasury u i l washington dc s a contact person telephone number in reference to orre ho t e i n ve w x y z dear sir or madam is this in response to a ruling_request submitted on your behalf by your authorized representative you are seeking approval under the suitability test of sec_4942 of the internal_revenue_code of a set-aside made by you as more fully described below c w is an organization that has been recognized as exempt under private section foundation described in sec_509 w is seeking to terminate its private_foundation_status and has received a determination that it is likely to qualify as a supporting_organization at the end of its month termination period classified code and the of as a each w's governing instrument requires that of w’s income be the distributed to and to be offered to x to support remaining of w’s income is foreign study fellowships to the extent that x is unable to use the surplus will be any distributed to other educational institutions described in sec_501 of the code to provide scholarships the program funds the for all of or of z y wis seeking to have an amount set-aside in treated as a qualifying_distribution under sec_4942 of the code for the tax the a separate_account for these funds year held are in peccs8eag within benefit of x and will be distributed to x or some other educational_institution set-aside approximately one-half of this amount was placed in the set-aside account on each of june and date it is anticipated that additional funds will be added to the set-aside account in june and december of and during that time funds will be expended from the account as requests from x are approved by w's board_of trustees months having been of w is working closely with the faculty of x to establish vv the program this work has involved the allocation of start-up and administrative expenses between x and w development of an office at x for the program selection of initial sites for study abroad development of applications promotional materials and post-study surveys for students research into possible additional educational sites and selection of students to participate in the program this program is funded entirely by w and will continue to be so funded so long as x’s program satisfies the terms of w’s by-laws the relevant countries in the program at x continues to the start-up phase although the first group of participants have completed study abroad and additional students currently are participating in the study programs abroad the program is still developing the board_of trustees believes that it is important to closely monitor the program for a few more years to confirm that its goals are being achieved in an appropriate manner be in x of the submits program w’s board_of trustees believes that it is important for them to distribute funds to x only as needed for the start-up and early operations for distributions to cover site visits student expenses and portions of the administrative expense associated with promoting the program and selecting participants in advance the board_of trustees is able to assess the extent to which administrative expenses are being borne by x the projected costs each participant and whether additional expenditures should be covered by w once the program has been fully established and begins to operate on a fairly regular basis w will make semi- annual distributions to the program the continuing operation of reviewing budget proposais proposals detailed for by of x although w’s interactions with x to date indicate that the program is being coordinated and operated in an appropriate manner and that all of the available funds will be used by x s students on an annual basis w’s governing documents permit the trustees to distribute funds to other educational institutions if x is unable to use all of the available funds adequately until the program is fully operational at x the trustees believe that it is appropriate to withhold funds not being used currently by xx sec_4942 of the code imposes on the undistributed_income a private_foundation for any taxable_year which has not been of distributed before the first day of the second or any succeeding taxable_year following such taxable_year if such first day falls within the taxable_period a tax equal to percent of the amount of such income remaining undistributed at the beginning of such second or succeeding taxable_year sec_4942 of the code defines the term undistributed_income as meaning any amount by which the distributable_amount for such taxable_year exceeds the qualifying distributions made before the end of that year such time out of such distributable_amount sec_4942 a of the code provides that for purposes of this section the term qualifying_distribution means a any amount including that portion of reasonable and necessary administrative expenses paid to accomplish one or more purposes described in sec_170 other than any contribution to an organization controlled directly or indirectly by the foundation or one or more disqualified persons as defined in sec_4946 with respect in paragraph or ii a private_foundation which is not an subsection j except as provided in paragraph foundation foundation operating provided defined except as the i in to as b any amount_paid to acquire an asset used or held for use purposes described in sec_170 directly carrying more out one or in of sec_53_4942_a_-3 the foundations and similar excise_taxes regulations hereinafter regulations provides that an amount set-aside for a specific project that is for one or more of the purposes described in sec_170 or b may be treated as a qualifying_distribution in the year in which set-aside but not in the year in which actually paid if the requirements of sec_4942 and this paragraph b the requirements of this paragraph b are satisfied if the private_foundation establishes to the satisfaction of the commissioner that the amount set-aside will be paid for the specific project within months after its set-aside and as satisfied i described in subparagraph set-aside satisfies the of this paragraph or the suitability test ii with respect to a set-aside made in a taxable_year beginning after date the private_foundation satisfies in subparagraph distribution of this paragraph described cash test the if the suitability test or cash distribution test is otherwise satisfied the month period for paying the amount set-aside may for good cause be extended by the commissioner sec_53_4942_a_-3 of the regulations provides that the private_foundation the suitability test establishes to the specific project for which the amount is set-aside is one that can be better accomplished by the immediate payment of funds the commissioner that the satisfaction of the set-aside than is satisfied if by direct as defined in sec_4944 specific projects that can be better accomplished by the use of a set-aside include but are not limited to projects in which relatively long-term grants or expenditures must be made in order to assure the continuity of particular charitable projects or or program-related investments where grants are made as part of such projects include for example a plan to erect a building to house the exempt activity of the private_foundation such as a museum building in which paintings are to be hung even though the exact location and architectural plans have not been finalized a plan to purchase an additional group of paintings offered for sale only as a unit that requires an expenditure of more than one year’s income or a plan to fund a specific research program that is of such magnitude as to require an accumulation of funds before beginning the research even though been finalized a matching grant program the program have educational the details charitable similar other not all or of of based on the information submitted and the representations made therein we rule your set-aside as described herein will be treated as an amount_paid to accomplish one or more c b purposes and this project can be better accomplished by set-aside than by immediate payment of funds and therefore is a qualifying_distribution within the meaning of section of sec_4942 of the code approved set-aside must be evidenced by pursuant to sec_53 b of the regulations your a dollar the entry of amount on your books_and_records as a pledge or obligation to be paid at a future date or dates any amount which is set-aside shall be taken into account for purposes of determining your minimum_investment_return under sec_53 c and any income attributable to into account in computing net_income under section a -2 d such set-aside shall be taken please keep a copy of this ruling in your permanent records this that requested it sec_6110 of the code provides that it may not be used or cited by others as precedent organization directed ruling only the to is sincerely yours y a jian tif li octet - kenneth j earnest acting chief exempt_organizations technical branch my ioss jun is internal_revenue_service national_office technical_advice_memorandum fam - 0ob q this document may not be us' edent or cited as preci sec_6110 of ‘ the internal revenue coda i index numbers taxpayer's name taxpayer’s address year s involved date of conference country a date b date c __ year e fc parent subsidiary purchaser - for purposes of determining the amount of a deemed issues a post-1986 sale of stock of dividend under sec_1248 of the internal_revenue_code with respect to corporation cfc may a u s shareholder of the cfc determine its ratable share of the cfc's earnings_and_profits e_p accumulated for the year of the sale without reducing such e_p by the amount of stock during the same taxable_year of the cfc a post-sale distribution to the purchaser of the a controlled foreign loy cc intl tam-106310-97 is a domestic_corporation that receives a sec_1248 deemed_dividend with respect to a post-1986 sale of stock of a cfc thereby entitled to a deemed-paid credit for foreign taxes paid_by the cfc prior to if the_domestic_corporation already claimed credit for such foreign taxes under former sec_902 prior to but the cfc has undistributed pre-1987 e_p as computed under sec_964 parent is a domestic_corporation subsidiary is a cfc facts as defined in sec_957 that is incorporated in country a priox to subsidiary qualified as a less_developed_country_corporation under former sec_902 percent of the stock of subsidiary prior to and continued to hold percent of such stock until the sale that is the subject of this technical_advice_memorandum parent acquired parent and subsidiary each file income_tax returns on the basis of a calendar_year the currency of country a defined in sec_985 the fc lost value relative to the u s dollar subsidiary keeps its books in the fc subsidiary’s functional_currency as during the relevant years is the fc for purposes of this technical_advice_memorandum it is assumed that all of subsidiary’s income is general_limitation_income described in sec_904 i f income as defined in sec_952 and that none is subpart pre-1987 transactions during through subsidiary generally earned a profit and paid foreign_income_taxes to country a regularly paid dividends to parent dividend parent claimed credit under sec_902 prior to that section’s amendment by the tax_reform_act_of_1986 taxes deemed paid the rules of sec_1_964-1 through c of the regulations and translated into u s dollars at the spot_rate in effect on the date of the dividend were translated from fcs into u s dollars as of the date of the dividend subsidiary’s e_p were computed in fcs the foreign taxes deemed paid also with respect to each for foreign_subsidiary under during parent included subsidiary’s undistributed a accumulated e_p as of december consent_dividend within the meaning of sec_565 such e_p were deemed to be distributed to parent in cash and immediately recontributed to subsidiary as paid-in capital parent claimed credit under former sec_902 for all foreign taxes paid_by subsidiary through date for which parent had not in gross_income as dos cc intl tam-106310-97 previously claimed credit actual dividends subsidiary’s e_p were computed in fcs e_p and foreign taxes deemed paid were translated into u s dollars at the spot_rate in effect on the date the e_p were deemed distributed consistent with the method used for both subsidiary made a cash distribution to parent during that was initially treated as a dividend entitling parent to credit under sec_902 for foreign taxes deemed paid the taxpayer and the examiner have agreed that such cash distribution will be treated as technical_advice_memorandum a return_of_capital for purposes of this - post -1986 transactions on date b subsidiary made a cash distribution to parent on date c parent sold all the stock of subsidiary to purchaser for a price in excess of parent's basis in the stock subsidiary made a cash distribution to purchaser and d were all within year e which was a year subsequent to were greater than the amount of either of the two distributions paid during year e but less than the sum of such distributions subsidiary’s total e_p for year e prior to distributions on date d dates b c pursuant to sec_1248 parent treated its gain on the sale of the stock of subsidiary as a dividend to the extent of subsidiary's undistributed post-1975 e_p while subsidiary qualified as a less_developed_country_corporation were disregarded parent claimed credit under sec_902 for foreign taxes deemed paid with respect to the sec_1248 deemed_dividend e_p earned prior to in order to measure the amount of gain treated as a deemed_dividend under sec_1248 parent computed its ratable share of subsidiary’s e_p for year e based on subsidiary’s total e_p for year e without reduction for the post-sale distribution during year e post-sale distribution prior to computing its ratable share the effect would have been to reduce the amount of the deemed_dividend paid out of subsidiary’s post-1986_undistributed_earnings which in turn would have reduced the amount of post- foreign_income_taxes deemed paid_by parent if parent had reduced the total e_p by the amount of the parent then translated subsidiary’s post-1986 e_p pool which was maintained in fcs in effect on the deemed_dividend date subsidiary’s pre-1987 e_p parent computed annual e_p accounts prior to distributions in u s dollars using the sec_964 rules sec_1_964-1 through e of the regulations that were in effect prior to into u s dollars at the spot_rate due to the declining value of the with respect to cc intl tam-106310-97 fc relative to the u s dollar the amounts of the e_p accounts computed using the sec_964 rules exceeded the amounts of the e_p accounts after translation into u s dollars computed for purposes of the foreign tax_credits that parent had claimed under sec_902 with respect to the pre-1987 dividends_paid including the consent_dividend parent reduced the u s dollar accounts computed under sec_964 by the u s dollar amounts of the pre-1987 dividends_paid parent then converted the balance remaining for each year into fcs at the spot_rate in effect on date in computing the amount of the deemed paid credit under sec_960 with respect to the sec_1248 deemed_dividend parent converted the amounts of the foreign taxes paid_by subsidiary during each year prior to from fcs into u s dollars at the exchange rates in effect on the dates the taxes were paid amounts for which credit had already been claimed under sec_902 prior to because the latter had been converted into u s dollars at the exchange rates in effect when the dividends with which they were associated had been paid at value of the fc relative to the u s dollar had declined such u s dollar amounts were greater than the a time when the sec_1248 applicable law under sec_1248 which was added to the code in if a u_s_person who meets the stock ownership requirements of sec_1248 sells stock in a foreign_corporation a portion of the gain recognized on the sale_or_exchange must be included in the u_s_person s gross_income as a dividend the amount of the deemed_dividend is limited to the e_p of the foreign_corporation that are attributable to the stock sold and that were accumulated in taxable years beginning after date and during the period or periods the stock was held by the u_s_person while the foreign_corporation was a cfc sec_1248 provides the general_rule that except as provided in sec_312 for purposes of sec_1248 e_p of any foreign corporation’ for any taxable_year are determined according ‘to rules substantially_similar to those applicable to domestic corporations under regulations prescribed by the secretary provides that certain amounts shall be excluded from e_p for purposes of sec_1248 such amount is e_p of a less_developed_country_corporation under former sec_902 sec_1248 da sec_1248 da one the sec_1248 expressly states that the amount of e_p attributable to the stock sold is to be determined under cc intl tam-106310-97 regulations prescribed by the secretary adopted at the end of sec_1_1248-2 of the regulations provides rules for determining the e_p attributable to the stock of foreign_corporations in simple cases and sec_1_1248-3 provides rules for complex cases a less_developed_country_corporation for any taxable_year beginning after december apply see sec_1_1248-2 a the rules for complex cases a foreign_corporation was regulations were if subject_to certain special rules not applicable here sec_1_1248-3 provides that the e_p accumulated for each taxable_year of the foreign_corporation are the e_p for such year computed in accordance with the rules prescribed in sec_1_964-1 reduced by the amount of distributions made by the corporation during the taxable_year for taxable years beginning prior to date the the full sec_964 method were e_p computed in accordance with the rules prescribed in sec_1_964-1 through e stated in u s dollars based on the annual change in the foreign corporation’s net_worth using a u s dollar balance_sheet that took into account certain unrealized exchange gains and losses however sec_986 which was enacted as part of the tax_reform_act_of_1986 now requires that determining the federal_income_tax of any shareholder of any foreign_corporation the e_p of such corporation must be determined in the corporation’s functional_currency a transition rule published in notice_88_70 c b pre-1987 e_p accounts based on the full sec_964 method were required to be translated into the foreign corporation's functional_currency if not the u s dollar as of the first day of the first taxable_year of the corporation beginning after december remain in such functional_currency for all post-1986 federal_income_tax determinations at the spot_rate in effect on that date and to for purposes of pursuant to sec_986 provides that when the e_p determined are distributed deemed distributed or under sec_986 otherwise taken into account in determining the federal_income_tax of a u_s_person such e_p shall into u s dollars using the appropriate_exchange_rate b provides that the appropriate_exchange_rate in the case of the deemed_dividend is included in income a sec_1248 deemed_dividend is the spot_rate on the date if necessary be translated section if the seller does not hold the stock of the foreign_corporation on each day of the taxable_year of the sale seller’s share of the foreign corporation's e_p accumulated for such taxable_year is number of days during the year the stock was held by the seller a pro_rata share based on the ratio of the the cc intl tam-106310-97 to the total number of days in the year of any e_p remaining after the total e_p for the year is reduced by the amount of distributions during the year d see sec_1_1248-3 and - revrul_71_388 1971_2_cb_314 provides that for purposes of determining the portion of gain on the sale of a cfc’s stock that is reportable as dividend income under sec_1248 the cfc’s e_p for the year of the sale must be reduced by a post-sale dividend distribution to the buyer during the same year this holding is based on sec_1_1248-2 and - e which provide rules for simple cases that are similar to the rules for complex cases provided in sec_1_1248-3 the last sentence of revrul_71_388 states parenthetically that the e_p of a cfc are not decreased by the amount of gain from the sale of the cfc’s stock that is treated as a dividend under sec_1248 that part of revrul_71_388 temporarily revrul_83_182 1983_2_cb_149 suspended if the e_p were not decreased by the amount of gain treated as a dividend under sec_1248 a subsequent distribution by the cfc to the new owner might have been treated as a dividend out of e_p that had already caused a ividend inclusion to the seller under sec_1248 the new owner also might have claimed entitlement to foreign tax_credits for taxes paid_by the cfc with respect to the dividend even if the seller had already claimed credit for the same taxes counting problem congress enacted sec_959 as part of the deficit_reduction_act_of_1984 to provide that e_p included in a seller’s gross_income as a dividend by reason of sec_1248 a become previously_taxed_income pti for purposes of sec_959 as pti such e_p are not includible in the gross_income of the buyer of the stock and do not give rise to deemed-paid foreign tax_credits when subsequently distributed to the buyer to address this potential double as part of the tax_reform_act_of_1986 congress amended sec_959 further to clarify in sec_959 that distributions excluded from gross_income under sec_959 a reduce e_p at the time of distribution revrul_90_31 1990_1_cb_147 now provides based on sec_959 and sec_959 that under the facts described in revrul_71_388 e_p are decreased at the time of the actual distribution of the pti amount attributable to the sec_1248 dividend thus revrul_90_31 modified the last sentence of revrul_71_388 and made revrul_83_182 obsolete revrul_90_31 also clarifies that the new owner is not entitled to a foreign_tax_credit with respect to the pti amount when such amount is actually distributed revrul_90_31 does not address f 2o4 cc intl tam-106310-97 the computation of the amount of the sec_1248 deemed_dividend sec_902 and sec_960 sec_1_1248-1 of the regulations provides that if a a the foreign_tax_credit provisions of domestic_corporation includes an amount in gross_income as dividend under sec_1248 sec_901 through apply in the same manner and subject_to the same conditions and limitations as if the amount had been distributed to the_domestic_corporation as an actual dividend sec_1_1248-1 provides that no credit shall be allowed with- respect to taxes not actually paid_or_accrued sec_902 a corporation deemed-paid credit under sec_902 with respect to foreign taxes actually paid_or_accrued by the cfc provided under sec_960 for foreign taxes associated with amounts that are included in a u s shareholder’s gross_income under sec_951 a see also referring to taxes paid_by the foreign the_domestic_corporation is entitled to a a similar credit is thus the purposes of the deemed-paid credit are i to protect a domestic parent from double_taxation of its income and equalize treatment between domestic corporations that operate through foreign subsidiaries and those that operate through unincorporated foreign branches rubber co united_states v goodyear tire u s ii to sec_902 was significantly amended by the tax reform act sec_902 provides definitions and certain of with respect to taxable years beginning after december special rules for calculating deemed-paid taxes on the basis of multi-year pools of earnings and taxes any dividend paid ina post-1986 taxable_year is treated as made first out of the foreign corporation’s post-1986_undistributed_earnings to the extent thereof and then out of pre-1987 earnings c b respect to actual or deemed distributions in a post-1986 taxable_year out of pre-1987 earnings are determined under the law in effect prior to sec_902 a provides that credits with section under the law in effect prior to a cfc’s accumulated_profits were calculated year by year and were matched with the foreign taxes paid_or_accrued each year foreign taxes deemed paid with respect to a dividend paid out of accumulated_profits for a particular year was computed under the following formula the amount of the aic cc intl tam-106310-97 taxes deemed paid foreign_income_taxes paid on or with respect to accumulated_profits for taxable_year x dividends_paid out of accumulated_profits for taxable_year accumulated_profits for taxable_year in excess of foreign_income_taxes for purposes of this formula the cfc’s accumulated_profits fora taxable_year were equal to the sum of the cfc’s e_p for such year plus the foreign_income_taxes imposed on or with respect to the gains profits and income to which such e_p are attributable sec_1_902-3 formerly sec_1_902-1 formerly see sec_1_902-3 providing that e_p may be determined accumulated_profits distributed as a dividend anda under pre-1987 law annual accounts of accumulated_profits and foreign_income_taxes were maintained in foreign_currency for purposes of sec_902 sec_1_902-1 under the rules provided by sec_1_964-1 exclusive of paragraphs d and e thereof the partial sec_964 method ratable portion of the cfc’s foreign_income_taxes were translated into u s dollars at the spot_rate in effect on the distribution date v commissioner 39_bta_825 translated at the exchange rate prevailing when the dividend is declared g profits and the associated foreign_income_taxes continue to be determined and translated into u s dollars under pre-1987 law for purposes of sec_902 holding that deemed-paid foreign taxes should be distributions out of pre-1987 accumulated see also sec_1_902-3 formerly section sec_1_902-1 ii see bon ami co different rules applied in computing e_p and deemed-paid taxes for purposes of determining a deemed-paid foreign_tax_credit under sec_960 for foreign taxes associated with amounts that were included in a u s shareholder’s gross_income under sec_951 prior to annual accounts of e_p were maintained in u s dollars under the full sec_964 method described above at the exchange rates in effect when the taxes were paid_or_accrued foreign taxes were translated into u s dollars sec_1_964-1 i if there was a combination of actual dividends and sec_951 inclusions for the same pre-1987 taxable_year necessary to compute two sets of e_p and foreign taxes accounts one under the rules that applied for purposes of sec_902 and the other under the rules that applied for purposes of sec_960 general discussion in tam which did not present this issue for decision no guidance has ever been issued as the two sets of accounts should be coordinated however apart from some see tam feb it was to how a cc intl tam-106310-97 as noted above the amount of a sec_1248 deemed_dividend the numerator in the fraction set forth above was based on annual e_p accounts computed in u s dollars under the full sec_964 method notice_88_70 supra such e_p accounts were required to be translated into the cfc’s functional_currency if not the u s dollar as of the first day of the first taxable_year of the cfc beginning after date at the spot_rate in effect on that date pursuant to the transition rule published in it see g_c_m e_p denominator of sec_1248 credit fraction determined is the position of the service that for purposes of determining the amount of the deemed-paid foreign_tax_credit associated with a sec_1248 deemed_dividend under pre-1987 law the accumulated earnings and foreign_income_tax accounts the denominator and the multiplicand of the fraction set out above are properly computed in accordance with the method that was used for a sec_960 credit under sec_960 method g_c_m january foreign tax multiplicand determined under sec_960 method for purposes of former sec_963 where both terms of fraction also determined under sec_960 method cf sec_1_905-5t foreign taxes deemed paid under sec_902 with respect to sec_1248 deemed_dividend translated into u s dollars at rate of exchange for date of payment of foreign taxes this position is based on the principles of proportionality and consistency because the amount of the sec_1248 deemed_dividend is computed by reference to sec_964 e_p which applies to the sec_960 credit the denominator and the multiplicand should likewise be determined under the method that applies to the sec_960 credit so that the percentage of foreign taxes deemed paid matches the percentage of accumulated earnings deemed distributed date issue l rationale examiner’s position the examiner’s position is that revrul_90_31 modifies revrul_71_388 only with respect to whether the accumulated e_p of a cfc are decreased by the amount of gain from the sale of its stock that is treated as a dividend under sec_1248 accordingly the examiner applied the methodology set forth in revrul_71_388 and reduced subsidiary’s e_p for year e by the amount of the distribution to purchaser on date d finally in calculating parent’s foreign taxes deemed paid in connection with the sec_1248 deemed_dividend the examiner included all of subsidiary’s e_p and foreign taxes accrued for year e undistributed_earnings and post-1986_foreign_income_taxes pools in the closing balances of subsidiary’s post-1986 al’ cc intl tam-106310-97 parent's position parent agrees that under a literal reading of sec_1_1248-3 of the regulations the methodology set forth in revrul_71_388 would be applicable and accordingly subsidiary’s e_p for year e would be reduced by the amount of the distribution to purchaser prior to computing parent’s ratable share of such e_p that applying the regulation would be inappropriate here because the result is inconsistent with legislative provisions enacted after the regulation was adopted in determining parent's foreign taxes deemed paid in connection with the sec_1248 inclusion parent included in subsidiary’s post- undistributed_earnings and taxes pools only a pro_rata portjon of the e_p and taxes accrued by subsidiary for year e under parent‘s position a larger portion of subsidiary s post - undistributed_earnings pool would be included in the sec_1248 dividend amount and a larger portion of subsidiary’s post- foreign_income_taxes would be deemed paid_by parent however parent contends further in analysis we conclude that sec_1_1248-3 of the the regulation was issued under a specific accordingly in determining parent's ratable share of regulations applies in determining parent’s sec_1248 deemed_dividend amount grant of authority and it implements the statute in a reasonable manner that is not inconsistent with subsequent legislative changes subsidiary’s e_p for purposes of sec_1248 for year e must first be reduced by the amounts of the year e distributions to parent and purchaser parent's sec_1248 deemed_dividend amount must then be determined and treated as creating a pti account pursuant to sec_959 distribution to purchaser on date d is treated as of pti to the extent thereof subsidiary’s e_p a distribution the parent contends that to be consistent with revrul_90_31 parent argues that if the e_p for the year of the and sec_959 subsidiary’s e_p for year e must be calculated for purposes of sec_1248 as of date c parent’s sale of the subsidiary stock to purchaser without reduction for subsidiary’s subsequent distribution to purchaser on date d sale is reduced by the amount of the post-sale distribution to the buyer prior to computing the sec_1248 dividend amount the application of sec_959 to create a pti account in the amount of the sec_1248 dividend would create an anomaly because the post-sale distribution to the buyer would be paid first out of pti which would be inconsistent with the assumption in revrul_71_388 that the distribution would be characterized as a dividend taxable to the buyer the date of we agree that the distribution in revrul_71_388 is described as a dividend to the buyer was issued prior to the enactment of sec_959 at however revrul_71_388 a time als cc intl tam-106310-97 a dividend for purposes of determining the amount of a section when the same e_p arguably could have been treated as to both the seller and the buyer further the holding in revrul_71_388 is based on the regulations described above which provide that deemed_dividend the foreign corporation's e_p accumulated for the year of the sale must be reduced by the amount of distributions during such year distributions that are treated as dividends fact that the distribution to purchaser on date d determined to be out of pti and is not treated as except that it reduces e_p does not affect the sec_1248 calculation buyér’of amounts taxed to the seller as a deemed_dividend under sec_1248 are pti sec_1_1248-3 for determining the amount of the sec_1248 deemed_dividend but does not modify the ordering rule_of revrul_90_31 confirms that distributions to the this rule is not limited to is ultimately a dividend in our view the parent also argues that allowing post-sale distributions to at the time congress enacted sec_959 it affirmed that the purpose of sec_1248 is to tax decrease the amount of e_p available for a sec_1248 deemed_dividend would be inconsistent with the purpose of sec_1248 parent states that in the accumulated_profits of active foreign_corporations upon repatriation parent quotes from the general explanation’s discussion of sec_1248 which was enacted at the same time as sec_959 to address an abusive situation where taxpayers were taking the position that sec_1248 did not apply to certain indirect transfers in which a cfc that was wholly owned by a widely held u s_corporation issued new shares and paid a small amount of cash in exchange for shares representing a majority interest in the u s_corporation the cited passage explains the need for sec_1248 as in the view of congress the ability to avoid ordinary follows income_tax by causing a foreign_corporation to engage ina transaction with the shareholders of its u s parent_corporation would undermine the principle of taxing accumulated_earnings_and_profits of foreign_corporations upon repatriation joint comm on taxation general explanation of the revenue provisions of the deficit_reduction_act_of_1984 decrease the amount of e_p available for a sec_1248 deemed_dividend also would undermine the principle of taxing accumulated e_p upon repatriation inclusions as well as sec_1248 amounts which parent contends sec_959 puts on par with subpart_f inclusions must be calculated before taking into account the effect of distributions according to parent allowing post-sale distributions to parent argues that all subpart_f pincite staff of d y cc intl tam-106310-97 as support for the foregoing argument parent relies on the under sec_951 a to resolve a potential double counting issue taxpayer_relief_act_of_1997 which added a sentence to sec_951 a section a the amount of subpart_f_income that is includible by a buyer of stock of a cfc for the year of the acquisition is reduced by a specified percentage of the amount of distributions received by the seller as a dividend with respect to the stock during the year sentence now provides that the seller's sec_1248 deemed_dividend will be treated as a distribution that reduces the amount of the buyer's subpart_f inclusion this amendment reflects a congressional purpose to give priority to ancluding year-of-sale earnings in the seller’s income under sec_1248 parent argues that p l the new in our opinion reducing the amount of a sec_1248 deemed_dividend by the amount of a same-year post-sale distribution is not inconsistent with the purpose of sec_1248 or with sec_951 conjunction with subpart_f the purpose of sec_1248 has been to ensure that when earnings accumulated by a foreign_corporation are repatriated they will be taxed as ordinary_income and not as capital_gains since when sec_1248 was enacted in under existing law through an ordinary taxable is possible to liquidation or sale_or_exchange it bring earnings accumulated by a foreign_corporation back to this country merely by paying a capital_gains_tax on such earnings included in the gain the bill has as one of its objectives in the foreign_income area the imposition of the full u s income_earned_abroad is repatriated taxation will occur in the case of the ordinary taxable liquidations or sales or exchanges only if the earnings_and_profits are in effect taxed as dividends to the extent of any gain at the time the funds are brought back to the united_states accomplished by this section of the bill this objective is full u s tax when s rep no 87th cong 2d sess 1962_3_cb_813 consistent with the purpose of sec_1248 congress determined in that sec_1248 was needed to prevent the shareholders of a widely held u s_corporation from obtaining capital_gains treatment on the exchange of their shares in the u s_corporation for shares in such corporation's wholly owned controlled_foreign_corporation thereby indirectly repatriating the accumulated earnings_of the controlled_foreign_corporation free of taxation at ordinary_income rates qs cc intl tam-106310-97 in contrast to sec_1248 which was needed to prevent taxpayers from circumventing the purpose of sec_1248 sec_959 was needed only to ensure that amounts included in one taxpayer's gross_income as a deemed_dividend by reason of sec_1248 will not be taxed as dividends again when subsequently distributed to another taxpayer whether the amounts at issue will be taxed at ordinary_income rates par with a subpart_f inclusion for purposes of sec_959 and sec_960 it has no effect on the computation of the amount of the sec_1248 inclusion sec_959 merely places a sec_1248 inclusion on there is no question as to the last sentence of sec_951 also was not needed its purpose was to provide an ordering rule for a this provision reflects a congressional determination that to prevent taxpayers from circumventing the purpose of sec_1248 situation where there was potential double counting and no definitive guidance by ensuring that amounts taxed to one u s shareholder as a sec_1248 deemed_dividend will not also be included in another u s shareholder's gross_income under sec_951 year-of-sale subpart_f earnings that are taxed to the seller under sec_1248 should not also be taxed to the buyer under sec_951 inference that congress intended to tax year-of-sale non-subpart f earnings to the seller in circumstances involving a post-sale distribution where no double counting issue is presented much less that congress intended retroactively to override a longstanding treasury regulation governing the computation of the sec_1248 inclusion however its enactment does not compel the the regulation does not include any provisions parent presents an additional argument based on the fact that other aspects of the sec_1248 regulations adopted in are out of date specifically sec_1_1248-1 which sets forth rules for the allowance of deemed paid credits for foreign_income_taxes paid_by first- and second-tier foreign subsidiaries and provides that a domestic corporation’s sec_1248 gain on sale of a first-tier subsidiary that owns a second- tier subsidiary is prorated based on the amount of e_p in each subsidiary for third-tier subsidiaries because deemed paid credits for foreign_income_taxes paid_by third-tier subsidiaries were not available until parent says that a literal reading of the regulation suggests that the availability of foreign tax_credits with respect to sec_1248 inclusions is limited to first- and second-tier subsidiaries would be inconsistent with current law parent says it reasonable to conclude that the sec_1248 proration and deemed paid credits would be extended to third-tier foreign_corporations distributions should be accounted for before the creation of parent argues that concluding that post-sale however because this interpretation is aic cc intl tam-106310-97 inclusions that result in pti would be as erroneous as disallowing third-tier foreign tax_credits in the sec_1248 context however the statutory change making deemed paid credits available for taxes paid_by third-tier subsidiaries rendered the provisions of sec_1_1248-1 of the regulations incomplete rather than erroneous or obsolete moreover we see nothing in the post-1964 changes to the code or the legislative_history thereof that overrides the position taken in sec_1_1248-3 b and revrul_71_388 with respect to post-sale distributions in calculating the sec_1248 amount accordingly we reject the taxpayer’s argument that the and statutory changes preclude the service from applying the regulation as written based on the foregoing we conclude that subsidiary’s e_p for year e must be reduced by the amount of the distributions to parent and purchaser prior to computing parent's ratable share of the e_p because the sum of subsidiary's distributions to parent and purchaser in year e exceeds subsidiary’s e_p for year e negative ratable share of e_p for year e together with the positive e_p arising in other post-1986 years in determining the extent to which parent’s gain on the sale of the stock of subsidiary is characterized as dividend income under sec_1248 for purposes of calculating parent’s foreign taxes deemed paid in connection with the sec_1248 deemed_dividend the entire amount of subsidiary’s e_p and taxes accrued in year e and not just a ratable share thereof are included in subsidiary’s post- undistributed_earnings and post-1986_foreign_income_taxes as of the end of year e a is taken into account as required by sec_902 and c issue as explained above there were different sets of rules prior to for computing and translating e_p and foreign taxes for actual dividends and deemed inclusions in the case of actual dividends annual e_p and foreign tax accounts for purposes of sec_902 were computed in foreign_currency and translated into u s dollars at the rate in effect on the dividend date case of deemed inclusions annual e_p accounts for purposes of sec_960 were maintained in u s dollars using the full sec_964 method and foreign taxes were translated into u s dollars at the exchange rates in effect when the taxes were paid_or_accrued sets of accounts when there was a combination of actual distributions and deemed inclusions of earnings from the same pre-1987 taxable_year of a foreign_corporation there was no guidance on how to coordinate the two in the ap cc intl tam-106310-97 parent and the examiner agree that parent's deemed-paid credit with respect to the sec_1248 inclusion out of pre-1987 earnings_and_profits is calculated using the sec_960 method parent and the examiner also generally agree that parent is not entitled to a double credit for pre-1987 taxes paid_by subsidiary and that offsets between the two sets of accounts are necessary the point of disagreement is whether the existence of a double credit should be determined with reference to the number of fcs of tax paid_by the foreign_subsidiary which is the basis for both tax accounts or with reference to the differing amounts of u s dollars into which the fcs were translated which translation occurred at the time of payment in the case of the sec_960 tax accounts and upon distribution of the associated earnings in the case of the sec_902 tax accounts examiner's position the examiner’s position is that once a deemed-paid foreign_tax_credit has been claimed by a u s_corporation for a unit of foreign tax paid_by a foreign_corporation no additional credit can be claimed for that same unit of foreign tax under another method that uses a different translation convention credit under sec_902 for all foreign taxes paid_by subsidiary through date the examiner disallowed any additional credit calculated under sec_960 for the same taxes the examiner’s position the foreign taxes would be viewed in fcs and the amount of taxes available for credit under sec_960 with respect to a deemed inclusion would be reduced by the fc amount of the taxes claimed as credits under sec_902 because parent had already received under parent's position parent’s position is that because the u s dollar amount of subsidiary’s pre-1987 taxes using the translation convention that applied for purposes of sec_960 and sec_1248 exceeded the u s dollar amount of subsidiary’s pre-1987 taxes using the translation convention that applied for purposes of sec_902 the sec_1248 deemed_dividend entitles parent to a deemed-paid foreign_tax_credit for the excess of the sec_960 dollar tax account over the dollar amount of credit previously claimed under sec_902 for each of the pre-1987 years in question purposes of sec_902 and sec_960 in terms of u s dollars thus parent compares the foreign taxes for analysis a sec_1_1248-1 deemed-paid foreign tax_credits are available see section only for foreign taxes actually paid_or_accrued c see also h 59_tc_53 aff'd per curiam 500_f2d_1399 accordingly the appropriate method for coordinating the two sets of pre-1987 tax accounts must be the method that ensures that credits are limited to foreign taxes actually paid_or_accrued accounts must be compared in terms of fcs we conclude that the two sets of 3d cir cc intl tam te there was no direct correlation between pre-1987 sec_902 e_p which was calculated using a foreign_currency profit and loss statement and sec_964 e_p which was calculated using a u s dollar balance_sheet accordingly a given distribution or deemed inclusion from a particular year’s earnings was virtually certain to constitute a different percentage of the year’s sec_902 profits and sec_964 profits and thus to attract a different percentage of the year’s creditable taxes depending on which section applied in contrast both sections based the amount of creditable tax on the foreign_currency taxes paid although different translation conventions applied subsidiary’s foreign tax_liabilities were determined in fcs and the fc liability is the basis for and paid in fcs determining allowable credits under both sec_902 and sec_960 in our view the only principled way to keep track of pre-1987 taxes previously credited and taxes still available for credit under either sec_902 or sec_960 is in fcs thus when there is an actual dividend or a deemed inclusion out of pre-1987 earnings and taxes are deemed paid both the sec_902 and the sec_960 tax accounts should be reduced by the fc amount of taxes deemed paid when the fc taxes for a particular pre-1987 year are all deemed paid and the tax accounts are thus reduced to zero no more credits are available with respect to that pre-1987 year even if earnings remain available to support a distribution or deemed inclusion from that year see sec_1_902-1 iii v commissioner parent argues that the pre-1987 sec_902 and parent first contends that this position is inconsistent with the requirement established by bon ami co supra that earnings and taxes be linked and translated on the same basis sec_960 regimes were designed to operate independently and that neither should limit or otherwise change the amount of e_p or tax_credit reflected in the operation of the other regime however parent concedes that cross-regime adjustments are necessary to avoid a doubling up of foreign tax_credits and therefore that credits claimed under one regime operate to limit the credits that would otherwise be available under the other regime the only point of disagreement is whether the starting point for determining this limit should be a foreign_currency amount or a dollar amount since translations are necessary for purposes of both accounts assist in the resolution of this problem much less require the foreign taxes credited under sec_902 to be viewed as a u s dollar amount of tax for purposes of determining the amount of tax available for credit under sec_960 the principles of bon ami do not parent next contends that viewing the pre-1987 tax accounts in terms of u s dollars would be more consistent with the goal aig cc intl tam-106310-97 of equalizing the tax treatment of domestic corporations operating abroad through subsidiaries and through branches and with the post-1986 statutory scheme contention parent points to the general explanation of the tax_reform_act_of_1986 which cited equalizing the tax treatment of subsidiaries and branches as a major reason for rejecting the bon ami translation convention in favor of the historic spot_rate translation convention for post-1986 foreign taxes of both branches and subsidiaries general explanation of the tax_reform_act_of_1986 pincite staff of joint comm on taxation in support of this we do not find this argument persuasive the issue of how to coordinate two sets of pre-1987 foreign tax accounts did not exist with respect to taxes of an unincorporated foreign_branch in enacting sections congress recognized and eliminated for post-1986 taxable years the problems created by the fact that different computational and translation conventions for determining earnings and taxes applied prior to for different u s tax purposes congress did not amend the law applicable to pre-1987 years nor express a view as to how the problem presented herein should be resolved parent also contends that its use of a dollar-based methodology is endorsed by the service’s own pronouncements namely notice_88_70 supra revrul_73_182 c b and g_c_m supra however none of these pronouncements addresses the specific question of whether the two sets of pre- foreign tax accounts should be coordinated in foreign_currency or in u s dollars revrul_73_182 and g_c_m do address the coordination of pre-1987 tax accounts when there is a combination of distributions and deemed distributions under two different regimes and they provide that the accounts must be reduced by the amount of the foreign taxes that are creditable with respect to the first distribution however because the sec_902 earnings and taxes accounts in each case were assumed to be maintained in u s dollars neither authority addresses the issue presented by this case based on the foregoing we agree with the examiner that the sec_1248 deemed_dividend does not entitle parent to additional credit for any of subsidiary’s pre-1986 foreign taxes parent is entitled to credit only for foreign_income_taxes actually paid_by subsidiary and parent has already received credit under sec_902 for all such taxes paid prior to it would not further the purposes of the indirect_foreign_tax_credit to allow any additional credit because additional credit would neither reduce the amount of any double_taxation with respect to subsidiary’s pre-1987 earnings nor make the treatment more comparable to that of an unincorporated foreign_branch al cc intl tam-106310-97 issue conclusions for purposes of determining the extent to which parent’s gain on the sale of the stock of subsidiary is characterized as dividend income under sec_1248 a subsidiary’s e_p for the we do not express an opinion on any aspect of parent’s computations other that those specifically addressed above a copy of this technical_advice_memorandum is to be given to of the code provides that it the taxpayer s may not be used or cited as precedent sec_6110 - end - a2


internal_revenue_service number release date index number ---------------------------------------- --------------------------------- --------------------- -------------- ------------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------- id no ------------- telephone number --------------------- refer reply to cc psi b03 plr-107775-06 date date ----------------------------------------- legend legend x ----------------------------------------------------------------------------- y z w a b c d state location location location location location ----------------------------------------------------------------------------------------------------------------- location location location location date dear -------------- --------------------- ------------------------------------- ---------------------------- -- -- ---- ---- ------------- --------- -------------------------- ---------------------------- ------------------------- ------------------------------------------------------------------------ ------------------------------------------------- ------------------------- --------------------------------------------------------- ------------------------- ------------------ this letter responds to your letter dated date submitted on behalf of x requesting a ruling concerning the qualifying_income exception to the publicly_traded_partnership rules of sec_7704 of the internal_revenue_code facts plr-107775-06 traded partnership within the meaning of sec_7704 the largest interest in x including the general_partnership interest is held by members of the y consolidated_group x is engaged in the refined petroleum products terminaling and pipeline business x is a limited_partnership organized under the laws of state x is a publicly x provides integrated terminaling storage pipeline and related_services for companies engaged in the distribution and marketing of refined petroleum products and crude_oil x handles light refined products such as gasolines distillates including diesel_fuel and heating oil and jet fuels heavy refined products such as residual fuel oils and asphalt and crude_oil x does not take ownership of the products that it handles or transports the substantial majority of x’s business is devoted to providing integrated terminaling and pipeline services to members of the y consolidated_group x represents that more than of x’s gross_income is qualifying_income within the meaning of sec_7704 x conducts its business through various disregarded entities x owns and operates a refined petroleum products terminals in location a refined petroleum products pipeline between location and location and b refined petroleum products terminals at the end of each of its pipelines in addition x has options to acquire from members of the y consolidated_group additional terminals in location location and location at the terminal’s fair_market_value at the time of the sale x expects to purchase the terminals at location sec_4 and for cash as part of its terminaling services x provides additization and blending services such as injecting additives to gasoline injecting dye into diesel_fuel and blending biodiesel fuel with petroleum diesel_fuel in the future x expects to inject lubricity additives into petroleum diesel_fuel blend biodiesel fuel into bunker fuel for ships blend ethanol with gasoline and blend a hydrogen sulfide inhibiting additive into imported refined petroleum products at its terminals x derives revenues from its refined product terminals by charging fees for providing integrated terminaling and related_services in some cases its additization services are included in the price paid for terminaling services and in other cases separately_stated fees are charged for its additization services x derives revenues from its pipeline operations by charging a tariff for transporting refined products additionally z a lower tier subsidiary of y leases a terminal facility located adjacent to one of x’s terminals in location on date z and x entered into a terminal agreement whereby x took over the operations of z’s leased terminal under the terminal agreement x performs all of the functions associated with the movement and storage of jet fuel under contracts with third parties including the receipt throughput storage and delivery of the jet fuel measuring the quantity of the jet fuel received and delivered providing personnel necessary for the operation of the terminal conducting inspections providing routine and preventative maintenance and identifying and purchasing supplies under the terminal agreement x receives a per barrel fee from z if x exercises its option to acquire the terminal at location x anticipates that it plr-107775-06 will serve as the operator of a refined petroleum products pipeline owned by a subsidiary of w the pipeline transports refined petroleum products between the terminal at location and w’s refinery located at location with additional delivery points thereafter x expects to perform all functions in connection with the operation of the portion of the pipeline between location and location including receiving the refined products monitoring the specifications of the refined products and providing all the necessary horsepower to pump the refined products to location providing the personnel necessary for the operations of the pipeline conducting inspections and providing routine and preventative maintenance x expects to receive a fee based on the volume of products transported through the pipeline x requests the following rulings x’s income derived from the injection of additives and dyes into and the blending of biodiesel in concentrations of up to c biodiesel and ethanol with refined petroleum products in connection with its terminaling services is qualifying_income within the meaning of sec_7704 and x’s income derived from the operation of a refined products terminal and a refined products pipeline owned by other persons is qualifying_income under sec_7704 law and analysis sec_7704 provides that a publicly_traded_partnership shall be treated as a corporation sec_7704 provides that the term publicly_traded_partnership means any partnership if interests in that partnership are traded on an established_securities_market or interests in that partnership are readily_tradable on a secondary market or the substantial equivalent thereof sec_7704 provides that sec_7704 shall not apply to any publicly_traded_partnership for any taxable_year if such partnership met the gross_income requirements of sec_7704 for such taxable_year and each preceding_taxable_year beginning after date during which the partnership or any predecessor was in existence sec_7704 explains that a partnership meets the gross_income requirements of sec_7704 for any taxable_year if percent or more of the gross_income of such partnership for such taxable_year is qualifying_income sec_7704 provides that the term qualifying_income means income or gains derived from the exploration development mining or production processing refining transportation including pipelines transporting gas oil or products thereof or plr-107775-06 the marketing of any mineral_or_natural_resource including fertilizer geothermal_energy or timber for purposes of sec_7704 the term mineral_or_natural_resource means any product of a character with respect to which a deduction for depletion is allowable under sec_611 except that such term shall not include any product described in sec_613 or b conclusion based solely on the facts submitted and representations made we conclude that the income derived by x from the injection of additives and dyes into and the blending of biodiesel in concentrations of up to and including c biodiesel and ethanol in concentrations of up to and including d ethanol with refined petroleum products in connection with its terminaling services is qualifying_income within the meaning of sec_7704 we further conclude that the income derived by x from the operation of refined products terminals and refined products pipelines owned by other persons is qualifying_income within the meaning of sec_7704 except as specifically provided no opinion is expressed or implied as to the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter in particular no opinion is expressed as to whether x meets the percent gross_income requirement of sec_7704 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 s sincerely james a quinn senior counsel branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


t c memo united_states tax_court seaview trading llc agk investments llc tax matters commissioner of internal revenue respondent partner petitioner v docket no filed date armando gomez david w foster and miriam louise fisher for petitioner justin d scheid and james m cascino for respondent memorandum opinion ruwe judge this matter is before the court on petitioner’s motion for summary_judgment filed pursuant to rule to which respondent objects 1unless otherwise indicated all rule references are to the tax_court rules continued respondent issued a notice of final_partnership_administrative_adjustment fpaa to agk investments llc agk as tax_matters_partner of seaview trading llc seaview on date the major relevant adjustment in the fpaa was the disallowance of a dollar_figure loss deduction allocated by seaview to agk and kmc investments llc kmc for the loss resulted from seaview’s participation in a listed_transaction in a related case we previously held that seaview was a partnership subject_to tefra proceedings and that agk is seaview’s proper tax_matters_partner seaview trading llc v commissioner t c dkt no date granting motion to dismiss for lack of jurisdiction aff’d 858_f3d_1281 9th cir after concessions by the parties the issue we must decide is whether for the reasons petitioner asserts in its motion for summary_judgment the continued of practice and procedure and all section references are to the internal_revenue_code code in effect for the year in issue 2in petitioner’s memorandum in support of the motion for summary_judgment it asserts that respondent issued the fpaa on date however the fpaa is dated date 3the fpaa also contained an adjustment for which petitioner contested in a separate petition respondent subsequently conceded the adjustment determinations in the fpaa are time barred by the limitations_period under section a for the reasons discussed below we will deny petitioner’s motion background seaview had its principal_place_of_business in california when it filed its petition and amended petition seaview was formed as a delaware limited_liability_company on date and is classified as a partnership for federal_income_tax purposes during the year in issue seaview was owned by agk and by kmc during the year in issue robert a kotick was agk’s sole member and charles m kotick was kmc’s sole member 4in its amended petition petitioner challenges the validity of the fpaa and respondent’s imposition of sec_6662 accuracy-related_penalties and sec_6662 gross_valuation_misstatement penalties petitioner did not challenge any of the substantive adjustments therefore those adjustments are deemed conceded see rule d c in the stipulation of settled issues the parties stipulated that petitioner is not liable for any of the sec_6662 penalties 5charles m kotick passed away in in date seaview entered into a straddle transaction through a common_trust_fund the trust fund terminated the transaction in date and allocated a dollar_figure loss to agk and kmc petitioner claims that seaview filed a form_1065 u s return of partnership income for in date but on date internal revenue_agent jerry johnson issued to seaview a letter stating among other things that the commissioner had never received seaview’ sec_2001 form_1065 on date jeffrey sedacca seaview’s accountant faxed to agent johnson a purported copy of seaview’ sec_2001 form_1065 and a certified mail receipt purporting to show that the return was initially sent to the commissioner on date in date the commissioner selected seaview’ sec_2001 tax_year for examination on date seaview’s attorney sent a purported copy of seaview’ sec_2001 form_1065 to respondent’s counsel the cover letter stated that the document was a copy of seaview’s form_1065 6agk was allocated dollar_figure and kmc was allocated dollar_figure 7although petitioner alleges that seaview filed a form_1065 in date petitioner does not place the allegation at issue in its motion for summary_judgment but petitioner reserves the right to argue the allegation if necessary on date more than three years after seaview both faxed the form_1065 to agent johnson and sent a copy to respondent’s counsel the commissioner issued to petitioner an fpaa for claiming that seaview never filed its form_1065 petitioner timely filed a petition with this court discussion summary_judgment is designed to expedite litigation and to avoid unnecessary and expensive trials 61_tc_861 under rule b the court may grant summary_judgment when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law 98_tc_518 aff’d 17_f3d_965 7th cir the burden is on the moving party to demonstrate that no genuine issue as to any material fact remains and that he is entitled to judgment as a matter of law 116_tc_73 in deciding whether to grant summary_judgment we view the evidence in the light most favorable to the nonmoving party 100_tc_32 however the nonmoving party is required to go beyond the pleadings and by his own affidavits or by the ‘depositions answers to interrogatories and admissions on file ’ designate ‘specific facts showing that there is a genuine issue for trial ’ 477_us_317 quoting fed r civ p c and e see also 119_tc_157 115_tc_554 summary adjudication is appropriate in this matter because the parties agree on all material facts and the only disputes we must resolve are matters of law the issue we must decide is whether as argued in petitioner’s motion respondent issued the fpaa outside the period of limitations on assessment generally the period for assessing any income_tax attributable to partnership items or affected items for a partnership taxable_year will not expire before the later of a date which is three years after the partnership files its return for the taxable_year in question or the last day for filing such return for such year without extensions sec a however the commissioner may assess tax attributable to a partnership or affected_item at any time if the partnership does not file a return sec c petitioner contends that seaview filed it sec_2001 form_1065 when mr sedacca faxed a copy of the return to agent johnson on date and again when its attorney sent a copy to respondent’s counsel on date respondent contends that seaview did not file a return because it failed to submit the return at the proper place for filing therefore the limitations_period never began to run furthermore respondent claims that neither the copy of the form_1065 mr sedacca faxed in nor the copy seaview’s attorney mailed in qualifies as a return if petitioner is correct that seaview filed the purported return on date and again on date then the fpaa was issued after the expiration of the period of limitations on assessment thus the success of petitioner’s motion hinges on whether seaview filed its return when it faxed a copy to agent johnson in or mailed a copy to respondent’s counsel in additionally the copies of the form_1065 that seaview submitted must actually constitute returns i whether seaview filed returns generally a limitations_period runs against the united_states only when they assent and upon the conditions prescribed 281_us_245 for a taxpayer to secure the benefit of a limitations_period bar there must be meticulous compliance by the taxpayer with all named conditions 96_tc_802 quoting lucas v pilliod lumber co u s pincite one such requirement is that a return be filed at the designated place of filing returns see id pincite however if a taxpayer submits a return to the wrong place but the return is later forwarded to designated place for filing the limitations_period commences when the return is received at the designated place for filing see id sec_1_6031_a_-1 income_tax regs designates the proper place to file a federal partnership income_tax return the designated place for filing is the service_center prescribed in the relevant irs revenue_procedure publication form or instructions to the form the instructions for form_1065 for state that the proper service_center for filing was the ogden utah service_center thus seaview did not submit a return to the proper place for filing when it faxed a copy to agent johnson in or when it sent a copy to respondent’s counsel in neither of the purported returns was forwarded to the ogden service_center additionally there is a plethora of caselaw holding that a revenue_agent is not a designated filing place 64_f2d_506 6th cir aff’g 22_bta_1351 and 23_bta_605 green v commissioner tcmemo_1993_152 tax ct memo lexis at aff’d 33_f3d_1378 5th cir see metals ref ltd v commissioner tcmemo_1993_115 tax ct memo lexi sec_113 at 8taxpayers could also file through magnetic media sec_1_6031_a_-1 income_tax regs with respect to seaview’s faxing of the return petitioner maintains that the internal_revenue_manual requires revenue agents to process delinquent returns that they receive in support petitioner relies on dingman v commissioner tcmemo_2011_116 tax ct memo lexi sec_112 dingman is inapplicable to the present case in dingman we held in a unique factual situation that a taxpayer filed his returns when his counsel provided delinquent returns to the irs criminal_investigation_division cid id at in sum we held that in the precise situation in dingman the cid was an appropriate place to hand-deliver a return id dingman is applicable only to hand-delivery of returns arising under the facts present in that case in dingman the taxpayer clearly intended that the returns submitted to the cid be delinquent returns with payments and the irs processed them as such and assessed the taxpayer’s payments those facts are not present in the instant case indeed petitioner continues to maintain that seaview timely filed it sec_2001 return dingman did not create a blanket rule that a taxpayer can file a return by whatever method he chooses nor did it create an additional place for taxpayers to file returns beyond the places specifically designated in the code or the regulations seaview sent what purported to be copies of its return to places not designated in the code or regulations therefore seaview did not file its return when it faxed a purported copy to agent johnson and it did not file its return when it mailed a purported copy to respondent’s counsel ii whether the forms seaview purported to file constitute returns our conclusion that seaview failed to file its return at the proper place for filing is enough to hold that respondent timely issued the fpaa however as an alternative ground we will also look at whether the documents seaview submitted even constitute returns a document must satisfy four elements to trigger the running of the period of limitations on assessment the document must contain sufficient data to calculate the taxpayer’s liability purport to be a return be an honest and reasonable attempt to satisfy the requirements of the revenue laws and be executed under the penalties of perjury 82_tc_766 aff’d 793_f2d_139 6th cir the relevant question in this case is whether the purported copy of the return seaview either faxed to agent johnson in or mailed to respondent’s counsel in purported to be a return in friedman v commissioner tcmemo_2001_207 tax ct memo lexis at aff’d 80_fedappx_285 3d cir a revenue_agent requested from a taxpayer copies of his returns for and the revenue_agent believed that the taxpayer filed returns for those years although the taxpayer had not id at the taxpayer provided copies of the returns to the revenue_agent but did not tell him that he had failed to file the returns id at and the revenue_agent received the returns thinking that they had already been filed id we therefore held in part that the taxpayer had not intended his delivery of the documents to constitute the filing of returns id at the situation in the present case is similar when seaview’s accountant faxed a purported copy of the return to agent johnson in he enclosed a copy of certified mail receipt purporting to show that the return had been previously filed in seaview’s accountant thus led respondent to believe that the return had been previously filed in therefore seaview did not intend to file a return when it faxed a copy to agent johnson seaview has the same problem with respect to the mailing of the purported copy of the return in seaview’s attorney enclosed with the document a cover letter stating that the document was a copy of it sec_2001 form_1065 this indicates that seaview believed it had previously filed its return and thus seaview did not intend to file a return when it mailed a copy to respondent’s counsel in reaching our decision we have considered all arguments made by the parties and to the extent not mentioned or addressed they are irrelevant or without merit to reflect the foregoing an appropriate order will be issued


t c memo united_states tax_court la marine service l l c petitioner v commissioner of internal revenue respondent docket no 28955-10l filed date william a neilson for petitioner john k parchman for respondent memorandum opinion foley judge the issue for decision is whether respondent abused his discretion in determining to proceed with the collection of petitioner’s tax_liabilities the parties submitted this case fully stipulated pursuant to rule 1unless otherwise indicated all section references are to the internal revenue continued background petitioner filed its quarterly federal employment_tax returns relating to the taxable periods ending june and date march june september and date march june september and date and march june and date but failed to pay the full amount of tax reported on these returns respondent assessed a late- filing addition_to_tax a tax deposit penalty and a failure to timely pay addition_to_tax relating to each of these returns petitioner filed but failed to pay the full amount of tax reported on its federal unemployment tax_return relating to on date respondent sent petitioner a final notice_of_intent_to_levy and your right to a hearing letter relating to the periods in issue on date petitioner timely requested a collection_due_process cdp hearing and indicated that it wanted to propose a collection alternative in a letter dated date respondent scheduled an date cdp hearing and requested that petitioner provide a collection information statement financial documentation and proof that it was current with all federal tax obligations thi sec_1 continued code in effect at all relevant times and all rule references are to the tax_court rules_of_practice and procedure cdp hearing was subsequently rescheduled at petitioner’s request to date on date petitioner’s counsel informed respondent that petitioner had applied for a loan to pay its tax_liabilities and requested postponement of its cdp hearing in addition petitioner proposed two collection alternatives a six-month stay of collection while it attempted to obtain a loan or in the alternative an installment_agreement petitioner asserted that it would submit a collection information statement and the requested documentation with its request for an installment_agreement on date respondent held a cdp hearing with petitioner’s counsel petitioner failed to provide respondent with any requested documentation and on date respondent issued notices of determination sustaining the proposed collection action on date petitioner whose principal_place_of_business was belle chasse louisiana filed its petition with the court after filing its petition petitioner satisfied its tax_liability relating to its federal unemployment tax_return discussion sec_6330 provides that the commissioner must notify the taxpayer of his right to a hearing prior to levying on the taxpayer’s property if the taxpayer submits a timely request for an administrative hearing the hearing must be conducted by the irs office of appeals before an impartial officer sec_6330 during a collection hearing the taxpayer may raise relevant issues such as the appropriateness of the proposed collection action and possible collection alternatives sec_6330 the appeals officer must verify that the requirements of applicable law and administrative procedure have been met consider issues properly raised by the taxpayer and consider whether the proposed collection action balances the need for the efficient collection_of_taxes with the taxpayer’s legitimate concern that any collection be no more intrusive than necessary sec_6330 c in reviewing the commissioner’s determination the court considers only matters that were properly raised at the cdp hearing or otherwise brought to the attention of the appeals_office see 135_tc_344 129_tc_107 petitioner contends that respondent erroneously assessed petitioner’s and federal unemployment tax_return liabilities during its cdp hearing 2petitioner references what respondent refers to as a miscellaneous penalty relating to petitioner’s federal unemployment tax_return the record provides no description or additional information relating to this penalty petitioner did not challenge its underlying tax_liabilities relating to the periods in issue therefore petitioner is precluded from contesting its underlying tax_liabilities before this court see pough v commissioner t c pincite giamelli v commissioner t c pincite accordingly we review respondent’s administrative determinations for abuse_of_discretion see 114_tc_176 petitioner contends that respondent abused his discretion in rejecting petitioner’s proposed collection alternatives petitioner however has failed to establish clear taxpayer abuse and unfairness see 461_f3d_610 5th cir prior to the cdp hearing the appeals officer requested documentation relating to petitioner’s financial condition respondent provided petitioner with sufficient time to submit the requested documentation and petitioner’s failure to do so provided a reasonable basis for respondent to reject petitioner’s proposed collection alternatives see mclaine v commissioner t c __ __ slip op pincite date holding that it is not an abuse_of_discretion for the commissioner to reject a collection alternative because of a taxpayer’s failure to provide requested documentation pough v commissioner t c pincite holding that the commissioner may set reasonable deadlines for a taxpayer to provide requested documentation accordingly respondent did not abuse his discretion see mclaine v commissioner t c at __ slip op pincite pough v commissioner t c pincite contentions we have not addressed are irrelevant moot or meritless to reflect the foregoing decision will be entered for respondent


internal_revenue_service department of the treasury number release date index number washington dc person to contact telephone number refer reply to cc psi b01-plr-100347-02 date date legend x y z date this letter responds to your letter dated date on behalf of x requesting a ruling that x be granted an extension of time pursuant to sec_301_9100-3 of the procedure and administration regulations to file an election to be treated as a disregarded_entity for federal_income_tax purposes under sec_301_7701-3 facts based on the information submitted and representations made within x is a foreign_subsidiary corporation of y y is a member of a consolidated_group of corporations owned by z a domestic_corporation x intended to file a form_8832 entity classification election seeking to be treated as a disregarded_entity effective date x inadvertently failed to file the form_8832 x represents that an entity classification election has never been previously been filed for x and that an extension to file a form_8832 would not prejudice the interests of the government plr-100347-02 law and analysis sec_301_7701-3 provides guidance on the classification of a foreign_entity for federal_income_tax purposes generally a foreign eligible_entity is treated as an association_taxable_as_a_corporation if all members have limited_liability unless the entity makes an election to be treated otherwise if a foreign eligible_entity has only one owner it may elect to be treated as a disregarded_entity pursuant to the rules in sec_301_7701-3 sec_301_7701-3 provides that an entity classification election must be filed on form_8832 and can be effective up to seventy-five days prior to the date the form is filed or up to twelve months after the date on which the form is filed under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except e g h and i sec_301_9100-1 defines the term regulatory election as including an election whose deadline is prescribed by a regulation published in the internal_revenue_bulletin sec_301_9100-2 and sec_301_9100-3 provide the standards the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion based solely on the facts and the representations submitted we conclude that the requirements of sec_301_9100-3 have been satisfied accordingly x is granted an extension of time of sixty days from the date of this letter to file a corrected form_8832 effective date with the appropriate service_center a copy of this letter should be attached to the election a copy is enclosed for that purpose except as specifically set forth above we express no opinion concerning the federal_income_tax consequences of the facts described above under any other provision of the code specifically we express no opinion as to x’s eligibility to request treatment as a disregarded_entity in accordance with sec_301 this ruling is directed only to the taxpayer s requesting it sec_6110 of the internal_revenue_code provides that it may not be used or cited as precedent plr-100347-02 in accordance with the power_of_attorney on file with this office a copy of this ruling will be sent to the taxpayer sincerely s paul f kugler associate chief_counsel passthroughs special industries enclosures cc copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index numbers ------------------------ --------------------- ------------------ -------------- ------------------------------ --------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no -------------- telephone number ---------------------- refer reply to cc corp plr-141070-12 date date legend parent date date date date dear --------------- ------------------------------------------- ---------------------- --------------------------- ---------------------- --------------------------- this letter responds to your date request for a ruling on certain federal_income_tax consequences of the transactions described below the information submitted in that request and in subsequent correspondence is summarized below summary of facts prior to date parent was the common parent of an affiliated_group_of_corporations that filed a consolidated federal_income_tax return on a calendar-year basis the old group effective date parent made an election under sec_1362 of the internal_revenue_code the code to be taxed as an s_corporation for federal_income_tax purposes and made qualified_subchapter_s_subsidiary qsub elections for all of its subsidiaries as a consequence the old group terminated for federal_income_tax purposes effective at the end of the day on date effective date parent revoked its s_corporation_election by filing a letter with the internal_revenue_service in accordance with the procedures set forth in sec_1362 and the applicable treasury regulations parent’s revocation of its s plr-141070-12 corporation election caused each qsub election to terminate as of the end of the day on date as a result of the termination of the qsub elections parent was treated for federal_income_tax purposes as transferring the assets of its qsubs to newly formed corporations the former qsubs as set forth in sec_1361 and the regulations promulgated thereunder as a result of parent’s revocation of its s_corporation_election parent and each of the former qsubs became members of an affiliated_group with parent as its common parent collectively the new group parent has requested a ruling for a waiver under sec_1504 permitting parent and each other member of the new group to be included in the new group's consolidated federal_income_tax return beginning date sec_1504 provides in part that if a corporation is included or required to be included in a consolidated_return filed by an affiliated_group and such corporation ceases to be a member of such group such corporation and any successor of such corporation may not be included in any consolidated_return filed by the affiliated_group or by another affiliated_group with the same common parent or a successor of such common parent before the 61st month beginning after its first taxable_year in which it ceased to be a member of such affiliated_group sec_1504 provides however that the secretary may waive the application of subparagraph a to any corporation for any period subject_to such conditions as the secretary may prescribe sec_5 of revproc_2002_32 2002_1_cb_959 sets forth the procedure for a deconsolidated corporation to request an automatic waiver under sec_1504 section dollar_figure provides that if the common parent of the current group is the common parent of the group from which the deconsolidated corporation disaffiliated a representation must be made that such common parent was not an s_corporation at any time during the period of disaffiliation in turn section dollar_figure requires a representation that the disaffiliation and subsequent consolidation has not provided and will not provide a benefit of a reduction in income increase in loss or any other deduction credit or allowance a federal tax savings that would not otherwise be secured or have been secured had the disaffiliation and subsequent consolidation not occurred in determining whether the disaffiliation and subsequent consolidation provided or will provide a federal tax savings the net tax consequences to all parties taking into account the time_value_of_money are considered parent cannot provide the representations required by sections dollar_figure and dollar_figure of revproc_2002_32 consequently parent is not eligible for an automatic waiver section of revproc_2002_32 provides that if a deconsolidated corporation cannot qualify for an automatic waiver a waiver under sec_1504 only may plr-141070-12 be obtained through a letter_ruling request section further provides that the ruling_request must include the information set forth in sec_5 to the extent the representations set forth in section dollar_figure or section dollar_figure cannot be made the letter_ruling request must contain information establishing that federal tax savings as described in sec_5 was not a purpose of the disaffiliation and that the amount of any federal tax savings attributable to the disaffiliation or a subsequent consolidation is not significant in the instant case the information submitted does not establish that the amount of federal tax savings attributable to the disaffiliation of parent and its subsidiaries as a result of parent’s election to be taxed as an s_corporation and its election to treat all of its subsidiaries as qsubs is not significant ruling based solely on the information submitted we rule that parent’s request for a waiver under sec_1504 is denied therefore the new group may not file a consolidated federal_income_tax return with parent as the common parent until the expiration of the period described in sec_1504 caveats we express no opinion about the tax treatment of any of the foregoing transactions under any other provisions of the code or treasury regulations or about the tax treatment of any conditions existing at the time of or effects resulting from these transactions that are not specifically covered by the above rulings procedural matters this ruling letter 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 letter must be attached to any federal_income_tax return to which it is relevant alternatively taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of this letter_ruling plr-141070-12 in accordance with the power_of_attorney on file in this office a copy of this letter is being sent to your authorized representative sincerely _____________________________________ russell g jones assistant to the branch chief branch office of associate chief_counsel corporate cc


internal_revenue_service number release date index number ------------------------------------------- -------------------------------- --------------------------- ------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ---------------------- id no ------------- telephone number --------------------- refer reply to cc psi b03 plr-120217-10 date date company ------------------------------------------------------------------------------------------------- ----------------------- legend legend state date date ------------- -------------------------- ---------------------- dear ------------------- this responds to a letter dated date submitted on behalf of company by its authorized representative requesting a ruling under sec_1362 of the internal_revenue_code facts company incorporated under the laws of state on date company intended to file form_2553 election by a small_business_corporation effective date due to inadvertence company’s form_2553 was not filed timely company requests a ruling that it will be recognized as an s_corporation effective date law and analysis sec_1362 provides that except as provided in sec_1362 a small_business_corporation may elect in accordance with the provisions of sec_1362 to be an s_corporation plr-120217-10 sec_1362 provides that an election under sec_1362 may be made by a small_business_corporation for any taxable_year a at any time during the preceding_taxable_year or b at any time during the taxable_year and on or before the 15th day of the third month of the taxable_year sec_1362 provides that if a a small_business_corporation makes an election under sec_1362 for any taxable_year and b the election is made after the 15th day of the third month of the taxable_year and on or before the 15th day of the third month of the following taxable_year then the election is treated as made for the following taxable_year sec_1362 provides that if a an election under sec_1362 is made for any taxable_year determined without regard to sec_1362 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 the secretary may treat the election as timely made for the taxable_year and sec_1362 shall not apply conclusion based solely on the information submitted and representations made we conclude that company has established reasonable_cause for failing to timely make an s_corporation_election thus we conclude that company is eligible for relief under sec_1362 accordingly if company makes an election to be an s_corporation by filing a completed form_2553 with the appropriate service_center effective date within days following the date of this letter then such election will be treated as timely made a copy of this letter should be attached to the form_2553 filed with the service_center a copy is enclosed for that purpose 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 as to whether company is otherwise eligible to be an s_corporation for federal tax purposes 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 a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative plr-120217-10 the ruling contained in this letter is 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 ruling_request it is subject_to verification on examination sincerely s danielle m grimm acting senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes


internal_revenue_service number release date index numbers -------------- ------------------------------------------------------ ---------------------------------------- ---------------------- ------------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact ----------------------- id no ------------------- --------------------------------------------------- telephone number ---------------------- refer reply to cc psi b03 plr-104815-15 date date x --------------------------------------------------------------------------------------------------- ---------------------------------------- legend country ------------------ date ------------------- date ----------------------- dear ------------- this letter responds to a letter dated date submitted on behalf of x by its authorized representative requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be classified as a disregarded_entity for federal tax purposes facts the information submitted states that x was formed on date under the laws of country and was a foreign_entity eligible to elect to be classified as a disregarded_entity as of date x however failed to timely file form_8832 entity classification election to elect to be classified as a disregarded_entity for federal tax purposes effective date law and analysis plr-104815-15 sec_301_7701-3 provides that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with a single owner can elect to be classified as an association and thus a corporation under sec_301 b or to be disregarded as an entity separate from its owner sec_301_7701-3 provides that except as provided in sec_301 b unless a foreign eligible_entity elects otherwise the entity is a a partnership if it has two or more members and at least one member does not have limited_liability b an association if all members have limited_liability or c disregarded as an entity separate from its owner if it has a single owner that does not have limited_liability sec_301_7701-3 provides that an eligible_entity may elect to be classified other than as provided under sec_301_7701-3 by filing form_8832 with the service_center designated on form_8832 under sec_301_7701-3 the election will be effective on the date specified by the entity on form_8832 or on the date filed if no such date is specified the effective date specified on form_8832 cannot be more than days prior to the date on which the election is filed sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code code except subtitles e g h and i sec_301_9100-1 provides that the term regulatory election includes an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a request for relief will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied as a result we grant x an extension of time of days from the date of this letter to plr-104815-15 file a form_8832 with the appropriate service_center to elect to be classified as a disregarded_entity for federal tax purposes effective date a copy of this letter should be attached to the form_8832 this ruling is contingent on the owner of x filing within days from the date of this letter all required federal_income_tax and information returns including amended returns consistent with the requested relief being effective date these returns must include but are not limited to form_8858 information_return of u s persons with respect to foreign disregarded entities such that the form reflects the consequences of the relief granted in this letter a copy of this letter should be attached to any such returns except as expressly provided herein we express or imply no opinion concerning the federal tax consequences of the facts discussed above under any other provision of the code in addition sec_301_9100-1 provides that the granting of an extension of time for making an election is not a determination that the taxpayer is otherwise eligible to make the election 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 under a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative the ruling contained in this letter is 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 ruling_request it is subject_to verification on examination sincerely associate chief_counsel passthroughs special industries by ______________________________________ mary beth carchia senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes