PLR 200844010: Terminating one divided QTIP trust did not affect the others

Plain-English summary

A QTIP marital trust was to be divided into five equal settlement trusts after family litigation, with each child the presumptive remainder beneficiary of one trust. One child’s trust would then terminate, paying the surviving spouse the actuarial value of her income interest and distributing the balance to that child. The IRS ruled that dividing the original trust and terminating that one settlement trust would not be treated under § 2519 as a transfer of property in the four surviving trusts. The termination itself would be a § 2519 transfer of the terminated trust’s corpus, reduced by the value of the spouse’s qualifying income interest. Because the child would pay the gift tax attributable to the transferred remainder under the spouse’s § 2207A recovery right, that tax payment also reduced the spouse’s gift. The ruling applied the same separation principle to a possible later termination of another child’s trust.

Ruling snapshot

• Question: Would dividing the QTIP trust and terminating one resulting trust create a § 2519 transfer of property in the four surviving trusts?
• Outcome: Approved. The division and termination did not cause a transfer of interests in the surviving trusts, although terminating the one trust was itself a § 2519 transfer.
• Key authorities: IRC §§ 2056(b)(7), 2207A, 2501, 2502, 2511, 2512, 2519; Treas. Reg. §§ 20.2056(b)-7, 25.2207A-1, 25.2519-1; Rev. Ruls. 75-72, 81-223

Full text (IRS public release)

~~~
Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 200844010 Third Party Communication: None
Release Date: 10/31/2008 Date of Communication: Not Applicable
Index Number: 2519.00-00
Person To Contact:
------------------------------------------------------------ ---------------, ID No. -------------
------------------- Telephone Number:
----------------------- ---------------------
--------------------------------------------- Refer Reply To:
---------------------------- CC:PSI:04
PLR-155786-07
RE: Date: JUNE 13, 2008

Legend

Decedent = ---------------------------
Trust = --------------------------------------------------------------------
Spouse = --------------------------------------------
Child 1 = -----------------
Child 2 = -----------------------
Child 3 = ------------------------
Child 4 = -----------------
Child 5 = -------------------
X = --------------------------
Bank = ------------------
Date 1 = ---------------------
Date 2 = ----------------------
Date 3 = -------------------------
Date 4 = ---------------------
Marital Trust = -----------------------------------------------------------
Settlement = -------------------------------------------
Agreement
State = ---------
Court = ------------------------------------------------------------------------------------
---------------------------------
Statute 1 = -----------------------------------------------------
Statute 2 = -----------------------------------------------------
Statute 3 = ------------------------------------------------------
y =
z =

Dear -----------------
PLR-155786-07 2

   This is in response to your authorized representative's submission dated

December 13, 2007, requesting a ruling that the division of a trust into five trusts and
the subsequent termination of one of the trusts will not be a transfer under § 2519 of the
Internal Revenue Code of any of the property of, or interest in, the four remaining trusts.

   On Date 1, Decedent established a revocable trust, Trust, which became

irrevocable on Decedent’s date of death. Pursuant to Article II(B)(1) of Trust, upon
Decedent’s death, if Spouse survives him, the trustee shall set aside in Marital Trust an
amount equal to fifty percent of Decedent’s adjusted gross estate as finally determined
for federal estate tax purposes, less the value of any assets passing outside Trust to
Spouse by reason of Decedent’s death.

    Under Article II(B)(1)(c)(i), the net income of Marital Trust shall be paid to Spouse

quarterly or more often. Under Article II(B)(1)(c)(iii), upon Spouse’s death, Marital Trust
shall be added to and pass as part of the Children’s Trust, as governed under Article
II(B)(3).

   Decedent died on Date 2, survived by Spouse, Child 1, Child 2, Child 3, Child 4,

and Child 5. On Decedent’s Form 706, United States Estate (and Generation-Skipping
Transfer) Tax Return, an election was made to treat Martial Trust as a qualified
terminable interest property (QTIP) trust pursuant to § 2056(b)(7)(B)(v). The Co-
trustees of Marital Trust are Spouse, X, and Bank.

   The assets of Marital Trust consist of marketable securities. Due to different

investment philosophies and risk tolerances, Spouse, X, Bank and the presumptive
remainder beneficiaries of Marital Trust (Child 1 - Child 5), have disagreed about the
investment and management of Marital Trust. Child 1 instituted litigation in State Court
against Spouse, X, and Bank, as Co-Trustees of Marital Trust, and the other remainder
beneficiaries, Child 2 – Child 5.

    In an effort to resolve this litigation, Court directed a mediation which resulted in

the interested parties entering into Settlement Agreement. Guardians ad litem were
appointed to represent the minor and unborn children for each of Child 1 – Child 5.
Court issued an order approving the agreement on Date 3. Settlement Agreement
provides that no later than the Effective Date of the agreement, the principal of Marital
Trust will be divided into five trusts (Settlement Trusts). All of the Settlement Trusts are
trusts for the life benefit of Spouse, with each of Child 1 through 5 being the
presumptive remainder beneficiary of one such trust. The Effective Date is the date that
the Internal Revenue Service (Service) issues a private letter ruling on this transaction.

   The division of Marital Trust is pursuant to State Statute 1. State Statute 1

provides that after notice to the qualified beneficiaries, a trustee may divide a trust into
two or more separate trusts, if the result does not impair rights of any beneficiary or
adversely affect achievement of the purposes of the trusts or trust, respectively. A
PLR-155786-07 3

separate trust created by severance must be treated as a separate trust for all purposes
from the date on which the severance is effective.

   Pursuant to Settlement Agreement, all accrued and accumulated net income in

Marital Trust as of the Effective Date will be distributed to Spouse as soon as
practicable on or after the Effective Date. Each separate Settlement Trust will be of
equal value and funded with a pro rata portion of the assets of Marital Trust. Except as
otherwise provided in Settlement Agreement, the Settlement Trusts of which each of
Child 2, Child 3, Child 4, and Child 5 are presumptive remainder beneficiaries
(collectively, the Surviving Settlement Trusts) will be held and administered pursuant to
the same terms and conditions as Marital Trust. Commencing as of Date 4, however,
each of the Surviving Settlement Trusts will be converted to a y% unitrust pursuant to
State Statute 2, with the unitrust amount payable to Spouse in monthly installments.

   State Statute 2 provides, in part, that a trustee may, without court approval,

convert an income trust to a total return unitrust if: (a) the trustee adopts a written
statement regarding trust distributions that provides that: (1) future distributions from the
trust will be unitrust amounts rather than net income, and indicates the manner in which
the unitrust amount will be calculated and the method in which the fair market value of
the trust will be determined; (b) the trustee determines the terms of the unitrust under
one of the following methods: (1) a disinterested trustee determines (a) the percentage
to be used to calculate the unitrust amount, provided the percentage used is not greater
than 5 percent nor less than 3 percent; (b) the method to be used in determining the fair
market value of the trust; and (c) which assets, if any, are to be excluded in determining
the unitrust amount; or (2) the interested trustee or disinterested trustee administers the
trust such that: (a) the percentage used to calculate the unitrust amount is 50 percent of
the applicable federal rate, as defined in § 7520, in effect for the month the conversion
becomes effective and for each January thereafter; however, if the percentage
calculated exceeds 5 percent, the unitrust percentage shall be 5 percent and if the
percentage calculated is less than 3 percent, the unitrust percentage shall be 3 percent;
and (b) the fair market value of the trust shall be determined at least annually on an
asset-by-asset basis, reasonably and in good faith.

    Upon Spouse’s death, the assets held in each of the Surviving Settlement Trusts

will be paid to trusts (Children’s Trusts) established for the benefit of Decedent’s
children and their descendants, other than Child 1, and distributed as provided in Trust.
Each of Child 2, Child 3, Child 4, and Child 5 shall serve as a trustee of the respective
Settlement Trust of which he or she is presumptive remainder beneficiary, along with a
corporate trustee to be selected by Spouse, with the approval of Child 2, Child 3, Child
4, or Child 5, as applicable.

    Settlement Agreement provides that in the event that Child 2’s Settlement Trust

is terminated for any reason prior to Spouse’s death, Child 2 agrees to execute a new
trust, to be administered by her and a corporate fiduciary of her choosing as co-
PLR-155786-07 4

trustees, with a unitrust payment to Child 2 of z% annually, and to pay the full amount
distributed to Child 2, net of all tax liabilities, interest and penalties, to such trust (Child
2’s Contingency Trust). If Child 2 survives Spouse, Child 2’s Contingency Trust will
terminate at Spouse’s death, and all assets thereof distributed to Child 2 outright. If
Child 2 predeceases Spouse, Child 2’s Contingency Trust will continue for Spouse’s
lifetime, with all income thereon accumulating in such trust, and on Spouse’s death, all
assets of Child 2’s Contingency Trust (including accumulated income) shall be paid in
equal shares to Child 3, Child 4, and Child 5’s respective Children’s Trusts. Settlement
Agreement does not contain a similar provision for any of the other Surviving Settlement
Trusts.

   It is represented that, among other things, compliance with the terms of Child 1’s

Settlement Trust will defeat or substantially impair a material purpose of the trust,
specifically, the preservation and transfer of wealth. Accordingly, Settlement Agreement
provides that, within ten days of the Effective Date, Child 1’s Settlement Trust will be
terminated pursuant to State Statute 3.

    State Statute 3 provides that upon application of a trustee of the trust or any

qualified beneficiary, a court at any time may amend or change the terms of the trust,
including terms governing distribution of the trust income or principal or terms governing
administration of the trust, terminate the trust in whole or in part, direct or permit the
trustee to do acts that are not authorized or that are prohibited by the terms of the trust,
or prohibit the trustee from performing acts that are permitted or required by the terms
of the trust, if, among other things, due to circumstances not anticipated by the trust
settlor, compliance with the terms of the trust would defeat or substantially impair the
accomplishment of a material purpose of the trust.

    Upon termination, a portion of the corpus of Child 1’s Settlement Trust equal to

the actuarial value of Spouse’s income interest in such trust will be distributed to
Spouse in satisfaction of her life estate and all interest in Child 1’s Settlement Trust. In
satisfying this distribution to Spouse, the cash, stocks and bonds held in Child 1’s
Settlement Trust will be distributed pro-rata to Spouse, valued as of the date of
distribution. The remaining property of the trust will be distributed to Child 1, as
remainder beneficiary of the terminated trust, in satisfaction of his interests in Marital
Trust (including any interest in the Survivor’s Settlement Trusts and the trusts
established pursuant to Trust for the benefit of Decedent’s children and their
descendants).

    The amount distributed to Child 1 upon termination of Child 1’s Settlement Trust

will be reduced by an amount, to be agreed to by Spouse’s and Child 1’s attorneys,
representing the total transfer tax liability incurred as a result of the termination and
distributions under Child 1’s Settlement Trust. The amount of such reduction will be
held in an escrow account pursuant to an Escrow and Tax Indemnity Agreement which
was concurrently executed with Settlement Agreement. Any transfer tax liability as a
PLR-155786-07 5

result of the termination and distributions under Child 1’s Settlement Trust will be paid
from the escrow account. Under the terms of Settlement Agreement, if the amount held
in the escrow account is insufficient to pay such liabilities, Child 1 will be personally and
solely responsible for any such remaining tax liability as a result of the termination of
Child 1’s Settlement Trust. Spouse will exercise her right of recovery under § 2207A to
have the gift tax attributable to the transfer under § 2519 paid by the person receiving
the property, as defined in § 25.2207A-1(d) and, which in this case is Child 1.

     Spouse will treat the termination of Child 1’s Settlement Trust as a result of her

receipt of cash in satisfaction of her interest in such trust as a transfer under § 2519 of
all of the interests in Child 1’s Settlement Trust, other than her qualifying income interest
in such trust, in an amount equal to (a) the aggregate value of Child 1’s Settlement
Trust as of the date that such trust is terminated reduced by the sum of (b) (i) the value
of Spouse’s qualifying income interest as of such date and (ii) the gift taxes payable
from the escrow account and by Child 1, if any, with respect to such transfer.

   Court approval of Settlement Agreement is contingent on the issuance of a

private letter ruling from the Service to the effect that the termination and distribution of
Child 1’s Settlement Trust (per the terms of Settlement Agreement) will not trigger
§ 2519 so as to cause gift tax liability with respect to any property of, or interest in, any
of the Surviving Settlement Trusts.

   The Co-Trustees, on behalf of Marital Trust, request a ruling that the division of

Marital Trust into five Settlement Trusts and the subsequent termination of Child 1’s
Settlement Trust pursuant to Settlement Agreement will not be deemed to be a transfer
under § 2519 of any property of, or interest in, the Surviving Settlement Trusts, and
therefore, such division and termination will not give rise to any gift tax liability with
respect to any property of, or interest in, any of the Surviving Settlement Trusts.

Law and Analysis

   Section 2056(a) provides that for purposes of the tax imposed by § 2001, the

value of the taxable estate shall, except as limited by subsection (b), be determined by
deducting from the value of the gross estate an amount equal to the value of any
interest in property which passes or has passed from the decedent to his surviving
spouse, but only to the extent that such interest is included in determining the value of
the gross estate. Section 2056(b)(1) provides, in pertinent part, that no deduction shall
be allowed under § 2056(a) where, on the lapse of time, on the occurrence of an event
or contingency, or on the failure of an event or contingency to occur, an interest passing
to the surviving spouse will terminate or fail, and on such termination, the property
passes to a person other than the surviving spouse or the spouse’s estate.

   Section 2056(b)(7) allows an estate tax marital deduction for qualified terminable

interest property. Under § 2056(b)(7)(B)(i), the term ”qualified terminable interest
PLR-155786-07 6

property” means property which passes from the decedent, in which the surviving
spouse has a qualifying income interest for life, and to which the QTIP election under
§ 2056(b)(7)(B)(v) applies. Section 2056(b)(7)(B)(ii) provides that the surviving spouse
has a qualifying income interest for life if the surviving spouse is entitled to all the
income from the property, payable annually or at more frequent intervals, and no person
has a power to appoint any part of the property to any person other than the surviving
spouse during the surviving spouse's life.

    Section 20.2056(b)-7(d)(2) of the Estate Tax Regulations provides that the

principles of § 20.2056(b)-5(f), relating to whether the spouse is entitled for life to all of
the income from the entire interest or a specific portion of the entire interest, apply in
determining whether the surviving spouse is entitled for life to all of the income from the
property regardless of whether the interest passing to the spouse is in trust. Section
20.2056(b)-5(f)(1) provides that the surviving spouse’s interest shall meet the conditions
set forth in paragraph (a)(1) of this section if the spouse is entitled to income as
determined by applicable local law that provides for a reasonable apportionment
between the income and remainder beneficiaries of the total return of the trust and that
meets the requirements of § 1.643(b)-1 of this chapter. Section 1.643(b)-1 of the
Income Tax Regulations provides that an allocation of amounts between income and
principal pursuant to applicable local law will be respected if local law provides for a
reasonable apportionment between the income and remainder beneficiaries of the total
return of the trust for the year, including ordinary and tax-exempt income, capital gains,
and appreciation. For example, a state statute providing that income is a unitrust
amount of no less than 3% and no more than 5% of the fair market value of the trust
assets, whether determined annually or averaged on a multiple year basis, is a
reasonable apportionment of the total return of the trust.

   Section 2044(a) provides that the value of the gross estate shall include the

value of any property in which the decedent had a qualifying income interest for life.
Section 2044(b)(2) provides that § 2044(a) applies to any property if § 2519 did not
apply with respect to a disposition by the decedent of part or all of such property.

    Section 2501(a)(1) provides that a tax is imposed for each calendar year on the

transfer of property by gift during such calendar year by any individual, resident or
nonresident. Section 2502(c) provides that the tax imposed by § 2501 shall be paid by
the donor. Section 2511(a) provides that subject to the limitations of chapter 12, the tax
imposed by § 2501 applies whether the transfer is in trust or otherwise, whether the gift
is direct or indirect, and whether the property is real or personal, tangible or intangible.
Section 2512(b) provides that where property is transferred for less than an adequate
and full consideration in money or money’s worth, then the amount by which the value
of the property exceeded the value of the consideration shall be deemed a gift, and
shall be included in computing the amount of gifts made during the calendar year.
PLR-155786-07 7

   Section 25.2511-2(a) of the Gift Tax Regulations provides that the gift tax is a

primary and personal liability of the donor, is an excise upon the donor’s act of making
the transfer, is measured by the value of the property passing from the donor, and
attaches regardless of the fact that the identity of the donee may not then be known or
ascertainable.

    Section 2519(a) provides that any disposition of all or part of a qualifying income

interest for life in any property to which this section applies is treated as a transfer of all
interests in the property other than the qualifying income interest. Section 2519(b)
provides that § 2519(a) applies to any property if a deduction was allowed with respect
to the transfer of such property to the donor under § 2056(b)(7).

   Section 25.2519-1(a) provides that if a donee spouse makes a disposition of all

or part of a qualifying income interest for life in any property for which a deduction was
allowed under §2056(b)(7) for the transfer creating the qualifying income interest, the
donee spouse is treated for purposes of chapters 11 and 12 as transferring all interests
in property other than the qualifying income interest.

    Section 25.2519-1(c)(1) provides that the amount treated as a transfer under

§ 2519 upon a disposition of all or part of a qualifying income interest for life in qualified
terminable interest property is equal to the fair market value of the entire property
subject to the qualifying income interest, determined on the date of the disposition
(including any accumulated income and not reduced by any amount excluded from total
gifts under § 2503(b) with respect to the transfer creating the interest), less the value of
the qualifying income interest in the property on the date of the disposition.

   Section 25.2519-1(f) provides that the sale of qualified terminable interest

property, followed by the payment to the donee spouse of a portion of the proceeds
equal to the value of the donee spouse’s income interest, is considered a disposition of
the qualifying income interest.

   The term “disposition,” as used in § 2519, applies broadly to circumstances in

which the surviving spouse’s right to receive the income is relinquished or otherwise
terminated, by whatever means. See H. REP. NO. 201, 97th Cong., 1st Sess. 161 (1981).

   Section 2207A(b) provides that if for any calendar year tax is paid under chapter

12 with respect to any person by reason of property treated as transferred by such
person under § 2519, such person shall be entitled to recover from the person receiving
the property the amount by which the total tax for such year under chapter 12, exceeds
the total tax which would have been payable under such chapter for such year if the
value of such property had not been taken into account for purposes of chapter 12.

   Section 25.2207A-1(a) provides that, if an individual is treated as transferring an

interest in property by reason of § 2519, the individual is entitled to recover from the
PLR-155786-07 8

person receiving the property the amount of gift tax attributable to that property. The
value of property to which § 25.2207A-1(a) applies is the value of all interests in the
property other than the qualifying income interest. There is no right of recovery from
any person for the property received by that person for which a deduction was allowed
from the total amount of gifts, if no federal gift tax is attributable to the property. The
right of recovery arises at the time the federal gift tax is actually paid by the transferor
subject to § 2519.

   Section 25.2207A-1(c) provides that the amount of federal gift tax attributable to

all properties includible in the total amount of gifts under § 2519 made during the
calendar year is the amount by which the total federal gift tax for the calendar year
(including penalties and interest attributable to the tax) under chapter 12 that has been
paid, exceeds the total federal gift tax for the calendar year (including penalties and
interest attributable to the tax) under chapter 12 that would have been paid if the value
of the properties includible in the total amount of gifts by reason of § 2519 had not been
included.

   Section 25.2207A-1(d) provides that a person’s right of recovery with respect to a

particular property is an amount equal to the amount determined in § 25.2207A-1(c)
multiplied by a fraction. The numerator of the fraction is the value of the particular
property included in the total amount of gifts made during the calendar year by reason
of § 2519, less any deduction allowed with respect to the property. The denominator of
the fraction is the total value of all properties included in the total amount of gifts made
during the calendar year by reason of § 2519, less any deductions allowed with respect
to those properties.

    Section 25.2207A-1(e) provides that, if the property does not remain in trust, the

person receiving the property is any person receiving the property prior to the expiration
of the right of recovery.

    Rev. Rul. 75-72, 1975-1 C.B. 310, holds that if, at the time of the transfer, the gift

is made subject to a condition that the gift tax is to be paid by the donee or out of the
transferred property, then the donor receives consideration for the transfer in the
amount of the gift tax to be paid by the donee. Thus, under § 2512(b), the value of the
gift is measured by the fair market value of the property passing from the donor minus
the amount of the gift tax to be paid by the donee or from the property itself.

    Rev. Rul. 81-223, 1981-2 C.B. 189, holds that, in determining the amount of the

gift, the value of the property transferred is reduced by the gift tax liability assumed by
the donee, if the payment of the tax by the donee is a condition of the transfer. The
donor’s available unified credit must be used to reduce the tax liability that the donee
has assumed to the extent the unified credit is available.
PLR-155786-07 9

   Although § 2502(c) provides that the gift tax imposed on a transfer is the liability

of the donor, in Rev. Rul. 75-72 and Rev. Rul. 81-223, the burden of the tax was shifted
to the donees by agreement. The amount of the gift on which the gift tax was computed
was reduced by the amount of gift tax paid by the donees.

    In the present case, Spouse has a qualifying income interest for life in Marital

Trust, and Child 1, Child 2, Child 3, Child 4, and Child 5 are the presumptive remainder
beneficiaries. Pursuant to Settlement Agreement, Marital Trust will be divided into five
trusts: specifically, four Surviving Settlement Trusts and Child 1’s Settlement Trust.
Under State Statute 1, each of the five trusts will be treated as a separate trust for all
purposes from the date on which the severance is effective. After the division, Spouse
will have a qualifying income interest for life, and Child 2, Child 3, Child 4, and Child 5
will be the remaindermen of the Surviving Settlement Trusts. Child 1’s Settlement Trust
will be terminated. Accordingly, based on the facts submitted and representations
made, we conclude that the division of Marital Trust into five trusts and the subsequent
termination of Child 1’s Settlement Trust pursuant to Settlement Agreement will not be
deemed to be a transfer under § 2519 of any property interest, or interest in, the
Surviving Settlement Trusts, and therefore, such division and termination will not give
rise to any gift tax liability with respect to any property of, or interest in, any of the
Surviving Settlement Trusts.

    As stated above, Child 1’s Settlement Trust will be terminated. Pursuant to

Settlement Agreement, a portion of the corpus of Child 1’s Settlement Trust will be
distributed to Spouse in satisfaction of her life estate and all interest in Child 1’s
Settlement Trust and the remaining corpus will be distributed outright to Child 1. Based
upon the facts submitted and the representations made, we conclude that the
termination of Child 1’s Settlement Trust is treated as a transfer under § 2519 of the fair
market value of the entire corpus of Child 1’s Settlement Trust on the date of the
termination, less the value of Spouse’s qualifying income interest in that trust.

    Spouse is exercising her right of recovery under § 2207A to recover the gift tax

attributable to the transfer of corpus in Child 1’s Settlement Trust to Child 1. As a
condition of Settlement Agreement, the parties have agreed that any gift tax imposed on
the termination of Child 1’s Settlement Trust will be paid by Child 1 with funds from the
escrow account and, to the extent those funds are insufficient, Child 1 will be personally
and solely responsible for any such remaining tax liability as a result of the termination
of Child 1’s Settlement Trust. Based upon the facts submitted and the representations
made, we conclude that the amount of the gift made by the Spouse under § 2519 will be
equal to the fair market value of the entire corpus of Child 1’s Settlement Trust,
determined on the date of the termination, less the value of Spouse’s qualifying income
interest in that trust on the date of the termination, reduced by the amount of the gift tax
attributable to that interest paid from the escrow account and by Child 1 under
§ 25.2207A-1(d).
PLR-155786-07 10

    Further, in the event Child 2’s Settlement Trust terminates and Child 2’s

Contingency Trust is established with the assets from Child 2’s Settlement Trust, the
termination of Child 2’s Settlement Trust would be treated as a transfer under § 2519 of
the fair market value of the entire corpus of Child 2’s Settlement Trust on the date of the
termination, less the value of Spouse’s qualifying income interest in that trust. However,
the termination of Child 2’s Settlement Trust, as provided for in Settlement Agreement,
would not be treated as a transfer under § 2519 of the remaining Surviving Settlement
Trusts, namely, Child 3’s Settlement Trust, Child 4’s Settlement Trust, and Child 5’s
Settlement Trust, assuming the provisions of Trust and Settlement Agreement continue
to govern those trusts.

   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.

  The rulings contained in this letter are based upon information and

representations submitted by the taxpayer and accompanied by a penalty of perjury
statement executed by an appropriate party. While this office has not verified any of the
material submitted in support of the request for rulings, it is subject to verification on
examination.

  This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of

the Code provides that it may not be used or cited as precedent.

     In accordance with the Power of Attorney on file with this office, a copy of this

letter is being sent to your authorized representatives.

                                   Sincerely,



                                   Lorraine E. Gardner
                                   Senior Counsel, Branch 4
                                   (Passthroughs & Special Industries)

Enclosures (2)
Copy for § 6110 purposes
Copy of this letter
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