CCA 200910054: Supporting-organization revisions addressed operational failure and indirect control

Number

200910054

Outcome

Advice

Document type

Chief Counsel Advice

IRS subject

Supporting Organizations

Topics

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This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2009, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.

About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.

View official IRS release (PDF)

Plain-English summary

Chief Counsel described final revisions to a revenue agent's report involving supporting-organization issues. The revisions added failure of the operational test and clarified that a redacted party was influenced by, rather than itself being, a disqualified person, producing indirect control by disqualified persons. They also addressed how loans held by another redacted party affected the control analysis. The effective date of private-foundation modification depended on what the organization disclosed in its application: the first year of the loans if the employee relationship was disclosed, or the organization's inception if it was not. The substantive attachment was redacted from the public release.

Ruling snapshot

Question: What final changes were needed in the report addressing supporting-organization status and control?
Outcome: Advice given on operational-test failure, indirect disqualified-person control, loan holdings, and the effective date of private-foundation modification.
Key authorities: Supporting-organization and disqualified-person rules; the released email cites no specific Code section.

Full text (IRS public release)

ID: CCA-129155-09 Number: 200910054
Release Date: 3/6/2009
Office: -------------
UILC: 9300.99-04

From: ---------------------------
Sent: Thursday, January 29, 2009 3:54:53 PM
To: ----------------------
Cc:
Subject: RE: ------- RAR 1 21 mbb (3).doc

My final changes to the ---------RAR are attached. This version deals with the SO issues. Adds failure of the operational test as a ground. Changes the intro a bit and also makes clear that -------- is not a DP but influenced by a DP resulting in indirect control by DPs. Also, addresses how -------- holdings, i.e. the loans play into disqualified person control. Finally, the effective date of PF modification depends on what
-------- disclosed about -------- on its application. If it disclosed that -------- was an employee of the ----------
---------, then modification should be effective the first year -------- loaned its funds to -----------. If not, then the date of inception.

Thanks.

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ATTACHMENT 1 [REDACTED]

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