CCA 200915041: Funded vested amounts were transfers of property under section 83

Plain-English summary

An IRS attorney considered whether amounts transferred to a trust constituted property transferred in connection with services. The key question was whether the amounts had been placed beyond the employer's creditors, making them vested and funded. Under Treasury Regulation section 1.83-3(e), vested and funded amounts are treated as a transfer of property. The attorney thought the trust amounts likely met that test because they were probably not subject to the employers' creditors, although the released advice does not state a definitive factual conclusion.

Ruling snapshot

• Question: Did amounts transferred to a trust constitute a transfer of property for section 83 purposes?
• Outcome: Advice given: likely yes, if the vested amounts were beyond the employers' creditors and therefore funded.
• Key authorities: IRC § 83; Treas. Reg. § 1.83-3(e).

Full text (IRS public release)

ID: CCA-159590-09 Number: 200915041
Release Date: 4/10/2009
Office: -----------------------
UILC: 83.00-00

From: --------------------
Sent: January 05, 2009 9:59 AM
To: ----------------------
Cc:
Subject: [-------------------------]

The key would be whether the amounts were set aside from the claims of creditors of the employer. That would mean the amounts were vested and "funded." Vested amounts that are set amount from the claims of creditors (i.e. funded) are considered a transfer of property under regulation § 1.83-3(e). It's likely was that they were; that is, the amounts transferred to the trust were likely not subject to the claims of the various employers' creditors. --------------------------------------------------------------------------------------------
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