Ezel / IRS Rulings / 200922055

CCA 200922055: Section 118 was described as applying to S corporations

Number
200922055
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Nonshareholder Contributions
Topics
Income and deductions
Code sections
§ 118
Ruling dated
October 9, 2008
Publicly released
May 29, 2009
Source
View Official PDF

Apply this to your situation

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.

Currency note: this determination was released in 2009
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
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

In this brief 2008 email, Chief Counsel stated that section 118 applied to all corporations, including S corporations. The email pointed to the Saline Sewer litigation, which involved an S corporation. It explained that the IRS had disputed whether customer connection fees were contributions in aid of construction, rather than arguing that the nonshareholder-contribution rules were unavailable to S corporations. The distinction concerned the character of the payments, not a categorical exclusion based on S corporation status.

Ruling snapshot

  • Question: Did the section 118 rules for nonshareholder contributions apply to S corporations?
  • Outcome: Advice given: section 118 applied to S corporations; the referenced dispute concerned the nature of the fees.
  • Key authorities: IRC § 118; Saline Sewer litigation referenced in the email.

Full text (IRS public release)

ID: CCA-109131-09 Number: 200922055
Release Date: 5/29/2009
Office: ------------
UILC: 118.01-02

From: ----------------------
Sent: Thursday, October 09, 2008 1:14 PM
To: ------------------------------------------
Cc: -------------------------------------------
Subject: RE: Emailing: books

Section 118 applies to all corporations. Saline Sewer involved an S corp.
Though we argued that the customer connection fees were not contributions in
aid of construction, we did not argue that nonshareholder contributions under
§118 do not apply to S corps.

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