Ezel / IRS Rulings / 200953024

CCA 200953024: Shipyard grants may qualify as nonshareholder capital contributions

Number
200953024
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Nonshareholder Contributions
Topics
Income and deductions
Code sections
§ 118
Ruling dated
December 10, 2009
Publicly released
January 1, 2010
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 2010, 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 2010
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

Chief Counsel advice considered whether grants from a small shipyard grant program could be excluded from gross income under IRC § 118. It explained that the result depends on the facts of the agreement and suggested a pre-submission conference to obtain those facts. If the agreement required the money to be used for capital improvements, § 118 might apply. If the money were used for operations such as training, § 118 would not apply.

Ruling snapshot

  • Question: Could small shipyard grant funds qualify for exclusion from gross income under IRC § 118?
  • Outcome: Advice given
  • Key authorities: IRC § 118

Full text (IRS public release)

ID: CCA_2009121015511942 Number: 200953024
Release Date: 12/31/2009
Office: ----------------------------
UILC: 118.01-02

From: ----------------------
Sent: Thursday, December 10, 2009 3:51:26 PM
To: -----------------
Cc: -------------------------------------------------------------------- Subject: FW: Small Shipyard Grant Program ---------

-----

A possible basis for excluding these grants from gross income is the nonshareholder contribution to capital rule found in section 118 of the Code. Please note that ----- has jurisdiction over this provision. ---
-----------------------, whose email appears below, would be happy to consider your specific facts.

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From: -----------------------
Sent: Wednesday, December 09, 2009 12:53 PM
To: -----------------------------
Cc: -----------------------
Subject: RE: Small Shipyard Grant Program ---------

The determination of whether §118 applies to the transaction is determined by the facts of the agreement. We suggest having the taxpayer come in for a pre-submission conference because we need to know the exact facts. If the agreement specifies the monies will be used for capital improvements, then §118 may possibly apply. However, if the monies will be used for operations such as training §118 will not apply.

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