Trust powers produce mixed income, gift, and estate tax results

Plain-English summary

A grantor created an irrevocable trust whose distributions could be directed through several powers held by the grantor and a nonfiduciary power-of-appointment committee. While the committee remained in existence and the trust remained a United States person, the IRS found no stated circumstance making the grantor or committee members owners under the grantor-trust provisions it analyzed, except that section 675 treatment would depend on how the trust actually operated and was deferred to examination. The grantor's retained powers made the transfer to the trust wholly incomplete for gift tax purposes, and property remaining at the grantor's death would be included in the grantor's estate. Distributions back to the grantor would not be gifts by committee members. Distributions to other beneficiaries would be completed gifts by the grantor, not by committee members. The committee members' jointly held powers were not general powers of appointment that would cause trust property to enter their estates.

Ruling snapshot

• Question: How would the trust's retained and jointly held appointment powers affect income-tax ownership, completed gifts, and estate inclusion?
• Outcome: Mixed: the requested gift and estate tax conclusions were granted, while section 675 income-tax ownership remained a factual question for examination.
• Key authorities: IRC §§ 671-679, 2041, 2501, 2511, and 2514; Treas. Reg. §§ 20.2041-3, 25.2511-2, and 25.2514-3.

Full text (IRS public release)

Internal Revenue Service                                  Department of the Treasury
                                                          Washington, DC 20224

Number: 201636028
Release Date: 9/2/2016
Index Number: 671.00-00, 2501.00-00,
              2514.00-00, 2041.00-00
                                                          Person To Contact:
--------------------------                                ----------------------------, ID No. ------------
-------------------                                       Telephone Number:
 ----------------------------------                       --------------------
                                                          Refer Reply To:
                                                          CC:PSI:B04 – PLR-139428-15
                                                          Date:
                                                          May 23, 2016




Re: --------------------------------------


Date 1                     = --------------------------
Date 2                     = ----------------
Date 3                     = --------------------
Grantor                    = --------------------------------------------------
Power of Appointment       = ------------------------------------------------------------------------------
Committee                  ---------------------------------------------------------------------------------
Trust                      = -----------------------------------------------------------------------------
                  ------------------------------------------------------------------------------------------
State                      = ------------------
Trustee                    = -----------------------------------
Father                     = ------------------------------------------------------
Mother                     = --------------------------------------------------
Brother                    = ---------------------------------------------------
Friend                     = ------------------------------------------------

Dear --------------:

      This letter responds to your authorized representative’s letter of December 1,
2015, and subsequent correspondence requesting rulings under §§ 671, 2501, 2514
and 2041 of the Internal Revenue Code.

       The facts submitted and representations made are as follows. On Date 1,
Grantor created an irrevocable trust (Trust) for the benefit of himself, his issue, his
Father, Mother, Brother, other siblings, Friend and charities (Beneficiaries). A corporate
trustee (Trustee) is the sole trustee.
PLR-139428-15                               2

        During Grantor’s lifetime, Trustee must distribute such amounts of net income
and principal to Grantor and Beneficiaries as directed by Power of Appointment
Committee and/or Grantor, as follows: (1) At any time, Trustee, pursuant to the
direction of a majority of Power of Appointment Committee, with the written consent of
Grantor, shall distribute to Grantor or Beneficiaries such amounts of the net income or
principal as directed by Power of Appointment Committee (Grantor’s Consent Power);
(2) At any time, Trustee, pursuant to the direction of all of Power of Appointment
Committee members, other than Grantor, shall distribute to Grantor or Beneficiaries
such amounts of the net income or principal as directed by the Power of Appointment
Committee (Unanimous Member Power); and (3) At any time, Grantor has the power, in
a nonfiduciary capacity, at any time and from time to time, to distribute to any one or
more of Beneficiaries, such amounts of the principal (including the whole thereof) as
Grantor deems advisable to provide for the health, maintenance, support and education
of Grantor’s issue (Grantor’s Sole Power). The Power of Appointment Committee may
appoint income or principal equally or unequally and to or for the benefit of any one or
more of the beneficiaries of Trust to the exclusion of others. Any net income not
distributed by Trustee will be accumulated and added to principal. The Power of
Appointment Committee is initially composed of Grantor, Mother, Father, Brother and
Friend and will cease to exist upon Grantor’s death.

        If at any time the Power of Appointment Committee includes three or more
members other than Grantor, then all the members of the Power of Appointment
Committee including the Grantor may by unanimous vote, at any time and from time to
time, add one or more members of the Power of Appointment Committee provided that
such members are Beneficiaries and, provided further that if any one or more of them is
a minor, the then serving members of the Power of Appointment Committee shall by
unanimous vote designate an individual to serve as guardian of the minor. The
members of Power of Appointment Committee in their capacities shall not serve or act
in a fiduciary capacity.

      Power of Appointment Committee ceases to exist upon the earlier of the
Grantor’s death, or the date the Power of Appointment Committee is reduced to one
member other than Grantor. If the Power of Appointment Committee ceases to exist,
Trustee may distribute to Grantor and Beneficiaries and/or trusts for their benefit such
amounts of the net income or principal as Trustee determines.

       Trustee, pursuant to the direction of the Power of Appointment Committee, shall,
at any time or times prior to or upon the distribution date, distribute to the trustee or
trustees of any one or more qualified trusts such amounts of the net income and or
principal of Trust (including the whole thereof) as the Power of Appointment Committee
determines. Any such distribution shall be added to the principal of such qualified trust
and disposed of in accordance with the terms of such qualified trust. No distribution or
PLR-139428-15                                3

transfer may be made to a qualified trust unless made pursuant to the direction of the
Power of Appointment Committee.

       Upon Grantor’s death, the remaining balance of Trust shall be distributed to or for
the benefit of any person or persons or entity or entities, other than Grantor’s estate,
Grantor’s creditors, or the creditors of Grantor’s estate, as Grantor may appoint by will.
In default of the exercise of this limited power to appoint (Grantor’s Testamentary
Power), if upon the distribution date, Grantor has living issue, the balance of Trust will
be distributed (1) five percent (5%) to each of those members of the Power of
Appointment Committee, other than Grantor’s issue, who are serving on the Power of
Appointment Committee as of the distribution date and (2) the remaining balance to the
Grantor’s then living issue per stirpes. If on the distribution date, Grantor has no living
issue, the balance of Trust will be distributed (1) five percent (5%) of the balance to
each of the members of the Power of Appointment committee, other than Grantor’s
parents and grantor’s siblings, who are serving on the Power of Appointment Committee
on the distribution date and, (2) the remaining balance in equal shares to such of
Grantor’s parents and Grantor’s siblings who are then living.

       You have requested the following rulings:

      1. As long as the Power of Appointment Committee is serving, no portion of the
items of income, deductions, and credits against tax of Trust shall be included in
computing the taxable income, deductions, and credits of Grantor or any member of the
Power of Appointment Committee under § 671.

      2. The contribution of property to Trust by Grantor will not be a completed gift
subject to federal gift tax.

       3. Any distribution of property by the Power of Appointment Committee from
Trust to Grantor will not be a completed gift, subject to federal gift tax, by any member
of the Power of Appointment Committee.

       4. Any distribution of property by the Power of Appointment Committee from
Trust to any Beneficiary of Trust, other than Grantor, will not be a completed gift subject
to federal gift tax, by any member of the Power of Appointment Committee, other than
Grantor.

       5. No member of the Power of Appointment Committee upon his or her death will
include in his or her estate any property held in Trust because such member is deemed
to have a general power of appointment within the meaning of § 2041 over property
held in Trust.

RULING 1
PLR-139428-15                                 4


        Section 671 provides that where it is specified in subpart E of part I of subchapter
J that the grantor or another person shall be treated as the owner of any portion of a
trust, there shall then be included in computing the taxable income and credits of the
grantor or the other person those items of income, deductions, and credits against tax of
the trust which are attributable to that portion of the trust to the extent that such items
would be taken into account under chapter 1 in computing taxable income or credits
against the tax of an individual.

      Section 672(a) provides, for purposes of subpart E, that the term “adverse party”
means any person having a substantial beneficial interest in the trust which would be
adversely affected by the exercise or nonexercise of the power which he possesses
respecting the trust.

       Sections 673 through 677 specify the circumstances under which the grantor is
treated as the owner of a portion of a trust.

       Section 673(a) provides that the grantor shall be treated as the owner of any
portion of a trust in which the grantor has a reversionary interest in either the corpus or
the income therefrom, if, as of the inception of that portion of the trust, the value of such
interest exceeds 5 percent of the value of such portion.

       Section 674(a) provides, in general, that the grantor shall be treated as the owner
of any portion of a trust in respect of which the beneficial enjoyment of the corpus or the
income therefrom is subject to a power of disposition, exercisable by the grantor or a
nonadverse party, or both, without the approval or consent of any adverse party.

      Section 674(b) provides that § 674(a) shall not apply to the power in § 674(b)(5)
regardless of by whom held.

       Section 674(b)(3) provides that § 674(a) shall not apply to a power exercisable
only by will, other than a power in the grantor to appoint by will the income of the trust
where the income is accumulated for such disposition by the grantor or may be so
accumulated in the discretion of the grantor or a nonadverse party, or both, without the
approval or consent of any adverse party.

      Section 674(b)(5) provides that § 674(a) shall not apply to a power to distribute
corpus to or for a beneficiary, provided that the power is limited by a reasonably definite
standard.

      Under § 675 and applicable regulations, the grantor is treated as the owner of
any portion of a trust if, under the terms of the trust agreement or circumstances
PLR-139428-15                                 5

attendant to its operation, administrative control is exercisable primarily for the benefit of
the grantor rather than the beneficiary of the trust.

         Section 676(a) provides that the grantor shall be treated as the owner of any
portion of a trust, whether or not he is treated as such owner under any other provision
of part I, subchapter J, chapter 1, where at any time the power to revest in the grantor
title to such portion is exercisable by the grantor or a nonadverse party, or both.

        Section 677(a) provides, in general, that the grantor shall be treated as the owner
of any portion of a trust, whether or not he is treated as such owner under § 674, whose
income without the approval or consent of any adverse party is, or, in the discretion of
the grantor or a nonadverse party, or both, may be (1) distributed to the grantor or the
grantor’s spouse; (2) held or accumulated for future distribution to the grantor or the
grantor’s spouse; or (3) applied to the payment of premiums on policies of insurance on
the life of the grantor or the grantor’s spouse.

       Section 678(a) provides that a person other than the grantor shall be treated as
the owner of any portion of a trust with respect to which: (1) such person has a power
exercisable solely by himself to vest the corpus or the income therefrom in himself, or
(2) such person has previously partially released or otherwise modified such a power
and after the release or modification retains such control as would, within the principles
of §§ 671-677, inclusive, subject a grantor of a trust to treatment as the owner thereof.

       Section 679(a) provides that a United States person who directly or indirectly
transfers property to a foreign trust shall be treated as the owner for his taxable year of
the portion of such trust attributable to such property if for such year there is a United
States beneficiary of any portion of such trust.

       Based solely on the facts and representations submitted, we conclude an
examination of Trust reveals none of the circumstances that would cause Grantor to be
treated as the owner of any portion of Trust under §§ 673, 674, 676, or 677 as long as
the Power of Appointment Committee remains in existence and Trust remains a United
States person. Because none of the members of the Power of Appointment Committee
has a power exercisable by himself, none shall be treated as the owner of any portion of
the Trust under § 678(a).

       We further conclude that an examination of Trust reveals none of the
circumstances that would cause administrative controls to be considered exercisable
primarily for the benefit of Grantor under § 675. Thus, the circumstances attendant on
the operation of Trust will determine whether Grantor will be treated as the owner of any
portion of Trust under § 675. This is a question of fact, the determination of which must
be deferred until the federal income tax returns of the parties involved have been
examined by the office with responsibility for such examination.
PLR-139428-15                                 6


RULINGS 2 AND 3

        Section 2501(a)(1) provides for the imposition of a gift tax on the transfer of
property by gift. Section 2511(a) provides that the gift tax 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 25.2511-2(b) of the Gift Tax Regulations provides that a gift is complete
as to any property with respect to which the donor has so parted with dominion and
control as to leave the donor with no power to change the disposition of the property,
whether for the donor’s own benefit, or for the benefit of another. But if upon a transfer
of property (whether in trust or otherwise) the donor reserves any power over its
disposition, the gift may be wholly incomplete, or may be partially complete and partially
incomplete, depending upon all the facts in the particular case. Accordingly, in every
case of a transfer of property subject to a reserved power, the terms of the power must
be examined and its scope determined.

       Section 25.2511-2(b) provides an example, where the donor transfers property in
trust to pay the income to the donor, or accumulate it in the discretion of the trustee, and
the donor retains a testamentary power to appoint the remainder among the donor’s
descendants. The regulation concludes that no portion of the transfer is a completed
gift. However, if the donor had not retained a testamentary power of appointment, but
had instead provided that the remainder should go to X or his heirs, the entire transfer
would be a completed gift.

       Section 25.2511-2(c) provides that a gift is incomplete in every instance in which
a donor reserves the power to revest the beneficial title in himself or herself. A gift is
also incomplete if and to the extent that a reserved power gives the donor the power to
name new beneficiaries or to change the interests of the beneficiaries as between
themselves unless the power is a fiduciary power limited by a fixed or ascertainable
standard.

       Under § 25.2511-2(e), a donor is considered as possessing a power if it is
exercisable by the donor in conjunction with any person not having a substantial
adverse interest in the disposition of the transferred property. Section 25.2511-2(f)
provides that the relinquishment or termination of a power to change the beneficiaries of
transferred property, occurring otherwise than by death of the donor, is regarded as the
event which completes the gift and causes the gift tax to apply.

      Section 25.2511-2(g) provides that if a donor transfers property to himself as
trustee (or to himself and some other person, not possessing a substantial adverse
interest, as trustees), and retains no beneficial interest in the trust property and no
PLR-139428-15                                 7

power over it except fiduciary powers, the exercise or nonexercise of which is limited by
a fixed or ascertainable standard, to change the beneficiaries of the transferred
property, the donor has made a completed gift.

        Section 25.2511-2(e) does not define “substantial adverse interest.” Section
25.2514-3(b)(2) provides, in part, that a taker in default of appointment under a power
has an interest that is adverse to an exercise of the power. Section 25.2514-3(b)(2)
also provides that a co-holder of a power is considered as having an adverse interest
where he may possess the power after the possessor’s death and may exercise it at
that time in favor of himself, his estate, his creditors, or the creditors of his estate.

       In Estate of Sanford v. Commissioner, 308 U.S. 39 (1939) the taxpayer created a
trust for the benefit of named beneficiaries and reserved the power to revoke the trust in
whole or in part, and to designate new beneficiaries other than himself. Six years later,
in 1919, the taxpayer relinquished the power to revoke the trust, but retained the right to
change the beneficiaries. In 1924, the taxpayer relinquished the right to change the
beneficiaries. The Court stated that the taxpayer’s gift is not complete, for purposes of
the gift tax, when the donor has reserved the power to determine those others who
would ultimately receive the property. Accordingly, the Court held that the taxpayer’s
gift was complete in 1924, when he relinquished his right to change the beneficiaries of
the trust. A’s retention of a power to change the beneficial interests in a trust causes
the transfer to the trust to be incomplete for gift tax purposes, even though the power
may be defeated by the actions of third parties. Goldstein v. Commisisoner, 37 T.C. 897
(1962). See also Estate of Goelet v. Commissioner, 51 T.C. 352 (1968).

        In this case, Grantor retained the Grantor’s Consent Power over the income and
principal of Trust. Under § 25.2511-2(e), a donor is considered as himself having a
power if it is exercisable by him in conjunction with any person not having a substantial
adverse interest in the disposition of the transferred property or the income therefrom.
Power of Appointment Committee members are not takers in default for purposes of
§ 25.2514-3(b)(2). They are merely co-holders of the power. Under § 25.2514-3(b)(2),
a co-holder of a power is only considered as having an adverse interest where he may
possess the power after the possessor’s death and may exercise it at that time in favor
of himself, his estate, his creditors, or the creditors of his estate. In this case, the Power
of Appointment Committee ceases to exist upon Grantor’s death. Accordingly, the
Power of Appointment Committee members do not have interests adverse to Grantor
under § 25.2514-3(b)(2) and for purposes of § 25.2511-2(e). Therefore, Grantor is
considered as possessing the power to distribute income and principal to any
beneficiary himself because he retained the Grantor’s Consent Power. The retention of
this power causes the transfer of property to Trust to be wholly incomplete for federal
gift tax purposes.
PLR-139428-15                                8

        Grantor also retained the Grantor’s Sole Power over the principal of Trust. Under
§ 25.2511-2(c), a gift is incomplete if and to the extent that a reserved power gives the
donor the power to name new beneficiaries or to change the interests of the
beneficiaries as between themselves unless the power is a fiduciary power limited by a
fixed or ascertainable standard. In this case, the Grantor’s Sole Power gives Grantor
the power to change the interests of the beneficiaries. Even though Grantor’s power is
limited by an ascertainable standard, i.e., health, education, maintenance and support,
Grantor’s power is not a fiduciary power. Accordingly, the retention of the Grantor’s
Sole Power causes the transfer of property to Trust to be wholly incomplete for federal
gift tax purposes.

       Further, Grantor retained Grantor’s Testamentary Power to appoint the property
in Trust to any persons, other than Grantor’s estate, Grantor’s creditors, or the creditors
of Grantor’s estate. Under § 25.2514-3(b)(2), the retention of a testamentary power to
appoint the remainder of a trust is considered a retention of dominion and control over
the remainder. Accordingly, the retention of this power causes the transfer of property
to Trust to be incomplete with respect to the remainder in Trust for federal tax purposes.

       Finally, the Power of Appointment Committee members possess the Unanimous
Member Power over income and principal. This power is not a condition precedent to
Grantor's powers. Grantor’s power over the income and principal is presently
exercisable and not subject to a condition precedent. Grantor retains dominion and
control over the income and principal of Trust until the Power of Appointment
Committee members exercise their Unanimous Member Power. Accordingly, this
power does not cause the transfer of property to be complete with respect to the income
interest for federal gift tax purposes. See Goldstein v. Commissioner, 37 T.C. 897
(1962); Estate of Goelet v. Commissioner, 51 T.C. 352 (1968),

      Accordingly, based on the facts submitted and the representations made, we
conclude that the contribution of property to Trust by Grantor is not a completed gift
subject to federal gift tax. Any distribution from Trust to Grantor is merely a return of
Grantor’s property. Therefore, we conclude that any distribution of property by the
Power of Appointment Committee from Trust to Grantor will not be a completed gift
subject to federal gift tax, by any member of the Power of Appointment Committee.
Further, upon Grantor’s death, the fair market value of the property in Trust is includible
in Grantor’s gross estate for federal estate tax purposes.

RULINGS 4 AND 5

       Section 2514(b) provides that the exercise or release of a general power of
appointment created after October 21, 1942, shall be deemed a transfer of property by
the individual possessing such power.
PLR-139428-15                                9

      Section 2514(c) provides that the term “general power of appointment” means a
power which is exercisable in favor of the individual possessing the power (possessor),
the possessor’s estate, the possessor’s creditors, or the creditors of the possessor’s
estate.

      Section 25.2514-1(c)(1) provides that a power of appointment is not a general
power if by its terms it is exercisable only in favor of one or more designated persons or
classes other than the possessor or his creditors, or the possessor’s estate or the
creditors of the estate.

      Section 2514(c)(3)(A) provides that, in the case of a power of appointment
created after October 21, 1942, if the power is exercisable by the possessor only in
conjunction with the creator of the power, such power is not deemed a general power of
appointment.

      Section 2514(c)(3)(B) provides, that in the case of a power of appointment created
after October 21, 1942, if the power is not exercisable by the possessor except in
conjunction with a person having a substantial interest in the property subject to the
power, which is adverse to the exercise of the power in favor of the possessor, such
power shall not be deemed a general power of appointment. For purposes of
§ 2514(c)(3)(B), a person who, after the death of the possessor, may be possessed of a
power of appointment (with respect to the property subject to the possessor’s power)
which he may exercise in his own favor shall be deemed as having an interest in the
property and such interest shall be deemed adverse to such exercise of the possessor’s
power.

       Section 25.2514-3(b)(2) provides, in part, that a coholder of a power has no
adverse interest merely because of his joint possession of the power nor merely
because he is a permissible appointee under a power. However, a co-holder of a power
is considered as having an adverse interest where he may possess the power after the
possessor’s death and may exercise it at that time in favor of himself, his estate, his
creditors, or the creditors of his estate. Thus, for example, if X, Y, and Z held a power
jointly to appoint among a group of persons which includes themselves and if on the
death of X the power will pass to Y and Z jointly, then Y and Z are considered to have
interests adverse to the exercise of the power in favor of X. Similarly, if on Y’s death the
power will pass to Z, Z is considered to have an interest adverse to the exercise of the
power in favor of Y.

       Section 2041(a)(2) provides that the value of the gross estate shall include the
value of all property to the extent of any property with respect to which the decedent has
at the time of death a general power of appointment created after October 21, 1942, or
with respect to which the decedent has at any time exercised or released such a power
by a disposition which is of such nature that if it were a transfer of property owned by
PLR-139428-15                                10

the decedent, such property would be includible in the decedent’s gross estate under
§§ 2035 to 2038, inclusive.

       Under § 2041(b)(1), the term “general power of appointment” is defined, in
relevant part, to mean a power which is exercisable in favor of the decedent, his estate,
his creditors, or the creditors of his estate.

       Section 2041(b)(1)(C)(ii) provides, however, that in the case of a power of
appointment created after October 21, 1942, if the power is not exercisable by the
decedent except in conjunction with a person having a substantial interest in the
property, subject to the power, which is adverse to the exercise of the power in favor of
the decedent -- such power shall not be deemed a general power of appointment. For
purposes of § 2041(b)(1)(C)(ii), a person who, after the death of the decedent, may be
possessed of a power of appointment (with respect to the property subject to the
decedent's power) which he may exercise in his own favor shall be deemed as having
an interest in the property and such interest shall be deemed adverse to such exercise
of the decedent’s power.

       Section 20.2041-3(c)(2) of the Estate Tax Regulations provides, in part, that a
co-holder of a power of appointment has no adverse interest merely because of his joint
possession of the power nor merely because he is a permissible appointee under a
power. However, a co-holder of a power is considered as having an adverse interest
where he may possess the power after the decedent’s death and may exercise it at that
time in favor of himself, his estate, his creditors, or the creditors of his estate. Thus, for
example, if X, Y, and Z held a power jointly to appoint among a group of persons which
includes themselves and if on the death of X the power will pass to Y and Z jointly, then
Y and Z are considered to have interests adverse to the exercise of the power in favor
of X. Similarly, if on Y’s death the power will pass to Z, Z is considered to have an
interest adverse to the exercise of the power in favor of Y.

       The powers held by the Power of Appointment Committee members under the
Grantor’s Consent Power are powers that are exercisable only in conjunction with the
creator, Grantor. Accordingly, under §§ 2514(b) and 2041(a)(2), the Power of
Appointment Committee members do not possess general powers of appointment by
virtue of possessing this power. Further, the powers held by the Power of Appointment
Committee members under the Unanimous Member Powers are not general powers of
appointment for purposes of §§ 2514(b) and 2041(a)(2). As in the examples in
§§ 25.2514-3(b)(2) and 20.2041-3(c)(2), the Power of Appointment Committee
members have substantial adverse interests in the property subject to this power.
Accordingly, any distribution made from Trust to a beneficiary, other than Grantor,
pursuant to the exercise of these powers, the Grantor’s Consent Power and the
Unanimous Member Powers, are not gifts by the Power of Appointment Committee
members. Instead, such distributions are gifts by Grantor.
PLR-139428-15                                11


        Based on the facts and representations made, we conclude that any distribution
of property by the Power of Appointment Committee from Trust to any beneficiary of
Trust, other than Grantor, will not be a completed gift subject to federal gift tax, by any
member of the Power of Appointment Committee. Further, we conclude that any
distribution of property from Trust to a beneficiary other than Grantor will be a
completed gift by Grantor. Finally, we conclude that the powers held by the Power of
Appointment Committee are not general powers of appointment for purposes of
§ 2041(a)(2) and, accordingly, no member of the Power of Appointment Committee
upon his or her death will include in his or her estate any property held in Trust because
such member is deemed to have a general power of appointment within the meaning of
§ 2041 over property held in Trust.

      Except as specifically ruled herein, we express no opinion on the federal tax
consequences of the transaction under the cited provisions or under any other
provisions of the Code. Specifically, we express no opinion on the trust provisions
permitting Trustee to distribute income or principal to trustees of other qualified trusts
(decanting).

      This ruling is directed only to the taxpayer who requested it. Section
6110(k)(3) provides that it may not be used or cited as precedent.

                                           Sincerely,


                                           Lorraine E. Gardner
                                           Lorraine E. Gardner
                                           Senior Counsel, Branch 4
                                           Office of Associate Chief Counsel
                                           (Passthroughs and Special Industries)

Enclosure
      Copy for section 6110 purposes


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