IRS Written Determinations
Free IRS private letter rulings, technical advice memoranda, and Chief Counsel advice with plain-English summaries and the official IRS release on every page.
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LLC gets relief to make both a late corporate classification election and a late S corporation election
An LLC with more than one owner intended to be taxed as an S corporation. To get there it needed two elections effective on the same date: first, Form 8832 to be treated as a corporation (an associati…
Partnership gets extra time to make a missed Section 754 election after a partner's death split the owner trust
An LLC taxed as a partnership had one interest held through a revocable living trust treated as owned by a married couple. When one spouse died, that trust split into several successor trusts, an even…
Foreign LLC gets extra time to elect partnership treatment via a late Form 8832
A foreign limited liability company, owned by a U.S. citizen living abroad and a foreign entity, wanted to be treated as a partnership for U.S. federal tax purposes, which it elects by filing Form 883…
Stock buyback from one shareholder qualifies as a sale, not a dividend, under Section 302(b)(1)
A privately held corporation with voting (Class A) and nonvoting (Class B) common stock redeemed some shares of both classes from one shareholder for cash. The tax question was whether that payment sh…
IRS blesses a port's method for measuring bond-financed property's economic life under the dock-and-wharf bond safe harbor
A public port authority financed dock and wharf improvements with tax-exempt "exempt facility" bonds. Interest on those bonds stays tax-free only if the financed property is government-owned, and a sa…
Small insurer gets IRS consent to revoke its Section 831(b) election to avoid captive-insurance reporting
A small insurance company, formed as a risk retention group by a trade association to insure its members, had elected under Section 831(b) to be taxed only on its investment income rather than on its …
Homeowners association gets late-filing relief to elect Section 528 treatment for several years
A residential real estate management association can elect, year by year, to be taxed under Section 528, which lets a qualifying homeowners association be taxed only on its non-exempt-function income …
Eligible entity gets extra time to file the Form 8832 electing to be taxed as a corporation
A business entity that was eligible to choose its own federal tax classification wanted to be treated as an association taxable as a corporation, which it does by filing Form 8832 (the "check-the-box"…
Operating-agreement clause created a second class of stock, but inadvertent-termination relief keeps S status
An LLC elected to be taxed as an S corporation, but its operating agreement contained a liquidation clause that allowed distributions to be made partly by capital-account balances rather than strictly…
S election restored after stock passed to two trusts that were later reformed into QSSTs
An S corporation's shares were transferred to two trusts that, as written, did not qualify as eligible S corporation shareholders, which automatically terminated the company's S election. The intent h…
S election saved after three shareholder trusts failed to make timely ESBT elections
A corporation elected S status, but three trusts that held its stock never filed the Electing Small Business Trust (ESBT) elections they needed to be eligible shareholders. Because those trusts were t…
S corporation status restored after a shareholder trust missed its ESBT election following the owner's death
An S corporation had a shareholder that was a grantor trust, which is a permitted S corporation shareholder while the grantor is alive. When the grantor (the deemed owner) died, the trust stayed eligi…
IRS pre-approves a community foundation's scholarship-grant procedures under Section 4945(g)
A private foundation asked the IRS to approve, in advance, the way it will run a scholarship program so that the grants do not count as "taxable expenditures" under Section 4945. Private foundations o…
501(c)(3) denied to a group subsidizing THC/CBD-medication patients because its purpose furthers a federally illegal activity
An organization applied for 501(c)(3) charity status to give financial help (living and other expenses) to financially disadvantaged patients who use THC and CBD (cannabis-derived) medications, plus s…
Partnership anti-abuse rule lets the IRS collapse a partnership to tax an offshore IP transfer under Section 367(d)
When a U.S. company moves intangible property (like patents) to a foreign corporation, Section 367(d) makes it pay U.S. tax on that value, either as a deemed royalty spread over the property's life (t…
Real estate company gets late-filing relief to elect REIT status after its manager missed the extension
A real estate company had been a wholly owned subsidiary of a publicly traded REIT, but after an outside investor bought into its parent it stopped qualifying as a "qualified REIT subsidiary" and had …
Exporter's corporation gets extra time to file its lost IC-DISC election form
A domestic corporation was set up to act as an interest-charge domestic international sales corporation (IC-DISC), a special export-incentive entity that earns commissions on a related company's forei…
Consolidated group gets relief after a blown extension made its accounting-method Forms 3115 late
A parent company filing a consolidated return for itself and five subsidiaries decided to change three accounting methods (for software costs, certain leasehold-improvement depreciation, and intangibl…
Partnership gets extra time to make a missed Section 754 basis-adjustment election
A partnership meant to make a Section 754 election, which lets it adjust the inside basis of its assets when interests change hands or property is distributed, so that later gain or loss lines up with…
A service company that finances its own customers need not file 1099-C cancellation-of-debt forms
A company whose main business is providing (non-financial) services also lets its customers finance the cost of those services. It asked the IRS whether it has to send Forms 1099-C, the "cancellation …
Bankruptcy liquidating trust keeps its trust status even after its term is extended again
A trust was created out of a company's Chapter 11 bankruptcy reorganization plan to liquidate the debtor's assets and pay creditors. The Bankruptcy Court had already extended the trust's wind-down dea…
Where to look in the IRM before filing a lien on an additional assessment
This is a one-paragraph internal email from the Office of Chief Counsel answering a colleague's question about filing Notices of Federal Tax Lien (NFTLs) when the government makes an additional assess…
Whether a taxpayer can designate how payments are applied when seeking a certificate of discharge
This Chief Counsel email discusses whether a taxpayer can control (designate) how payments are applied when the taxpayer is seeking a certificate of discharge of a federal tax lien under section 6325.…
One-line approval that a proposed disclosure is permissible under § 6103(h)(1)
This is an extremely brief Chief Counsel email. In a single sentence, the author approves a proposed course of action as permissible under section 6103(h)(1), the provision that allows returns and ret…
Disclosures involving the Taxpayer Advocate should be coordinated by counsel under § 6103(h)(2)
In this brief Chief Counsel email, the author sees no disclosure problem with a proposed arrangement involving the Taxpayer Advocate. The reasoning is that the Taxpayer Advocate office (TAO) is part o…
When the statute of limitations runs on the § 6707A reportable-transaction penalty
This Chief Counsel email explains when the IRS must assess the section 6707A penalty for failing to disclose a reportable transaction. The general rule: when disclosure is required with a return (beca…
Transmittal email forwarding a CCA memo on SECA loss limitations for a general partner
This is a short transmittal email forwarding a separate Chief Counsel Advice memorandum. The email explains that the attached CCA memo, based on the offices' earlier discussions and a general fact pat…
How CPEOs must report payments to self-employed individuals, including partners
This Chief Counsel Advice clarifies, in response to practitioner questions about the preamble to the proposed Certified Professional Employer Organization (CPEO) regulations, how a CPEO must treat and…
Information gathered from a foreign financial institution can be a taxpayer's return information
This short Chief Counsel email answers whether information the IRS obtained from a foreign financial institution (FFI) is protected as a taxpayer's "return information" under section 6103. The advice …
Brief email confirming a Tax Court signature-block point
This is a brief, informal Chief Counsel email that is part of an exchange about recent amendments to the United States Tax Court's Rules of Practice and Procedure. In a one-line reply, the author conf…
Effective dates of the Tax Court's passport-case rules and amended signature-block rule
This very short Chief Counsel Advice is an email answering a question about two recent changes to the United States Tax Court's Rules of Practice and Procedure. First, it notes that the new Title XXXI…
Family-member 2% S-corp shareholders can still take the § 162(l) health insurance deduction
This Chief Counsel Advice addresses the self-employed health insurance deduction for a family member who is treated as a 2-percent shareholder of an S corporation only because of family attribution. U…
Dormant charity loses 501(c)(3) status for showing no activity and keeping no records
The IRS revoked the 501(c)(3) exemption of an essentially dormant charity that could not show it was doing anything. To keep exemption, an organization must pass the operational test, engaging primari…
Wellness-practitioner cooperative denied 501(c)(3) status for serving members' private interests
The IRS denied 501(c)(3) exemption to an organization that ran a shared-facility cooperative for wellness practitioners, artists, and educators, concluding it operated mainly for the private benefit o…
Retirement-community residents' association loses 501(c)(3) status for serving residents' private interests
The IRS revoked the 501(c)(3) exemption of a residents' association at a retirement community because its activities primarily served the private interests of the residents rather than the public. To …
Foundation's educational grant procedures for charter-school graduates approved under 4945(g)(3)
A private foundation received advance IRS approval of its educational grant procedures under Code Section 4945(g)(3), a companion to the scholarship rule that keeps a foundation's grants to individual…
Foundation's memorial scholarship procedures for relatives of insurance agents approved under 4945(g)
A private foundation received advance IRS approval of its scholarship grant procedures under Code Section 4945(g), which spares the foundation the Section 4945 excise tax that otherwise applies to gra…
Foundation's robotics/STEM scholarship procedures approved under 4945(g)
A private foundation got advance IRS approval of the procedures it uses to award scholarships, which keeps the grants from being "taxable expenditures" that would trigger the Section 4945 excise tax. …
Foundation's primary-care provider scholarship procedures approved under 4945(g)
A private foundation received advance IRS approval of its scholarship grant procedures under Code Section 4945(g), which lets a foundation avoid the Section 4945 excise tax on grants to individuals wh…
Foundation's scholarship procedures for students of a particular descent approved under 4945(g)
A private foundation asked the IRS to approve, in advance, the procedures it uses to award scholarships, and the IRS said yes. Private foundations owe an excise tax under Code Section 4945 on "taxable…
"Pay-what-you-want" café foundation loses 501(c)(3) status as a substantial commercial business
The IRS revoked a foundation's 501(c)(3) exemption because its main activity was running "pay-what-you-want" cafés that looked and operated like ordinary restaurants rather than a charity. To be exemp…
Rural golf club loses 501(c)(7) exemption because most of its money came from the public
A social club exempt under section 501(c)(7), a small rural nine-hole golf club with a bar, restaurant, and gaming (pull-tab) operation, lost its exemption because it took in too much money from nonme…
Charity set up to fundraise for one named accident victim is denied 501(c)(3) status
The IRS refused to recognize an organization as tax-exempt under section 501(c)(3) because it existed only to raise money for a single, named individual and his family. To qualify, an organization mus…
Social club loses 501(c)(7) exemption for renting its hall to the public past the 15% limit
A social club exempt under section 501(c)(7), a heritage/fellowship club that owned an event hall, lost its exemption because too much of its money came from renting that hall to the general public. S…
Cancer charity loses 501(c)(3) status for running as a family business and inflating gift-in-kind reporting
The IRS revoked the tax-exempt status of a charity that had been recognized under section 501(c)(3) to give financial aid to needy cancer patients. To keep exemption, an organization must be operated …
An S corporation's accidental termination is forgiven after two trusts missed their QSST elections
An S corporation can only have certain kinds of shareholders. A trust generally is not an eligible shareholder unless it fits a permitted category, and one common way is for the trust's income benefic…
An LLC gets extra time to elect to be taxed as a corporation
The "check-the-box" rules under Treasury Regulation section 301.7701-3 let an eligible business entity, such as a limited liability company (LLC), choose how it is taxed for U.S. purposes by filing Fo…
An LLC gets extra time to elect to be taxed as a corporation
The "check-the-box" rules under Treasury Regulation section 301.7701-3 let an eligible business entity, such as a limited liability company (LLC), choose how it is taxed for U.S. purposes by filing Fo…
Letting employees borrow to buy shares does not disqualify an employee stock purchase plan
An employee stock purchase plan (ESPP) that qualifies under section 423 gives employees favorable tax treatment: no income at the time they buy discounted employer stock, with tax deferred until they …
An investor who did not know his foreign company was a PFIC gets to make a late QEF election
A passive foreign investment company (PFIC) is a foreign corporation with mostly passive income or assets, and U.S. investors in a PFIC face harsh default tax treatment unless they elect to treat it a…
IRS denies 501(c)(3) status to a scholarship-and-columbarium conduit that mainly benefits a related for-profit
To be tax-exempt under section 501(c)(3), an organization must be operated exclusively for charitable or educational purposes and must serve public rather than private interests; even one substantial …
A structure designed to move CFC cash to the U.S. parent without a section 956 inclusion still triggers one
When a U.S. company owns a controlled foreign corporation (CFC), section 956 generally forces the U.S. shareholder to pick up income (via section 951(a)(1)(B)) when the CFC invests its earnings in "Un…
A bond issuer gets more time to fix which affordability test applies to a tax-exempt rental project
Interest on state and local bonds is generally tax-exempt, and one qualifying use is financing a "qualified residential rental project" under section 142(d). To qualify, the project must meet one of t…
A foreign entity gets extra time to elect to be taxed as a partnership
The "check-the-box" rules under Treasury Regulation section 301.7701-3 let an eligible business entity choose how it is taxed for U.S. purposes by filing Form 8832: an eligible entity with at least tw…
Buyers of an S corporation get more time to make a section 336(e) election
A section 336(e) election lets certain sales of a corporation's stock be treated for tax purposes as if the corporation had sold its assets, which can give the buyers a stepped-up basis in those asset…
A partnership gets more time to make the deemed-sale election on contributing appreciated property to a REIT
When appreciated property owned (directly or through a partnership) by a C corporation becomes property of a real estate investment trust (REIT), the tax rules under Treasury Regulation section 1.337(…
A partnership gets more time to make the deemed-sale election on contributing appreciated property to a REIT
When appreciated property owned (directly or through a partnership) by a C corporation becomes property of a real estate investment trust (REIT), the tax rules under Treasury Regulation section 1.337(…
A consolidated group gets more time to make a section 336(e) election on a stock sale
A section 336(e) election lets certain sales of a corporation's stock be treated for tax purposes as if the corporation had sold its assets, which can give the buyer a stepped-up basis in those assets…
An S corporation's accidental termination is forgiven after a trust missed its ESBT election
An S corporation can only have certain kinds of shareholders. A trust is an eligible shareholder only if it fits one of the permitted categories, and one common way is for the trust to elect to be an …
A partnership gets more time to make the deemed-sale election on contributing appreciated property to a REIT
When appreciated property owned (directly or through a partnership) by a C corporation becomes property of a real estate investment trust (REIT), the tax rules under Treasury Regulation section 1.337(…
What these documents are
- Private letter rulings (PLRs): A taxpayer asked the IRS to rule on a planned transaction before doing it. The ruling shows exactly how the IRS applied the Code to those facts.
- Technical advice memoranda (TAMs): The IRS National Office answering a question raised during an audit or other proceeding.
- Chief Counsel advice (CCAs): IRS lawyers advising their own field staff on how to apply the law.
- Determination letters: Rulings on exempt-organization matters, such as whether an organization qualifies under § 501(c)(3) or a foundation's grant procedures pass § 4945.
- Not precedent, still useful: Under 26 U.S.C. § 6110(k)(3) none of these can be cited as precedent. They remain the best public window into how the IRS actually rules on facts like yours, and practitioners read them for exactly that.