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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Local-government association's income is excluded and Form 990 waived
An association of state special districts helped its governmental members share information, manage risks and insurance, obtain financial and administrative assistance, and reduce operating costs.…
Levy does not reach contract payments that are not yet due
Chief Counsel confirmed the position stated in CCA 199930003 and agreed that the government should concede the issue in the pending case. The levy did not reach payments that a third party might…
Governmental employee-benefit trust income excluded from tax
Political subdivisions created a trust to fund health and welfare benefits for current and former employees and their families. The IRS ruled that providing those benefits was an essential…
Lessor receives extension to pass energy credit to tenant
A partnership owned energy property and agreed to pass the related energy credit to a tenant, but it did not timely file the required election and instead reported and allocated the credit on its…
Lessor receives extension to transfer energy credit to tenant
A partnership owned energy property and agreed to pass the related energy credit to a tenant, but it did not timely file the required election and instead reported and allocated the credit on its…
Earlier ERP software cost treatment still applies
Chief Counsel considered whether later intangible-property regulations displaced the IRS's earlier treatment of enterprise resource planning software costs. It concluded that the principles in PLR…
Taxpayer may make late success-fee safe harbor election
A corporate group paid a success-based fee in connection with a stock acquisition and intended to use the safe harbor in Rev. Proc. 2011-29. Its return preparer applied the safe harbor's substantive…
Utility must reflect depreciation-related NOL carryover in ADIT
A regulated natural-gas utility used accelerated depreciation and had net operating loss carryovers during the relevant years. For ratemaking, it maintained accumulated deferred income tax accounts…
Managing shareholder may deduct lawsuit damages and legal fees
An individual managed a closely held corporation and was sued by another shareholder for fraud, breach of fiduciary duty, and breach of contract. A jury found the manager liable and awarded…
Understated tip credits may increase open-year carryforward
An owner of restaurant partnerships and S corporations discovered that the businesses had understated IRC § 45B credits for employer taxes paid on employee tips, including in years closed by the…
Parent may claim ordinary loss on worthless subsidiary stock
A consolidated group planned to sell the operating subsidiary held by another group member, use distributed receivables and sale proceeds to repay intercompany debt, cancel the remaining debt, and…
Spouse-plan reimbursement depends on after-tax payment
An employer considered paying employees for health coverage obtained through their spouses' employer plans. Chief Counsel advised that payments may be excluded under IRC § 106 when the spouse paid…
Charitable transfer avoids the disqualified-benefit excise tax
A business trust planned to terminate a voluntary employees’ beneficiary association after all plan benefits and liabilities had been satisfied. The remaining trust assets, all derived from…
Online software access fails the comparable exception
Chief Counsel reviewed the section 199 regulation file while developing the primary position for an online-software taxpayer. The email states that the regulatory history offered no additional…
Network-produced game broadcasts generate non-DPGR receipts
A professional sports team received a share of fees paid under league contracts that pooled and licensed the teams’ national television rights. The network had to create the finished live game…
Arts organization loses exemption for operating a commercial rental business
An arts organization was recognized as tax-exempt based on plans to present free public arts events and provide stage-crew training and work to economically disadvantaged people. During examination,…
Each representative must personally sign the Form 2848 declaration
One representative signed Part II of Form 2848 in his own name for another designated representative, and the IRS processed all three representatives onto its authorization file. Chief Counsel…
No-fault family-care payments excluded from income
A state-created entity administered a no-fault plan for children with birth-related neurological injuries. Under the governing statute, parents or legal guardians could be paid for medically…
Negotiated-rate solar facility is not public utility property
A regulated electric utility planned to own and operate a solar facility whose entire output would be sold to a federal installation under a negotiated contract. Although the buyer was a federal…
Purchased domain names must be capitalized and may be amortizable
Chief Counsel addressed the tax treatment of internet domain names purchased on the secondary market for use in a business. Acquisition costs for both generic and non-generic domain names must be…
Promotional donation program payments may be business expenses
A business promoted a program that distributed amounts to tax-exempt, nonprofit, and for-profit organizations. Chief Counsel preliminarily concluded that the money belonged to and was paid by the…
Highly compensated finance officer was a covered employee
Chief Counsel considered the section 162(m) status of a smaller reporting company’s principal financial officer. Notice 2007-49 generally excludes an officer whose compensation is disclosed solely…
Grid-frequency storage device was five-year service property
A taxpayer used a large electricity-storage device to stabilize grid frequency by taking electricity from the grid when frequency was high and returning it when frequency was low. The taxpayer asked…
Employee-paid optional life insurance could avoid imputed income
A life insurer provided employees basic group-term life insurance at no cost and offered separate optional coverage paid for by employees with after-tax dollars. The basic and optional obligations…
Hurricane Sandy victims received 45 days for prior-year loss election
Homeowners sustained a federally declared Hurricane Sandy disaster loss and claimed it on the return for the disaster year. Their original tax adviser did not know they could elect under section…
Utility must prorate deferred taxes for projected test periods
A regulated electric utility asked how the tax normalization rules applied to projected rate adjustments, formula rates, and later true-ups. The IRS ruled that projected rate periods are future test…
Denial of bond-penalty waiver is not appealable
Chief Counsel considered whether a taxpayer could appeal a Tax Exempt Bonds decision denying a request to waive the penalty imposed by section 148(f)(7). After reviewing the relevant authorities,…
Nonresident gambler losses and session netting addressed
Chief Counsel discussed casino player-card records used by a nonresident alien gambler to calculate gains. Unless the gambler was a professional or used session netting, losses were not taken into…
Converted biomass facility qualifies as five-year property
A taxpayer converted a former coal-fired generating plant to burn biomass and restructured its ownership to satisfy federal energy rules for a qualifying small power production facility. FERC's…
Housing credit agency may correct two Forms 8609
A taxpayer gave a housing credit agency incorrect applicable fractions for two buildings in a low-income housing project. The mistake caused the agency's Forms 8609 to show incorrect housing-credit…
Advance refunding bonds avoid abusive-arbitrage treatment
A public issuer used tax-exempt advance refunding bonds and retained current debt-service revenues and a reserve portion in its debt service fund. The IRS found no abusive arbitrage device because…
Volunteer-firefighter benefit trust earns section 115 income exclusion
A city used a trust to provide length-of-service incentive benefits to volunteer firefighters and their beneficiaries. The trust was city-controlled, its assets were dedicated to benefits and…
Refined-coal process and testing qualify for section 45 credit rules
A partnership operated a relocated facility that mixed proprietary additives with coal to reduce nitrogen oxide and mercury emissions before the coal was burned to generate electricity. The IRS…
Refined-coal process and testing qualify for section 45 credit rules
A partnership operated a relocated facility that mixed proprietary additives with coal to reduce nitrogen oxide and mercury emissions before the coal was burned to generate electricity. The IRS…
Tax-exempt controlled entity receives late depreciation election relief
An entity wholly owned by a tax-exempt corporation served as general partner of a low-income housing partnership. It intended to elect under section 168(h)(6)(F)(ii) not to be treated as tax-exempt…
Municipal-district repayments are not tax-exempt bond interest
A real estate developer advanced money to special municipal districts that financed and built public infrastructure for its development. The developer treated the advances as common-improvement…
Public-employer benefit trust income is excluded under section 115
A multiple-employer trust allowed public agencies to fund retiree health, welfare, and pension obligations. Each employer's contributions and investment results remained in a separate account…
Condominium PILOT payments qualify as deductible real property taxes
A property sponsor asked whether payments in lieu of taxes under a ground lease would be treated as real property taxes. The payments were imposed at the general real-property-tax rate under an…
Tax-exempt controlled entity receives late depreciation election relief
A corporation owned equally by two section 501(c)(3) organizations was a tax-exempt controlled entity under section 168(h)(6). Its partnership agreement required an election not to be treated as…
Real estate holding company may make late depreciation election
A real estate holding company owned by two section 501(c)(3) organizations was a tax-exempt controlled entity under section 168(h)(6). Its partnership agreement called for an election not to be…
RFPA exception may support Federal Reserve information request
This brief email addresses a Federal Reserve information request under the Right to Financial Privacy Act. The writer believed the exception in section 3413 could supply the requested explanation of…
Offsite solar-array ownership qualifies for residential energy credit
A homeowner purchased solar panels and a share of related equipment in a ground-mounted offsite array. All electricity entered the public utility's grid, and the utility applied the homeowner's…
Cooperative loss recovery plan and NOL carryforwards approved
A nonexempt farmers cooperative incurred a large loss consisting of patronage and nonmember or nonpatronage portions. It planned to waive the carryback period, carry each portion forward against the…
Patent infringement litigation costs are deductible business expenses
A manufacturer licensed patented technology from an affiliate and shared litigation costs under the license agreement. The patent case concerned whether a competitor infringed the patent and whether…
LLC receives late corporate-classification and depreciation election relief
An LLC owned by two section 501(c)(3) organizations served as general partner of a low-income housing partnership. Its partnership agreement required both corporate tax classification and an…
Late merger-fee safe-harbor election granted
A corporation incurred success-based fees in merger transactions carried out through bankruptcy plans. Its timely return deducted 70 percent and capitalized 30 percent under the Revenue Procedure…
Late low-income housing credit-period elections granted
A partnership placed multiple low-income housing buildings in service but inadvertently failed to elect that their 10-year credit periods begin in that year. The IRS found that the standards for…
Late election to capitalize employee lease costs granted
A partnership incurred employee compensation costs while entering into a long-term office lease and intended to elect to capitalize those costs. Its return preparer included the election in the…
Taxpayer received more time for success-based fee safe harbor
A corporation incurred success-based fees in merger transactions completed through bankruptcy plans. Its short-period return treated 70 percent of the fees as deductible and capitalized 30 percent…
Utility must account for NOLs when reducing rate base for deferred taxes
A regulated natural gas utility used accelerated tax depreciation while carrying net operating losses. For ratemaking, its accumulated deferred income tax account normally reduces rate base because…
Ten-year captive excess-loss policies were not insurance
Related healthcare businesses bought ten-year excess-loss policies from a captive insurer owned by the same individual. The policies were priced before the parties set the attachment points, those…
Refined-coal processes and emissions testing qualified for section 45 credit rules
A taxpayer leased and operated a facility that applied separate chemical-additive processes to coal used in cyclone and pulverized boilers, with the goal of reducing nitrogen oxide and mercury…
Refined-coal process, facility relocation, and retesting methods approved
A taxpayer leased a relocated facility that applied two chemical additives to coal to reduce nitrogen oxide and mercury emissions at a coal-fired power plant. The IRS ruled that the product could be…
Leased transport equipment fails chemical-security credit tests
A manufacturer and lessor of transport equipment claimed the section 45O agricultural-chemical security credit for repair-shop and manufacturing costs. The IRS declined to decide whether the…
Transmission-upgrade reimbursements are taxable CIACs
An electric utility built transmission interconnection facilities and system upgrades required to connect a privately developed project between two regional grids. The project owner reimbursed the…
Like-kind exchange requires removal of ADIT balance
A regulated natural-gas utility exchanged distribution assets for storage and transmission assets in a transaction represented to qualify under section 1031. The utility had accumulated deferred…
Storage-asset exchange requires removal of ADIT balance
A regulated natural-gas company exchanged storage and transmission assets for distribution assets in a transaction represented to qualify under section 1031. It had accumulated deferred income tax…
Formula-rate projections require deferred-tax proration
An electric-transmission utility used annual formula rates based on projected service-year costs, followed by a true-up to actual results. The IRS approved its use of 13-month plant and depreciation…
Annual employee transit cards qualify for monthly exclusion
A city bought discounted annual, nontransferable transit smart cards for every employee. The cards worked only on the regional transit authority's systems and were deactivated when an employee…
Professional error justified late CNOL carryback waiver
A consolidated group intended to waive the entire carryback period for a consolidated net operating loss but failed to file a valid election with its return. The parent represented that the group…
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.