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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Teacher innovation fellowship grant procedures receive approval
A private foundation proposed a competitive fellowship program for educators who developed innovative entrepreneurship and engineering teaching approaches. Recipients would be selected through applica…
Artist residency and grant procedures receive approval
A private foundation proposed an artist and scholar residency program plus several grant opportunities for artistic and scholarly work. Residencies would bring together participants from varied discip…
Emergency management fellowship procedures receive approval
A private foundation proposed a research fellowship for experienced emergency management professionals and scholars. Fellows would study disaster communication, logistics, hazard mitigation, or enviro…
Organization serving one named child is denied exemption
An organization was created solely to raise funds for the treatment, education, and therapy of one named child with autism. The child’s parents were its only directors, its organizing document express…
Foreclosure counseling organization denied exemption
An organization offered free foreclosure-prevention counseling and helped homeowners prepare and pursue loan modifications. It had abandoned its proposed classes and broader housing programs, did not …
Low-income housing trust denied exemption for inadequate records
A charitable trust owned a 200-unit apartment complex donated by an LLC owned by its married founders and trustees, subject to a substantial loan and other liabilities. Although the trust proposed low…
Inactive organization loses charitable exemption
An organization reported that it had been inactive for several years, had no operations or financial activity planned, and had entered bankruptcy. It did not respond to certified audit correspondence …
Nonreorganization stock conversion is an ISO disposition
An employee exercised an incentive stock option and later received acquiring-company stock plus cash in a merger before the incentive-stock holding period expired. Chief Counsel advised that a qualify…
Section 833 medical loss ratio uses aggregate CCIIO data
Chief Counsel advised that the section 833(c)(5) medical loss ratio is computed across all market segments, unlike the Public Health Service Act ratio, which is calculated separately for individual, s…
Preparer penalties depend on signing, filing, and understatement
Chief Counsel advised that a willful-or-reckless preparer penalty may apply to an unfiled amended return if the preparer signed it, because a return is deemed prepared when signed. It may also apply t…
Farm-use semitrailer body is exempt from retail excise tax
A manufacturer designed a semitrailer to haul and unload feed, seed, fertilizer, and similar agricultural materials on farms and fields. Its alloy-aluminum construction, sealed lightweight moving floo…
Independently governed charter school is not a state instrumentality
A nonprofit charter school sought refunds of FICA taxes on the theory that it was a wholly owned instrumentality of a state or political subdivision. Applying the six factors in Revenue Ruling 57-128,…
Late bonus-depreciation opt-out receives relief
A consolidated group omitted the required statements electing not to claim additional first-year depreciation for multiple entities, property classes, and tax years, although its timely returns did no…
Corporation receives late S election relief
A corporation intended to be treated as an S corporation from a specified effective date but did not timely file the required election. The IRS found reasonable cause for the late filing and granted r…
Refined-coal process and testing qualify for production credit
Three facilities mixed proprietary additives with coal to reduce nitrogen-oxide and mercury emissions before the refined coal was burned to produce steam and electricity. The IRS approved the process …
Partnership receives late section 754 election relief
A partnership failed to make a section 754 election for a year in which one member purchased part of another member’s interest because its tax advisers did not explain that the election was available.…
Shareholder receives retroactive QEF election consent
A U.S. shareholder acquired an interest in a foreign holding company that was a passive foreign investment company. The shareholder gave a qualified accounting firm all relevant information, but the f…
Utility must net NOL carryforward against deferred-tax reserve
A regulated natural-gas utility projected net operating losses while claiming accelerated and bonus depreciation. Its regulator proposed reducing rate base by the full accumulated deferred income tax …
Corporation receives late IC-DISC election relief
Two shareholders formed a corporation intending it to operate as an interest-charge domestic international sales corporation. Their accounting firm accepted responsibility for the federal filings but …
Companion refined-coal process and testing rulings approved
A partnership-owned group of three facilities mixed proprietary additives with coal to reduce nitrogen-oxide and mercury emissions before combustion. The IRS approved the process as refined coal under…
S corporation receives inadvertent termination relief
An S corporation had accumulated earnings and profits and received more than 25% passive investment income for three consecutive years, terminating its election under section 1362(d)(3). Its return pr…
Severance benefits excluded from parachute-payment definition
An organization described in section 501(c)(1) had change-in-control agreements providing severance benefits to senior executives who were disqualified individuals. The payments were contingent on a m…
Invalid QSub election receives inadvertent relief
An S corporation intended to acquire all shares of a subsidiary and elected qualified subchapter S subsidiary status effective on the acquisition date. The election was invalid because the parent did …
Bus fares are not payments for managed highway lanes
A public transit issuer planned to use bond proceeds for construction and equipment associated with privately operated managed highway lanes. Some express and regional buses would travel over the lane…
Late elections out of automatic GST allocation receive relief
A taxpayer made cash gifts to three irrevocable trusts with generation-skipping-transfer potential. The accounting firm preparing the taxpayer’s gift-tax returns, without consulting the trusts’ drafti…
Corporation receives late S election relief
A corporation intended to be treated as an S corporation from its incorporation date but did not timely file the election. The IRS found reasonable cause for the late filing and granted relief under s…
Trust settlement preserves GST exemption and avoids gift and income tax
Beneficiaries of a pre-September 25, 1985 testamentary trust settled extensive litigation over trust administration and a no-contest clause. Two beneficiaries and their issue would terminate their int…
Late real-property debt-discharge election receives relief
Partners received cancellation-of-debt income after a short sale of residential rental property. The partnership preparer did not identify the debt as qualified real property business indebtedness, an…
Partnership shareholder causes inadvertent S termination
Two shareholders transferred their S-corporation stock to a partnership, an ineligible shareholder under section 1361(b)(1)(B), terminating the corporation’s S election. After discovering the error, t…
Entity receives late classification and S election relief
A newly formed eligible entity intended to elect corporate classification and S-corporation status from the same effective date but did not timely file either Form 8832 or Form 2553. The IRS found tha…
S corporation receives inadvertent termination relief for disproportionate distributions
An S corporation made disproportionate distributions to its shareholders because its in-house accountant misunderstood the distribution rules. The corporation later learned that the distributions coul…
Corporation receives relief for a late S election
A corporation intended to be treated as an S corporation from the date it was incorporated, but its S election was not timely filed. The IRS found reasonable cause for the late filing and granted reli…
Foreign entity receives late classification relief but treaty benefits are unavailable
A foreign eligible entity intended to elect disregarded-entity status from a specified date but did not timely file Form 8832. The IRS found that the entity acted reasonably and in good faith and that…
Corporation receives relief for an inadvertently invalid S election
A corporation made an S election that contained errors and may not have been effective. The corporation represented that the possible ineffectiveness was inadvertent, was not motivated by tax avoidanc…
Bankruptcy successor receives more time to elect out of special loss rules
A bankruptcy successor became the new loss corporation and substitute agent for a consolidated group after a reorganization caused an ownership change. It intended to elect out of the special bankrupt…
Treaty exempts royalties for broadcasting foreign television channels
A foreign television broadcaster licensed its channels to a wholly owned U.S. subsidiary, which arranged for an unrelated U.S. distributor to show them on its platform. The subsidiary would pay royalt…
S corporation receives relief after a trust misses its ESBT election
After a shareholder died, shares of an S corporation passed under the shareholder's will to a trust. The trust could hold the shares for two years without an election, but its trustee failed to elect …
Hybrid annuity receives tax treatment for its fixed and public-fund accounts
A life insurance company proposed a nonqualified deferred annuity with a fixed account and a separate account holding publicly available mutual funds. The IRS ruled that the policyholder, not the insu…
Pension plan may change four non-prescribed actuarial assumptions
A defined benefit pension plan requested approval to change non-prescribed actuarial assumptions for a plan year beginning October 1, 2013. The changes covered retirement rates, disability rates, sele…
Inactive gift-annuity charity loses exemption after payments stop
A charity originally formed to support cancer patients later shifted to marketing charitable gift annuities. Many annuities were unsecured or uninsured, and funds from new investors were used to make …
IRS revokes a foundation after property transfers benefited its trustees
The IRS revoked a private foundation's section 501(c)(3) status after examining two property transfers involving its trustees. The trustees transferred a mortgaged personal residence to the foundation…
Foundation scholarship procedures qualify for advance approval
A private foundation asked the IRS to approve procedures for scholarships serving high-achieving students with limited financial means in two local areas. Applicants must meet academic and geographic …
Recreational-residence association loses social welfare exemption
The IRS revoked the section 501(c)(4) exemption of an association serving owners of recreational residences on National Forest land. The association installed and maintained a water chlorination syste…
Choose between overlapping preparer penalties based on the facts
Chief Counsel advised that the IRS should consider all facts and circumstances when deciding whether the return-preparer penalty under section 6694(b), the aiding-and-abetting penalty under section 67…
Uncertain deficiency-notice mailing does not itself authorize abatement
Chief Counsel addressed a collection due process case in which an Appeals Officer could not independently verify that a statutory notice of deficiency was properly mailed, and the taxpayer could not r…
Assessment period expired 64 days after the waiver
Chief Counsel concluded that the assessment limitations period expired 64 days after the taxpayer executed a valid Form 5564 waiver. Under sections 6213 and 6503, the waiver ended the 90-day suspensio…
FUTA interest exception covers quarterly deposits, not the annual balance
Chief Counsel explained how the section 6601(i) interest exception applies to federal unemployment tax. The exception prevents underpayment interest on quarterly FUTA payments required under section 6…
Same-year correction does not prevent section 409A income inclusion
A corporation promised an executive a retention bonus but reserved discretion to accelerate its payment, causing the arrangement to violate section 409A. The corporation removed that discretion before…
Management agreement termination fee need not be capitalized
A corporation paid its manager a termination fee after ending a management services agreement in connection with an initial public offering. The agreement did not give either party an exclusive right …
Late election may defer low-income housing credit period
The owner of a single-building low-income housing project intended to begin its ten-year credit period in the year after the building was placed in service. Its return preparer mistakenly checked the …
Refundable brownfield credit qualifies for REIT tests
A parent REIT and subsidiary REITs expected refundable state franchise tax credits from redeveloping brownfield land into rental housing. The IRS ruled that each right to a refund was an ordinary-cour…
Couple receives late investment-income election relief
A married couple's return preparer omitted an investment-interest carryover and failed to advise them about electing to include net capital gain and qualified dividends in investment income. The coupl…
Disproportionate distributions do not end S status after relief
An S corporation made disproportionate distributions to its shareholders over multiple years, then made corrective distributions to several shareholders. Its articles provided for one class of stock w…
Settlor may make late prior-month rate elections for two CLATs
A settlor created two charitable lead annuity trusts and valued each charitable annuity using a section 7520 interest rate from one of the two preceding months. The gift tax returns omitted the statem…
Foreign entity receives late disregarded-entity election relief
A wholly owned foreign eligible entity intended to be classified as disregarded from its formation date. It failed to file Form 8832 on time because of inadvertence. The IRS found that the entity sati…
Trust settlement and division preserve GST tax protection
Beneficiaries and trustees settled long-running disputes over the administration of four family trusts. The court-approved settlement divided each trust into subtrusts along beneficiary lines, replace…
Court settlement does not expose divided trusts to GST tax
A court-approved settlement resolved years of litigation over the administration of four family trusts. The settlement divided the trusts into subtrusts for separate beneficiary groups, installed succ…
Dividing family trusts under settlement preserves GST exemption
Four family trusts sought assurance about a settlement of extensive beneficiary and trustee litigation. The settlement divided the trusts among beneficiary groups, provided for independent successor t…
Settlement divisions leave family trusts outside GST tax
A settlement divided four family trusts after prolonged disputes over trustee conduct and distributions. The new subtrusts separated beneficiary groups, adopted independent trustee provisions, and cha…
Entity receives late corporate classification election relief
A state-law entity intended to elect corporate tax classification from its formation date but inadvertently failed to file Form 8832 on time. The entity had three successive sole owners between format…
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.