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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Partner guarantee shifts basis and at-risk treatment
An LLC taxed as a partnership acquired, renovated, and held hotel properties, while a separate manager handled daily hotel operations. One member personally guaranteed partnership notes, and another…
Cost-sharing arrangement may change stock compensation methods
A domestic corporation with a cost-sharing arrangement had used the default tax-deduction method to measure stock-based compensation included in intangible development costs. After its stock became…
Foreign parent's non-LIFO reporting satisfies conformity requirement
A domestic subsidiary used LIFO for most inventory while its foreign parent considered adopting IFRS, which would report the subsidiary's results on a non-LIFO basis. The foreign parent and its…
Revised nuclear decommissioning fund schedule approved
A regulated public utility requested a revised schedule of deductible contributions to its nuclear decommissioning fund after shutting down a plant and beginning decommissioning. The proposed…
Revised decommissioning schedule approved after rate reduction
A public utility requested a revised schedule of contributions to its nuclear decommissioning fund after its regulator reduced the decommissioning costs included in rates. The reduction meant that…
Nuclear fund schedule revised after regulated costs declined
A public utility requested a revised schedule of contributions to its nuclear decommissioning fund after its regulator reduced the decommissioning costs included in rates. The reduction meant that…
Lease termination term defeats rent allocation schedule
Chief Counsel considered whether a rental agreement made a specific allocation of fixed rent under IRC § 467. The lease stated that any termination would reduce the section 467 loan balance to zero…
Barrier contracts create ownership and current tax events
A taxpayer used bank contracts labeled cash-settled barrier call options to obtain leveraged exposure to baskets of hedge-fund interests that its chosen manager could change. Chief Counsel advised…
Utility receives revised nuclear decommissioning schedule
An electric utility owned and operated an interest in a nuclear power plant whose operating license had been extended. It requested revised annual ruling amounts for deductible contributions to its…
Nuclear plant owner receives revised contribution schedule
An electric utility owned and operated an interest in a nuclear power plant whose operating license had been extended. It requested revised annual ruling amounts for deductible contributions to its…
Utility receives revised decommissioning contribution schedule
An electric utility owned and operated an interest in a nuclear power plant with an extended operating license. It requested revised annual ruling amounts for deductible contributions to its nuclear…
Mandatory decommissioning schedule revision is approved
An electric utility with an ownership interest in a nuclear power plant requested a mandatory revised schedule of deductible contributions to its decommissioning fund after the plant’s operating…
Revised nuclear decommissioning schedule is approved
A utility with a direct ownership interest in a permanently retired nuclear plant requested a revised schedule of ruling amounts for its qualified nuclear decommissioning fund. Its proposed schedule…
County deferred compensation plan qualifies under section 457
A county adopted a nonqualified deferred compensation plan and related trust for its employees. The plan required advance deferral elections, applied the statutory annual and catch-up limits,…
Revised nuclear decommissioning fund schedule approved
A taxpayer requested mandatory review of its nuclear decommissioning fund schedule after the Nuclear Regulatory Commission extended the plant’s operating license. The proposed amounts used a recent…
Revised nuclear decommissioning funding schedule approved
The owner of a nuclear power plant requested a revised schedule of deductible contributions to its nuclear decommissioning fund after the plant’s operating license was extended. The taxpayer based…
Nuclear plant receives revised decommissioning funding schedule
An investor-owned utility requested a mandatory revision of its nuclear decommissioning fund schedule after the plant’s operating license was extended. The proposed annual amounts used an…
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…
Mortgage warranty reserves are not section 475 losses
A mortgage originator and seller recorded aggregate reserves for contractual obligations to repurchase defective mortgages or indemnify purchasers when representations and warranties were breached.…
Section 754 election does not prevent an accounting method change
A partnership deferred gains, losses, income, and deductions from securities held through basket transactions until the contracts ended. IRS examiners determined that the partnership beneficially…
Nuclear decommissioning funds retain status through plant transfers
Two utility companies proposed to transfer nuclear plants, related liabilities, and qualified nuclear decommissioning funds to a buyer outside their consolidated group. The IRS ruled that the…
Partnership-level loss character controls later passive-loss proceedings
Chief Counsel advised that the amount and character of partnership losses determined on the return or through an FPAA are binding in later partner-level proceedings under section 469. A no-change…
Deemed plant transfer preserves nuclear decommissioning trusts
A corporate group planned for a disregarded subsidiary to elect corporate status, causing a deemed transfer of interests in two nuclear plants and their qualified decommissioning trusts. The…
Taxpayer may change stock-compensation methods in its cost-sharing arrangement
A domestic corporation and its subsidiary used a cost-sharing arrangement for developing intangibles. The corporation asked to replace the default tax-deduction method for measuring and timing…
Nuclear decommissioning fund may pay three broad cost categories
A utility had permanently shut down a nuclear plant and was using a qualified nuclear decommissioning fund. It expected license-termination costs, greenfield demolition and site-restoration costs,…
Volunteer firefighter plan qualifies as a length of service award plan
A city established a plan providing retirement, death, and disability benefits to long-serving volunteer firefighters and rescue-service volunteers. Eligible members performed fire, emergency…
Nonrecourse debt sets floor for securities mark-to-market value
Related partnerships issued mortgage-backed securities in exchange for cash and treated the notes as nonrecourse liabilities secured by mortgage assets. When calculating year-end mark-to-market gain…
Late tax-year change application is treated as timely
A taxpayer filed Form 1128 after the deadline to change its federal tax year from a January 31 year-end to a December 31 year-end. It sought discretionary relief soon after discovering that it did…
Controlled-substance businesses use pre-1986 inventory rules for cost of goods sold
Chief Counsel explained how a business trafficking in a Schedule I or Schedule II controlled substance determines cost of goods sold while IRC § 280E disallows its business deductions and credits.…
Real estate agents may be property brokers, but mortgage brokers are not
Chief Counsel interpreted “real property brokerage” for the real estate professional rules in IRC § 469(c)(7)(C). A real estate agent who brings together buyers and sellers of real property may…
Captive reimbursement arrangement requires facts review and accounting adjustment
Chief Counsel considered a captive insurer's deductible reimbursement policy issued to its parent. Whether the captive could report premium income and related deductions depended on the…
Leveraged forward contract was a swaption with a circular loan
Chief Counsel analyzed a promoted leveraged forward contract that paired a purported loan with matching payments under prepaid derivative contracts. The loan and guaranteed contract payments offset…
Nuclear plant owner receives revised funding and deduction schedules
A utility owned and operated a share of a nuclear power plant and maintained a qualified nuclear decommissioning fund. Following a rate proceeding and updated decommissioning assumptions, it…
Nuclear plant owner receives revised funding and deduction schedules
A utility owned and operated a share of a nuclear power plant and maintained a qualified nuclear decommissioning fund. Following a rate proceeding and updated decommissioning assumptions, it…
Merger's contingent payments require payment-specific interest rates
A merger agreement provided a closing payment followed by five years of contingent purchase-price payments adjusted for reserve results and a retention measure. The agreement also calculated a final…
Aggregated court registry fund qualifies as a disputed ownership fund
Multiple courts pooled interest-bearing cash held in their registries while litigation determined who owned it. The pooled fund invested in government securities, remained under court control, and…
Consent granted to change stock compensation cost-sharing methods
A publicly traded domestic corporation and its foreign subsidiary operated a cost-sharing arrangement for developing intangibles. The corporation requested prospective consent to measure and time…
Bankruptcy fund qualifies as DOF and supports bad-debt deduction
A U.S. company in chapter 11 had guaranteed debt issued by a foreign affiliate and faced disputed prepetition guarantee claims. It proposed creating a court-controlled fund, transferring cash or…
Revised nuclear decommissioning funding schedule approved
A utility owned a redacted percentage of a nuclear plant and operated the facility. After a rate proceeding changed the approved assumptions for decommissioning costs, investment returns,…
Nuclear decommissioning deduction and contribution schedules approved
A utility that owned and operated part of a nuclear plant requested permission to make a special transfer to its nuclear decommissioning fund and to use a revised schedule of annual contributions.…
Bankruptcy trust qualifies as a settlement fund
A bankruptcy plan created a trust to satisfy a group of creditors’ claims arising from an asset sale and related service obligations. The trust received interests in a separate liquidating trust,…
Cooperative may freeze trustee deferred compensation plan
A tax-exempt cooperative maintained a nonelective deferred compensation plan for trustees who served as independent contractors and completed an initial service requirement. It proposed freezing…
Recasting oil-and-gas leases as purchases requires accounting-method consent
An energy company had consistently treated foreign oil-and-gas agreements as leases, deducting or including royalties in cost of goods sold. It later filed claims seeking to recast the agreements as…
Production-sharing contracts cannot be recast without accounting-method consent
An energy company had treated foreign production-sharing contracts as leases for financial and federal tax reporting for decades. It later claimed that the contracts should be treated as contingent…
Closed-year CDS gains enter section 481 adjustment
An investment adviser deferred incentive fees and also deferred gains from participation interests in credit-default swaps that it said hedged those fees. Examination proposed recognizing the CDS…
Damaged-goods claims cannot use recurring-item exception
An accrual-method moving company deducted pending customer claims for lost or damaged goods when it paid them within five months after year-end, relying on the recurring-item exception. Chief…
Tenant reimbursements are not rent, but some assets require ADS
A building owner received lump-sum reimbursements from a federal agency for tenant improvements beyond amounts amortized through stated rent. Chief Counsel advised that the lease and surrounding…
County deferred compensation plan qualifies under Section 457(b)
A county board maintained a deferred compensation plan for employees that allowed advance elective deferrals, statutory catch-up contributions, qualifying loans, required minimum distributions, and…
Section 475 mark-to-market applied to basket transactions
A securities trader that had elected § 475(f) could not omit its basket transactions from mark-to-market accounting. Whether the arrangements were recharacterized as direct ownership of the…
Nuclear decommissioning funds could pay severance and preparation costs
The IRS ruled that employee severance payments and broad categories of pre-dismantlement costs connected with shutting down two nuclear plants were nuclear decommissioning costs under § 468A. The…
Home-sale exclusion did not absorb suspended passive rental losses
A taxpayer used a home as a principal residence, converted it to a rental property, and accumulated suspended passive activity losses. The taxpayer then sold the entire rental activity to an…
Real estate professional status is determined before testing each rental activity
Chief Counsel advised that the section 469(c)(7)(B) tests for qualifying taxpayer status do not apply separately to each rental property when a taxpayer has not elected to combine all rental real…
Ending basket transaction deferral required an accounting method change and section 481 adjustment
A partnership treated barrier basket securities transactions as options and deferred gains, losses, income, and deductions until each contract ended. Field Operations concluded that the contracts…
Residual mortgage interests did not make holding company a securities dealer or trader
A holding company owned residual interests in trusts backed by mortgage loans and claimed that loan modifications by a subservicer made it a securities dealer entitled to mark the loans to market.…
Foreclosure qualifies as a fully taxable disposition of a passive activity
Chief Counsel advised that a foreclosure on real property securing recourse debt can be a fully taxable disposition of a taxpayer's entire passive activity. That conclusion applies even when…
Swap payments treated as sale-price adjustments
Chief Counsel considered the timing and characterization of payments under an agreement labeled as a stock share swap. The taxpayer sold restricted stock and agreed to make payments tied mainly to…
Receivership depreciation deductible as an administrative expense
Chief Counsel advised that depreciation on commercial real estate held by a receivership was deductible in calculating the modified gross income of a designated settlement fund. The depreciation was…
Employee cannot group employer activity with owned activities
Chief Counsel considered whether a taxpayer could group two owned activities with the activity of a closely held C corporation where the taxpayer worked as an employee but owned no interest. The…
Nuclear decommissioning funds may reimburse specified employee and transition costs
The IRS ruled that severance payments and broadly described transitional costs incurred as nuclear plants move from operation to shutdown and dismantlement are nuclear decommissioning costs under…
IRS approves correlative depreciation adjustments for earnings and profits
The IRS ruled that a corporation changing its depreciation method for federal income tax purposes must make a corresponding change in the depreciation used to compute earnings and profits. The…
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.