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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202311007: IRS denies exemption to group promoting a local business district
An organization sought section 501(c)(3) status for activities promoting a local industrial market where the public could visit craft beverage producers and other businesses. It held wine tastings, li…
202311006: IRS denies exemption to commercial credit-repair organization
An organization applied for recognition as a section 501(c)(3) charity and described its work as credit education, budgeting help, and document preparation. Its website offered several paid service pa…
Tax-free spin-off of a business division, with a debt-repayment step
A parent company owns a subsidiary, "Distributing," that runs two businesses: Business A and, through a separate division, Business B. Distributing wants to split the two apart. It will form a new sub…
45-day extension to file a late Form 8996 after a firm/management-team mix-up
An LLC (taxed as a partnership) was formed to be a Qualified Opportunity Fund (QOF) as one of many entities in a single large development project. Because it formed late in the year and had no income,…
Late Form 8996 accepted so a fund can self-certify as a Qualified Opportunity Fund
A partnership (an LLC) was formed to be a Qualified Opportunity Fund (QOF), a vehicle that lets investors defer tax on capital gains reinvested in opportunity-zone property. Becoming a QOF requires "s…
Late Form 8996 accepted so a fund can self-certify as a Qualified Opportunity Fund
A partnership (an LLC) was set up to be a Qualified Opportunity Fund (QOF), a vehicle that lets investors defer tax on capital gains reinvested in opportunity-zone property. To become a QOF, an entity…
Specially formulated infant food is not a deductible medical expense
A parent asked the IRS whether the cost of a specially formulated food for their infant qualifies as a medical-care expense deductible under § 213. The product delivers a specific nutrient early in li…
Two subsidiaries omitted from a consolidated return by mistake of law may be folded back in
A holding company that elected to be taxed as a corporation filed a consolidated federal income tax return for its group. All members of an affiliated group must be included in a consolidated return, …
501(c)(3) exemption denied to an employees' collective-bargaining association
An organization made up of employees of a local school district applied for 501(c)(3) charitable/educational status using the streamlined Form 1023-EZ. When the IRS asked for more detail, its constitu…
501(c)(7) social-club exemption denied to a student-athlete funding group
A membership organization applied for tax exemption as a 501(c)(7) social club using Form 1024. Its sole purpose was to raise money from members and donate it to local student athletes, giving funds t…
501(c)(3) exemption denied to a city-promotion events group
A nonprofit applied for 501(c)(3) charitable status using the streamlined Form 1023-EZ. Its mission was to hold events promoting a city, with the goal of attracting new businesses and residents and bo…
Late election granted to treat an S corporation stock sale as an asset sale
A buyer (taxed as a partnership) bought all the stock of an S corporation. The parties wanted the stock purchase to be treated, for tax purposes, as if the company had sold its assets, which a § 336(e…
Estate gets extra time to make a late portability election for the surviving spouse
When one spouse dies, the estate can make a "portability" election so the surviving spouse can use the deceased spouse's unused estate-and-gift-tax exclusion (the DSUE amount). That election is made o…
S corporation status restored after stock was transferred to an IRA
A company taxed as an S corporation transferred some of its shares into an individual retirement account (IRA) set up for one person. An IRA is not an allowed S corporation shareholder, so the transfe…
Tax-free spin-off separating two businesses of a public company
A publicly traded parent company runs two distinct lines of business and wants to separate them so that one becomes a standalone public company. It plans to gather the second business (held through a …
Extra time granted to file a late check-the-box election to be taxed as a corporation
A business started as a state-law corporation, then converted to a single-owner LLC. After the conversion, its default federal tax status was "disregarded" (treated as part of its owner), but the owne…
Late extension request granted for three tax elections missed after a botched Form 7004
A corporation that files a consolidated return meant to make three tax elections on its return for one year: the de minimis safe harbor for small capital purchases, a controlled foreign corporation (C…
S corporation election restored after two trusts missed their ESBT elections
An S corporation asked the IRS to forgive an accidental loss of its S status. Two of its shareholders were trusts. One trust had been a qualified subchapter S trust (QSST); after its income beneficiar…
Late-election relief to self-certify as a Qualified Opportunity Fund on Form 8996
A company that wanted to be a Qualified Opportunity Fund (QOF), the vehicle investors use to defer capital gains by investing in opportunity zones, has to self-certify by filing Form 8996 with a timel…
Inadvertent S corporation termination relief where an LLC operating agreement created a second class of stock
An LLC that had elected to be taxed as an S corporation ran into a common trap: to stay an S corporation, a company can have only one class of stock, meaning all owners must have identical rights to d…
One-time cash grant from a dissolving hospital is an "unusual grant" excluded from the public-support test
Public charities have to keep getting enough of their money from the general public to stay "publicly supported"; a single huge gift can throw off that math and jeopardize their status. The tax rules …
Advance approval of a foundation's leadership-development fellowship procedures under section 4945(g)(3)
A private foundation asked the IRS to pre-approve how it awards educational grants, which private foundations must do under section 4945(g) to avoid an excise tax on grants to individuals. The foundat…
Advance approval of a fire department foundation's memorial scholarship procedures under section 4945(g)
A private foundation asked the IRS to pre-approve how it awards scholarships, which private foundations must do under section 4945(g) to avoid an excise tax on grants to individuals. The foundation ru…
Advance approval of a private foundation's STEM scholarship procedures under section 4945(g)
A private foundation asked the IRS to pre-approve the way it awards scholarships. Private foundations owe an excise tax on grants to individuals for study unless the IRS approves the grant-making proc…
Dog-training and breed-evaluation club denied 501(c)(3) exemption
A club applied for 501(c)(3) charitable/educational status using the streamlined Form 1023-EZ, describing its mission as training owners and handlers of a certain breed of dogs and promoting the breed…
Racing-sport organization denied 501(c)(6) business-league exemption
An organization applied to be recognized as a tax-exempt business league under section 501(c)(6), the category that covers chambers of commerce and boards of trade. Its actual purpose was to promote a…
Gain from repeatedly selling syndicated conservation easement LLC interests is ordinary income under section 1221
A promoter ran syndicated conservation easement (SCE) deals: it would buy into land-holding LLCs, subdivide the land, package interests into new LLCs, and sell those interests to investors who were pr…
Disaster-driven power and gas costs are extraordinary items a city utility can finance with tax-exempt refunding bonds
A municipal electric and gas utility got hit with extraordinary power and fuel costs when a disaster caused massive, unprecedented outages and price spikes across its regional grid. The utility is lit…
Tax-free split-off separating an S corporation's two businesses among feuding shareholders
An S corporation ran two separate businesses, one directly and one through a wholly owned subsidiary that had elected QSub status. Its shareholders split into camps that disagreed about the two busine…
Late-election relief to enter the agreement and statement treating an S corporation stock sale as an asset sale under section 336(e)
When a buyer purchases all the stock of an S corporation, the parties can jointly elect under section 336(e) to treat the sale as if the company sold its assets. Making that election requires two on-t…
Late-election relief to treat an S corporation stock sale as an asset sale under section 336(e)
When someone buys all the stock of an S corporation, the buyer and the selling shareholders can jointly elect under section 336(e) to treat the deal as if the company had sold its assets instead of it…
Buyer of foreign-subsidiary targets gets 75 days to make late Section 338(g) elections its tax advisor failed to file
When one corporation buys the stock of another in a "qualified stock purchase," Section 338(g) lets the buyer elect to treat the deal as if it had bought the target's assets instead of its stock, whic…
Opportunity-zone fund gets 45 days to self-certify for its first year, after its manager did not realize a Form 8996 was required
A Qualified Opportunity Fund (QOF) must self-certify each year by attaching Form 8996 to its timely filed tax return. Here, a tiered set of LLCs (all taxed as partnerships) set up a fund to invest in …
Opportunity-zone fund gets 45 days to file a late self-certification after its advisor missed the extension deadline
A Qualified Opportunity Fund (QOF) lets investors defer and reduce tax on capital gains they roll into businesses located in designated opportunity zones. To become a QOF, an entity must "self-certify…
IRS rules that a rancher's perpetual water-diversion rights are "real property" like-kind to land, so they can be swapped tax-free under Section 1031
Section 1031 lets a taxpayer swap one piece of real property for another "like-kind" real property without paying tax on the gain right away. The question here was whether water rights count as "real …
Couple gets 120 days to elect out of automatic GST exemption allocation for four stepchild trusts, after their accountant left the election off three years of gift tax returns
The generation-skipping transfer (GST) tax applies when wealth passes to grandchildren or other beneficiaries more than one generation down. Everyone has a GST exemption, and when someone funds certai…
S corporation gets 60 days to make a late election opting out of bonus depreciation after its tax firm forgot to attach the statement
Bonus depreciation (the "additional first year depreciation" under Section 168(k)) normally lets a business deduct 100% of the cost of qualifying property in the year it is placed in service. Some tax…
LLC owned by a charity gets 120 days to make two missed elections so a rehab project isn't stuck with slower depreciation as tax-exempt use property
When property is owned (through partnerships) by a tax-exempt entity, part of it can be treated as "tax-exempt use property," which forces slower depreciation and can undercut credits. The Code offers…
Married couple gets 120 days to make a late election grouping all their rental real estate as one activity, after their tax pro never told them the election existed
Rental real estate is normally treated as "passive," which limits how much of its losses can offset other income. A real estate professional who qualifies under Section 469(c)(7) can escape that rule,…
IRS blesses a nonprofit health insurer's "unstacking" into a holding-company structure, ruling its membership interests count as stock and it stays a Section 833 organization
A nonprofit, non-stock health insurance company (the kind taxed under Sections 501(m) and 833, which covers Blue Cross Blue Shield-type organizations) wanted to reorganize its corporate family under a…
Corporate group gets 60 days to make a late success-based-fee safe-harbor election it forgot to attach, conditioned on fixing which subsidiary paid the fee
When a company pays an investment banker a fee that is contingent on closing an acquisition (a "success-based fee"), the tax rules presume the whole fee must be capitalized unless the company document…
IRS approves a private foundation's set-aside to fund multi-year construction of a public cultural and educational center
A private foundation asked the IRS to approve a "set-aside." Private foundations normally must pay out a minimum amount for charitable purposes each year, but section 4942(g)(2) lets a foundation inst…
202308012: IRS denies 501(c)(3) status to a "time bank" barter cooperative that mainly served the private interests of its own members
The IRS denied tax-exempt status under 501(c)(3) to a nonprofit that ran a "time bank." In a time bank, members earn one time-dollar for each hour of service they give and can spend those time-dollars…
202308011: IRS revokes a 501(c)(3) that ignored an audit, after repeated mailed notices and roughly twenty unanswered phone calls to its officers
The IRS revoked a charity's 501(c)(3) status because it never responded to an audit. The organization had been recognized as exempt after filing the streamlined Form 1023-EZ. When the IRS selected it …
Late success-based-fee election denied because the investment banking fee was the private-equity seller's selling cost, not the target's deduction
When a business is sold, investment banking "success-based fees" tied to closing the deal can sometimes be split under a safe harbor (Rev. Proc. 2011-29), deducting 70 percent and capitalizing 30 perc…
Consolidated group gets 120 days to make a late GILTI high-tax exclusion election after misreading the 24-month deadline
U.S. companies that own controlled foreign corporations (CFCs) generally have to include the CFCs' "GILTI" (global intangible low-taxed income) in their own income under Section 951A. A regulation let…
LLC gets 120 days to re-file a check-the-box election that was missing required signatures
Under the "check-the-box" rules, an LLC with two or more members is treated as a partnership by default but can elect to be taxed as a corporation by filing Form 8832. That form has to be signed by th…
Late relief lets an LLC self-certify as a Qualified Opportunity Fund after its advisor missed the extension deadline
To be a Qualified Opportunity Fund (QOF), which lets investors defer tax on capital gains reinvested in opportunity zones, an entity must self-certify each year by filing Form 8996 with a timely tax r…
S corporation status preserved after three trusts missed their ESBT elections
An S corporation passes income through to its shareholders untaxed at the corporate level, but only eligible owners may hold the stock. A trust can qualify only if its trustee timely files an Electing…
S corporation status preserved after an invalid election by an ineligible shareholder and a later missed trust election
This is a companion ruling to a same-day request (its file reference PLR-111038-22 sits next to PLR-111031-22) with the same fact pattern. An S corporation passes its income through to shareholders un…
S corporation status saved after an invalid election by an ineligible shareholder and a later missed trust election
An S corporation is a small business that passes its income through to shareholders instead of paying corporate tax, but only certain owners are allowed to hold the stock. This company had two problem…
Real estate professionals get 120 days to make a late election grouping all rental properties as one activity
Rental real estate is normally treated as a "passive activity," so losses from it can only offset passive income. Section 469(c)(7) gives an exception to taxpayers who qualify as real estate professio…
Partnership gets 120 days to make a late Section 754 basis-adjustment election it meant to make on a buyout
When someone buys into a partnership (here an LLC taxed as a partnership), the partnership can elect under Section 754 to adjust the tax basis of its assets so the new partner's inside basis lines up …
Late relief granted so an LLC can self-certify as a Qualified Opportunity Fund for two missed years
An investor put capital gains into a Qualified Opportunity Fund (QOF) to defer tax on those gains, a benefit created by the Opportunity Zone rules in Section 1400Z-2. To be a QOF, the entity (here an …
Private foundation's scholarship-award procedures approved in advance, so the grants aren't taxable expenditures
A private foundation asked the IRS to pre-approve the way it runs its scholarship program. This matters because when a private foundation gives money to individuals for study, that grant is normally a…
Faith-based matchmaking and social-event club denied 501(c)(3) status as a commercial venture serving private interests
An organization applied to be recognized as a tax-exempt charity under Section 501(c)(3). It planned to run an exclusive faith-based social club, a paid matchmaking service where clients hire it to fi…
Late portability election allowed, estate gets 120 more days to claim a deceased spouse's unused estate-tax exclusion
When a married person dies without using up their federal estate-tax exclusion (the amount that can pass tax-free, roughly $13 million in recent years), the leftover, called the DSUE amount, can be tr…
S election that was invalid from the start (and later at risk) restored as inadvertent
A company's S corporation election was defective from day one, and the IRS forgave the defect. When the company first elected S status, its shares were owned by an ineligible shareholder, and no eligi…
S corporation status preserved after a trust shareholder missed its ESBT election
An S corporation's tax status accidentally lapsed and the IRS restored it. An S corporation can only have certain kinds of shareholders. A trust may hold S corporation stock if it elects to be an Elec…
45 days granted to file a late Form 8996 QOF election after the tax preparer's oversight
An LLC taxed as a partnership was formed to qualify as a Qualified Opportunity Fund (QOF) and invest in an Opportunity Zone. To get QOF treatment, an entity must self-certify by filing Form 8996 with …
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.