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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IRS revokes a fraternal title-holding group's 501(c)(7) status after it sold its building and kept only investment income
This organization started as a company that owned and held title to a building for a fraternal lodge. Over the decades its tax classification shifted: originally exempt as a title-holding corporation …
IRS approves a company foundation's employer-related scholarship procedures under 4945(g)(1)
A private foundation tied to a company asked the IRS to pre-approve the way it runs an employer-related scholarship program. The program pays for the college education of the children of the company's…
A low-income housing project got more time to make its 40-60 minimum set-aside election
A taxpayer owns a single-building low-income housing project and claims the low-income housing tax credit under Section 42. To qualify, a project must commit to a "minimum set-aside": renting enough u…
A company got more time to fix the effective date of its REIT election
A limited liability company wanted to be taxed as a Real Estate Investment Trust (REIT) under Section 856. A REIT election is made on the company's tax return (Form 1120-REIT) for the first year it wa…
A complete Form 8886 can satisfy the disclosure needed to avoid the 40% economic-substance penalty, even without a separate Form 8275
When the IRS disallows a tax benefit because a transaction lacked "economic substance" (it had no real business purpose beyond tax savings), it can add a 20 percent penalty. That penalty doubles to 40…
Supplemental spin-off ruling lets a parent hand a spun-off subsidiary's retained shares to a bank to pay off debt without recognizing gain under section 361(c)
When a corporation spins off a subsidiary in a tax-free transaction under sections 355 and 368, it can keep some of the subsidiary's stock ("retained shares") and later use that stock to pay down its …
A parent's separation of one subsidiary's four businesses into three newly spun-off corporations qualifies as tax-free "D" reorganizations and section 355 distributions
A publicly traded parent company owns a subsidiary ("Sub 1") that runs four distinct businesses through a web of lower-tier corporations and disregarded entities. To split those businesses apart, Sub …
Widowed spouse gets 120 more days to make a missed QTIP election after the estate's accountant failed to advise it
A married person set up a revocable trust and left their whole estate to it. When they died, the trust became irrevocable and was designed to pay all its income to the surviving spouse for life, the c…
Buyers and seller of an S corporation get extra time to file the late election that treats their stock purchase as an asset purchase under section 336(e)
When someone buys all the stock of an S corporation, a section 336(e) election lets the parties treat the deal as if the company sold its assets instead of its stock, which usually gives the buyer a s…
Trustee gets 120 more days to certify that a non-citizen surviving spouse became a U.S. citizen, ending the special estate tax on a QDOT
When someone dies leaving property to a surviving spouse who is not a U.S. citizen, the estate normally cannot claim the unlimited marital deduction unless the property goes into a "qualified domestic…
Investor whose late K-1s pushed the return past its deadline gets 60 more days to make a section 1045 election deferring gain on small-business stock
Section 1045 lets an investor who sells "qualified small business stock" (QSBS) held more than six months roll the gain into new QSBS bought within 60 days, deferring tax on the sale. The election tha…
The automatic GST-exemption allocation rules applied to a decedent's trust even though the estate never made the allocation on Schedule R
The generation-skipping transfer (GST) tax applies when wealth passes to grandchildren or later generations, but each person has a GST exemption (here $1,000,000 under the law in effect at the deceden…
A foreign partnership gets 120 more days to make the section 754 election it forgot to file with its return
A section 754 election lets a partnership adjust the tax basis of its assets when a partner's interest changes hands or when the partnership distributes property, so that the inside basis of the asset…
A company that repeatedly blew its S corporation status through partnership conversions and missed trust elections gets inadvertent-termination relief under section 1362(f)
An S corporation gets pass-through tax treatment only if it stays a "small business corporation," which among other things means it can have just one class of stock and only eligible shareholders (cer…
IRS approves a foundation's educational grant procedures for a BIPOC dance-artist support program under 4945(g)(3)
Private foundations normally owe an excise tax when they hand grant money to individuals for study or travel, unless the IRS approves the foundation's grant-making procedures in advance. Here a founda…
IRS approves a foundation's grant procedures for a fellowship on faith and gender equality under 4945(g)(3)
A private foundation normally owes an excise tax when it gives grant money to individuals for study or similar purposes, unless the IRS has approved its grant procedures in advance. This foundation so…
IRS denies 501(c)(3) status to a retirement-community firearms and shooting club that serves its members' private interests
To be a tax-exempt charity under section 501(c)(3), an organization must be operated exclusively for charitable or educational purposes and must serve the public rather than the private interests of i…
IRS revokes a fraternal chapter's 501(c)(7) social-club exemption because all its revenue came from investment income, not members
A social club exempt under section 501(c)(7) (think a fraternity chapter, country club, or hobby club) is supposed to be supported mainly by its members through dues, fees, and assessments. The law le…
IRS revokes a charity that did not substantiate educational or charitable operations
A section 501(c)(3) organization told the IRS that it would carry on educational activities, but an audit found no educational opportunities or defined charitable class. The organization provided some…
IRS revokes a social club whose outside catering income exceeded the nonmember-income limit
A section 501(c)(7) social club operated a gathering place for business executives and contracted with an outside catering company. The club received monthly revenue from that arrangement, classified …
Social club loses exemption after excessive investment and nonmember income
A membership organization devoted to genealogical and historical information had been recognized as a tax-exempt social club under IRC § 501(c)(7). Its revenue included member dues and program receipt…
Social club loses exemption after mineral income replaces member support
A family membership organization had been recognized as a tax-exempt social club under IRC § 501(c)(7). It reported no member dues in the examined years and instead received a mineral-lease signing bo…
Exemption revoked over family fundraising benefits and deficient governing documents
A membership organization used fundraising programs to support activities for participating families. It credited fundraising work to family accounts that could offset trip and other program costs, so…
Social club exemption revoked for recurring investment income
A hunting, fishing, and recreation club held a professionally managed investment fund created from a lump-sum lease payment. For several consecutive years, investment income caused the club to receive…
Exemption revoked after organization failed to substantiate its operations
A private foundation did not fully respond to repeated IRS requests for its organizing documents, activity descriptions, minutes, financial records, and other examination materials. The partial respon…
Social club exemption revoked for recurring public-event income
A social club held shows and training classes that were open to the public. Most show participants were not members, but the club did not separate member and nonmember receipts or maintain the records…
Medicaid care payments remain subject to employment tax unless an exception applies
A parent received state-program payments for providing in-home care to the parent's disabled child. Notice 2014-7 treats qualifying Medicaid waiver payments as difficulty-of-care payments excluded fro…
Closed-year interest remains in the balance for open-year self-dealing tax
A private foundation made a self-dealing loan to a disqualified person, and unpaid interest was added to the loan balance each year. By the time of examination, the assessment period had expired for t…
S corporation received inadvertent-termination relief after trust transfers
Two shareholders transferred S corporation stock to trusts that were mistakenly treated as grantor trusts. Because the trusts did not qualify as eligible S corporation shareholders, the transfers term…
Estate received 120 days to elect portability
An estate that was not otherwise required to file an estate tax return missed the deadline to elect portability of the deceased spouse's unused estate tax exclusion. The estate requested regulatory re…
Corporation received 90 days to file its IC-DISC election
A corporation was formed to operate as an interest charge domestic international sales corporation for an affiliated manufacturer's exports. Its advisers and staff prepared Form 4876-A and believed th…
Partnership received 45 days to self-certify as an opportunity fund
A partnership intended to operate as a qualified opportunity fund, but its tax adviser mistakenly failed to attach Form 8996 to its timely filed return. The partnership did not know about the separate…
Family business split-off qualified as a tax-free Type D reorganization
Three family shareholders who operated an S corporation disagreed about how to manage its business and wanted to run separate portions independently. The corporation proposed forming a controlled corp…
Tax-exempt controlled entity received 60 days to make depreciation election
A taxable corporation wholly owned by a section 501(c)(3) organization indirectly owned a partnership that placed depreciable property in service. The corporation intended to elect under section 168(h…
Partnership received 120 days to make a late section 754 election
A decedent held a partnership interest through a grantor trust, and the trustee later distributed that interest equally to the decedent's children. The partnership timely filed its return but did not …
Educational-facility construction set-aside approved
A private foundation requested approval to set aside an amount for construction of an educational facility with classrooms and research space. COVID-19 disruptions made project scheduling uncertain, c…
Gated homeowners association denied charitable exemption
A small gated homeowners association applied for section 501(c)(3) status even though it had previously filed homeowners-association tax returns and later said the exemption application was a mistake.…
Social club exemption revoked for recurring nonmember income
A recreational social club received nonmember income from investments, royalties, securities, and rent. Although it reported some unrelated business income, it did not report all investment or royalty…
Exemption revoked after organization ignored records requests
An exempt organization had previously been classified as a private foundation and received approval to try to terminate that status by demonstrating public support. It did not establish that it met th…
Exemption revoked for defective articles and failure to provide records
An organization had attested in its streamlined exemption application that its organizing document limited its purposes and properly dedicated its assets on dissolution. State records showed that the …
Social club exemption revoked after activities ceased and investment income exceeded limits
The IRS revoked the Section 501(c)(7) exemption of a social club that had sold the property it was formed to hold. After the sale, the organization stopped conducting its own social activities and mad…
Exemption revoked for an organization that never became active
The IRS revoked the Section 501(c)(3) status of an organization that said it had never truly been active and had no plans to begin operating. The organization had received exemption through a streamli…
Exemption revoked after charity stopped operating and withheld records
The IRS revoked the Section 501(c)(3) status of an organization that had stopped conducting exempt activities but still held a parcel of land. The organization did not provide articles of dissolution,…
Resident-owned mobile home community denied charitable status
A resident-owned manufactured-home community sought exemption under Section 501(c)(3). It owned the land and rented lots only to members who owned or occupied homes in the community, with the goal of …
Cemetery denied charitable status because it served private interests
An organization applied for Section 501(c)(3) status to operate and maintain a cemetery and sell burial plots. Its organizing document stated that cemetery operation was its purpose, and its only acti…
Exemption revoked when claimed foreign charity work could not be verified
The IRS revoked the Section 501(c)(3) status of an organization that claimed to build charitable and educational facilities in another country. Its returns did not describe those foreign activities, i…
Boat condominium denied social-club exemption
A boat-condominium operator applied for exemption as a Section 501(c)(7) social club. Its recurring activities included boat storage and retrieval, marina maintenance and repairs, fuel sales, member a…
Local business-promotion group denied charitable status
A local organization applied for Section 501(c)(3) status while describing its mission as promoting business activity in its community. It sponsored teacher recognition, children’s events, community c…
Grantmaking charity revoked after loss of corporate status and public support
The IRS revoked the Section 501(c)(3) status of a grantmaking organization whose nonprofit corporate status had been revoked by its state of incorporation. Despite repeated requests, the organization …
IRS denies 501(c)(3) status to an agricultural research and processing facility that substantially serves private commercial interests
An organization applied for 501(c)(3) status saying it was formed for scientific and educational purposes to promote agricultural production. In practice it planned to build and run a specialty proces…
IRS denies 501(c)(3) status to a members-only funeral-benefit mutual-aid group that serves its members' private interests
An unincorporated nonprofit association applied for 501(c)(3) charitable status using the streamlined Form 1023-EZ. It operates as a members-only mutual-aid fund: members pay a monthly fee, register t…
IRS approves a private foundation's high school scholarship procedures in advance, so the grants aren't taxable expenditures
A private foundation asked the IRS to approve, in advance, the procedures it uses to award college scholarships to graduating seniors of two high schools. This approval matters because section 4945 ta…
Estate gets extra time to make the section 642(c)(1) election to claim a charitable deduction it missed
An estate that pays part of its income to charity can deduct that payment under section 642(c)(1), and a special timing rule lets a fiduciary elect to treat a charitable payment made in the following …
Employer can move a terminated pension plan's surplus into two ongoing 401(k) plans, treated as one "qualified replacement plan," without triggering the reversion excise tax
When an employer terminates an overfunded pension plan and takes back the leftover money, that "reversion" is hit with an excise tax under section 4980 (20 percent, rising to 50 percent) on top of reg…
Buyers and seller of an S corporation get extra time to make the section 336(e) election that treats a stock sale as an asset sale
When someone buys the stock of a corporation, the tax law normally treats it as a purchase of stock. But a section 336(e) election lets the parties treat a qualifying stock sale as if the corporation …
Trust gets extra time to elect to deduct a charitable gift in the earlier year it was meant to count
A trust (or estate) that pays money to charity out of its income can deduct that payment under section 642(c)(1). There is a special timing rule: if the charitable payment is actually made in the year…
Estate that didn't have to file an estate tax return gets extra time to make a "portability" election so the surviving spouse can use the unused exclusion
When someone dies, any unused portion of their federal estate/gift tax exclusion can be transferred to their surviving spouse (the "deceased spousal unused exclusion," or DSUE) through a "portability"…
Estate gets extra time to make QTIP and "reverse" QTIP elections its attorney botched on the estate tax return
When a married person dies, an estate can defer estate tax on assets left in trust for the surviving spouse by making a "QTIP" election (qualified terminable interest property) under section 2056(b)(7…
S corporation with trust shareholders gets to fix mistaken ESBT elections, make late QSST elections, and keep its S status after an inadvertent termination
An S corporation was owned through trusts that were split into separate shares for individual family beneficiaries. To keep S-corporation eligibility, each separate trust share needed to be a permissi…
IRS revokes a "low-income housing" nonprofit that ran a commercial home-flipping business and funneled money to the founder's family
A nonprofit told the IRS it existed to create homeownership for low-income and disadvantaged people. On audit, the IRS found it mostly bought foreclosed houses through a bank-transfer program, rehabil…
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.