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 501(c)(7) status of a social club whose nonmember income exceeded the 15% limit year after year
A tax-exempt social club under IRC § 501(c)(7) can take in only a limited share of its money from outside its membership: no more than 35% of gross receipts from all outside sources, and within that, …
IRS revokes 501(c)(7) status of a social club that leased its facilities to for-profit operators and earned substantial nonmember income
A tax-exempt social club under IRC § 501(c)(7) is supposed to be run substantially for the pleasure and recreation of its members, funded mostly by member dues, with only limited money coming from out…
IRS revokes a 501(c)(3) collection/museum charity that could not be distinguished from the affiliated social club that controlled it
A nonprofit had been recognized as a 501(c)(3) public charity (a publicly supported organization under sections 170(b)(1)(A)(vi) and 509(a)(1)) to assemble, collect, and display a significant collecti…
IRS revokes a "flow-through charity" used as a vehicle in a promoter's abusive donated-LLC-interest charitable-giving tax scheme
A nonprofit obtained 501(c)(3) status using a short-form application (Form 1023-EZ) and then operated as a "flow-through" for donated limited liability company (LLC) interests. On audit, the IRS found…
S corporation keeps its status after an operating agreement accidentally created a second class of stock
An S corporation is allowed only one class of stock, meaning all shares must confer identical rights to distributions and liquidation proceeds. Here a corporation adopted an operating agreement whose …
Estate gets more time to fix a botched QTIP marital-deduction election
A "QTIP" election under § 2056(b)(7) lets an estate claim the unlimited marital deduction for property left in trust for a surviving spouse, so no estate tax is due at the first spouse's death. Here t…
Couple gets more time to elect corporate tax rates on foreign-corporation income after their accountant missed it
When a U.S. individual owns a share of a controlled foreign corporation, they can be taxed currently on that foreign income, and a § 962 election lets the individual instead be taxed at corporate rate…
Couple gets more time to elect corporate tax rates on foreign-corporation income after their accountant missed it
When a U.S. individual owns a share of a controlled foreign corporation, they can be taxed currently on that foreign income, and a § 962 election lets the individual instead be taxed at corporate rate…
Foreign subsidiary gets extra time to file a late "disregarded entity" election
Under the "check-the-box" rules, a business entity with a single owner can elect on Form 8832 to be disregarded for federal tax purposes, meaning it is treated as part of its owner rather than as a se…
Foreign subsidiary gets extra time to file a late "disregarded entity" election
Under the "check-the-box" rules, a business entity with a single owner can elect on Form 8832 to be disregarded for federal tax purposes, meaning it is treated as part of its owner rather than as a se…
Foreign subsidiary gets extra time to file a late "disregarded entity" election
Under the "check-the-box" rules, a business entity with a single owner can elect on Form 8832 to be disregarded for federal tax purposes, meaning it is treated as part of its owner rather than as a se…
S corporation keeps its status after several trusts accidentally became ineligible shareholders
An S corporation can only be owned by certain kinds of shareholders, and some trusts qualify only if the beneficiary files a timely "QSST" election. Here a corporation's S election was accidentally te…
Estate gets extra time to make a portability election for the surviving spouse
When one spouse dies without using all of their federal estate-tax exemption, the leftover amount (the "DSUE" amount) can pass to the surviving spouse, but only if the executor makes a "portability" e…
IRS approves a foundation's scholarship procedures for professional-development grants to under-represented communities
A private foundation asked the IRS to pre-approve the way it runs a scholarship program, and the IRS said yes. This advance approval matters because a private foundation normally owes an excise tax wh…
IRS denies 501(c)(3) status to a fraternal lodge whose main purpose is its own ritual activities
A fraternal lodge applied for 501(c)(3) charity status using the short Form 1023-EZ, then had to answer follow-up questions. The IRS denied the application on both of the two tests every charity must …
IRS removes a social club from its group exemption for exceeding the 35% investment-income limit
A social club that housed and served a group of students had its 501(c)(7) exemption pulled after an IRS audit. The club was a subordinate under a parent organization's group ruling; one related entit…
IRS revokes 501(c)(3) status of a defunct, family-funded charity that failed both the organizational and operational tests
The IRS revoked the 501(c)(3) exemption of a small charity that had essentially gone dormant. On audit, the founder explained that the group had started as a way to do occasional charitable activities…
IRS revokes a charity's 501(c)(3) status after it failed to produce its records
The IRS revoked a charity's 501(c)(3) exemption because the organization did not cooperate with an examination. The agency picked the group for audit to confirm its documents and activities matched it…
IRS revokes 501(c)(7) status of an inactive fraternity clubhouse corporation with only investment income
A corporation that owned and ran a clubhouse for a college chapter's members had its 501(c)(7) social-club exemption revoked after an IRS audit. It had been a subordinate under a parent organization's…
IRS disqualifies a self-declared 501(c)(7) club whose members never meet or commingle
An organization had been treating itself as a tax-exempt social club under 501(c)(7) without ever getting a formal ruling from the IRS and without being covered by any group exemption. On audit, the I…
IRS revokes 501(c)(7) status of a social club left with no members and only investment income
A tax-exempt social club (a subordinate chapter under a parent group exemption) had its 501(c)(7) status revoked after an IRS audit. A 501(c)(7) club must be organized and operated substantially for t…
IRS denies 501(c)(6) business-league status to a referral-networking club
A membership group applied to be recognized as a tax-exempt business league under 501(c)(6). Its members meet weekly to swap sales leads and refer business to one another, and it caps membership at on…
IRS denies 501(c)(3) status to a group that runs an annual community automotive festival
An organization already recognized as a 501(c)(4) social-welfare group applied to be reclassified as a 501(c)(3) charity, which would let donors deduct their gifts. Its main activity is planning and r…
A PPP loan forgiven based on false statements is taxable income
This is internal legal advice from IRS Chief Counsel to fraud counsel about Paycheck Protection Program (PPP) loans. Normally, when a PPP loan is forgiven, a special rule (15 U.S.C. § 636m(i) and sect…
Extension of time for a corporate group to make a late section 59(e) election to amortize R&E expenses over 10 years
Companies that incur research and experimental (R&E) expenses can elect under section 59(e) to spread the deduction ratably over 10 years instead of taking it all at once, which can be useful for mana…
Extension of time for a life insurer that heads a consolidated group to file a late copy of its accounting-method-change form
A life insurance company that is the parent of a consolidated group filed an automatic accounting-method change with its tax return, attaching the original Form 3115 (Application for Change in Account…
Extension of time for a life insurer in a consolidated group to file a late copy of its accounting-method-change form
A life insurance company that is a member of a consolidated group filed an automatic accounting-method change with its tax return, attaching the original Form 3115 (Application for Change in Accountin…
Extension of time for a life insurance company to file a late copy of its accounting-method-change form
A life insurance company filed an automatic accounting-method change with its tax return, attaching the original Form 3115 (Application for Change in Accounting Method) to the return. Through administ…
How commonly controlled partnerships count toward the section 7874 inversion ownership fraction
Section 7874 is the anti-inversion rule: when a foreign corporation acquires a U.S. business, the tax law measures how much of the new foreign parent the former U.S. owners hold (the "ownership fracti…
Marina floating docks are REIT real property, and related storage, insurance, and amenity income qualifies
A company that owns and operates marinas planned to elect to be taxed as a real estate investment trust (REIT). REITs must meet strict tests: most of their assets must be real estate, and most of thei…
Extension of time for a corporate group to make a late election to file a consolidated return
A group of affiliated corporations can elect to file a single consolidated federal income tax return, with a common parent, instead of separate returns. The election is made by timely filing that cons…
Extension of time to file a late section 336(e) election treating an S corporation stock sale as an asset sale
When a buyer purchases all the stock of an S corporation, the parties can elect under section 336(e) to treat the stock sale as if the corporation had sold its assets, which often gives the buyer a st…
Extension of time for an estate to make a portability election preserving the deceased spouse's unused exclusion
When a spouse dies without using all of their federal estate-tax exemption, the surviving spouse can claim the leftover (the "deceased spousal unused exclusion," or DSUE) only if the deceased spouse's…
Final denial of 501(c)(3) exemption to a hobby-enthusiast archive operated for substantial social purposes
An organization built around a particular product or brand (referred to only as "Z," described as part of automotive history) applied for charitable tax-exempt status under section 501(c)(3). Its main…
Retained surface-mining rights disqualify a conservation easement deduction under section 170(h)
This is internal legal advice from IRS Chief Counsel to a field attorney about conservation easement charitable deductions. To deduct the value of a conservation easement, the gift must be made exclus…
Extension of time for an estate to make a portability election preserving the deceased spouse's unused exclusion
When someone dies without using up their full federal estate-tax exemption, the leftover amount (the "deceased spousal unused exclusion," or DSUE) can be passed to the surviving spouse, but only if th…
Extension of time for an insurance company to file late copies of its accounting-method-change forms
An insurance company filed automatic accounting-method changes with its consolidated tax return, attaching the original Forms 3115 (Application for Change in Accounting Method) to the return. Through …
Tax-free rulings for a multi-step corporate reorganization and spin-off of a controlled subsidiary
A publicly traded parent corporation that files a consolidated return with its subsidiaries planned to reorganize its corporate structure and then spin off one subsidiary to its shareholders. The reor…
IRS grants a foreign subsidiary extra time to file a late "check-the-box" election to be a disregarded entity
A foreign subsidiary wholly owned by a parent company wanted to be treated as a "disregarded entity" for U.S. federal tax purposes, meaning it is ignored as separate from its owner and its activities …
IRS grants a foreign subsidiary extra time to file a late "check-the-box" election to be a disregarded entity
A foreign subsidiary wholly owned by a parent company wanted to be treated as a "disregarded entity" for U.S. federal tax purposes, meaning it is ignored as separate from its owner and its activities …
A VEBA may expand its membership to all former employees without losing its tax exemption
A voluntary employees' beneficiary association (VEBA) is a tax-exempt group under section 501(c)(9) that pays life, sick, accident, or similar benefits to its employee-members. This VEBA, funded only …
IRS grants an LLC late-election relief to be taxed as a corporation and then as an S corporation
A single-owner limited liability company (LLC) wanted to be taxed as an S corporation. That takes two steps: first the LLC must elect to be treated as a corporation (an association) by filing Form 883…
IRS lets a housing partnership amend Forms 8609 to fix inadvertent low-income housing credit election errors
A limited partnership owns a multi-building housing project that received low-income housing tax credits under section 42. To claim those credits, the owner files a Form 8609 for each building and mak…
IRS grants a foreign entity extra time to file a late "check-the-box" election to be taxed as a partnership
A foreign business entity wanted to be treated as a partnership for U.S. federal tax purposes. To do that, an eligible entity files a "check-the-box" election on Form 8832 under the entity classificat…
IRS grants advance approval of a private foundation's scholarship and educational grant procedures
A private foundation asked the IRS to approve, in advance, how it will award scholarships and related educational grants. This approval matters because section 4945 taxes a private foundation's "taxab…
IRS treats a large trust distribution to a public charity as an "unusual grant" that will not upset its public-support status
A publicly supported charity must normally show that a large share of its funding comes from broad public support rather than a few big donors. A single very large gift can distort that math and threa…
IRS denies 501(c)(3) status to a juice and smoothie bar as a commercial business
An organization applied for recognition as a tax-exempt charity under section 501(c)(3). Its stated purpose was to promote health through education and by selling affordable organic juices, smoothies,…
IRS denies 501(c)(4) social welfare exemption to a tax-preparation operation run like a for-profit business
An organization applied to be recognized as a tax-exempt social welfare group under section 501(c)(4). Its sole activity was tax preparation, along with related services like tax resolution, audits, a…
An entity lacking dealer or bank-type regulatory supervision is not a qualified derivatives dealer eligible entity, so its application should be rejected
U.S. tax rules on payments to foreign persons let certain foreign financial firms register as qualified derivatives dealers (QDDs), a status that changes how withholding applies to dividend-equivalent…
A section 965 underpayment from disregarding a regulation cannot be spread over installments and is due at once
The 2017 tax law imposed a one-time transition tax under section 965 on U.S. companies' accumulated offshore earnings, and it let a company elect to pay that tax in eight annual installments. Here a d…
An S corporation's accidental election termination is treated as inadvertent, so S status continues if the trust beneficiary makes a late QSST election
An S corporation had a trust among its shareholders. While the trust's grantor was alive, the trust counted as a grantor trust owned by him, which is a permitted S corporation shareholder. When the gr…
IRS consents to revoke a mark-to-market election on a foreign fund so the investor can switch to a QEF election
A U.S. investment partnership held stock in a foreign company that is a passive foreign investment company (PFIC). A U.S. owner of PFIC stock generally must choose a tax regime for it, and two common …
A REIT's accounting-method adjustments are excluded from its income tests and treated as paid from E&P
A real estate investment trust (REIT) earns nearly all of its income through a partnership that owns communications towers and related real estate. The partnership discovered it had been depreciating …
Advisory fees paid out of an annuity's cash value are not a taxable distribution under section 72(e)
A life insurance company offers deferred annuity contracts designed to be managed with the help of an investment adviser. The owner authorizes the company to deduct the adviser's fee (capped at 1.5% o…
Court-ordered restructuring of long-term care policies in an insurer rehabilitation is not a taxable event for policyholders
A state-domiciled life insurance company that sold guaranteed-renewable long-term care policies was placed into rehabilitation by a state court because its projected liabilities far exceeded its asset…
S corporation relief after its operating agreement created a second class of stock
An S corporation can have only one class of stock, meaning all shares must confer identical rights to distributions and liquidation proceeds. Here the company's owners signed an operating agreement wh…
Tax-free split-off lets two family branches divide a closely held S corporation
A closely held S corporation is owned by two branches of a family that disagree about how to run the business. To separate, the corporation (Distributing) will form a new subsidiary (Controlled), move…
Late relief to elect out of the bankruptcy loss rule under section 382(l)(5)
Section 382 limits how much of a corporation's past losses it can use after an ownership change. A special rule, section 382(l)(5), applies when the ownership change happens in bankruptcy (a title 11 …
IRS treats a subsidiary as having consented to a consolidated return despite a missing Form 1122
A corporate parent and its wholly owned subsidiary wanted to be treated as filing a consolidated federal income tax return, but the parent had mistakenly treated the subsidiary as a disregarded entity…
IRS approves a foundation's set-aside for a historic decorative-arts restoration matching grant
A private foundation asked the IRS to approve a "set-aside," which lets it earmark money now for a specific project and still count it toward the minimum it must distribute each year, as long as it pa…
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.