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 confirms a bankruptcy liquidating trust keeps its grantor-trust status even after its term is extended again
When a company goes through Chapter 11 bankruptcy, its remaining assets are often placed in a "liquidating trust" whose only job is to sell them off and pay creditors. Under Treas. Reg. § 301.7701-4(d…
IRS gives a married couple 120 days to make a late election to treat all their rental real estate as one activity
Rental real estate income is normally treated as "passive," which limits when the owner can deduct losses against other income. Taxpayers who qualify as real estate professionals under § 469(c)(7) can…
IRS rules a REIT's senior independent-living facilities aren't health care facilities and the resident services won't taint its rents
A real estate investment trust (REIT) gets its favorable tax treatment only if almost all of its income is "good" REIT income, most importantly rents from real property, and if it does not directly ru…
IRS grants 120 days to file a late check-the-box election making a foreign subsidiary a disregarded entity
Under the "check-the-box" rules (Treas. Reg. § 301.7701-3), an eligible business entity can choose how it is taxed by filing Form 8832. A foreign entity that does not elect otherwise defaults to being…
Chief Counsel email on whether a foreign corporation that elected under § 953(d) to be a domestic life insurer must file an FBAR
This is a short internal email of Chief Counsel Advice about the Report of Foreign Bank and Financial Accounts (FBAR), which certain U.S. persons must file to disclose foreign financial accounts. The …
IRS lets a church use the 15-year neighborhood-land rule so mortgaged land it is redeveloping isn't taxed as debt-financed property
A tax-exempt organization normally pays "unrelated business income tax" on income from property it bought with borrowed money (debt-financed property), even on rents that would otherwise be tax-free. …
IRS blesses a tax-free split-up of a feuding family's S corporation into two new corporations, one for each sibling's branch
A family-owned S corporation was jointly owned, through trusts and family members, by two siblings' branches. The siblings could no longer get along, and the disputes made it impossible to keep runnin…
IRS rules advisory fees paid out of an annuity's cash value aren't a taxable distribution to the owner
When money comes out of a deferred annuity before payouts begin, § 72(e) generally treats it as an "amount received" that can be taxable to the owner. A life insurance company planned to sell fixed-in…
IRS rules the depreciation part of a utility's under-recovered rider costs stays subject to normalization, so excess deferred taxes can't be refunded fast
Regulated utilities that use accelerated depreciation for tax purposes must follow "normalization" rules (§ 168(i)(9)) that stop them from flowing the resulting deferred-tax benefit through to custome…
IRS grants 120 days to file a late check-the-box election making a foreign entity a disregarded entity
Under the "check-the-box" rules (Treas. Reg. § 301.7701-3), an eligible business entity elects how it is taxed by filing Form 8832. A single-owner entity can elect to be "disregarded," meaning it is t…
IRS grants a late estate 120 extra days to make a portability election so the surviving spouse can use the decedent's unused exclusion
When someone dies, any part of their federal estate-and-gift tax exclusion they did not use can be transferred to a surviving spouse through a "portability" election. The estate makes that election by…
IRS grants an S corporation 120 days to make late QSub elections for three subsidiaries
An S corporation that owns 100% of a subsidiary can elect to treat that subsidiary as a "qualified subchapter S subsidiary" (QSub) under § 1361(b)(3). A QSub is ignored as a separate corporation, so i…
IRS grants a multiemployer pension plan a 5-year extension to amortize its unfunded liabilities under section 431(d)
Multiemployer pension plans must fund their promised benefits under minimum funding rules, paying down "unfunded liabilities" over set amortization periods. Section 431(d) lets a plan apply for an aut…
IRS approves a private foundation's non-profit-leadership fellowship procedures under section 4945(g)(3)
A private foundation asked the IRS to approve, in advance, how it will run a fellowship program that trains and funds emerging non-profit leaders working on social change. This advance approval matter…
IRS denies 501(c)(3) status to a mutual-aid group that pays bereavement benefits to its own members
A membership group applied to be recognized as a tax-exempt charity under IRC § 501(c)(3), and the IRS denied it. The group's stated purpose was to support its own members when they lose an immediate …
IRS denies 501(c)(6) business-league status to a weekly referral club that admits one member per profession
A business-networking group applied for tax-exempt status as a business league under IRC § 501(c)(6), and the IRS denied it. The group holds weekly meetings where members exchange business referrals a…
IRS denies 501(c)(3) status to a parent-run homeschool cooperative as serving members' private interest
A parent-run homeschool cooperative applied to be recognized as a tax-exempt educational charity under IRC § 501(c)(3), and the IRS denied it. In the co-op, homeschooling parents volunteer as teachers…
Tax-free spin-off of one business under sections 355 and 368(a)(1)(D), with a debt-for-cash "purging distribution"
A publicly traded parent corporation asked the IRS to bless a tax-free spin-off. The parent (Distributing) plans to separate two of its businesses by contributing one business to a newly formed subsid…
A bank cannot turn time-barred over-reported section 597 income into deductible basis in mortgage servicing rights
A bank acquired a failed bank in an FDIC-assisted deal, which was a "taxable transfer" under section 597 that came with loss-share agreements counted as federal financial assistance. Because of a comp…
Reverse termination (break-up) fees on abandoned deals are section 165 losses, capital under section 1234A, not section 162 expenses
A company agreed to acquire a target, then had to abandon the deal and a related asset sale, paying "reverse" termination (break-up) fees. On its return it deducted those fees as ordinary business exp…
Late "portability" election allowed so a surviving spouse can use a deceased spouse's unused estate-tax exclusion
When someone dies without using up their federal estate-tax exclusion, the unused part (the DSUE amount) can pass to the surviving spouse, but only if the estate makes a "portability" election on a ti…
Judicial modification of a pre-1985 grandfathered trust does not cost it GST-tax-exempt status
A trust created before September 25, 1985 is "grandfathered" from the generation-skipping transfer (GST) tax, but that protection can be lost if the trust is changed in the wrong way. Here the settlor…
Late "portability" election allowed so a surviving spouse can use a deceased spouse's unused estate-tax exclusion
When someone dies without using up their federal estate-tax exclusion, the unused part (the DSUE amount) can pass to the surviving spouse, but only if the estate makes a "portability" election on a ti…
IRS lets a taxpayer revoke and re-make its section 59(e) elections after a rare natural event caused it to miss drilling and mining costs
An affiliated group of corporations asked the IRS for two things: permission to revoke its existing tax elections under section 59(e) and extra time to make fresh ones. Section 59(e) lets a taxpayer s…
IRS grants late-election relief to file a forgotten Rev. Proc. 2011-29 success-based-fee safe-harbor statement
When a company is bought or sold, it often pays advisers "success-based" fees that are owed only if the deal closes. Tax rules presume those fees must be capitalized rather than deducted, but Revenue …
Buyer and sellers get more time to make a late section 338(h)(10) election to treat an S corporation stock purchase as an asset sale
When a corporation buys the stock of an S corporation in a qualified stock purchase, the buyer and the selling shareholders can jointly elect under section 338(h)(10) to treat the deal as if the targe…
A taxable rural telephone cooperative's cellular-network income is patronage-sourced income
A rural telephone cooperative that is now taxable (it once qualified for exemption under section 501(c)(12) but stopped meeting the 85%-member-income test) asked the IRS how to classify the income fro…
Tax-free "Reverse Morris Trust" separation and merger under sections 355 and 368(a)(1)(D) (19 rulings)
A publicly traded parent corporation asked the IRS to bless a tax-free "Reverse Morris Trust" transaction, in which it separates one of its businesses and combines it with an unrelated public company.…
Bond issuer gets more time to file the carryforward election for unused private-activity-bond volume cap
States and their agencies get a yearly cap on how much tax-exempt private activity bonds they can issue. If an issuer does not use all of its allocation, it can "carry forward" the unused amount for c…
IRS approves a private foundation's college scholarship program under section 4945(g)(1)
A private foundation asked the IRS to approve, in advance, the way it hands out college scholarships. This approval matters because a private foundation that makes grants to individuals for study norm…
IRS denies 501(c)(3) status to a performing-arts nonprofit that failed the organizational test
A newly incorporated nonprofit focused on creating performances that explore the human experience and inspiring young artists applied for recognition as a tax-exempt charity using the short Form 1023-…
Late "portability" election allowed so a surviving spouse can use a deceased spouse's unused estate-tax exclusion
When someone dies without using up their federal estate-tax exclusion, the unused part (the DSUE amount) can pass to the surviving spouse, but only if the estate makes a "portability" election on a ti…
Company gets more time to make the identification needed to integrate convertible notes with a hedge under Reg. § 1.1275-6
A corporation issued convertible notes and, at the same time, bought call options on its own stock to hedge the notes' conversion feature. Treasury Regulation § 1.1275-6 lets a taxpayer treat a qualif…
Company gets more time to make the identification needed to integrate convertible notes with a hedge under Reg. § 1.1275-6
A corporation issued convertible notes and, at the same time, bought call options on its own stock to hedge the notes' conversion feature. Treasury Regulation § 1.1275-6 lets a taxpayer treat a qualif…
Fund gets more time to self-certify as a Qualified Opportunity Fund after its preparer omitted Form 8996
To be a Qualified Opportunity Fund (QOF), an entity must self-certify each year by attaching Form 8996 to a timely filed return. Here an LLC taxed as a partnership was set up specifically to be a QOF,…
Real estate investor gets more time to elect to treat all rental properties as one activity under section 469(c)(7)
Rental real estate is normally treated as a passive activity, but a qualifying taxpayer in a real property business can elect under section 469(c)(7) to treat all of their rental real estate interests…
Estate gets more time to make a missed QTIP marital-deduction election after the preparer put the property on the wrong schedule
When a person dies, property left in trust for a surviving spouse can qualify for the unlimited estate-tax marital deduction only if the estate makes a "QTIP" election under section 2056(b)(7) on the …
Sale of a nuclear power plant: transfer of its qualified decommissioning fund is tax-free, and the seller's assumed cleanup liability counts toward amount realized
A regulated utility group sold a nuclear power plant to a nuclear-decommissioning company in a deal treated as an asset sale. The plant came with a qualified nuclear decommissioning reserve fund, a tr…
Sale of a nuclear power plant: transfer of its qualified decommissioning fund is tax-free, and the seller's assumed cleanup liability counts toward amount realized
A regulated utility group sold a nuclear power plant to a nuclear-decommissioning company in a deal treated as an asset sale. The plant came with a qualified nuclear decommissioning reserve fund, a tr…
IRS denies extra time to file late Forms 3115 for an unauthorized accounting-method change
An S corporation that runs a production company switched from the cash method to an accrual method of accounting without filing the two Forms 3115 needed to obtain the Commissioner's consent, and it d…
S corporation status saved after an invalid election and transfers to an ineligible shareholder are ruled inadvertent under section 1362(f)
A State LLC elected to be taxed as an S corporation but never obtained all of the shareholder consents required for a valid election, so the election was ineffective from the start. Later, interests i…
Late "portability" election allowed so a surviving spouse can use a deceased spouse's unused estate-tax exclusion
When someone dies without using up their federal estate-tax exclusion, the unused part (the DSUE amount) can pass to the surviving spouse, but only if the estate makes a "portability" election on a ti…
Tax-free spin-off: a public company's multi-step internal separation and distribution of a business to its shareholders qualifies under sections 355 and 368
A publicly traded parent company (called Distributing) wanted to separate one of its businesses from the rest of its worldwide group and spin it off to its shareholders. To get there it ran a series o…
Late "portability" election allowed so a surviving spouse can use a deceased spouse's unused estate-tax exclusion
When someone dies without using up their federal estate-tax exclusion, the unused part (the DSUE amount) can pass to the surviving spouse, but only if the estate makes a "portability" election on a ti…
Late "eligible acquisition transaction" election allowed so a partnership can recognize its full section 481(a) adjustment in the sale year
A health-care LLC taxed as a partnership sold part of its business and, by contract, changed from the cash method to an accrual method of accounting and agreed to recognize its entire section 481(a) c…
Late "portability" election allowed so a widow(er) can use a deceased spouse's unused estate-tax exclusion
When someone dies without using up their federal estate-tax exclusion, the unused part (the DSUE amount) can pass to the surviving spouse, but only if the estate makes a "portability" election on a ti…
Herbal-supplement maker denied 501(c)(3) status under the commerciality doctrine
An organization that manufactures and sells an oral herbal supplement (and educates the public about the supplement's claimed health benefits) applied for 501(c)(3) charity status, and the IRS denied …
Soccer-referee association denied 501(c)(10) fraternal-society status for lacking a lodge system and fraternal activities
An organization that supplies certified referees to officiate youth and school soccer matches applied to be recognized as a tax-exempt domestic fraternal society under section 501(c)(10), and the IRS …
Corporation granted more time to make a late success-based-fee safe-harbor election
A corporation got more time to make a "success-based fee" safe-harbor election after its preparer left the required statement off the return. When a company pays fees that are contingent on closing an…
Estate granted more time to make a late portability election for a surviving spouse
An estate whose value did not require it to file a federal estate tax return missed the deadline to make a "portability" election, and the IRS granted it more time. Portability lets a surviving spouse…
Estate granted more time to make a late portability election for a surviving spouse
An estate whose value did not require it to file a federal estate tax return missed the deadline to make a "portability" election, and the IRS granted it more time. Portability lets a surviving spouse…
Partnership granted more time to make a late section 754 basis-adjustment election
A limited partnership got more time to make a section 754 election after its tax preparer inadvertently missed the deadline. A section 754 election lets a partnership adjust the tax basis of its prope…
Estate granted more time to make a late portability election for a surviving spouse
An estate whose value did not require it to file a federal estate tax return missed the deadline to make a "portability" election, and the IRS granted it more time. Portability lets a surviving spouse…
IRS pre-approves a private foundation's artist- and scholar-residency grant program
A private foundation asked the IRS to approve, in advance, the procedures it uses to award grants to individuals. This step matters because a private foundation's grants to individuals for travel or s…
IRS revokes a family private foundation run from the founders' home for inurement and self-dealing
The IRS revoked the tax-exempt status of a private foundation, effective January 1, 2016, after an audit found the foundation was operated for the private benefit of the married couple who ran it (the…
State chapter of a professional association denied 501(c)(3) status for serving members rather than exclusively educational purposes
A state chapter of a national professional association applied for 501(c)(3) charity status using the streamlined Form 1023-EZ, and the IRS denied it. The chapter serves professionals in a particular …
Veterans' organization denied 501(c)(3) status because a civic center for social events is a substantial nonexempt purpose
An organization already recognized as a tax-exempt veterans' group under section 501(c)(19) applied to also be recognized as a charity under section 501(c)(3), and the IRS denied it. The denial became…
IRS revokes exemption for a fee-based building-code inspection organization
The IRS revoked the Section 501(c)(3) status of an organization that succeeded a for-profit building-code inspection and consulting business. The organization contracted with municipalities, governmen…
Land and water-rights broker for a mining town denied 501(c)(6) business-league status
The IRS denied section 501(c)(6) business-league status to a nonprofit set up to help a community recover from the closure of a major local employer by facilitating transfers of that company's land an…
Social club loses 501(c)(7) status after living on investment income from selling its clubhouse
The IRS revoked a men's social club's section 501(c)(7) exemption because too much of its income came from outside its membership. A tax-exempt social club may receive at most 35 percent of its gross …
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.