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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ESOP receives more time to reinvest after corporate reorganization
An employee stock ownership plan held stock that ceased to count as employer securities after an affiliate's initial public offering. A planned corporate reorganization would give the plan stock of…
$100 noncash recognition awards are not de minimis fringes
An IRS employment tax official asked Chief Counsel whether noncash recognition awards worth $100 could be treated as de minimis fringe benefits. Counsel advised that they could not. The memorandum…
Return with math error can still be a refund claim
District Counsel asked whether an original return containing an incorrect Social Security number could count as a timely refund claim, and whether a later return could supply the missing information…
Credit allowed for California death tax under retroactive legislation
Chief Counsel considered whether California estate tax paid under Assembly Bill 2818 could support a federal state death tax credit for estates of people who died before the bill was enacted on…
Refund claim period tolled for restricted Indian trust land
Chief Counsel advised on refund claims for taxes paid on income from restricted Indian trust land after government superintendents filed returns for the landowners. It concluded that the section…
Insurance accounts may look through nested investment funds
Two investment funds used by variable life insurance and annuity accounts asked how diversification would be measured if one fund invested more than 55 percent of its assets in the other. The IRS…
Former resident's departure lacks a principal tax avoidance purpose
A former U.S. lawful permanent resident sought a ruling after relinquishing that status. The person's net worth exceeded a statutory threshold that could trigger a presumption of tax avoidance under…
Former resident rebuts tax avoidance presumption only
A former U.S. lawful permanent resident sought a ruling that relinquishing that status did not have a principal purpose of avoiding U.S. taxes. The person's net worth exceeded the threshold that…
Proposed unitrust qualifies for specified charitable deductions
Two donors proposed a charitable remainder unitrust funded with publicly traded stock. Its annual payout would be seven percent of asset value, split among an individual and a charity for the…
Late S corporation election treated as timely if filed within 60 days
A corporation intended to elect S corporation status from its first tax year, but its accountant did not prepare or file Form 2553 on time. The corporation and its shareholders filed tax returns…
Late S corporation election allowed after attorneys' miscommunication
A corporation intended to be an S corporation from inception, but miscommunication between its attorneys left its Form 2553 unfiled for its first tax year. Contemporaneous correspondence from one…
Charitable lead trust receives gift and estate tax rulings
A taxpayer proposed an irrevocable charitable lead annuity trust that would pay a fixed annual amount to two charities before passing remaining assets to family members. The taxpayer also held…
Late S corporation election relief granted for requested effective date
A corporation intended to be treated as an S corporation from a specified date but did not file its election on time. The IRS found reasonable cause for the late filing under section 1362(b)(5). It…
Late S corporation election effective from incorporation
A corporation's shareholder intended S corporation treatment from the date of incorporation, but the election was not filed on time. The IRS found reasonable cause for the missed deadline under…
Cleanup costs capitalized and insurance proceeds reduce land basis
The taxpayers acquired land that was already contaminated and later incurred costs to clean it and treat contaminated groundwater. The IRS ruled that those costs must be capitalized under section…
Extension granted to file section 338(g) election
A consolidated group's foreign subsidiary acquired all the stock of a foreign target, and the parent intended to make a section 338(g) election for the purchase. The election was missed despite…
Late S corporation election treated as effective from incorporation
A corporation's sole shareholder wanted S corporation treatment from the corporation's date of incorporation, but the election was not filed on time. The IRS found reasonable cause for the failure…
Late S corporation election relief from incorporation date
A corporation intended S corporation treatment from its incorporation date but did not file the election on time. The IRS found reasonable cause for the delay under section 1362(b)(5). It concluded…
Late S corporation election recognized for requested date
A corporation's shareholders intended S corporation status from a specified date but did not file the election on time. The IRS found reasonable cause for the late filing under section 1362(b)(5).…
Consolidated group given more time for intercompany transaction election
A consolidated group failed to attach a required intercompany transaction election to the return for the year it sold a subsidiary's stock with a section 338(h)(10) election. The group had relied on…
Consent denied for new S election within five years of revocation
A corporation revoked an earlier S corporation election and later sought consent to make a new one within the five-year waiting period. Its stock had moved from five trusts to their beneficiaries,…
Partnership settlement bars later administrative adjustment request
Chief Counsel advised that partners who had executed Forms 870-P(AD) could not later request an administrative adjustment to increase partnership research credits. The forms finally determined the…
Shareholder split-off receives nonrecognition rulings
An S corporation proposed to give one shareholder all the stock of its wholly owned subsidiary in exchange for that shareholder's stock in the parent. The stated business purpose was to resolve…
S election relief after service center found no filing record
A corporation's sole shareholder said a Form 2553 had been mailed and that both the corporation and shareholder filed tax returns consistent with S corporation status. The service center later said…
Corporate split-off for shareholder dispute receives tax rulings
An S corporation proposed to exchange all its subsidiary's stock for the parent company stock held by one shareholder. The stated purpose was to resolve a shareholder dispute affecting the business…
Partnership receives extension for corporate classification election
A business incorporated under state law later converted to a limited partnership with at least two members. It intended to elect corporate classification for federal tax purposes from the conversion…
Nuclear plant purchase and decommissioning funds receive tax treatment rulings
A public utility proposed to acquire additional interests in two nuclear plants, along with portions of the sellers' qualified and nonqualified decommissioning funds, while assuming related…
Revised nuclear decommissioning fund schedule approved
A utility requested a revised schedule of ruling amounts for its qualified nuclear decommissioning fund after a regulator reduced the decommissioning costs included in the utility's cost of service.…
Restoring original trust terms preserves generation-skipping tax exemption
A trust became irrevocable before September 25, 1985, and had previously been reformed to qualify a subtrust holding company stock as a qualified subchapter S trust. After the subtrust sold that…
Gift of stock subject to earlier voting agreement remains deductible
A shareholder proposed to donate closely held company stock to a charitable supporting organization. Years earlier, she had transferred certain voting rights under a business agreement, and the…
Stock donation deductible despite separate voting rights
A shareholder planned to give closely held stock to a charitable supporting organization while the shares remained subject to a voting agreement. She had transferred certain voting rights to another…
Charitable stock gift allowed despite prior voting agreement
A shareholder proposed to give stock in a closely held company to a charitable supporting organization. The stock remained subject to a voting agreement under which she had transferred certain…
Capital gain distributions preserve trust's generation-skipping tax exemption
Trustees of a trust irrevocable before September 25, 1985, obtained a local court judgment construing the trust instrument to let them allocate realized capital gains to income. They asked whether…
Domestic partner health coverage triggers wages when partner is not a dependent
A self-insured multiemployer employee benefit association provided health coverage to workers' domestic partners. The IRS ruled that coverage for a partner who qualified as the worker's tax…
Trademark value decline does not trigger consolidated stock loss anti-avoidance rule
A consolidated group sold a subsidiary after moving stock of another subsidiary, which held trademarks, up the ownership chain. Chief Counsel advised that the move did not trigger the anti-avoidance…
Two-company merger does not trigger parachute payment rules for one company
Two public companies merged into subsidiaries of a new parent, and one company asked whether the merger triggered the tax rules for parachute payments to its employees. Its former shareholders would…
Duty-related police disability pension is excluded from income
A police officer retired after an injury in the line of duty and asked whether his disability pension was taxable. The local statute paid a pension only for a service-connected disability that…
Corporation receives relief for a late S election
A newly incorporated business intended to elect S corporation status from its incorporation date but missed the filing deadline. It asked the IRS to treat its late election as timely under section…
Investment fund asset transfer qualifies as a C reorganization
Two investment funds proposed to combine by transferring substantially all of one fund's assets and liabilities to the other for voting shares. The transferring fund would distribute those shares to…
Blank partnership forms are not valid returns
Related partnerships and a bankruptcy trustee filed Forms 1065 that contained no income information from which tax could be calculated. Chief Counsel advised that the blank forms were not valid…
Chief Counsel challenges lease income shifted to foreign investors
A corporation put lease assets into a partnership structure that allocated later rental income to two foreign investors. Chief Counsel advised examiners to develop sham transaction and sham…
Graded interest factors permitted for structured settlement annuity reserves
A life insurer used different interest rates for different payment periods when calculating reserves for older structured settlement annuities. An IRS district office questioned whether section 807…
Repayment of untaxed loss-sale proceeds is not deductible, but interest is
An Alaska Native corporation received tax-sharing payments when other corporations used its tax losses. After an IRS adjustment reduced the losses available for those transactions, it returned part…
Hospital system pension plan qualifies as a church plan
A nonprofit health care system affiliated with a church sponsored a defined benefit pension plan for employees of several hospitals and related organizations. The IRS found that the participating…
Foundation may set aside funds for a community center
A private foundation wanted to reserve income for construction of an updated community center offering educational, health, and recreational activities. It represented that the reserved money would…
Surviving spouse may roll over an annuity share passing through a trust
A surviving spouse inherited half of a section 403(b) annuity directly, while a trust received the other half. She was the trust's sole trustee and could withdraw all principal from the subtrust…
Foundation may transfer all assets to another foundation under common control
Two private foundations controlled by the same people proposed to move all assets from one foundation to the other. The IRS ruled that the transfer qualified under section 507(b)(2), would not…
Replacement retirement plan permits a 20 percent reversion tax
A cooperative bought another cooperative whose pension plan was being terminated. It proposed transferring 25 percent of that plan's remaining assets into its own 401(k) plan before receiving the…
Trust may transfer all assets to a commonly controlled foundation
A charitable trust proposed transferring all its assets to a private foundation controlled by the same people. The IRS ruled that the transfer qualified under section 507(b)(2) without itself ending…
Bankruptcy successor may send unused welfare plan funds to charities
A bankrupt company's successor planned to close employee health and dependent care plans after all benefits had been paid, cover small administrative costs, and give the unused funds to charities.…
How to handle altered and homemade income tax returns
IRS Chief Counsel advised a processing center on forms that taxpayers had altered and income tax forms taxpayers had made themselves. An altered Form 1040 can be rejected if its changes show no…
IRS may maintain a conduct based frivolous return database
IRS Chief Counsel considered whether a database used by the Frivolous Return Program violated section 3707 of the 1998 IRS Restructuring and Reform Act. That provision barred the IRS from labeling…
October 2000 criminal tax case summaries
This issue of the IRS Criminal Tax Bulletin summarizes recent court decisions rather than deciding a taxpayer's request. Its case digests cover attorney fee claims after criminal prosecutions,…
IRS summonses generally cannot be served abroad
IRS Chief Counsel considered how to obtain information from U.S. citizens living abroad through an administrative summons. Counsel advised that IRS employees generally lack authority to serve such…
Corporate split to resolve shareholder disputes qualifies for tax deferral
Two equal shareholder groups were in serious conflict over a corporation's operations. The corporation transferred part of its business assets to a new corporation and planned to give that…
Inadvertent S corporation election failure caused by foreign subsidiary
A software company elected S corporation status after forming a wholly owned United Kingdom subsidiary. Its ownership of the subsidiary made the election ineffective under the rules then in force.…
Late S corporation election accepted for reasonable cause
A corporation's shareholders wanted S corporation treatment starting when the company was incorporated, but the election was not filed on time. The IRS found reasonable cause for the missed deadline…
Governmental deferred compensation plan qualifies under section 457
A state governmental instrumentality asked whether its employee deferred compensation plan qualified under section 457(b). Participants could defer pay, subject to annual limits, and the plan held…
Clearing broker may rely on introducing brokers for tax certifications
A clearing broker asked how to meet backup withholding and information reporting duties for investor accounts handled through introducing brokers. The IRS ruled that, for transferred accounts, the…
Extra time granted for dual consolidated loss filings
A corporate group missed agreements and annual certifications for losses allocated to domestic owners by foreign partnerships. Its tax manager had initially believed the losses were not dual…
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.