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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Nonmember income costs social club its exemption
The IRS revoked a social club's Section 501(c)(7) exemption after investment and rental income exceeded the 35% limit on investment and nonmember income in four of five examined years. The organizatio…
Inactivity and missing dissolution records trigger revocation
An education-focused organization stopped conducting exempt activities but retained land and did not complete or substantiate dissolution. The IRS repeatedly requested stamped dissolution articles, an…
Block beautification group fails charitable tests
A nonprofit formed to beautify and maintain a particular city block did not qualify under Section 501(c)(3). Its purpose and dissolution clauses expressly included Section 501(c)(4) purposes, so its g…
Public rentals revoke social club exemption
A social club maintained a building used as rental investment property and as a meeting place for a Section 501(c)(8) organization. It advertised the facilities to the public, and nonmember facility r…
Private homeowners association loses exemption
A gated homeowners association classified as a private foundation did not qualify under Section 501(c)(3). Its articles stated the nonexempt purpose of operating a homeowners association and required …
Public bingo and dinners revoke club exemption
A social club opened weekly bingo, dinner events, and substantial portions of its facilities to the public, advertised bingo publicly, and leased land to a for-profit solar company. Its recurring nonm…
Annual cultural festival did not support charity exemption
An organization recognized under Section 501(c)(3) operated an annual one-day cultural New Year festival as its sole activity. The festival featured performances and contests, charged admission and ve…
Property owners’ association denied business-league exemption
A commercial property owners’ association applied for exemption as a business league under Section 501(c)(6). Membership was compulsory for owners in one commercial development, and the association ma…
Member social club lost Section 501(c)(4) exemption
An organization created through the efforts of several veterans’ organizations was exempt as a social-welfare organization under Section 501(c)(4). Members of the related organizations automatically b…
Inactive supporting organization lost charity exemption
A Type I supporting organization had no income, expenses, bank account, assets, liabilities, or activities after formation. It made no payments to its supported organization and provided no services o…
Charity lost exemption after ignoring audit requests
A cultural education organization was selected for an audit of its Form 990-N filing and exempt activities. The IRS mailed multiple information requests, called the organization and its representative…
IRS consents to a new method for counting stock-based compensation under a cost sharing arrangement
A domestic corporation and its foreign subsidiary share the costs of developing intangible property under a cost sharing arrangement governed by IRC § 482. The corporation asked to change how it measu…
IRS permits three investment funds to revoke PFIC mark-to-market elections
Three regulated investment company series had made IRC § 1296 mark-to-market elections for stock in a passive foreign investment company (PFIC). They could not initially make qualified electing fund (…
Timing-difference deductions will not by themselves cause foreign use of a dual consolidated loss
A U.S. parent planned entity-classification elections and transfers that would bring a foreign business into a combined separate unit for the dual consolidated loss rules. The parent expected that uni…
A new gain recognition agreement prevents a shareholder's death from triggering deferred gain
A U.S. shareholder had transferred domestic-company stock to a foreign corporation and entered into a gain recognition agreement (GRA) under the § 367 regulations. The shareholder later died while the…
LLC receives 120 days to file a late corporate-classification election
A state-law limited liability company intended to be treated as an association taxable as a corporation from a specified date. It missed the Form 8832 filing deadline because of inadvertence and asked…
Parties receive extra time to elect asset-sale treatment for an S corporation stock purchase
An individual bought all the stock of an S corporation, and the buyer, target, and shareholders intended to treat the transaction as an asset sale under IRC § 336(e). Their tax professional failed to …
IRS approves a prospective switch in cost-sharing treatment of stock-based compensation
A publicly traded domestic corporation shares intangible-development costs with foreign participants under a cost sharing arrangement governed by IRC § 482. It asked to change the measurement, timing,…
S corporation keeps its status after fixing second-class-of-stock provisions
A limited liability company had elected S corporation status and later issued restricted membership units to two service providers. When those units vested, partnership-style provisions in the operati…
Late QSST election receives inadvertent S corporation termination relief
An S corporation shareholder sold some shares to a trust that represented it met the qualified subchapter S trust (QSST) requirements. The trust's sole income beneficiary failed to timely make the QSS…
Missed ESBT election receives inadvertent S corporation termination relief
A trust acquired stock in an S corporation and represented that it qualified as an electing small business trust (ESBT). The trustee failed to file the ESBT election, causing the corporation's S elect…
Mortgage investment fund interests may qualify as registered-form pooled-fund obligations
A limited partnership planned to pool investor capital to hold U.S. mortgage loans and interests in affiliated mortgage funds. Some investors might be foreign persons, making the registered-form rules…
LLC receives 120 days to file its late S corporation election
A state-law limited liability company had elected to be classified as an association taxable as a corporation. It also intended to elect S corporation status from a later date but failed to properly a…
REIT and subsidiary receive 90 days to file a late taxable REIT subsidiary election
A real estate investment trust and an indirectly owned limited liability company intended to jointly elect taxable REIT subsidiary (TRS) treatment under IRC § 856(l). The subsidiary first needed corpo…
REIT and two subsidiaries receive more time for taxable REIT subsidiary elections
A real estate investment trust and two indirectly owned limited liability companies intended to jointly elect taxable REIT subsidiary (TRS) treatment under IRC § 856(l). The companies also needed corp…
S corporation receives relief after a partnership temporarily held its shares
An S corporation sold some of its ownership units to a limited liability company taxed as a partnership. Because a partnership is not an eligible S corporation shareholder, the sale terminated the cor…
Company receives S corporation relief after fixing its liquidation provisions
A company intended to elect S corporation status, but its operating agreement required liquidating distributions according to positive capital-account balances rather than ownership percentages. Those…
Four missed ESBT elections receive inadvertent S corporation relief
Two shareholders transferred S corporation shares to four trusts whose trustees failed to make timely electing small business trust (ESBT) elections. The missed elections caused the corporation's S st…
IRS approves a private foundation set-aside for a classical dance and arts facility
A private foundation asked to set aside funds to acquire and develop a building for classical dance and arts programs. The facility would contain studios and educational space, house administrative wo…
Student-loan lottery denied exemption because it primarily benefited private winners
An organization sought IRC § 501(c)(3) status for a student-loan lottery tied to prize-linked savings accounts. Participants would deposit money, winners would be selected randomly, and investment inc…
Family-run care organization denied exemption for organizational defects and private benefit
A family-run organization sought reinstatement of IRC § 501(c)(3) status after its prior exemption was automatically revoked for failing to file required returns. Its filed articles allowed any lawful…
Supplemental ruling revises the facts of an earlier entity-classification ruling
This supplemental private letter ruling modifies the facts section of an earlier ruling and incorporates the rest of that ruling by reference. The revised facts describe a foreign corporation owned by…
Annuity-risk retrocession contract qualifies as reinsurance for federal tax purposes
A reinsurance company had assumed mortality, longevity, lapse, credit, reinvestment, and related risks under modified coinsurance agreements covering annuity contracts. It entered into a contract unde…
Successor LLC receives more time to file a late section 336(e) election
A partnership-taxed purchaser acquired all the stock of an S corporation through a disregarded entity. The parties intended to elect under IRC § 336(e) to treat the qualified stock disposition as an a…
Annuity-paid advisory fees are contract expenses rather than taxable owner distributions
A life insurer offered variable deferred annuity contracts designed for owners who receive ongoing advice about allocating contract value among investment options. Under a separate authorization, the …
Direct payment of annuity advisory fees is not a taxable receipt by the owner
A life insurer offered variable deferred annuity contracts designed to work with ongoing investment advice about allocations among the available contract options. Owners could authorize the insurer to…
Foreign retrocessionaire substitution does not itself create a BEAT base erosion payment
A domestic insurance company had retroceded a share of reinsured policy risks to one foreign affiliate, which then retroceded those risks to another foreign affiliate. The parties proposed substitutin…
IRS approves college and early-learning scholarship procedures
A private foundation sought advance approval for two scholarship programs under IRC § 4945(g). One program supported graduating high school students pursuing college or trade-school education, while t…
Family-owned S corporation may complete two tax-free split-offs
Three family shareholder groups disagreed about management of an S corporation's business. The corporation proposed transferring portions of the business to two newly formed corporations, then exchang…
Partnership receives 120 days to make a late section 754 election
A limited partnership intended to elect under IRC § 754 to adjust partnership-property basis after distributions or transfers of partnership interests. It timely filed its partnership return but inadv…
Missed QSST elections and a later partnership transfer receive S corporation relief
An S corporation shareholder transferred shares to two trusts that represented they qualified as qualified subchapter S trusts, but their beneficiaries did not timely file QSST elections. The trusts l…
Estate receives 120 days to make a late portability election
An estate was not otherwise required to file an estate tax return based on the represented gross estate and taxable gifts. It nevertheless needed a timely Form 706 to elect portability of the decedent…
Trust constructions preserve GST status and avoid income, gift, and estate tax consequences
A testamentary trust created before September 25, 1985 had undergone court proceedings concerning trustee succession and the meaning of trust earnings. After the primary beneficiary died, another cour…
Court-corrected trust division retains GST grandfathering without transfer-tax consequences
A testamentary trust created before September 25, 1985 had been the subject of court proceedings about trustee succession and whether earnings included capital gains. When its primary beneficiary died…
Judicial trust corrections avoid gain, gifts, estate inclusion, and loss of GST status
A pre-September 25, 1985 testamentary trust had previously received judicial rulings about corporate trustee succession and the treatment of capital gains as earnings. Following the primary beneficiar…
Grandfathered trust may be corrected and divided without federal tax recognition
A testamentary trust established before the effective date of the generation-skipping transfer tax rules had undergone judicial changes involving trustee succession and trust earnings. A later court j…
Trust reformation and equal child-trust distributions receive favorable tax rulings
A grandfathered testamentary trust and the primary beneficiary's will contained provisions later addressed in several state-court proceedings. The final judgment corrected drafting errors, clarified t…
Corrected exercise of a limited power preserves a trust's GST exemption
A testamentary trust created before September 25, 1985 was governed by a limited power of appointment and had already undergone judicial proceedings about trustee succession and trust earnings. After …
IRS approves scholarship and individual educational grant procedures
A private foundation proposed scholarships under IRC § 4945(g)(1) and educational or talent-development grants under § 4945(g)(3). Its program would support higher education, youth, stronger communiti…
Automobile club denied exemption because social activities predominated
An automobile membership club sought recognition as a charitable and educational organization under IRC § 501(c)(3). Its governing documents promoted ownership and enjoyment of a particular car, and m…
IRS approves corporate reorganizations and related cost-sharing treatment
A publicly traded domestic parent completed a multi-step restructuring that moved intangible-property rights and reorganized domestic and foreign subsidiaries. The taxpayer asked whether two parts of …
IRS grants extra time for a Section 336(e) election
A purchaser acquired all the stock of an S corporation from a seller, and the parties intended to elect under IRC § 336(e) to treat the qualified stock disposition as an asset disposition. The electio…
IRS approves tax-free spin-off and domestic treatment of foreign controlled company
A publicly traded domestic corporation proposed separating one business from another through a pro rata distribution of a newly formed company incorporated abroad. The transaction included contributio…
IRS grants extra time for mixed straddle account election
A partnership engaged in securities trading intended to elect mixed straddle account treatment but missed the filing deadline. Its tax department was disrupted by the COVID-19 work-from-home transitio…
IRS grants extra time for mixed straddle account election
A partnership engaged in securities trading intended to elect mixed straddle account treatment but missed the filing deadline. Its tax department was disrupted by the COVID-19 work-from-home transitio…
IRS grants extra time for mixed straddle account election
A partnership engaged in securities trading intended to elect mixed straddle account treatment but missed the filing deadline. Its tax department was disrupted by the COVID-19 work-from-home transitio…
IRS grants extra time for mixed straddle account election
A partnership engaged in securities trading intended to elect mixed straddle account treatment but missed the filing deadline. Its tax department was disrupted by the COVID-19 work-from-home transitio…
IRS grants extra time for mixed straddle account election
A partnership engaged in securities trading intended to elect mixed straddle account treatment but missed the filing deadline. Its tax department was disrupted by the COVID-19 work-from-home transitio…
IRS grants estate extra time to elect portability
An estate that was not otherwise required to file an estate tax return failed to timely elect portability of the deceased spouse's unused exclusion amount. The estate asked for regulatory relief so th…
IRS grants late election out of automatic GST exemption allocation
A taxpayer created a grantor retained annuity trust whose remaining property later passed to a family trust with generation-skipping transfer potential. The taxpayer's attorney failed to explain that …
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.