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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Built-in-gain property leaving a § 721(c) partnership for a new foreign corporation is governed by § 367, with no separate § 721(c) gain
A U.S. corporate group set up a foreign partnership and contributed appreciated (built-in-gain) property to it. Because a U.S. member contributed that property to a partnership in which related…
Winding up a charitable remainder annuity trust by giving the annuity interest to the charity is a gift, not a sale, and not self-dealing
A married couple created a charitable remainder annuity trust (CRAT): they receive a 5 percent annuity for their joint lives, and a private foundation they control is the remainder beneficiary. They…
A utility's negotiated-rate solar array is not "public utility property," so it escapes the depreciation normalization rules
A regulated electric utility built a solar photovoltaic array and dedicated part of it (a "dedicated renewable energy facility," or DREF) to serve one municipal-airport customer under a special…
A REIT's billboard advertising income still counts as "rents from real property" despite short-term and TRS leases
A real estate investment trust (REIT) owns buildings with large billboard signs attached, and it leases the advertising space on those signs to tenants. It has elected to treat the signs as real…
Home-buyer cash rebates from a brokerage's referral program are purchase-price adjustments, not income, and need no Form 1099 reporting
An online real estate brokerage matches home buyers with brokers and collects a referral fee out of the broker's commission when a deal closes. Under a promotional program, the brokerage pays a…
Inadvertent-invalidity relief for an S election spoiled by operating-agreement terms that created a second class of stock
A limited liability company elected to be taxed as an S corporation. To be an S corporation, a company can have only one class of stock, meaning all owners must have identical rights to…
IRS approves renewable scholarships for seniors at two local high schools
A private foundation proposed annual scholarships for graduating seniors at two local high schools. School staff would screen applications for academics, activities, community service, and financial…
IRS denies § 501(c)(3) status to a member health-cost sharing organization
An organization applied for § 501(c)(3) recognition after changing its stated purpose from helping underserved businesses to operating a health-cost sharing program. Members would sign a statement…
State retiree-benefit trust has excluded income and no annual return requirement
A state agency created a trust to fund health and welfare benefits for retired state employees, their spouses, and dependents. Only the agency may designate contributions, and trust assets may be…
Parties receive time to file a late § 336(e) election statement
A partnership-taxed purchaser acquired all shares of an S corporation, and the parties intended to elect under IRC § 336(e) to treat the stock sale as an asset sale. A qualified tax professional…
Market-priced solar service systems are not public utility property
A company proposed owning and maintaining solar systems on customers' premises under long-term service agreements. Customers would receive a share of the electricity in exchange for monthly fees…
Estate receives 120 days to make a late portability election
An estate that was not otherwise required to file Form 706 failed to timely elect portability of the decedent's unused estate and gift tax exclusion to the surviving spouse. Because the filing…
Corporation receives S status relief after four trusts missed ESBT elections
A parent S corporation created a wholly owned subsidiary and elected qualified subchapter S subsidiary status for it. Four trusts later acquired parent stock but did not timely make electing small…
Entire city qualifies as the utility commission's service area for bond rules
A city public utilities commission had generated, transmitted, distributed, and sold electricity to retail customers throughout the city for more than ten years. The city planned to use bond…
Foreign corporation receives time to elect disregarded-entity status
A foreign private limited corporation was wholly owned by a foreign revocable grantor trust whose settlor and primary beneficiary had become a U.S. citizen. The corporation was eligible to elect…
S corporation receives relief after five trusts missed QSST elections
Five trusts acquired shares of an S corporation and met the substantive requirements for qualified subchapter S trusts. Their respective income beneficiaries did not timely make the required QSST…
Manufacturing contract uses percentage-of-completion accounting and counts supplier prepayments
A manufacturer contracted to design, build, install, and commission multiple products whose expected production periods each exceeded twelve months. It prepaid a related subsidiary to procure raw…
IRS approves stipends for low-income students in an after-school arts program
A private foundation proposed an after-school fine-arts program for high school juniors and seniors from low-income households. Participants would study with art professionals, complete individual…
Labels do not turn a shareholder's personal expenses into deductible compensation
A closely held corporation paid expenses for its sole shareholder, chief executive, and president, and reported some payments as business expenses while the shareholder reported other amounts as…
Beneficiary made a taxable gift by directing a foreign foundation's assets elsewhere
A U.S. resident was the primary beneficiary of a foreign foundation and was entitled to all of its assets and liquidation proceeds. When the foundation dissolved, the beneficiary directed its assets…
S corporation receives relief after a trust missed its ESBT election
An S corporation's shares were held by a grantor trust. After the deemed owner died, the trust remained an eligible S corporation shareholder for two years, but its trustee failed to elect electing…
S corporation receives relief after two trusts missed ESBT elections
Two grantor trusts held stock in an S corporation. After their deemed owner died, each trust remained an eligible S corporation shareholder for two years, but their trustees failed to elect electing…
S corporation receives relief after two trusts failed to elect ESBT status
Two grantor trusts held stock in an S corporation. After their deemed owner died, each trust remained an eligible S corporation shareholder for two years, but their trustees failed to elect electing…
IRS grants a constructive-ownership exception for an outbound stock exchange
A proposed transaction would reorganize a publicly traded U.S. target and have certain public shareholders exchange new U.S. target stock for stock of a new foreign subsidiary. The general rule in…
LLC receives 120 days to file a late S corporation election
An LLC timely elected to be taxed as a corporation and intended to be an S corporation from the same effective date. It failed, however, to properly and timely file Form 2553. The LLC and its sole…
Corporate group receives 90 days to make a late consolidated-return election
A domestic parent corporation and its affiliated group failed to timely make the election to file a consolidated federal income tax return. The parent requested relief under Treas. Reg. § 301.9100-3…
Partnership receives 120 days to make a late § 754 election
A limited liability company taxed as a partnership intended to elect under IRC § 754 to adjust the basis of partnership property, but omitted a valid election from its timely filed return. It…
Life insurers preserve consolidated status through a holding-company reorganization and spin-off
A partnership placed several life insurance companies and a service company under a new holding company, then one insurer distributed the stock of another insurer to that holding company. The…
Pension surplus may move to a replacement plan without employer-reversion tax
A public corporation terminated a defined benefit pension plan and proposed to transfer all surplus assets, after paying benefits and expenses, to its defined contribution plan. At least 95 percent…
Pro rata corporate spin-off receives nonrecognition rulings
A parent corporation proposed merging one subsidiary into another and then distributing all stock of the surviving controlled corporation pro rata to its two shareholders. The IRS ruled that neither…
60-day IRA rollover deadline waived for a fraud-scheme victim
A taxpayer withdrew money from her traditional IRA but did not roll it into another retirement account within the 60 days the law normally requires. She explained that she was the victim of an…
IRS denies charitable status to an artists' cooperative gallery
A membership cooperative of local artists applied for 501(c)(3) charitable status using the short Form 1023-EZ. It runs a gallery where members pay an initial fee and monthly dues to display and…
Determining the fraud penalty in TEFRA syndicated conservation easement cases
This Chief Counsel Advice answers how the IRS applies the 75% civil fraud penalty of Section 6663(a) against a partnership that used a syndicated conservation easement (SCE) transaction, when the…
Determining the fraud penalty in BBA syndicated conservation easement cases
This Chief Counsel Advice is the companion to the TEFRA analysis, answering how the IRS applies the 75% civil fraud penalty of Section 6663(a) against a partnership that used a syndicated…
Whether an informal probate proceeding suspends the collection deadline
This is internal Chief Counsel advice, written as an email, about whether the deadline for the IRS to collect a deceased taxpayer's unpaid tax (the collection statute expiration date, or CSED) was…
Statute of limitations does not bar a § 6676 penalty on a fraudulent refund claim
This short internal Chief Counsel advice answers a timing question about the Section 6676 penalty, which applies to erroneous claims for tax refunds or credits. A taxpayer had filed a return more…
Late-election relief to claim a hurricane timber loss in the prior year
Taxpayers who operate timber farms had three tracts damaged by a hurricane in a federally declared disaster area. The tax law (Section 165(i)) lets a disaster-area loss be claimed in the tax year…
Permission to aggregate scattered mineral royalty interests as single properties for depletion
The taxpayer is a subsidiary of an international mineral-royalty company that owns passive royalty interests (overriding oil and gas royalties in one region, and gold and other mineral royalties in…
Extra time granted to make a late election to file a consolidated return
A parent corporation heads an affiliated group that wanted to file a single consolidated federal income tax return for one tax year. To do that, the group has to make an election under Treas. Reg. §…
S corporation status restored after a trustee missed the ESBT election
A company had validly elected to be taxed as an S corporation. Later, a trust acquired some of its stock. A trust can hold S corporation stock only if it qualifies as an electing small business…
Extending a bankruptcy liquidating trust's term won't cost it liquidating-trust status
A trust was created under a confirmed Chapter 11 bankruptcy plan to liquidate a debtor's assets, turn them into cash, resolve claims, and distribute the proceeds to beneficiaries. A trust set up…
Trust named as IRA beneficiary is a "see-through" trust, so payouts stretch over the surviving spouse's life
A person died before reaching age 70 1/2, leaving six IRAs whose sole beneficiary was their revocable living trust. The trust became irrevocable at death and channeled the retirement assets into a…
Advance approval of amended scholarship-grant procedures for a private foundation
A private foundation runs a scholarship program and had it approved by the IRS once before. It made three changes and asked the IRS to re-approve its grant-making procedures under Section 4945(g).…
Advance approval of a foundation's scholarship and educational-grant procedures
A private foundation asked the IRS to pre-approve two individual-grant programs tied to promoting a particular philosophy: a scholarship program under Section 4945(g)(1) and an educational-grant…
Approval to set aside a matching grant for a historic-building restoration
A private foundation wanted to earmark money now for a project it will pay for later. Private foundations must give away a minimum amount each year, and cash actually paid out counts toward that…
Advance approval of an employer-related scholarship program for employees' children
A private foundation runs a scholarship program for the children and dependents of employees at three related companies and asked the IRS to pre-approve its selection procedures under Section…
Advance approval of scholarship procedures for a trust converted from a student-loan fund
A private foundation set up as a charitable trust asked the IRS to pre-approve its scholarship selection procedures under Section 4945(g). The trust originally made low-cost student loans, but it…
Advance approval of a scholarship program that recruits students through youth charities
A private foundation asked the IRS to pre-approve the selection procedures for a scholarship program it runs. Advance approval matters because a private foundation that pays a grant to an individual…
Advance approval of a foreign scholarship program for underprivileged students
A private foundation asked the IRS to pre-approve the selection procedures for a scholarship program aimed at economically disadvantaged students in a rural area of a foreign country. Advance…
A religious community's members are a religious order, so their support isn't taxable wages
A Section 501(c)(3) tax-exempt organization is part of a church-controlled network of communal religious communities. Its members take vows of poverty, chastity, and obedience, give up all private…
A religious community's members are a religious order, so their support isn't taxable wages
A Section 501(c)(3) tax-exempt organization is part of a church-controlled network of communal religious communities. Its members take vows of poverty, chastity, and obedience, give up all private…
A religious community's members are a religious order, so their support isn't taxable wages
A Section 501(c)(3) tax-exempt organization is part of a church-controlled network of communal religious communities. Its members take vows of poverty, chastity, and obedience, give up all private…
Extra time granted to file a late Section 336(e) election for an S corporation stock sale
A partnership bought all the stock of an S corporation, and the S corporation later merged into a disregarded LLC owned by the buyer. The parties intended to make a Section 336(e) election, which…
Extra time granted to file a late Section 336(e) election after a tax professional missed the deadline
Buyers acquired all the stock of an S corporation from its seller and wanted the stock sale treated as an asset sale for tax purposes. A Section 336(e) election does exactly that when a deal is a…
IRS approves a private foundation's employer-related scholarship procedures
A private foundation asked the IRS to approve a scholarship program for children of employees of an affiliated company. An experienced public charity will administer the program, and its staff will…
Daily fantasy sports entry fees are wagers for federal tax purposes
Chief Counsel considered whether a player's payment to enter a daily fantasy sports contest is a wagering transaction under IRC § 165(d). The contests are pay-to-play arrangements in which entry…
Developer may use the alternative cost method for required utilities but not optional amenities
An accrual-method real estate developer asked to use the alternative cost method in Rev. Proc. 92-29 for common improvements in a development expected to sell lots over more than ten years. That…
School district receives more time to spend clean renewable energy bond proceeds
A school district issued new clean renewable energy bonds to buy and install equipment that would supply electricity at district sites. City approval problems, a dispute with the contractor,…
Five children may split an inherited IRA while using the oldest child's life expectancy
A decedent who had already reached the required beginning date named a revocable trust as the beneficiary of an IRA. After death, the trust became irrevocable and divided the remaining property…
Partnership receives 120 days to make a late § 754 election
A limited liability company taxed as a partnership intended to elect under IRC § 754 to adjust the basis of partnership property, but omitted a valid election from its timely filed return. It…
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.