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Private Letter Rulings

Interests in partnership investing in student loans treated as obligations in registered form

Interests in partnership investing in student loans treated as obligations in registered form

PLR 201614026 In a private letter ruling (PLR), IRS has concluded that interests in a partnership organized to invest in student loans using funds from domestic feeder and foreign feeder partnerships will be treated as being obligations in registered form for purposes of Code Sec. 163(f)(1). Background. Under Code Sec. 163(f)(1), there’s no deduction for interest […]

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Swaps and captive REIT liquidations won’t sour REIT prohibited transactions safe harbor

Swaps and captive REIT liquidations won’t sour REIT prohibited transactions safe harbor

PLR 201614009 IRS has privately ruled that a real estate investment trust’s (REIT’s) like-kind exchanges won’t be treated as sales for purposes of the Code Sec. 857(b)(6)(C) prohibited transactions safe harbor, but that gain recognized on boot received in such exchanges may be treated as a sale for that safe harbor. IRS also ruled that […]

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Bank’s debt purchase doesn’t preclude favorable treatment of later securities exchange

Bank’s debt purchase doesn’t preclude favorable treatment of later securities exchange

PLR 201613008 In a private letter ruling (PLR), IRS has determined that where, as part of a series of transactions aimed at spinning off the portion of a consolidated group member’s business that wasn’t compatible with its business unit, a bank acquired the member’s indebtedness from the existing debt holders, that acquisition won’t prevent a […]

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Company’s matching contributions to employee PAC aren’t deductible

Company’s matching contributions to employee PAC aren’t deductible

PLR 201616002 A private letter ruling (PLR) concludes that a corporation’s contributions to an employee political action committee (PAC) charity match program aren’t deductible as ordinary and necessary business expenses under Code Sec. 162. The corporation’s contributions are made “in connection with” a political campaign and thus are nondeductible under Code Sec. 162(e)(1)(B). Background. Under […]

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Rollover requirement waived for taxpayer who relied on spouse’s financial acumen

Rollover requirement waived for taxpayer who relied on spouse’s financial acumen

PLR 201612017 In a private letter ruling (PLR), IRS has waived the 60-day IRA rollover requirement for a spouse who erroneously relied on her spouse’s financial know-how. However, the other spouse wasn’t as lucky. His untimely IRA rollover got no relief because he couldn’t show that he intended to make a valid rollover. He deposited […]

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Property sold by REIT as part of liquidation wasn’t held primarily for sale to customers

Property sold by REIT as part of liquidation wasn’t held primarily for sale to customers

PLR 201609004 In a Private Letter Ruling (PLR), IRS has ruled that real property that a real estate investment trust (REIT) sold as part of a plan of liquidation was not “property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business” and therefore the sale was […]

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Parent’s worthless stock deduction for sub determined under look-through approach

Parent’s worthless stock deduction for sub determined under look-through approach

PLR 201610004 IRS has privately ruled, for purposes of the Code Sec. 165(g)(3) gross receipts test, that a holding company will include in its aggregate gross receipts all amounts of gross receipts received in certain intercompany transactions. IRS further held that such amounts from the intercompany transactions will be treated as “gross receipts from passive […]

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Stock warrants granted to vendors generate a deduction when they are exercised

Stock warrants granted to vendors generate a deduction when they are exercised

PLR 201610006 A private letter ruling (PLR) applies the principles of Code Sec. 83 to a company that granted stock warrants to vendors. It holds that the grantor may claim a deduction under its method of accounting when the warrants are exercised by the vendors rather than when they are granted. Background. Under an accrual method […]

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Private Letter Ruling – payment from sale of unredeemed gift cards for goods or services could be deferred

Private Letter Ruling – payment from sale of unredeemed gift cards for goods or services could be deferred

PLR 201610017 In a Technical Advice Memorandum (TAM), IRS has concluded that a company can defer the recognition of advance payment income received from the sale of unredeemed gift cards that are redeemable for goods or services for up to two years, to the extent it can make an appropriate estimate of the amounts that […]

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Entire functional group moved to another subsidiary, so successor employer rule applied

Entire functional group moved to another subsidiary, so successor employer rule applied

PLR 201611007 In a Private Letter Ruling, IRS has concluded that a transfer of both all of the non-revenue-producing employees that performed a particular function for two of a taxpayer’s subsidiaries, and all of the assets used by those employees, to another of the taxpayer’s subsidiaries, met the Code Sec. 3121(a)(1) rule allowing the successor […]

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Partnership’s obligations under a construction contract were liabilities under Code Sec. 752

Partnership’s obligations under a construction contract were liabilities under Code Sec. 752

PLR 201608005 IRS has privately ruled that a partnership’s obligations under a construction contract, to proceed with performing work and to incur related costs, as well as to provide remedies in the event of a default, were liabilities under Code Sec. 752 as of the date of, and to the extent of, certain payments that […]

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Publicly traded partnership’s income from fluid management services was qualifying income

Publicly traded partnership’s income from fluid management services was qualifying income

PLR 201608011 IRS has privately ruled that the gross income of a publicly traded partnership (PTP) from its fluid management and disposal services, and from selling to non-end/retail users filtered hydrocarbons collected as part of the disposal process, was qualifying income under Code Sec. 7704(d)(1)(E). However, the ruling didn’t apply to income derived by the […]

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Subsidy payments by state energy organization not taxable to homeowner beneficiaries

Subsidy payments by state energy organization not taxable to homeowner beneficiaries

PLR 201607004 In a private letter ruling, IRS has concluded that amounts paid by a state organization to contractors who install solar energy systems in the homes of homeowners, as part of a program to increase energy efficiency, are not taxable to the homeowners and that the organization need not file information returns with IRS […]

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Income of trust created by public agencies to pay employee benefits isn’t taxable

Income of trust created by public agencies to pay employee benefits isn’t taxable

PLR 201607025 In a private letter ruling (PLR), IRS has held that income of a multiple employer trust arrangement created to enable public-agency employers to set aside funds to be used to satisfy the employers’ employee benefit obligations, was excludable from gross income under Code Sec. 115. The ruling also held that the trust was […]

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Surviving spouse/sole trustee of decedent’s trust granted rollover relief for IRA despite regs

Surviving spouse/sole trustee of decedent’s trust granted rollover relief for IRA despite regs

PLR 201606032 In a Private Letter Ruling (PLR), IRS has ruled that it would waive the 60-day rollover requirement for a taxpayer whose failure to timely roll over funds from her husband’s individual retirement arrangement (IRA) to her IRA was due to her emotional distress following the death of her husband and the stress of […]

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Disability payments with pension offset qualify as worker’s compensation

Disability payments with pension offset qualify as worker’s compensation

PLR 201606020 In a private letter ruling, IRS has held that a state’s plan for disability payments to workers injured on the job, which included an offset for benefits received under a money purchase plan, qualified as worker’s compensation and that, as a result, payments made under the plan were excludable from gross income under […]

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Private Letter Ruling – foreign parent didn’t have to waive treaty rights on domestic subsidiary’s liquidation

Private Letter Ruling – foreign parent didn’t have to waive treaty rights on domestic subsidiary’s liquidation

PLR 201606006 IRS has privately ruled that a foreign subsidiary will not be required to irrevocably waive its right to claim any applicable treaty benefits with regard to the Code Sec. 884(a) branch profits tax or the Code Sec. 881(a) excess interest tax with respect to any property entitled to nonrecognition treatment under Reg. § […]

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REIT’s income inclusions from its foreign subsidiaries are qualifying income

REIT’s income inclusions from its foreign subsidiaries are qualifying income

PLR 201605005 In a private letter ruling, IRS has determined that, for purposes of Code Sec. 856(c)(2)’s 95% gross income test to qualify as a real estate investment trust (REIT), income inclusions attributable to a REIT’s ownership in foreign subsidiaries that are either controlled foreign corporations or passive foreign investment companies constitute qualifying income. IRS […]

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Plans’ benefits couldn’t be treated as single optional form, but could be aggregated for testing

Plans’ benefits couldn’t be treated as single optional form, but could be aggregated for testing

PLR 201605006 IRS has privately ruled that a defined benefit plan’s unsubsidized single sum benefit and a defined contribution plan’s single sum benefit—both of which were provided upon termination of employment—couldn’t be treated as single optional form of benefit under Reg. § 1.401(a)(4)-4(e)(1)(i). However, they could be aggregated for nondiscrimination testing purposes under Reg. § […]

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Rollover relief granted to taxpayer who suffered emotional distress following spouse’s death

Rollover relief granted to taxpayer who suffered emotional distress following spouse’s death

PLR 201606032 In a Private Letter Ruling (PLR), IRS has ruled that it would waive the 60-day rollover requirement for a taxpayer whose failure to timely roll over funds from her husband’s individual retirement arrangement (IRA) to her IRA was due to her emotional distress following the death of her husband and the stress of […]

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Meet Paul Raymond

Meet Paul Raymond

Mr. Raymond is a sought after speaker in tax controversy law by many attorney, accountant, and business groups and at the request of the Internal Revenue Service, has presented programs at the IRS Nationwide Tax Forum, attended by tax professionals throughout the United States.

Additionally, he continues to be an active member in the Section of Taxation, American Bar Association, where he was the Past Chair of the Employment Taxes Committee.

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Member CA Bar Member Orange County Bar US Tax Court Attorney