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Technical Advice Memoranda

IRS TAM describes what is reasonable cause for purposes of abatement of the tax on private foundations

IRS TAM describes what is reasonable cause for purposes of abatement of the tax on private foundations

PLR 201547007 In a Technical Advice Memorandum, IRS has concluded that cases that provide that a taxpayer had reasonable cause for purposes of avoiding the imposition of various penalties are not reliable precedent for determining what is reasonable cause for purposes of abating the taxable expenditure tax on private foundations. Background—tax on private foundations. Excise taxes […]

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Tax Treatment Explained Where Remic Regular Interests Sold and Residual Interest Retained

Tax Treatment Explained Where Remic Regular Interests Sold and Residual Interest Retained

PLR 201517007   In a Technical Advice Memorandum (TAM), IRS has concluded that a parent corporation could take a capital loss from its subsidiary’s sale or exchange of real estate mortgage investment conduit (REMIC) regular interests, while taking an ordinary loss on a retained REMIC residual interest, under Code Sec. 860F(b)(1)(D)(ii) and Reg. § 1.860F-2(b)(4)(iv). […]

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Taxpayer didn’t qualify as insurance company where primary business wasn’t insurance

Taxpayer didn’t qualify as insurance company where primary business wasn’t insurance

PLR 201517018   In a redacted Technical Advice Memorandum (TAM), IRS has concluded that a corporation didn’t qualify as an insurance company under Code Sec. 501(c)(15) for the years at issue because the majority of its business wasn’t related to insurance and it failed to achieve adequate risk distribution during those years. Background. Small nonlife insurance […]

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IRS provides guidance on empowerment zone designations in light of TIPA

IRS provides guidance on empowerment zone designations in light of TIPA

Notice 2015-26, 2015-11 IRB In a Notice, IRS has explained how a State or local government amends the nomination of an empowerment zone to provide for a new termination date, as provided for by Code Sec. 1391, as amended by the Tax Increase Prevention Act of 2014 (TIPA, P.L. 113-295, 12/19/2014). Background. Under Code Sec. 1391, […]

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IRS rules no abatement for foundation’s first-tier excise tax on excess business holdings

IRS rules no abatement for foundation’s first-tier excise tax on excess business holdings

PLR 201441021 In a Technical Advice Memorandum (TAM), IRS has concluded that the first-tier excise taxes under Code Sec. 4943, on a foundation’s excess business holdings for the years at issue, shouldn’t be abated under Code Sec. 4962 because it failed to demonstrate that the existence of excess business holdings was due to reasonable cause. […]

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IRS Rules on Whether Retained Royalties Qualified for Depletion

IRS Rules on Whether Retained Royalties Qualified for Depletion

PLR 201448020 In a Technical Advice Memorandum (TAM), IRS determined that a taxpayer that transferred a mine, but retained a bonus royalty and a production royalty, continued to have an economic interest in the production royalty but not in the bonus royalty. As a result, depletion could be claimed with respect to the retained production […]

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Preparer’s miscalculation of foundation’s business holdings justified excise tax abatement

Preparer’s miscalculation of foundation’s business holdings justified excise tax abatement

PLR 201448032 In a Technical Advice Memorandum (TAM), IRS has concluded that the first-tier excise taxes under Code Sec. 4943 on a private foundation’s excess business holdings for the years at issue should be abated under Code Sec. 4962. The foundation established that it had reasonable cause for the violation where it provided all relevant […]

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Charter school’s evolution into building lessor justifies revocation of exempt status

Charter school’s evolution into building lessor justifies revocation of exempt status

PLR 201438034 In a Technical Advice Memorandum (TAM), IRS has concluded that an organization’s tax exempt status should be revoked retroactively to the date when IRS first learned that the organization’s activity changed from operating a charter school to leasing buildings to unrelated nonexempt charter schools. Click here for the TAM. Background. Code Sec. 501(c)(3) […]

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Loan to ESOP was a prohibited transaction

Loan to ESOP was a prohibited transaction

PLR 201425019. In a Technical Advice Memorandum (TAM), IRS has concluded that a company’s loan to its employee stock ownership plan (ESOP) was a prohibited transaction and triggered an excise tax under Code Sec. 4975. Even if the loan met the documentation requirements of an applicable reg, it violated the reg in operation. Facts. On […]

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Collateral release method made share-purchase loan to ESOP a prohibited transaction

Collateral release method made share-purchase loan to ESOP a prohibited transaction

PLR 201425019. In a Technical Advice Memorandum (TAM), IRS has concluded that a company’s loan to its employee stock ownership plan (ESOP) was a prohibited transaction and triggered an excise tax under Code Sec. 4975. Even if the loan met the documentation requirements of an applicable reg, it violated the reg in operation. Facts. On […]

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SB/SE memo provides guidance on Fast Track Settlement program

SB/SE memo provides guidance on Fast Track Settlement program

Click here for SBSE-04-0414-0010, Interim Guidance for Small Business/Self-Employed Fast Track Settlement, Technical Procedures and Guidelines. IRS’s Small Business/Self-Employed (SB/SE) Division has issued a memo providing interim guidance on the SB/SE Fast Track Settlement (FTS) program.Among other things, the memo covers eligibility for the program, how to apply, the roles and responsibilities of SB/SE during […]

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Health corporation’s schools didn’t shield it from tax on unrelated business income

Health corporation’s schools didn’t shield it from tax on unrelated business income

In PLR 201407024, a Technical Advice Memorandum (TAM), IRS has concluded that, despite the fact that it operated schools, a corporation organized and operated as the parent of an integrated health group wasn’t an educational organization under Code Sec. 170(b)(1)(A)(ii). Accordingly, it wasn’t a qualified organization under Code Sec. 514(c)(9)(C) and had to treat indebtedness […]

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What is the value and utility of regs, rulings, and other IRS documents? – Part II

What is the value and utility of regs, rulings, and other IRS documents? – Part II

IRS issues a wide variety of documents every week, some of which are written for public release and others of which are for IRS’s internal use but are ultimately released under the Freedom of Information Act. Whether written for internal or public use, IRS administrative pronouncements vary in precedential value and utility. This 2-part Practice […]

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Corporation that operated schools wasn’t Code Sec. 170 educational organization

Corporation that operated schools wasn’t Code Sec. 170 educational organization

In a Technical Advice Memorandum (TAM), PLR 201407024, IRS has concluded that, despite the fact that it operated schools, a corporation organized and operated as the parent of an integrated health group wasn’t an educational organization under Code Sec. 170(b)(1)(A)(ii). Accordingly, it wasn’t a qualified organization under Code Sec. 514(c)(9)(C) and had to treat indebtedness […]

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TAM upholds exempt status of organization that maintains community ice rink facilities

TAM upholds exempt status of organization that maintains community ice rink facilities

In a Technical Advice Memorandum (TAM), PLR 201344009, IRS determined that a not-for-profit organization that operates two recreational ice rink facilities and makes the rinks available to the general community for relatively low or zero cost is tax-exempt under Code Sec. 501(c)(3). Although the organization itself doesn’t directly educate children in hockey or figure skating, […]

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Professional employer organization denied credit for tips received by clients’ employees

Professional employer organization denied credit for tips received by clients’ employees

In a National Office Technical Advice Memorandum (TAM), PLR 201347020, IRS has concluded that a professional employer organization (PEO) may not claim the Code Sec. 45B income tax credit for Federal Insurance Contributions Act (FICA) tax paid on tips received by its clients’ employees in connection with the providing, delivering, or serving of food or […]

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Community development district wasn’t political subdivision able to issue tax-exempt bonds

Community development district wasn’t political subdivision able to issue tax-exempt bonds

In a Technical Advice Memorandum (TAM), PLR 2013-34038, IRS has concluded that a community development district wasn’t a political subdivision under Reg. § 1.103-1(b) capable of issuing tax-exempt bonds because it wasn’t a division of a State or local governmental unit during the period at issue. Background. Under Code Sec. 103(a), gross income doesn’t include […]

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Damages were fully taxable gain, not a nontaxable return of capital Chief Counsel Advice 201208030

Damages were fully taxable gain, not a nontaxable return of capital Chief Counsel Advice 201208030

Editor’s Note:  There are a number of published documents from IRS which taxpayers and practitioners rely upon, directly or indirectly, for positions and procedure.  For example, Private Letter Rulings (PLR) or determinations are written memoranda furnished by the IRS National Office in response to requests by taxpayers under published annual guidelines. Technical Advice Memoranda (TAM) […]

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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