Nuclear decommissioning funds may convert pooled investments to partnership treatment

Plain-English summary

Six qualified nuclear decommissioning funds pooled their assets for investment and had elected to exclude the pooling arrangement from subchapter K partnership rules. They sought to revoke that election, contribute their portfolios to the resulting partnership, recapitalize their fixed-income and equity interests, and aggregate built-in gains and losses for section 704(c) allocations. The IRS permitted the revocation and ruled that the recapitalization would not recognize gain or loss or terminate the partnership. It also approved the proposed aggregation method, subject to safeguards against shifting tax consequences among the funds. Neither the conversion nor recapitalization would be self-dealing, so the qualified decommissioning funds would not be disqualified under section 468A.

Ruling snapshot

• Question: May qualified nuclear decommissioning funds convert their investment pool to partnership treatment and recapitalize without gain, termination, self-dealing, or disqualification?
• Outcome: approved
• Key authorities: IRC §§ 468A, 704(c), 708, 721, 761(a), 4951; Rev. Proc. 2001-36; Rev. Proc. 94-75

Full text (IRS public release)

Internal Revenue Service                                       Department of the Treasury
                                                               Washington, DC 20224

Number: 201747001                                              Third Party Communication: None
Release Date: 11/24/2017                                       Date of Communication: Not Applicable
Index Number: 761.00-00, 468A.00-00,
              704.01-04, 4951.04-00                            Person To Contact:
                                                               -----------------------------, ID No. -------------
------------------------------------                           -----------------
------------------------------------------------------------   Telephone Number:
--------------------------------------------------------       ----------------------
--------------------------------------                         Refer Reply To:
-------------------------------                                CC:PSI:B01
                                                               PLR-103706-17
                                                               Date:
                                                               August 01, 2017




Legend

Y                   = --------------------------------------------------------------------------------------------
                      -----------------------------------
X                   = --------------------------------------------------------------------------------------------
                      --------------------
State               = --------------
Pooling             = --------------------------------------------------------------------------------------------
Arrangement           ----------------------
Trust               = --------------------------------------------------------------------------------------------
                      -------------------------------------------------------------
Fund A              = --------------------------------------------------------------------------------------------
                      ---------------------------
Fund B              = --------------------------------------------------------------------------------------------
                      ---------------------------
Fund C              = --------------------------------------------------------------------------------------------
                      ---------------------------
Fund D              = --------------------------------------------------------------------------------------------
                      ---------------------------
Fund E              = --------------------------------------------------------------------------------------------
                      ---------------------------
Fund F              = --------------------------------------------------------------------------------------------
                      ---------------------------
Year 1              = -------
Year 2              = -------
Date 1              = ---------------------------
n1                  = ----
n2                  = ----
n3                  = ----
n4                  = ----
PLR-103706-17                                 2

n5                = ----
n6                = ----


Dear --------------:

        This letter responds to your letter dated January 24, 2017, and subsequent
correspondence, submitted on behalf of Pooling Arrangement, Fund A, Fund B, Fund C,
Fund D, Fund E, and Fund F (collectively the “Funds”), by their authorized
representative requesting permission to revoke an election made pursuant to § 761(a)
of the Internal Revenue Code (the Code) that was intended to exclude Pooling
Arrangement from subchapter K of chapter 1 of the Code. Additional rulings related to
the revocation the election are also requested. Specifically, you requested the following
rulings:

        1. Permission to revoke the election made pursuant to § 1.761-2(b)(3) to be
        excluded from the application of subchapter K;
        2. The recapitalization of each fund’s interest in Pooling Arrangement will not result
        in gain or loss and will not cause a termination under § 708.
        3. Pursuant to Rev. Proc. 2001-36, Pooling Arrangement requests permission to
        aggregate built-in gains and built-in losses from contributed property for purposes
        of making § 704(c) and reverse § 704(c) allocations.
        4. Neither the revocation of Pooling Arrangement’s § 761(a) election nor the
        recapitalization of Pooling Arrangement is a prohibited act of self-dealing under
        § 468A; and
        5. None of the Funds will be disqualified under § 468A as a result of (i) the
        revocation the § 761(a) election and subsequent treatment of Pooling
        Arrangement as a partnership subject to subchapter K or (ii) the recapitalization
        of Pooling Arrangement.

                                          FACTS

       Y, a wholly owned subsidiary of Company X, is engaged in providing electric
public utility service to customers in State. Y owns an interest in six electric nuclear
generating stations (Units). Y is responsible for a share of the eventual
decommissioning costs associated with each Unit.

        Y established separate qualified funds (Fund A, Fund B, Fund C, Fund D, Fund
E, and Fund F) for the nuclear decommissioning costs of each Unit under a single
qualified trust agreement (Trust). Each Fund is a qualified fund subject to the rules of
§ 468A. Y contributes to each Fund its respective share of each Unit’s
decommissioning costs that will qualify for a current deduction under § 468A.
PLR-103706-17                                             3

       Trust permits the trustee to pool together the Funds’ assets for investment
purposes. Pooling Arrangement was established by Y with respect to the Funds for
investment purposes. Currently, Pooling Arrangement allocates investment gains and
losses pro-rata based on each Fund’s account balance relative to Pooling
Arrangement’s total Fund account balances. Each Fund’s account is separately
maintained by the trustee to account for all decommissioning contributions, and all
income and other increments to each Fund, and all distributions from each Fund.

      In Year 1, Y requested, and the Service issued PLR-9515006 (Dec, 28, 1994)
concluding that Pooling Arrangement would be classified as a partnership for federal
income tax purposes. Pooling Arrangement’s, Form 1065, Partnership Return of
Income, for the taxable year ended Date 1 included the election under § 761(a) to be
excluded from the application of subchapter K.

         Y represents that, as required under § 1.468A-4(d)(1), a return on Form 1120-ND
is filed each year for each Fund.

         ------------------------------------------------------------------------------------------------------------
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In order to continue to more accurately reflect each Fund’s income and investment
balances and to more effectively meet its investment objectives, the parties want to
revoke the prior election under § 761(a) to be excluded from the application of
subchapter K.

       Upon granting permission to revoke the election made pursuant to § 761(a), Y
represents it will treat each Fund as having contributed its securities to Pooling
Arrangement in exchange for interests therein in a non-recognition transaction under
§ 721(a). Further, § 721(b) will not apply to any such contribution because each Fund
will contribute a portfolio of assets that was “diversified” within the meaning of § 1.351-
1(c)(6)(i).

       After formation of the partnership, Y states Pooling Arrangement will undergo a
recapitalization. Y states that each Fund will exchange its n1% interest in fixed income
investments and n2% interest in equity investments of Pooling Arrangement for, in the
case of each of Fund A, Fund B, and Fund C, a n3% of the fixed income investments
and n4% of the equity investments of Pooling Arrangement and, in the case of each of
Fund D, Fund E, and Fund F a n5% in the fixed income investments and n6% in equity
investments in Pooling Arrangement. Y represents that each Fund’s proportionate
share of Pooling Arrangement will remain the same after the planned recapitalization of
the membership interests.
PLR-103706-17                                  4

       Y represents that each Fund will maintain detailed capital accounts. Each capital
account will consist of two sub-account to correspond with each Fund’s fixed and equity
investment accounts of the asset pools, and will track the asset pool’s performance. An
interest in a particular asset pool entitles a Fund to an interest in the profits, losses, and
capital of the asset pool to which that interest relates. The sub-accounts and the capital
account will be maintained in accordance with § 1.704-1(b)(4)(iv). Pooling Arrangement
will make special allocations of items of income, gain, loss, deduction or credit to
specific Funds in the pool. Each Fund will track the difference between the fair market
value and tax basis of the assets contributed to Pooling Arrangement in accordance
with § 704(c) and Rev. Proc. 94-75, 1994-2 C.B. 824.

       On the recapitalization, each Fund will determine its § 704(c) amounts for the
assets contributed to Pooling Arrangement. Y states that Pooling Arrangement will
increase the § 704(c) accounts by allocating any gain on the sale of assets to the Fund
that receives the cash associated with the sale or, if no cash is being distributed, in
accordance with each Funds’ capital account. Once that Fund receives an allocation of
gain equal to its § 704(c) amount, any remaining gain will be allocated to the other
Funds based upon each Fund’s relative capital account until all § 704(c) amounts are
eliminated. For purposes of tracking, the § 704(c) amount, the § 704(c) amounts will be
aggregated.

       Y further represents as follows:

    1. The assets of Pooling Arrangement constitute a diversified portfolio of stocks and
      securities within the meaning of § 1.351-1(c)(6)(i);
    2. Pooling Arrangement is not an investment company within the meaning of
      § 351(c) and § 1.351-1(c)(3);
    3. After the revocation of its prior election under § 761(a), Pooling Arrangement will
      qualify as a “securities partnership” as defined in § 1.704-3(e)(3)(iii);
    4. Pooling Arrangement will make revaluations at least annually in accordance with
      § 1.704-3(e)(3)(iii)(B)(2)(ii);
    5. The burden of making § 704(c) allocations separately from reverse § 704(c)
      allocations is substantial; and
    6. Pooling Arrangement’s contributions, revaluations, and the corresponding
      allocations of tax items are not made with a view to shifting the tax
      consequences of built-in gain or loss among the Funds in a manner that would
      substantially reduce the present value of the Funds’ aggregate tax liability.

                                  LAW AND ANALYSIS

   Ruling 1: Permission to revoke the election made pursuant to § 1.761-2(b)(3) to be
             excluded from the application of subchapter K;
PLR-103706-17                                 5

         Section 761(a) provides that under regulations the Secretary may, at the election
of all the members of an unincorporated organization, exclude such organization from
the application of all or part of subchapter K, if it is availed of for investment purposes
only and not for the active conduct of a business, if the income of the members of the
organization may be adequately determined without the computation of partnership
taxable income.

        Section 1.761-2(a)(1) provides that an unincorporated organization described in
§ 1.761-2(a)(2) may be excluded from the application of all or a part of the provisions of
subchapter K. Such organization must be availed of for investment purposes only and
not for the active conduct of a business. The members of such organization must be
able to compute their income without the necessity of computing partnership taxable
income. Any syndicate, group, pool, or joint venture which is classifiable as an
association, or any group operating under an agreement which creates an organization
classifiable as an association, does not fall within these provisions.

        Section 1.761-2(a)(2) provides that where the participants in the joint purchase,
retention, sale, or exchange of investment property--(i) own the property as co-owners,
(ii) reserve the right separately to take or dispose of their shares of any property
acquired or retained, and (iii) do not actively conduct business or irrevocably authorize
some person or persons acting in a representative capacity to purchase, sell, or
exchange such investment property, although each separate participant may delegate
authority to purchase, sell, or exchange his share of any such investment property for
the time being for his account, but not for a period of more than a year, then such group
may be excluded from the application of the provisions of subchapter K under the rules
set forth in paragraph (b) of this section.

        Based on the information provided and the representations made, Pooling
Arrangement and the Funds may revoke the election under § 761(a) of the Code by
filing a statement to that effect with Pooling Arrangement’s Form 1065 for its first
taxable year for which the revocation is to be effective.

   Ruling 2: The recapitalization of each fund’s interest in Pooling Arrangement will
          not result in gain or loss and will not cause a termination under § 708

      Section 741 provides, in part, that when a partnership interest is sold or
exchanged, the transferor partner recognizes gain or loss.

        Under § 1001, if there is a sale or other disposition of property, the entire amount
of the gain or loss realized thereunder will be recognized, unless another section of
subtitle A provides for nonrecognition.

      Under § 721, no gain or loss is recognized by a partnership or any of its partners
upon the contribution of property to the partnership in exchange for an interest therein.
PLR-103706-17                                6


       Section 708 provides, in part, that a partnership continues if it is not terminated.
A partnership terminates only if (1) no part of any business, financial operation, or
venture of the partnership continues to be carried on by any of its partners in a
partnership, or (2) within a 12-month period there is a sale or exchange of 50 percent or
more of the total interest in partnership capital and profits.

       Rev. Rul. 84-52, 1984-1 C.B. 158, addressed the circumstance where a general
partnership interest was converted into a limited partnership interest in the same
partnership. Each partner’s total percent ownership interest in the partnership remained
the same after the conversion. Rev. Rul. 84-52 holds, in part, that the partnership was
not terminated because the conversion was not a sale or exchange for § 708 purposes.

        Based on the facts provided and the representations made, no gain or loss will
be recognized by the Funds on the conversion of fixed income investments into equity
investments in Pooling Arrangement and vice versa on a one-to-one basis. Further, we
determine the recapitalization of the Funds interest in the Pooling Arrangement will not
result in a termination of the Pooling Arrangement under § 708.

  Ruling 3: Pursuant to Rev. Proc. 2001-36, Pooling Arrangement requests permission
            to aggregate built-in gains and built-in losses from contributed property for
            purposes of making § 704(c) and reverse § 704(c) allocations.

       The aggregation rule of § 1.704-3(e)(3) applies only to reverse § 704(c)
allocations. Therefore, a securities partnership using an aggregate approach must
generally account for any built-in gain or loss from contributed property separately. The
preamble to § 1.704-3(e)(3) explains that the final regulations do not authorize
aggregation of pre-contribution built-in gains and losses with built-in gains and losses
from revaluations because this type of aggregation can lead to substantial distortions in
the character and timing of income and loss recognized by contributing partners. T.D.
8585, 1995-1 C.B. 120, 123. The preamble, however, also recognizes that there may be
instances in which the likelihood of character and timing distortions is minimal and the
burden of making § 704(c) allocations separate from reverse § 704(c) allocations is
great. Consequently, § 1.704-3(e)(4)(iii) authorizes the Commissioner to permit, by
published guidance or private letter ruling, aggregation of qualified financial assets for
purposes of making § 704(c) allocations in the same manner as that described in
§ 1.704-3(e)(3).

       In Rev. Proc. 2001-36, 2001-1 C.B. 1326, the Service granted automatic
permission for certain securities partnerships to aggregate contributed property for
purposes of making § 704(c) allocations. Rev. Proc. 2001-36 also described the
information that must be included with the ruling requests for permission to aggregate
contributed property for purposes of making § 704(c) allocations submitted by
partnerships that do not qualify for automatic permission.
PLR-103706-17                                 7


         Rev. Proc. 94-75, 1994-52 I.R.B. 29, provides that the Commissioner will not
challenge a partnership’s reverse § 704(c) allocations if: (1) all of the partners in the
partnership are nuclear decommissioning reserve funds that, under the provisions of the
Internal Revenue Code, are in the same tax bracket at all times and for all income, (2)
all of the partnership’s book and tax allocations are made in proportion to the partners’
relative book capital accounts, (3) state or federal regulations require that, until
substantial completion of nuclear decommissioning of the nuclear powerplant, the
assets of the partnership may only be used to pay the partners’ statutory
decommissioning liabilities and associated administrative costs, and (4) no partner
makes a contribution to the pooling arrangement with a principal purpose of
substantially reducing the present value of the partners’ aggregate federal tax liability.

       Pooling Arrangement represents that the burden to it of making § 704(c)
allocations separate from reverse § 704(c) allocations is substantial. Pooling
Arrangement represents that it will comply with Rev. Rul. 94-75 with respect to its
reverse § 704(c) allocations.

        Based on the information submitted and representations made, we find that
Pooling Arrangement’s method of making § 704(c) allocations, including reverse
allocations, for the Funds is permissible under § 1.704-3(e)(4)(iii), provided that a
contribution or revaluation of the property and the corresponding allocation of tax items
with respect to the property are not made with a view to shifting the tax consequences
of built-in gain or loss among the partners in a manner that substantially reduces the
present value of the Funds’ aggregate tax liability.

   Ruling 4: Neither the revocation of Pooling Arrangement’s § 761(a) election nor the
             recapitalization of Pooling Arrangement is a prohibited act of self-dealing
             under § 468A.

       Section 468A(a) of the Code provides that a taxpayer may elect to deduct
payments made to a nuclear decommissioning reserve fund (hereinafter referred to as
the “Fund”) that meets the requirements of section 468A.

       Section 468A(e)(6) provides that in any case in which the Fund violates any
provision of this section or § 4951, the Secretary may disqualify such Fund from the
application of this section. Treas. Reg. § 1.468A-1(b)(4) provides that a “qualified
nuclear decommissioning fund” is a Fund that satisfies the requirements of § 1.468A-5.

       Treas. Reg. § 1.468A-5(c)(1) provides that if at any time during the taxable year
a qualified nuclear decommissioning fund does not satisfy a requirement of § 1.468A-
5(a), or the fund and a disqualified person engage in an act of self-dealing, the Service
may, in its discretion, disqualify all or a portion of the fund as of the date that the fund
does not satisfy such requirements.
PLR-103706-17                               8


       Section 468A(e)(5) prohibits self-dealing by providing that under regulations
prescribed by the Secretary, for purposes of § 4951, a qualified nuclear
decommissioning fund shall be treated in the same manner as a trust described in
§ 501(c)(21). Section 4951(a) imposes a tax on each act of self-dealing between a
disqualified person and a trust described in § 501(c)(21).

       Treas. Reg. § 1.468A-5(a) sets out the qualification requirements for nuclear
decommissioning funds. It provides, in part, that a qualified nuclear decommissioning
fund must be established and maintained pursuant to an arrangement that qualifies as a
trust under state law.

       Treas. Reg. § 1.468A-5(b)(1) provides that, except as otherwise provided in
paragraph (b), the excise taxes imposed by § 4951 apply to each act of self-dealing
between a disqualified person and a nuclear decommissioning fund. Further, § 1.468A-
5(b)(2) provides that (with exceptions not relevant to this analysis), for purposes of
paragraph (b), the term self-dealing means any act described in § 4951(d).

       Section 4951(d)(1) provides, in relevant part, that the term “self-dealing” means
any direct or indirect sale, exchange, or leasing of real or personal property between a
trust described in § 501(c)(21) and a disqualified person. Treas. Reg. §1.468A-5(b)(3)
provides that, for these purposes, the term “disqualified person” includes each person
described in § 4951(e)(4) and Treas. Reg. § 53.4951-1(d).

      Section 4951(e)(4) provides that the term “disqualified person” means, with
respect to a trust described in § 501(c)(21), a person who is—

   (A) a contributor to the trust,
   (B) a trustee of the trust,
   (C) an owner of more than 10% of--
        (i) the total combined voting power of a corporation,
        (ii) the profits interest of a partnership, or
        (iii) the beneficial interest of a trust or unincorporated enterprise, which is a
              contributor to the trust,
   (D) an officer, director, or employee of a person who is a contributor to the trust,
   (E) the spouse, ancestor, lineal descendant, or spouse of a lineal descendant of an
       individual described in subparagraph (A), (B), (C), or (D),
   (F) a corporation of which persons described in subparagraph (A), (B), (C), (D), or
   (E) own more than 35% of the total combined voting power,
   (G) a partnership in which persons described in subparagraph (A), (B), (C), (D), or
       (E), own more than 35% of the profits interest, or
   (H) a trust or estate in which persons described in subparagraph (A), (B), (C), (D), or
       (E), hold more than 35% of the beneficial interest.
PLR-103706-17                                  9

The flush language of § 4951(e)(4), following § 4951(e)(4)(H), provides, in part, that for
purposes of § 4951(e)(4)(C)(i) (an owner of more than 10% of the total combined voting
power of a corporation that is a contributor to a particular trust) and (F) (a corporation in
which specified disqualified persons own more than 35% of the combined voting
power), there shall be taken into account indirect stockholdings which would be taken
into account under § 267(c).

       Further, this flush language also provides that for purposes of
§§ 4951(e)(4)(C)(ii) and (iii) (an owner of more than 10% of the profits interest of a
partnership or of the beneficial interest of a trust or unincorporated enterprise, which is a
contributor to the trust), (G) (a partnership in which disqualified persons own more than
35% of the profits interest), and (H) (a trust or estate in which disqualified persons own
more than 35% of the beneficial interest), the ownership of profits or beneficial interests
shall be determined in accordance with the rules for constructive ownership of stock
provided in § 267(c).

        Section 267(c)(1) provides that stock owned, directly or indirectly, by or for a
corporation, partnership, estate, or trust shall be considered as being owned
proportionately by or for its shareholders, partners, or beneficiaries. Section 267(c)(5)
provides, in part, that stock constructively owned by a person by reason of § 267(c)(1)
shall, for purposes of applying § 267(c)(1), be treated as actually owned by such
person.

        Treas. Reg. § 53.4946-1(e) contains rules for the attribution of profits and
beneficial interests. In particular, Treas. Reg. § 53.4946-1(e)(1) provides that, for
purposes of Treas. Reg. § 53.4946-1(a)(1)(iii)(b) (relating to an owner of more than 20%
of the profits interests of a partnership and Treas. Reg. § 53.4946-1(a)(1)(iii)(c) (relating
to the beneficial interests of a trust), ownership of profits or beneficial interests shall be
taken into account as though such ownership related to stockholdings, if such
stockholdings would be taken into account under § 267(c) and the regulations
thereunder. However, for purposes of Treas. Reg. § 53.4946-1(e), any profits interest
or beneficial interest which has been counted once (whether by reason of actual or
constructive ownership) in applying § 4946(a)(1)(F) (relating to a partnership in which
disqualified persons hold more than 35% of the beneficial interest) or § 4946(a)(1)(G)
(relating to a trust or estate in which disqualified persons hold more than 35% of the
beneficial interest) shall not be counted a second time.

        The revocation of Pooling Arrangement’s § 761(a) election and the
recapitalization of the Funds are two separate transactions in which self-dealing
potentially may occur. Under § 468A(e)(5), a Nuclear Decommissioning Reserve Fund
is treated in the same manner as a trust described in § 501(c)(21) for purposes of
§ 4951. Each Fund is a qualified fund subject to the rules of § 468A. Accordingly, each
Fund is treated in the same manner as a trust described in § 501(c)(21) and is subject
to the excise tax on self-dealing imposed by § 4951.
PLR-103706-17                                 10


       Applying the rules under § 4951(e)(4) to the facts as provided, we determined
:
        1. Y contributes its share of the decommissioning costs to each Fund and
therefore is a disqualified person described in § 4951(e)(4)(A) with respect to each
Fund;
        2. Each Fund is a disqualified person with respect to any other Fund with
respect to which a disqualified person described in § 4951(e)(4)(A) holds more than
35% of the beneficial interest; and
        3. Pooling Arrangement is not a disqualified person with respect to any of the
Funds because the profits interests in Pooling Arrangement held by the Funds are
considered as owned proportionately by or for Y.

       In order for an act of self-dealing to have occurred, either or both the revocation
of the § 761(a) election and the recapitalization of the Funds must be a direct or indirect
sale or exchange of real or personal property between the Funds and Y or among the
Funds. As represented by Y, the revocation of its § 761(a) election results in a § 721
contribution of the investment assets by each Fund to Pooling Arrangement and not a
sale or exchange of real or personal property for purposes of § 4951. Therefore, the
revocation the § 761(a) election does not result in an act of self-dealing for purposes of
§ 468A(e)(5).

        Similarly, recapitalization of the Funds results in the deemed exchange of one
interest in Pooling Arrangement for another interest that represents a specific mix of
assets in the different asset pools. Y represents that the total fair market value of the
investments of each Fund will be the same before and after the recapitalization.
Because Pooling Arrangement is not a qualified person with respect to the Funds, no
act of self-dealing occurs for purposes of § 468A(e)(5).

    Ruling 5: None of the Funds will be disqualified under § 468A(e)(6) as a result of the
              revocation of Pooling Arrangement’s § 761(a) election and subsequent
              treatment of Pooling Arrangement as a partnership subject to subchapter
              K or the recapitalization of Pooling Arrangement.

       Because neither the revocation of Pooling Arrangement’s § 761(a) election and
subsequent treatment of Pooling Arrangement as a partnership subject to subchapter K
nor the recapitalization of Pooling Arrangement result in an act of self-dealing for
purposes of §§ 4951(a) and 468A(e)(5), none of the Funds will be disqualified under
§ 468A(e)(6).

       Except as specifically set forth above, no opinion is expressed concerning the
federal tax consequences of the facts described above under any other provision of the
Internal Revenue Code and the regulations thereunder. Specifically, we express or
PLR-103706-17                                  11

imply no opinion regarding whether Pooling Arrangement is a partnership or the tax
consequences resulting from the revocation of the § 761(a) election.

       This ruling is limited to allocations of gain or loss from the sale or other
disposition of qualified financial assets made under §§ 704(b), 704(c)(1)(A), and 1.704-
3(a)(6). Specifically, no opinion is expressed concerning allocations of items other than
items of gain or loss from the sale or other disposition of qualified financial assets, or
the aggregation of built-in gains and losses from qualified financial assets contributed to
Pooling Arrangement by any owner other than the Funds described in this ruling.
Pooling Arrangement must maintain sufficient records to enable it and its Funds to
comply with §§ 704(c)(1)(b) and 737.

       Additionally, this ruling applies only to the contributions to Pooling Arrangement
by the Funds for whom Pooling Arrangement supplied specific information concerning
the contributed assets as described above, and not to any other contributions by the
Funds or any other future owner.

      This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of
the Code provides that it may not be used or cited as precedent. In accordance with the
power of attorney on file with this office, copy of this letter is being sent to Y’s authorized
representatives.


                                        Sincerely,


                                        David R. Haglund
                                        David R. Haglund
                                        Branch Chief, Branch 1
                                        (Passthroughs & Special Industries)


Enclosures (2)
 Copy of this Letter
 Copy for 6110 purposes


cc: