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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Pro rata trust divisions preserve existing tax treatment
Two irrevocable trusts created before September 25, 1985 proposed dividing into separate, pro rata subtrusts for each of three children and their descendants. The IRS ruled that the divisions would pr…
Pro rata trust divisions preserve existing tax treatment
Two irrevocable trusts created before September 25, 1985 proposed dividing into separate, pro rata subtrusts for each of three children and their descendants. The IRS ruled that the divisions would pr…
Whistleblower claim material withheld as return information
Chief Counsel reviewed material responsive to a Freedom of Information Act request. Pages tied to a specific whistleblower claim were treated as the taxpayer's return and were to be withheld in full u…
Public employee health pool's income excluded
Political subdivisions formed an entity to pool and administer health and disability coverage for their employees. Its assets could be used only for benefits, related administration, and reasonable ex…
Debt issuance costs not deductible after conversion to warrants
A company issued convertible debentures and capitalized the related issuance costs. The holder later converted the debt into warrants exercisable for common stock at a nominal price, and the company s…
Insurer owns variable contract investment portfolio
A life insurer used a partnership-classified investment portfolio for segregated accounts supporting variable contracts. Contract holders could choose among broad subaccounts, but they could not direc…
Insurer owns variable contract investment portfolio
A life insurer used a partnership-classified investment portfolio for segregated accounts supporting variable contracts. Contract holders could select broad subaccounts but could not direct investment…
Entity conversion fixes year of worthless stock loss
Chief Counsel assumed that a subsidiary's stock became worthless several years before the taxpayer claimed the loss. Because the subsidiary remained in the taxpayer's consolidated group, the consolida…
Internal-use software credit requires complete rule set
Chief Counsel analyzed the research credit for internal-use software in years before the 2015 proposed regulations. It concluded that section 41(d)(4)(E) was not self-executing, so internal-use softwa…
Fixed-term maintenance payments are not alimony
A divorced taxpayer asked whether court-ordered spousal maintenance payments were alimony under IRC § 71(b). The divorce terms removed the state court's power to modify the award and required payments…
Channel packages are not qualified films for section 199
A multichannel video distributor claimed that each package of television channels was a qualified film it produced for purposes of the domestic production activities deduction under IRC § 199. The IRS…
Channel packages are not qualified films for the domestic production deduction
A multichannel video programming distributor claimed former § 199 domestic production activities deductions based on subscription packages containing many television channels. It argued that each pack…
Taxpayers get 60 days for late investment income election
Married taxpayers had investment interest expense and carryovers that exceeded their net investment income. Their return preparer omitted earlier carryovers and failed to advise them that they could e…
Corporation may revoke elections out of bonus depreciation
A corporate parent elected not to claim additional first-year depreciation for all classes of qualified property placed in service during several tax years. It made those elections because its tax dep…
Taxpayer could revoke timely section 83(b) elections
An employee exercised compensatory stock options and received employer shares subject to a substantial risk of forfeiture. The employee timely filed section 83(b) elections, then asked to revoke them …
Taxpayer could revoke timely section 83(b) elections
An employee exercised compensatory stock options and received employer shares subject to a substantial risk of forfeiture. The employee timely filed section 83(b) elections, then asked to revoke them …
Taxpayer could revoke a timely section 83(b) election
An employee exercised compensatory stock options and received employer shares subject to a substantial risk of forfeiture. The employee timely filed a section 83(b) election, then asked to revoke it l…
Energy credit award disclosures should follow certification
Chief Counsel advised when the IRS should disclose recipients of credits under sections 48A, 48B, and 48C. For sections 48A and 48C, the applicant's identity and credit amount should be disclosed afte…
Duty-related disability benefits excluded as workers' compensation
A former city police officer asked whether disability benefits awarded after an on-duty injury were excluded from gross income. The governing state statute paid benefits for total disability caused by…
Merger termination fee produced capital gain or loss after capitalized costs
Chief Counsel considered how an acquiring corporation should treat a merger termination fee when it had capitalized costs incurred while investigating and pursuing the stock acquisition. The fee first…
Uncollectible insurance deductibles treated as bad debts after claim payment
Chief Counsel analyzed an insurer's treatment of unreimbursed deductible amounts under high-deductible liability policies. Because the insurer did not include the deductible layer in gross premiums wr…
Loss on purchased production equipment did not reduce QPAI
Chief Counsel considered a taxpayer that bought equipment, used it solely to produce qualifying production property, and later sold it for less than its adjusted basis. The equipment's depreciation ha…
Life reinsurance acquisition was assumption reinsurance requiring amortization
A life insurer acquired another reinsurer's business through an asset purchase and a 100 percent coinsurance retrocession agreement. The parties also agreed to obtain novation and release agreements t…
Late success-based fee election statements received an extension
A corporate taxpayer paid success-based consulting fees for a taxable stock acquisition. On its original return, it used the Revenue Procedure 2011-29 safe harbor by deducting 70 percent of the fees a…
Entity received extensions for corporate classification and tax-exempt control elections
A limited liability company wholly owned by a section 501(c)(3) organization missed two intended elections. It failed to file Form 8832 for corporate tax classification and also failed to elect under …
IRS may require added reporting to trace rehabilitation credits
Chief Counsel considered reporting requirements for section 47 rehabilitation credits passed through multiple entities or transferred from lessors to lessees. It advised that the IRS may require a non…
Donations to cities' consolidated department are deductible
An organization formed by all incorporated cities in a state asked whether donations to it were deductible under section 170. The cities established it by intergovernmental agreement as their consolid…
Physician-services contract avoids private business use
A state instrumentality issued bonds to finance facilities owned by a nonprofit medical center. A related taxable physician practice used those facilities under a services agreement with the healthcar…
RIC distribution routing does not produce foreign-dividend deduction
A consolidated corporate group routed investment funds and returns from a domestic regulated investment company through a controlled foreign corporation. The structure was designed to convert interest…
Future salary election differs from cash-for-health-benefits ruling
Public school employees received a brief, one-time irrevocable choice between retaining future retiree health benefits and avoiding a reduction in future compensation. An earlier IRS memorandum treate…
Tribe may no longer pass renewable-energy credits to lessee
An earlier private letter ruling allowed a tribe to elect under section 50(d)(5) to pass investment credits associated with renewable-energy assets to an unrelated lessee. After reconsideration, the I…
Repair-related rate-base offset does not violate normalization rules
A regulated electric utility changed to a safe-harbor tax accounting method that produced larger repair deductions than the deductions reflected in an earlier rate case. In a later proceeding, a regul…
Late success-fee safe-harbor election is denied
A corporate taxpayer incurred acquisition costs but did not account for them on its original return because its tax director believed the costs belonged to its parent. After later claiming additional …
Taxpayer receives more time to complete success-fee election
A corporation paid success-based fees in an acquisition and timely reported 70 percent as deductible and 30 percent as capitalized, consistent with the Rev. Proc. 2011-29 safe harbor. Its return prepa…
Retiree medical premium reimbursements qualify for tax exclusions
A company proposed using excess assets in a qualified pension plan's separate IRC § 401(h) account to reimburse eligible retirees and their families for health-plan premiums through an unfunded retire…
Industrial structures qualify as real property for production deduction
A national construction contractor substantially renovated or erected several types of large industrial units and asked whether receipts from those projects qualified as domestic production gross rece…
Partner receives 45 days to make a late debt-discharge election
A partnership realized cancellation-of-debt income when a lender reduced debt secured by real property. Its accountant mistakenly made the IRC § 108(c)(3)(C) election on the partnership return, even t…
Partner receives 45 days to make a late debt-discharge election
A partnership realized cancellation-of-debt income after negotiating a reduction of debt secured by its real property. Its accountant mistakenly made the IRC § 108(c)(3)(C) election on the partnership…
Work-related disability benefits are partly tax-free, but DRO payments are taxable
A governmental pension administrator asked how IRC § 104(a)(1) applied to industrial disability, survivor, death, cost-of-living, and supplemental benefits under three plans. The IRS ruled that disabi…
Merger-based dividend waiver creates no income for waiving owners
A merger assigned zero value to an uncertain debt instrument owned by one merging corporation and required the new large shareholder to waive any later distribution of sale proceeds from that instrume…
Merger-based dividend waiver creates no income for waiving owners
A merger assigned zero value to an uncertain debt instrument owned by one merging corporation and required the new large shareholder to waive any later distribution of sale proceeds from that instrume…
Consolidated group may revoke bonus depreciation opt-out
A consolidated group engaged in the coal business placed five-year and seven-year qualified property in service. On its timely return, it elected not to claim the 50 percent additional first-year depr…
Public hospital authority gets governmental income and payroll-tax treatment
A county created a separate public authority to receive and operate its hospital, provide care to indigent residents, and preserve the hospital's viability. The IRS ruled that the authority performed …
Public-school trust keeps its governmental-income exclusion after asset sale
A trust serving public-school entities planned to sell an insurance subsidiary and most assets of a claims and benefits company to an unrelated buyer at fair market value. It would use most sale proce…
Sports broadcast contract receipts are not domestic production gross receipts
A sports organization granted a television network rights to produce and broadcast games and asked whether its contract receipts qualified for the former domestic production activities deduction under…
Government utility's shared generating facility avoids private business use
A city planned to issue bonds so its utility authority could buy an undivided interest in a new electric generating facility from a private company. The authority and company would form a tax partners…
Trust reallocation avoids GST, gift, and income tax
A trust created before the generation-skipping transfer tax effective date had been divided into successor trusts under a court-approved settlement. When a beneficiary died without descendants, the ag…
Consolidated group receives more time to waive loss carryback
A consolidated corporate group incurred a consolidated net operating loss and intended to give up the loss carryback period. Its return was prepared consistently with that choice, but a valid election…
Growing family qualifies for reduced home-sale exclusion
A married couple bought a two-bedroom condominium while they had one child. One bedroom also served as the husband's home office and a guest room. After the purchase, the wife became pregnant and the …
Retail sales are not advertising income from domestic print media
A specialty retailer sold products manufactured outside the United States and distributed catalogs and similar print media that advertised only its own brands. The retailer gave the publications to cu…
IRS approves a VEBA trust merger and excess asset transfer
A corporate employer proposed merging two voluntary employees' beneficiary association trusts into a third VEBA trust and making a one-time transfer from an overfunded collectively bargained retiree m…
Recovery of FSC and ETI depreciation depends on basis and timing
Chief Counsel analyzed four scenarios involving depreciation allocated to exempt foreign trade income under the former foreign sales corporation regime or excluded extraterritorial income. Recovery de…
A timely section 83(b) election revocation was approved
An employee received restricted employer stock and filed an election under section 83(b) covering all of the shares. The employee then asked to revoke the election less than 30 days after the stock tr…
A timely section 83(b) election revocation was approved
An employee received restricted employer stock and filed an election under section 83(b) covering all of the shares. The employee then asked to revoke the election less than 30 days after the stock tr…
A timely section 83(b) election revocation was approved
An employee received restricted employer stock and filed an election under section 83(b) covering all of the shares. The employee then asked to revoke the election less than 30 days after the stock tr…
Chemical transportation units were not credit-eligible facilities
The IRS considered whether transportation units used to move agricultural chemicals were separate facilities for the section 45O agricultural chemicals security credit. Because tax credits must be cle…
An acquired target could not use the success-fee safe harbor
An S corporation's shareholders sold all its stock, and the target and buyer elected under section 338(h)(10) to treat the deal as a taxable asset acquisition. The target deducted 70 percent of its su…
Two Medicaid programs qualified for difficulty-of-care treatment
A state agency administered two Medicaid-funded programs that paid individual providers to care for aged, blind, or disabled recipients in the providers' homes. Although the programs operated under So…
QRPBI exclusion limit applies property by property
A taxpayer owned two business properties, each financed by debt whose proceeds were used only for that particular property, although both debts were secured by both properties. One debt was partially …
FINRA enforcement fines treated as government penalties
Chief Counsel considered whether FINRA is a government agency or instrumentality for the rule denying deductions for fines and similar penalties. Applying the functional test from Guardian Industries,…
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.