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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Attorney payments may support continuous wage levy
Chief Counsel considered a levy on payments to an attorney that might qualify as federal payments. The IRS implements section 6331(h) only through electronic levies served on federal agencies under th…
Deed in lieu produces capital gain on mortgage note
Chief Counsel assumed that a taxpayer held a mezzanine mortgage note as an investor rather than as inventory or another excluded asset. On that assumption, the note was a capital asset under section 1…
Oilfield fluid and waste services produce qualifying income
A planned publicly traded partnership would provide fluid delivery, water transfer, equipment washout, and waste processing and disposal services to oil and gas producers. It would also recover, recyc…
Patronage dividends are excluded from REIT income tests
A timberland REIT borrowed under a credit agreement from cooperative lenders and received annual patronage dividends based on its borrowing activity. Those dividends were includible in the REIT's gros…
Foreign entity receives 120 days to elect partnership status
A foreign entity whose owners all had limited liability intended to be classified as a partnership for federal tax purposes but inadvertently failed to file Form 8832 on time. The IRS found that the r…
Estate receives 120 days to opt out of automatic GST allocation
A donor transferred property to an irrevocable trust for a child and descendants but did not intend to allocate generation-skipping transfer tax exemption to the gift. The donor relied on a certified …
Farmers’ market is denied charitable exemption
An organization sought recognition as a tax-exempt charity under IRC § 501(c)(3) for operating a weekly farmers’ market and related educational events. The IRS found that the market’s substantial purp…
Mandatory pension contributions qualify for pickup treatment, elective contributions do not
A city asked whether additional employee contributions to two governmental retirement plans could be treated as employer contributions under IRC § 414(h)(2). The IRS ruled that mandatory contributions…
Unused vacation may fund a 401(k) plan or retiree health account
An employer proposed allowing collectively bargained employees to make an advance, irrevocable election to direct the value of forfeitable unused vacation to a 401(k) plan, a retiree health reimbursem…
Related-party aircraft qualify as held for productive business use
A partnership exchanged aircraft that it owned and leased to a related operating business whose executives used them for business and personal travel. The leases covered carrying costs but were not de…
Consolidated group receives more time for an extended NOL carryback election
A former common parent of a consolidated group failed to timely elect an extended carryback period for a consolidated net operating loss under IRC § 172(b)(1)(H). The group explained that it reasonabl…
Open-market repurchases are treated as pro rata for section 355(e) testing
A public corporation completed a distribution of a controlled corporation followed by a merger with another public company. It later made, and planned to continue making, open-market repurchases of it…
Medical system setup is not further manufacture for excise tax purposes
A healthcare-products reseller sold and set up a system under an agreement that licensed it to install the developer’s software. The reseller did not list either the system or the software as a device…
Affiliated group receives more time to elect consolidated filing
A parent corporation and subsidiary intended to file a consolidated federal income tax return but failed to make the required election on time. The parent showed that it reasonably relied on a qualifi…
Estate receives 120 days to elect portability
An estate failed to timely file Form 706 to transfer the decedent’s unused estate tax exclusion to the surviving spouse. The spouse had reasonably relied on a qualified tax professional who failed to …
Mortgage settlement payments preserve REMIC status and interest classifications
A trustee for numerous residential mortgage REMICs entered a court-approved settlement over alleged breaches of loan representations, warranties, and servicing duties. The settlement allocated payment…
Cooperative grain venture preserves patronage treatment and production deduction rules
A nonexempt agricultural cooperative planned to combine its grain marketing operations with another cooperative and a corporate investor through an LLC taxed as a partnership. The cooperative would co…
Corporation receives 60 days to file its IC-DISC election
A domestic corporation was formed to operate as an interest charge domestic international sales corporation, and its owner timely signed Form 4876-A. The form was never filed because the accounting fi…
Missing ESBT and QSST elections do not end S corporation status
A corporation’s S election was ineffective because one shareholder trust did not timely elect electing small business trust status. A second shareholder trust later failed to make a qualified subchapt…
Multi-step business separation receives discrete reorganization rulings
A public parent planned a complex separation of two businesses through foreign entity restructurings, several internal distributions, a new spin company, debt exchanges, a cash transfer, and a final d…
Foundation serving one individual loses charitable exemption
A foundation operated as a microboard providing care and support for one person with disabilities. The IRS examination found that all of the foundation’s activities, expenses, and earnings benefited t…
Title-holding company loses exemption for operating rental and bar services
A title-holding organization exempt under IRC § 501(c)(2) owned a building with offices and a banquet hall. It rented the hall to union members and the public and provided bar, bartender, and security…
Group is denied social-welfare exemption for an insufficient activity record
An organization applied for exemption under IRC § 501(c)(4) to promote a stated viewpoint through grassroots groups, candidate vetting, and public debates. Its only described activity was a forum for …
Dormant charity loses exemption for promoting a private tutoring business
A charity received exemption based on plans to help homeless and low-income people through tutoring, job support, and related programs. During examination, its representative said the organization was…
Purchased local tax-lien certificates likely have priority over the federal lien
Private parties purchased local tax-lien certificates and, under the relevant state law, stepped into the taxing authority’s position. Chief Counsel advised that their lien interests were likely subro…
Taxpayer may record examination meeting about transfer pricing
IRS employees planned to meet with a taxpayer about transfer-pricing studies used to determine its tax liability. Chief Counsel advised that the meeting was an in-person taxpayer interview covered by …
Fraudulent-conveyance settlement must be capitalized
A corporate subsidiary paid cash and stock to settle claims that assets had been fraudulently transferred during a reorganization. Chief Counsel concluded that amounts attributable to the fraudulent-c…
Related-entity transfers may be treated as a direct transfer
A foreign subsidiary loaned funds to a second foreign corporation, which distributed the funds to its U.S. parent. That U.S. corporation then distributed the same funds to the common U.S. parent of th…
S corporation cannot claim ordinary loss for worthless subsidiary stock
An S corporation terminated its election, which also ended its subsidiary's qualified subchapter S subsidiary status, and claimed an ordinary worthless-stock loss under IRC § 165(g)(3). Chief Counsel …
Corporate successor is consolidated group's default substitute agent
A consolidated group's former common parent dissolved without designating a substitute agent. A domestic holding company had assumed the group's federal income tax liabilities through a bankruptcy ord…
Purchased seismic data does not qualify for G&G amortization
An oil and gas company acquired seismic data as part of a larger asset purchase after the seller had used the data to locate and develop producing properties. The company amortized the amount allocate…
Corporate group may switch to tax book value for interest allocation
A domestic corporate group had long used fair market value to value assets when apportioning interest expense. It asked to switch because that method required significant professional fees and employe…
Foreign entity receives more time for disregarded-entity election
A foreign single-owner entity was classified by default as an association for federal tax purposes. Its U.S. parent tried to file Form 8832 to elect disregarded-entity status, but the election was not…
Late accounting-period change application is treated as timely
A taxpayer filed Form 1128 late when seeking to change its annual accounting period. It requested discretionary relief and submitted the form within 90 days after the filing deadline. The IRS found th…
Foreign entity receives more time for disregarded-entity election
A foreign single-owner entity was classified by default as an association for federal tax purposes. Its U.S. parent tried to file Form 8832 to elect disregarded-entity status, but the election was not…
Foreign entity receives more time for disregarded-entity election
A foreign single-owner entity was classified by default as an association for federal tax purposes. Its U.S. parent tried to file Form 8832 to elect disregarded-entity status, but the election was not…
Foreign entity receives more time for disregarded-entity election
A foreign single-owner entity was classified by default as an association for federal tax purposes. Its U.S. parent tried to file Form 8832 to elect disregarded-entity status, but the election was not…
Foreign entity receives late election for disregarded period
A foreign single-owner entity was classified by default as an association, and its U.S. parent unsuccessfully tried to elect disregarded-entity status on Form 8832. The entity later converted under lo…
Foreign entity receives more time for disregarded-entity election
A foreign single-owner entity was classified by default as an association for federal tax purposes. Its U.S. parent tried to file Form 8832 to elect disregarded-entity status, but the election was not…
Foreign entity receives more time for disregarded-entity election
A foreign single-owner entity was classified by default as an association for federal tax purposes. Its U.S. parent tried to file Form 8832 to elect disregarded-entity status, but the election was not…
Acquired group may switch to tax book value for interest allocation
A domestic corporate group had used fair market value to apportion interest expense because a former parent required that method. After later ownership changes, the group asked to use tax book value t…
Acquiring group may retain tax book value for interest allocation
A domestic consolidated group had long used tax book value to apportion interest expense. It acquired another group that had used fair market value, which otherwise required the combined related group…
Partnership may make late low-income housing credit elections
A partnership placed several buildings in service but inadvertently failed to elect to begin their low-income housing credit periods in the following year. The IRS found that the partnership met the s…
Cash-or-stock RIC dividends are taxable property distributions
A regulated investment company planned dividends that shareholders could elect to receive in cash or common stock. Cash would equal at least 20 percent of each dividend, with cash elections prorated i…
Estate receives more time to elect portability of unused exclusion
An estate below the federal estate-tax filing threshold missed the deadline to file Form 706 and elect portability of the decedent's unused exclusion amount to the surviving spouse. Because the estate…
REIT subsidiary's late taxable election is treated as timely
A real estate investment trust and its subsidiary intended to elect taxable REIT subsidiary status from the date the subsidiary began operating a facility. Their accounting firm did not obtain the org…
Cost-sharing arrangement may change stock compensation methods
A domestic corporation with a cost-sharing arrangement had used the default tax-deduction method to measure stock-based compensation included in intangible development costs. After its stock became pu…
Foreign entity receives late election for disregarded period
A foreign single-owner entity was classified by default as an association, and its U.S. parent unsuccessfully tried to elect disregarded-entity status on Form 8832. The entity later converted under lo…
Taxpayer may make late GST exemption allocation to trust
A taxpayer transferred property to an irrevocable trust with generation-skipping transfer tax potential. A tax professional failed to advise the taxpayer to allocate GST exemption on a timely Form 709…
Corporation may make late IC-DISC election
A domestic corporation was formed to operate as an interest charge domestic international sales corporation and filed returns on that basis. It later learned that neither its law firm nor accounting f…
Partnership may make late election out of bonus depreciation
A partnership claimed additional first-year depreciation on qualified property even though its transaction documents and financial projections reflected an intent not to claim it. The return preparer …
Corporation may replace invalid IC-DISC election
A domestic corporation was formed to operate as an interest charge domestic international sales corporation. It timely filed Form 4876-A and later filed IC-DISC returns, but the IRS found that the ele…
Business unit satisfies qualified separate-line scrutiny
An employer asked to treat one business unit as a qualified separate line of business for employee-benefit testing under IRC § 414(r). The unit met the basic line-of-business, organizational, and 50-e…
Legal aid fee award is not income to client with no fee obligation
A taxpayer obtained injunctive relief in a discrimination lawsuit while represented by two legal aid organizations. Both retainer agreements stated that the taxpayer would not have to pay the lawyers,…
IRS approves scholarship program for low-income urban students
A private foundation proposed a scholarship program for low-income graduates from specified counties who planned to attend accredited four-year colleges or universities. Applicants had to meet financi…
IRS denies social-club exemption for alcohol venue arrangement
An organization sought IRC § 501(c)(7) social-club exemption so it could obtain a private-club alcohol permit for an event venue owned by its president. Membership requirements were minimal, membershi…
Recognized income and gain do not defeat active-business requirement
A corporate group planned to separate one business into a newly formed controlled corporation and distribute that corporation's stock to the parent's shareholders. As part of the restructuring, a part…
Estate receives 120-day extension to elect portability
An estate below the estate-tax filing threshold missed the deadline to elect portability of the decedent's unused estate and gift tax exclusion to the surviving spouse. The estate discovered the omiss…
Ski lift towers qualify as real property for REIT rules
A publicly traded real estate investment trust planned to acquire ski resort assets and lease them to operators. It asked whether the concrete foundations, steel towers, tower head assemblies, and wal…
Employee-funded pension contributions remain taxable wages
A city and its employees agreed to use part of the employees' fixed salaries to pay a portion of the city's required employer contributions to a governmental retirement plan. The city asked the IRS to…
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.