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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IRS again rules the electric-vehicle credit belongs to the party that buys and leases the cars, not the beneficial-interest holder
This is a companion ruling to PLR 202219006, with the same facts and the same result, differing only in which trust submitted the request. The Section 30D credit for a new plug-in electric vehicle goe…
IRS rules the electric-vehicle credit belongs to the party that buys and leases the cars, not the beneficial-interest holder
The Section 30D credit for a new plug-in electric vehicle goes to the taxpayer who is the vehicle's original user and who acquires it for use or lease (not resale). Here, two statutory trusts bought q…
How the depreciation normalization proration formula applies to a utility's two-part projected transmission rate base
A regulated electric utility sets its wholesale transmission rates using a formula that projects a yearly revenue requirement and then trues it up to actual results in the next cycle. The projected re…
IRS rules a utility may not fold cost-of-removal into the formula that returns excess deferred taxes to ratepayers after the TCJA rate cut
A regulated electric and gas utility asked the IRS a normalization question created by the 2017 Tax Cuts and Jobs Act. When the corporate tax rate dropped from 35% to 21%, utilities ended up holding "…
Interests in a mortgage-backed investment fund count as obligations "in registered form"
Under Section 163(f), interest on certain debt obligations is only deductible if the obligation is "in registered form," meaning ownership is tracked through the issuer or a book-entry system rather t…
Interests in a mortgage-backed investment fund count as obligations "in registered form"
Under Section 163(f), interest on certain debt obligations is only deductible if the obligation is "in registered form," meaning ownership is tracked through the issuer or a book-entry system rather t…
Interests in a mortgage-backed investment fund count as obligations "in registered form"
Under Section 163(f), interest on certain debt obligations is only deductible if the obligation is "in registered form," meaning ownership is tracked through the issuer or a book-entry system rather t…
Once a corporation makes the CARES Act election, the refundable minimum tax credit is not prorated in a short tax year
An exempt organization that owed tax on unrelated business income had built up an old alternative minimum tax (AMT) credit under section 53. The CARES Act (2020) made that leftover corporate AMT credi…
Supplemental letter re-dating an earlier grant of extra time to make the success-based-fee safe harbor election
A taxpayer had earlier won an extension of time under Treasury Regulations §§ 301.9100-1 and 301.9100-3 to make the safe harbor election for success-based fees in Revenue Procedure 2011-29, which lets…
A utility's solar facilities sold at competitive market rates are not "public utility property," so the depreciation normalization rules do not apply
Regulated utilities that recover their costs through traditional "rate-of-return" ratemaking must use a slower "normalization" method of accounting for their depreciation on "public utility property";…
A consolidated group gets consent to undo an inadvertent election to capitalize intercompany underwriting fees, even though a later tax-rate cut makes revocation valuable
A regulation (section 1.263(a)-5(d)(4)) lets a taxpayer elect to capitalize certain employee-compensation-type costs of a borrowing rather than deducting them right away. Here a corporate group, by si…
A housing bond issuer gets its late-filed carryforward election for unused private-activity bond volume cap treated as timely
States and local authorities get an annual "volume cap" limiting how much tax-exempt private-activity bond financing they can issue. If an authority does not use all of its cap in a year, it can elect…
Late relief to make the Rev. Proc. 2011-29 safe-harbor election for success-based fees
When a company pays advisors fees that are contingent on a deal closing (success-based fees), the tax rules presume those fees must be capitalized rather than deducted, unless the taxpayer documents t…
NOL attributable to accelerated depreciation must be reflected in a water utility's excess deferred tax offset to rate base
A regulated water and wastewater utility uses accelerated depreciation for federal tax but must follow the tax "normalization" rules, which stop it from passing the accelerated-depreciation tax saving…
Section 280E bars the Work Opportunity Tax Credit for a marijuana business
This Chief Counsel Advice answers whether a business that traffics in marijuana can claim the Work Opportunity Tax Credit (WOTC) under § 51 for wages paid to employees from targeted groups. The answer…
IRS denies a six-year-late election to exclude discharged real-property business debt as based on hindsight
Section 108(c)(3)(C) lets a non-corporate taxpayer elect to exclude from income the cancellation of "qualified real property business indebtedness," in exchange for reducing the basis of depreciable r…
IRS denies a six-year-late election to exclude discharged real-property business debt as based on hindsight
Section 108(c)(3)(C) lets a non-corporate taxpayer elect to exclude from income the cancellation of "qualified real property business indebtedness," in exchange for reducing the basis of depreciable r…
Ground improvements financed with tax-increment bonds do not create private business use
Interest on state and local bonds is generally tax-exempt, but not if the bonds are "private activity bonds," which happens when more than 10% of the proceeds are used in a private trade or business (…
Ground improvements financed with tax-increment bonds do not create private business use
Interest on state and local bonds is generally tax-exempt, but not if the bonds are "private activity bonds," which happens when more than 10% of the proceeds are used in a private trade or business (…
IRS lets a trust revoke its election to treat dividends and capital gain as investment income
A trust files Form 1041 and, on the advice of its tax preparer, elected under section 163(d)(4)(B) to treat qualified dividend income and net capital gain as "investment income." That election raises …
A utility's market-rate solar project is not "public utility property," so normalization rules do not apply
A regulated electric utility planned to develop a solar facility and hold it through a partnership with an unrelated investor. The partnership would sell the solar power into the wholesale market at m…
Bankruptcy claims trusts are qualified settlement funds; operating subsidiary deducts settlement funding and recognizes no gain on transferring parent stock
A regulated operating company and its holding-company parent went through Chapter 11 bankruptcy because of massive damage claims tied to their failure to maintain their property. Under the confirmed p…
Engineered low-salinity waterflood is a qualified tertiary recovery method for the enhanced oil recovery credit; pre-injection costs allowed on amended returns
Section 43 gives oil producers a credit for costs of a "qualified enhanced oil recovery project," but only if the project uses a "qualified tertiary recovery method." Ordinary waterflooding (injecting…
Late section 42(f)(1) election to defer the low-income-housing credit period allowed under 9100 relief
The low-income housing credit under § 42 is claimed over a 10-year "credit period" that starts the year a building is placed in service, unless the owner makes an irrevocable § 42(f)(1) election to st…
How to tell the deductible from the non-deductible parts of a False Claims Act health care fraud settlement under section 162(f)
When a company settles a False Claims Act (FCA) case and the settlement agreement is silent on tax treatment, the pre-TCJA version of IRC § 162(f) still bars a deduction for the punitive (non-compensa…
IRS grants a company 60 more days to make the 70/30 safe-harbor election for success-based fees
When a company pays fees that are contingent on closing a merger or acquisition ("success-based fees"), the tax rules presume the whole fee must be capitalized (spread out) rather than deducted, unles…
IRS rules a gas pipeline may return TCJA excess deferred taxes to ratepayers over a revised regulatory life without a normalization violation
A regulated interstate natural gas pipeline uses accelerated depreciation for tax purposes, which is allowed for utilities only if they follow the "normalization" rules. Those rules govern the timing …
IRS consents to revoke a Section 83(b) election filed within the 30-day window
A taxpayer received restricted units from an employer that were subject to a substantial risk of forfeiture, then filed an election under section 83(b). An 83(b) election accelerates income tax to the…
Splitting a QTIP marital trust in two, then disclaiming one, is a gift but not a taxable sale and keeps QTIP status
After a decedent's death, the marital share of his revocable trust was treated as qualified terminable interest property (QTIP), giving his surviving spouse a lifetime income interest. The spouse, as …
IRS grants a tax-exempt controlled entity 45 days to make a late Section 168(h)(6)(F)(ii) election out of tax-exempt entity status
A limited liability company that elected to be taxed as a corporation, and that is wholly owned by a 501(c)(3) charity, counts as a "tax-exempt controlled entity" under section 168(h). That status can…
A low-income housing partnership gets 9100 relief to fix an inadvertent "deep rent skewing" election on Form 8609
A partnership that owns a low-income housing tax credit project filed Form 8609 to certify its building, but it accidentally checked the box on line 10d that elects "deep rent skewing" under section 1…
A low-income housing partnership gets 9100 relief to correct which year its credit period begins on Form 8609
A partnership that owns a low-income housing tax credit project had to pick when the building's 10-year credit period starts: either the year the building is placed in service, or, by irrevocable elec…
A water agency's bonds financing lead pipe replacements do not flunk the private security or payment test, so they stay tax-exempt
A public water agency issued tax-exempt bonds partly to replace privately owned lead service lines, the pipes running from the agency's main to each customer's building, to reduce lead in the drinking…
IRS denies consent to revoke a section 59(e) research-expense election; CARES Act and GILTI regulation changes are not "rare and unusual"
A consolidated group of corporations had elected under section 59(e) to capitalize and amortize part of its research or experimental (R&E) expenses over 10 years. That election let it avoid a net oper…
A utility commission's order to flow back excess deferred income taxes without matching rate-base adjustments violates the normalization consistency rule, but the utility avoids sanctions by taking corrective action
Utilities that use accelerated depreciation on public utility property must follow the "normalization" rules, which stop regulators from flowing the resulting tax benefits back to ratepayers faster th…
Missing notice of a preexisting use may defeat a conservation deduction
Chief Counsel considered how a preexisting use of property affects a deduction for a qualified conservation contribution. The advice distinguished the requirement that property be used exclusively for…
A former consolidated-group member may deduct only its allocable share of interest paid on a prior-year group tax deficiency, not the entire interest payment
This Chief Counsel email conveys internal analysis concluding that a taxpayer should be challenged on its deduction of the entire interest payment made on a consolidated group's tax deficiency for a p…
Utility normalization excludes cost of removal but includes salvage value
A regulated electric utility asked how the tax-rate reduction in the 2017 tax law affected its accumulated deferred taxes and the average rate assumption method used to return excess deferred taxes to…
Market-rate solar facility is not public utility property
A regulated utility planned to invest in a partnership that would own a solar electric generating facility and sell most of its output to the utility under a wholesale power purchase agreement. The pa…
Housing issuer receives 60 days to make a late mortgage-credit election
A state-authorized housing issuer wanted to convert unused private-activity bond volume cap into authority for a mortgage credit certificate program. It had timely carried forward the volume cap for q…
Holding company may count subsidiary's historic receipts for worthless-stock test
A U.S. subsidiary organized foreign companies to develop and commercialize a product, then contributed them to a foreign holding company. The product failed, monetizing its intellectual property prove…
Statutory overpayment-interest limits apply in the savings-bond context
Chief Counsel addressed interest in connection with the purchase of U.S. Series I savings bonds through Form 8888. The brief email states that, in the bond context, the listed provisions of Section 66…
Bankruptcy tort-claim trust qualifies as a settlement fund and permits a current deduction
A corporate group faced more than a redacted number of disputed product-related tort claims and placed a redacted cash amount into a bankruptcy-court-approved trust to resolve them. The court retained…
S corporation's business separation qualifies as a tax-free reorganization
An S corporation proposed separating one business from another by forming a controlled corporation, electing qualified subchapter S subsidiary status, contributing a disregarded subsidiary and an inte…
Buyer and target receive 60 days to elect the success-fee safe harbor
A corporate buyer and its acquisition target paid several success-based advisory fees in a covered transaction but did not make the Revenue Procedure 2011-29 safe-harbor election on their original ret…
Regulated customer fees used for business obligations are gross income
An S corporation operating a regulated facility charged clients separate fees to fund legally required future activities and placed the money in interest-bearing accounts subject to varying degrees of…
Division of grandfathered trust preserves GST exemption and avoids transfer-tax and income-tax consequences
A trust created under a settlor's will before September 25, 1985 proposed dividing one child's share into two equal trusts, one associated with each of that child's children. The new trusts would have…
Pro-rata division into separate family trusts preserves income-tax attributes and GST exemption
Two grantors created a trust for their children and allocated enough generation-skipping transfer tax exemption to give it an inclusion ratio of zero. As the family grew and beneficiaries' financial n…
Early pro-rata trust division preserves income-tax attributes and GST exemption
Two grantors created a trust for their descendants and allocated enough generation-skipping transfer tax exemption to give it an inclusion ratio of zero. After one grantor died and family members deve…
A drug-fee reimbursement is not automatically excluded from a controlled-group member's income
A U.S. distributor paid the federal branded prescription drug fee for its controlled group and was fully reimbursed by foreign group members that manufactured the drugs and owned the related intellect…
Market-priced solar sales are not public utility property
A regulated utility planned to invest with a tax-equity investor in a partnership that would acquire a solar facility and sell its power to the utility. A federal regulator would approve the affiliate…
Improvement carveouts invalidate conservation easement deductions
The Chief Counsel advised that a conservation easement deed fails Section 170(h) when its extinguishment clause subtracts the value of post-donation improvements, or appreciation attributable to those…
Market-rate solar partnerships avoid utility normalization rules
A regulated utility planned to acquire solar projects, place them in tax-equity partnerships, and have those partnerships sell electricity directly into wholesale markets. The partnerships would recei…
DOJ report identifies punitive part of False Claims Act settlement
Chief Counsel addressed how the pre-TCJA version of Section 162(f) applies when a False Claims Act settlement does not specify the federal tax treatment of the payment. Single damages are compensatory…
Utility deducts shared environmental mitigation payment
A utility paid its agreed share of another entity's cost to acquire water used solely to mitigate groundwater drawdown caused by a jointly developed generating facility. The IRS found the payment ordi…
Treasury-rate formula preserves a qualified structured settlement
A structured-settlement company assumed an insurer's obligation to make deferred payments for a minor's physical-injury claim and bought an annuity to fund those payments. The settlement called for mo…
IRS allows a timely revocation of a Section 83(b) election
A service provider made a Section 83(b) election for restricted employer stock and later asked the IRS for permission to revoke it. Such an election generally cannot be revoked without IRS consent, an…
Partnership receives more time for success-based fee election
A partnership paid a fee contingent on completing a merger transaction. Its accounting firm prepared the return using the Revenue Procedure 2011-29 safe harbor, deducting 70 percent of the fee and cap…
Acquirer receives more time for success-based fee election
A corporation paid a fee contingent on completing an acquisition treated as a statutory merger. Its advisers prepared the Revenue Procedure 2011-29 safe harbor statement, and the filed return used the…
Cost-of-removal tax shortfall is not normalization-protected
A regulated electric and gas utility collected estimated asset-removal costs from customers through book depreciation before those costs could be deducted for tax purposes. The federal corporate rate …
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.