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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Depreciation method-change adjustments enter the Section 163(j) ATI addback
A taxpayer changed the recovery period for depreciable property from seven years to five years, producing a net negative Section 481(a) adjustment of $100x in 2020. Chief Counsel advised that the adju…
Property owner gets 120 days to make a late rehabilitation-credit election
A property owner rehabilitated a building and leased it to a tenant under a structure intended to pass the rehabilitation credit to the tenant. The owner agreed to elect under Section 50(d)(5) and Tre…
Finance company must capitalize retailer payments tied to acquired contracts
A manufacturer's captive finance subsidiary bought retail financing contracts from independent brand retailers. In addition to each contract's principal amount, it paid three program payments that wer…
Pipeline safety costs do not qualify for the 10-year specified-liability-loss carryback
An energy company claimed that deductible costs to repair leaks, replace natural gas pipelines, and protect pipelines under federal safety rules generated specified liability losses eligible for a 10-…
Taxpayer may revoke later underwriting-fee elections but not earlier ones
A consolidated group had inadvertently followed its financial accounting treatment and elected to capitalize intercompany underwriting fees paid for employees' debt-underwriting services. After discov…
Taxpayer gets 45 days to make a late success-based-fee election
A U.S. holding company incurred a success-based advisory fee when it acquired stock in a taxable transaction. Its newly formed, high-turnover tax department was unaware of the fee and did not elect th…
NOL carryback waiver bars separate ten-year liability-loss carryback
The parent of a consolidated group elected under Section 172(b)(3) to waive the entire carryback period for net operating losses in two years. It later discovered specified liability losses that were …
Deemed asset sales qualify, but anti-churning limits amortization
A corporate group planned to distribute two target companies to an upper-tier subsidiary, elect to treat those distributions as deemed asset sales under Section 336(e), and then sell the distributing …
State fund rights qualify for Section 197 amortization
A regulated company joined an optional fund created by state law to reimburse specified losses and provide a favorable prudency standard and a liability cap if the company met the statutory conditions…
Taxpayers receive time for canceled real-property debt election
Two taxpayers indirectly owned partnerships whose debt for business real estate was forgiven. Their tax adviser intended to elect the qualified real property business indebtedness exclusion, excluded …
Clean-energy bond spending period extended
A public authority issued new clean renewable energy bonds to finance solar equipment for a city's exclusive use. Significant equipment defects, contractor errors, resulting litigation, and pandemic d…
Sole proprietor may use primary-purpose test for aircraft travel
A sole proprietor owned an aircraft directly or through a disregarded entity and used it for business and entertainment travel. Chief Counsel advised that the proprietor may use the primary-purpose te…
Bitcoin Cash hard-fork income arises when dominion begins
Bitcoin's 2017 hard fork created Bitcoin Cash units for Bitcoin holders. The IRS advised that receiving the new cryptocurrency creates ordinary income under Section 61 once the holder has dominion and…
Direct sperm costs are deductible, but surrogacy costs are not
A married male couple planned to use one spouse's sperm, the other spouse's sister's egg, and an unrelated gestational surrogate. The IRS ruled that costs directly attributable to medical care of the …
Related-party debt forgiveness generally avoids recognition
A foreign financing subsidiary proposed forgiving part of debt owed by an insolvent U.S. consolidated group. The IRS ruled that the U.S. parent and two subsidiaries would recognize no income, gain, or…
Temporary wagering-loss rule does not cover gambling businesses' ordinary expenses
Chief Counsel considered whether the Tax Cuts and Jobs Act's temporary amendment to Section 165(d) treated a gambling business's ordinary and necessary expenses as wagering losses. The advice conclude…
Service-connected survivor benefits qualify for income exclusion
A governmental plan pays disability and death benefits to eligible firefighters and police officers and may continue those benefits to surviving beneficiaries. The IRS ruled that payments continuing j…
Mortgage investment fund interests may qualify as registered-form pooled-fund obligations
A limited partnership planned to pool investor capital to hold U.S. mortgage loans and interests in affiliated mortgage funds. Some investors might be foreign persons, making the registered-form rules…
Foreign retrocessionaire substitution does not itself create a BEAT base erosion payment
A domestic insurance company had retroceded a share of reinsured policy risks to one foreign affiliate, which then retroceded those risks to another foreign affiliate. The parties proposed substitutin…
Trust constructions preserve GST status and avoid income, gift, and estate tax consequences
A testamentary trust created before September 25, 1985 had undergone court proceedings concerning trustee succession and the meaning of trust earnings. After the primary beneficiary died, another cour…
Court-corrected trust division retains GST grandfathering without transfer-tax consequences
A testamentary trust created before September 25, 1985 had been the subject of court proceedings about trustee succession and whether earnings included capital gains. When its primary beneficiary died…
Judicial trust corrections avoid gain, gifts, estate inclusion, and loss of GST status
A pre-September 25, 1985 testamentary trust had previously received judicial rulings about corporate trustee succession and the treatment of capital gains as earnings. Following the primary beneficiar…
Grandfathered trust may be corrected and divided without federal tax recognition
A testamentary trust established before the effective date of the generation-skipping transfer tax rules had undergone judicial changes involving trustee succession and trust earnings. A later court j…
Trust reformation and equal child-trust distributions receive favorable tax rulings
A grandfathered testamentary trust and the primary beneficiary's will contained provisions later addressed in several state-court proceedings. The final judgment corrected drafting errors, clarified t…
Corrected exercise of a limited power preserves a trust's GST exemption
A testamentary trust created before September 25, 1985 was governed by a limited power of appointment and had already undergone judicial proceedings about trustee succession and trust earnings. After …
IRS extends school construction bond expenditure period after pandemic delays
A public authority issued qualified school construction bonds and loaned the proceeds for renovation and construction of school facilities. Most proceeds funded a completed renovation, while the remai…
Student loan authority may issue bonds on behalf of a city
A nonprofit student loan authority planned to broaden its educational lending activities and issue revenue bonds on behalf of its sole sponsoring city. The city appointed and could remove every direct…
A governmental self-insurance pool's income is excluded under § 115
An unincorporated association of local governments runs a group self-insurance pool that provides workers' compensation and liability coverage to its member governments and their employees. Only polit…
Qualifying solar equipment has a five-year recovery period for the bonus-depreciation test
Counsel considered the recovery period for a solar energy system when applying the bonus-depreciation rules in IRC § 168(k). Property described in § 48(a)(3)(A), including certain solar-energy equipme…
Premium for conservation-easement tax-loss coverage was not deductible
A partnership donated a conservation easement and bought a policy that could pay amounts calculated by reference to a later disallowance of the charitable deduction. The policy covered the partnership…
Late-election relief to use the 70/30 safe harbor for success-based deal fees
A company that acquired another business paid its financial advisors fees that were contingent on the deal closing (success-based fees). Under a safe harbor in Revenue Procedure 2011-29, a buyer may d…
Late-election relief for an LLC to be taxed as a corporation and opt out of tax-exempt-use rules
A single-member LLC, wholly owned by a § 501(c)(3) tax-exempt organization, was the co-general partner in a partnership that developed a low-income housing tax credit property for the elderly. Because…
IRS permits a late election for a tax-exempt controlled corporation to receive taxable-entity depreciation treatment
A corporation wholly owned by a § 501(c)(3) organization was the general partner of a partnership that acquired and rehabilitated multifamily housing. The corporation intended and contractually agreed…
IRS permits a late election for a tax-exempt controlled corporation to receive taxable-entity depreciation treatment
A corporation wholly owned by a § 501(c)(3) organization was the general partner of a partnership that acquired and rehabilitated multifamily housing. The corporation intended and contractually agreed…
"Tax insurance" premiums covering a charitable-deduction adjustment are not deductible
The IRS Office of Chief Counsel advised on whether a partnership can deduct premiums it pays for a "tax insurance" policy. The policy would reimburse the partners if the IRS later reduced the tax bene…
IRS grants more time to fix a wrongly checked box on low-income housing credit forms
A partnership that owns a multi-building low-income housing project claimed the low-income housing tax credit under Code § 42. When it filed Forms 8609 for certain buildings, it accidentally checked t…
IRS rules accident-lawsuit damages, including loss of consortium, are tax-free
A man riding his bike home from work was struck by a car and suffered severe, permanent injuries, including traumatic brain injury. He and his spouse sued the driver's employer, and a jury awarded him…
An environmental-mitigation trust is a qualified settlement fund, and its investment income becomes § 115 tax-exempt once the company stops running it
A company that operates a facility caused an environmental incident and, under a court-approved consent decree with a state attorney general and environmental agency, set up a trust to fund mitigation…
IRS grants a tax-exempt-controlled entity extra time to elect out of "tax-exempt entity" status so its real estate can be depreciated faster
When property is used by a "tax-exempt entity," the tax law forces slower depreciation (the alternative depreciation system) instead of the faster general system. The taxpayer here is an LLC that elec…
IRS grants a late § 108(b)(5) election letting an insolvent company cut depreciable-property basis instead of its net operating losses
When debt is cancelled, the forgiven amount is normally taxable, but § 108 lets an insolvent taxpayer exclude it from income; the price is that the taxpayer must "reduce tax attributes," which by defa…
Winding up a charitable remainder annuity trust by giving the annuity interest to the charity is a gift, not a sale, and not self-dealing
A married couple created a charitable remainder annuity trust (CRAT): they receive a 5 percent annuity for their joint lives, and a private foundation they control is the remainder beneficiary. They w…
A utility's negotiated-rate solar array is not "public utility property," so it escapes the depreciation normalization rules
A regulated electric utility built a solar photovoltaic array and dedicated part of it (a "dedicated renewable energy facility," or DREF) to serve one municipal-airport customer under a special progra…
Home-buyer cash rebates from a brokerage's referral program are purchase-price adjustments, not income, and need no Form 1099 reporting
An online real estate brokerage matches home buyers with brokers and collects a referral fee out of the broker's commission when a deal closes. Under a promotional program, the brokerage pays a buyer …
State retiree-benefit trust has excluded income and no annual return requirement
A state agency created a trust to fund health and welfare benefits for retired state employees, their spouses, and dependents. Only the agency may designate contributions, and trust assets may be used…
Market-priced solar service systems are not public utility property
A company proposed owning and maintaining solar systems on customers' premises under long-term service agreements. Customers would receive a share of the electricity in exchange for monthly fees negot…
Entire city qualifies as the utility commission's service area for bond rules
A city public utilities commission had generated, transmitted, distributed, and sold electricity to retail customers throughout the city for more than ten years. The city planned to use bond proceeds …
Labels do not turn a shareholder's personal expenses into deductible compensation
A closely held corporation paid expenses for its sole shareholder, chief executive, and president, and reported some payments as business expenses while the shareholder reported other amounts as “Othe…
Daily fantasy sports entry fees are wagers for federal tax purposes
Chief Counsel considered whether a player's payment to enter a daily fantasy sports contest is a wagering transaction under IRC § 165(d). The contests are pay-to-play arrangements in which entry fees …
School district receives more time to spend clean renewable energy bond proceeds
A school district issued new clean renewable energy bonds to buy and install equipment that would supply electricity at district sites. City approval problems, a dispute with the contractor, unexpecte…
Stock transfer limits and an employer repurchase right do not defeat § 83(i) deferral
A privately held corporation wanted eligible employees to elect under IRC § 83(i) to defer income from exercising stock options granted before 2018. Employees could not transfer the shares during the …
Tax-rate adjustment does not make a solar facility public utility property
A regulated electric utility agreed to sell power from a new solar facility at a fixed rate negotiated from comparable market prices rather than through traditional cost-of-service, rate-of-return rat…
Insurer remains owner of pension separate-account assets after restructuring
An insurance company funded group pension annuity contracts through a separate account holding real estate investments. It proposed contributing most of those assets to an operating partnership that w…
IRS grants late election for the success-based fee safe harbor
A corporation incurred success-based fees in connection with two stock acquisition transactions. Its tax professional prepared the return using the safe harbor in Rev. Proc. 2011-29, deducting 70 perc…
IRS confirms insurer ownership of pension separate-account assets
This supplemental ruling modified a 2012 private letter ruling concerning a pension-contract separate account. The separate account would generally keep more than a redacted percentage of its assets d…
Government retiree-benefit trust income is excluded and no annual return is required
Political subdivisions created a trust to invest irrevocably contributed funds for retiree health and other post-employment welfare benefits. Each participating government retained a separate account,…
Interests in a pooled loan-investment partnership can qualify as obligations in registered form under § 163(f)
Federal tax law generally denies an interest deduction, and withholds certain foreign-investor benefits, unless a debt-like obligation is held in "registered form" (ownership tracked through the issue…
IRS treats payments for state-granted fund rights as an amortizable § 197 intangible
A regulated company joined a state-created fund by making an initial contribution and committing to annual contributions. Participation gave the company state-granted rights that included reimbursemen…
IRS grants 60 days for a success-fee election omitted from an examined return
A corporation paid a contingent advisory fee in a business acquisition and intended to use the Rev. Proc. 2011-29 safe harbor. Its accounting firm prepared the required election statement and the retu…
IRS grants 60 days to add an omitted success-fee election to an amended return
A corporate group completed a taxable stock acquisition and paid contingent fees to two financial advisers. Its return deducted 70 percent of the fees and capitalized 30 percent, consistently with the…
Crypto earned for doing online "microtasks" is taxable ordinary income
People increasingly earn small amounts of cryptocurrency by doing tiny online jobs ("microtasks") on crowdsourcing platforms, such as reviewing images, taking surveys, downloading apps and leaving rev…
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.