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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Investors may make retroactive QEF elections for nine PFICs
A married couple held direct or indirect interests in nine foreign corporations that were passive foreign investment companies. Their accounting and legal advisers did not identify the companies as PF…
Court-approved trust divisions avoid gift and estate tax and generally preserve income tax treatment
Two continuing trusts created after a grantor retained annuity trust ended proposed dividing their assets into separate successor trusts for each of the grantor's two sons and their respective descend…
Investment fund receives 90 days to file late constant-yield interest election
A regulated investment fund decided to elect the constant-yield method under Treas. Reg. § 1.1272-3 for all eligible debt instruments acquired during its first taxable year. Its financial statements a…
Laboratory-testing company qualified as a section 1202 trade or business
Taxpayers sold stock in a company that used proprietary technology to perform specialized laboratory testing and report the results to healthcare providers. The company did not diagnose patients, reco…
Estate receives 120 days to make the 2010 carryover basis election
The executor of an estate for a decedent who died in 2010 hired an attorney to prepare required tax filings. The attorney failed to file Form 8939 by the extended deadline, so the estate did not elect…
Pro rata trust division preserves tax treatment and S eligibility
An irrevocable grantor trust holding S corporation stock and other assets proposed moving the non-S stock assets, pro rata, into eight separate family trusts while retaining the S corporation shares. …
Bargain sale basis is calculated property by property
An S corporation planned to have several qualified subchapter S subsidiaries donate business properties to a section 501(c)(3) charity. Some properties could be subject to mortgage debt, which is trea…
Divorce settlement trust avoids gain, gift, and most estate inclusion
A divorcing husband proposed transferring half of his company shares to an irrevocable trust for his wife in exchange for her marital rights and property claims. The wife would receive all trust incom…
Divorce settlement trust avoids gain and gift, but remains in husband's estate
A divorcing husband proposed transferring half of his company shares to an irrevocable trust for his wife in exchange for her marital rights and property claims. The wife would receive all trust incom…
Cellular towers and installed cable systems are like-kind property
A communications provider proposed exchanging cellular tower sites for installed fiber-optic and copper cable distribution systems. The tower structures, equipment huts, fencing, and related component…
FCC spectrum sale qualifies as threatened involuntary conversion
A television station planned to relinquish its spectrum-based broadcast rights and related assets through the FCC's incentive auction, then reinvest the proceeds in similar or related property. If it …
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…
Corporation may make retroactive QEF elections for three PFICs
A U.S. corporation failed to make timely qualified electing fund elections for three foreign corporations that were passive foreign investment companies. It had relied on a tax adviser for its returns…
Mortgage servicer receives late safe-harbor election relief
A mortgage-banking group sold loans while retaining mortgage servicing rights and applied the Revenue Procedure 91-50 safe-harbor rates to determine reasonable servicing compensation. The group and it…
Patent-payment termination amount qualifies for capital gain treatment
A partnership owned by individuals transferred patent-related rights to an unrelated company in exchange for payments based on product sales. When the parties later terminated that agreement, part of …
Trust transfers remain incomplete gifts and community property receives a basis adjustment
A married couple in a community property state transferred property to an irrevocable trust for descendants and charities while retaining several powers over income and principal. The IRS concluded th…
Trust transfers remain incomplete gifts and community property receives a basis adjustment
A married couple in a community property state transferred property to an irrevocable trust for descendants and charities while retaining several powers over income and principal. The IRS concluded th…
Trust transfers remain incomplete gifts and community property receives a basis adjustment
A married couple in a community property state transferred property to an irrevocable trust for descendants and charities while retaining several powers over income and principal. The IRS concluded th…
Trust powers preserve incomplete gifts without giving committee members general powers
A married couple placed community property in an irrevocable trust and shared distribution powers with a power-of-appointment committee. The IRS concluded that the trust terms did not make either gran…
Trust powers preserve incomplete gifts without giving committee members general powers
A married couple placed community property in an irrevocable trust and shared distribution powers with a power-of-appointment committee. The IRS concluded that the trust terms did not make either gran…
Trust powers preserve incomplete gifts without giving committee members general powers
A married couple placed community property in an irrevocable trust and shared distribution powers with a power-of-appointment committee. The IRS concluded that the trust terms did not make either gran…
Trust powers preserve incomplete gifts without giving committee members general powers
A married couple placed community property in an irrevocable trust and shared distribution powers with a power-of-appointment committee. The IRS concluded that the trust terms did not make either gran…
Trust powers preserve incomplete gifts without giving committee members general powers
A married couple placed community property in an irrevocable trust and shared distribution powers with a power-of-appointment committee. The IRS concluded that the trust terms did not make either gran…
Trust powers preserve incomplete gifts without giving committee members general powers
A married couple placed community property in an irrevocable trust and shared distribution powers with a power-of-appointment committee. The IRS concluded that the trust terms did not make either gran…
Retroactive qualified electing fund election approved
A partnership-owned shareholder invested in a foreign corporation that qualified as a passive foreign investment company. Its tax adviser did not identify the PFIC status or explain the qualified elec…
Late qualified small business stock election approved
A taxpayer sold qualified small business stock but failed to make the section 1045 election on its return. That election can defer gain when replacement qualified small business stock is purchased dur…
Intermediary may repay secured debt with exchange proceeds
A leasing business used a qualified intermediary for a program of deferred like-kind exchanges under IRC § 1031. The properties being sold secured loans, and the governing agreements required the inte…
Administrative trust changes avoid estate, gift, GST, and income tax consequences
Two grantors sought to modify an irrevocable grantor trust after paying its income taxes became unduly burdensome. A state court approved changes to trustee succession, administrative powers, a substi…
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…
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…
Shareholder allowed a retroactive QEF election
A U.S. shareholder requested permission to make a qualified electing fund election retroactive to the year he acquired shares in a passive foreign investment company. The shareholder was not a tax pro…
Hedge fund receives more time for mixed-straddle elections
A hedge fund entered mixed-straddle transactions in two tax years but did not timely elect mixed-straddle account treatment. The fund had hired a CPA firm for tax and administration services, but the …
S corporation election continues through restructuring steps
An S corporation with two business groups proposed inserting a new parent, becoming disregarded or a QSub, moving one business to the parent, and then separating the other business through a new subsi…
Late mixed straddle account elections receive a 30-day extension
A corporate taxpayer failed to renew its mixed straddle account election for two tax years after an acquisition transferred responsibility to a tax department unfamiliar with the annual filing require…
Water reclamation upgrades qualify as replacement property
A water utility received compensation after a city condemned one of its potable water facilities. It planned to defer the resulting gain under section 1033 by using the proceeds for improvements to ex…
Stock retains qualified small business status through conversions
Taxpayers originally formed a C corporation, later changed its name, converted it to a limited liability company that elected C corporation treatment, and then converted it back to corporate form. The…
Shareholder may make retroactive QEF elections for two PFICs
A U.S. shareholder owned one foreign corporation directly and another indirectly, but an experienced accounting firm failed to identify either corporation as a passive foreign investment company or ad…
Investors may make a retroactive qualified electing fund election
A married couple acquired shares in a passive foreign investment company and relied on their tax accountant to prepare their joint return. Although the accountant knew about the investment, the accoun…
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…
Alternative basis recovery approved for contingent merger payments
A taxpayer sold an ownership interest in an S corporation through a merger for an initial payment and three later payments tied to the buyer's stock price. After the stock price declined, the normal r…
Proportional basis recovery approved for merger installments
A taxpayer owned an S corporation interest through a grantor trust and exchanged that interest in a merger for an initial payment plus three stock-price-based installments. A later decline in the buye…
Alternative installment basis method avoids deferred recovery
An S corporation shareholder received an initial merger payment and rights to three later payments determined by the buyer's stock price. When that stock price declined, allocating basis equally over …
Grantor-trust owner may recover basis proportionally
A taxpayer owned an S corporation interest through two grantor trusts and sold the interest in a merger for an initial payment and three contingent installments. The later payments depended on the buy…
Taxpayer granted a retroactive QEF election
A U.S. taxpayer received shares of a foreign corporation that was a passive foreign investment company. Two accountants knew the corporation was foreign but did not identify its PFIC status or advise …
Taxpayer granted retroactive QEF treatment for PFIC shares
A U.S. taxpayer received shares of a foreign corporation that qualified as a passive foreign investment company. Three accountants prepared returns over several years but did not identify the PFIC sta…
Married taxpayers granted a retroactive QEF election
A married couple held gifted shares in a foreign corporation that was a passive foreign investment company. Three accountants received information about the corporation but did not recognize its PFIC …
Timeshare seller could not choose a separate AFR for each payment
A timeshare developer financed customer purchases and reported the sales under the special installment method for timeshare dealers. IRC § 453(l)(3) required it to add interest to its tax liability as…
Investment funds receive relief for elections on late-filed returns
Four regulated investment company funds timely extended their returns, but the employees who coordinated filing at the adviser and custodian both left before the extended due date. The unfiled returns…
Relocation reimbursements excluded but reimbursed costs yield no deduction or basis
A partnership-owned business had to relocate because a state agency acquired part of its premises for a federally assisted highway project. The business received payments under the Uniform Relocation …
Taxpayers receive relief to elect out of installment method
Shareholders sold all of their company stock in an installment sale and instructed their return preparer to elect out of installment reporting. The preparer accidentally transmitted a different draft …
Options dealer gets 30 days for mixed-straddle election
An options dealer became a partnership when its parent admitted a new partner. The parent's outside accounting firm explained that the new partnership could use mixed-straddle account treatment but di…
Taxpayer receives relief for late debt-and-hedge identification
A corporate group issued convertible notes and bought call options intended to hedge the notes' conversion feature. The taxpayer believed integrated tax treatment was automatic and did not timely crea…
Statutory property interests qualified for involuntary-conversion relief
A corporation operated facilities on government land and held statutory beneficial ownership interests in buildings and improvements that it financed. A government agency forced the corporation to sur…
Mixed-use aircraft is one property for like-kind exchange analysis
An individual exchanged an aircraft used for both business or investment travel and personal flights in a transaction intended to qualify under section 1031. Chief Counsel advised that the aircraft mu…
Estate receives 120-day extension for 2010 carryover-basis election
The executor of an estate for a decedent who died in 2010 hired an accountant to handle estate-tax filings. The accountant failed to advise the executor that Form 8939 had to be filed by January 17, 2…
Shareholder may make retroactive QEF election
A U.S. shareholder acquired stock in a foreign corporation that was a passive foreign investment company but did not make a timely qualified electing fund election. The shareholder's tax adviser knew …
Division into three family trusts preserves tax attributes
An irrevocable trust for three daughters and their descendants had a zero generation-skipping transfer tax inclusion ratio. A state court conditionally approved dividing it into three equal trusts, ea…
Corporate conversion preserves qualified small business stock status
A corporation sold and redeemed portions of its original shareholders' stock, then converted under state law into a limited liability company that remained taxed as a corporation. The taxpayer represe…
Corporate conversion preserves qualified small business stock status
A corporation sold and redeemed portions of its original shareholders' stock, then converted under state law into a limited liability company that remained taxed as a corporation. The taxpayer represe…
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.