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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A nonprofit that pools county governments' employee health insurance has income exempt under § 115
A state law set up a nonprofit corporation to let county governments and other public bodies band together to buy group health insurance (and related services, including medical coverage for county-ja…
City disability-pension benefits are tax-free as "in the nature of" workers' comp, but only up to half of pay
A city runs a tax-qualified governmental pension plan that pays disability benefits to employees hurt on the job and death benefits to their survivors. The city asked the IRS how those benefits are ta…
A utility's solar facility sold under market-priced contracts is not "public utility property"
A regulated electric utility plans to buy a solar generating facility to meet large commercial customers' demand for renewable power. Unlike its normal operations, the utility will not put the facilit…
Utility's cost-of-removal deferred taxes are not protected by the depreciation normalization rules
A regulated electric and gas utility asked the IRS how the depreciation "normalization rules" of Section 168(i)(9) apply to two things: its deferred taxes tied to the cost of removing retired assets (…
Late election to defer the start of a low-income housing credit period
A partnership owns and operates a multi-building low-income housing project and claims the low-income housing credit under Section 42. The credit runs for a 10-year "credit period." A building owner c…
IRS says two renewable-energy facilities are not public utility property
A regulated electric utility planned to develop one solar and battery facility and acquire another under a state renewable-energy program. State law permanently excluded both facilities' capital inves…
IRS excludes a municipal-utility service organization's income under IRC § 115
A nonprofit corporation was formed to help municipally owned utilities provide reliable and economical utility service. Its members were public utilities that were political subdivisions or entities w…
IRS grants a partnership more time to elect the success-based fee safe harbor
A partnership incurred success-based transaction fees when a buyer acquired the stock of its two corporate owners. Its tax professional prepared a return that deducted 70 percent of the fees and capit…
Section 265 does not bar a charitable deduction in calculating UBTI
A tax-exempt organization claimed a charitable-contribution deduction when calculating its unrelated business taxable income. Chief Counsel considered whether section 265(a)(1) disallowed the deductio…
Payments for state-created loss-fund rights produce an amortizable section 197 intangible
A regulated company committed to make an initial contribution and later annual contributions to an optional fund created by state law after a specified damaging event. Participation gave it government…
Employees may allocate employer contributions between an HRA and retirement plan without creating a cash deferral election
A union maintained a health reimbursement arrangement and a qualified profit-sharing plan under collective bargaining agreements. The plans proposed allowing employees to make an annual irrevocable ch…
A brand-license termination payment need not be capitalized for one replacement agreement
A partnership group paid to terminate a sublicense allowing it to use an individual's name and related brand rights, then entered three new agreements concerning the brand. One replacement license was…
Wind facility is not public utility property, but loss question goes unanswered
A regulated electric utility and an independent investor planned to form a partnership to buy and operate a wind facility intended to qualify for the section 45 production tax credit. The partnership …
Chief Counsel catalogs 121 charitable-contribution cases
Chief Counsel prepared an updated case list covering 121 selected charitable-contribution decisions and orders from 2012 through April 15, 2020. Most entries concern conservation easements, including …
Governmental commodity authority's income excluded under section 115
A nonprofit authority was formed by governmental members to buy, sell, manage, and distribute a redacted commodity on their behalf. Its members were political subdivisions or entities whose income was…
Closing agreement still governs payments after section 162(f) amendment
A corporate group had entered a binding settlement agreement requiring perpetual annual payments and later entered an IRS closing agreement governing the payments' tax treatment. The closing agreement…
Closing agreement continued to govern settlement payment deductions
A subsidiary made perpetual settlement payments under an agreement entered before December 22, 2017, and an IRS closing agreement treated those payments as deductible business expenses rather than fin…
Assumption reinsurance would not restart life insurance tax tests
Members of a corporate group owned private-placement variable life insurance policies on selected employees to finance employee benefit liabilities. After an event involving the insurer, the policyhol…
Market-priced solar systems are not public utility property
A regulated electric utility proposed a voluntary program under which it would own and operate solar systems at participating commercial customers' premises. Each customer would receive a percentage o…
Taxpayer receives 45 days to file a success-fee safe-harbor election
A partnership paid success-based financial advisory fees in connection with acquisitions of broadband businesses. Its return preparer analyzed the fees under Revenue Procedure 2011-29 and prepared the…
IRS extends the period for a commercially reasonable liquidation
A taxpayer asked the IRS to supplement an earlier private letter ruling governing a plan to liquidate a group of debtors. It represented that it had consistently pursued liquidation as quickly as comm…
Taxpayer receives 60 days to correct a success-fee election
A taxpayer incurred success-based fees when its ownership interests were sold and intended to use the Revenue Procedure 2011-29 safe harbor. Severe weather prevented its return-extension form from bei…
Repair-related deferred taxes are outside utility normalization rules
A regulated water and wastewater utility changed its tax accounting for repair costs and asset dispositions under an IRS consent agreement. It asked whether several categories of accumulated deferred …
Municipal homeowner grants were taxable and reportable
A municipal corporation offered grants to eligible owner-occupants for installing approved home systems intended to address a local problem. Homeowners selected contractors and systems from approved l…
Housing project gets 120 days to make 40-60 set-aside election
The owner of a multiple-building low-income housing project intended to elect the 40-60 minimum set-aside under section 42(g)(1)(B). It inadvertently omitted the election from the Form 8609 submitted …
IRS grants late success-based-fee safe-harbor election
A corporation incurred success-based fees in an acquisition and reported them using Revenue Procedure 2011-29’s 70-percent deduction and 30-percent capitalization safe harbor. Its accounting firm prep…
IRS applies utility normalization rules to surcharge rate base and NOL carryforwards
A regulated water and wastewater utility asked how federal tax normalization rules applied when an infrastructure surcharge rate case used accumulated deferred income tax (ADIT) to reduce rate base wh…
Partnership basis step-up need not change utility deferred-tax balances
An acquirer purchased all partnership interests in an entity that indirectly owned regulated electric transmission and distribution assets. A section 754 election would create special section 743(b) b…
Late private activity bond volume-cap carryforward election accepted
A public housing agency received a state allocation of private activity bond volume cap for tax-exempt financing of a residential rental project. Because this was its first bond issue requiring a carr…
Chief Counsel corrects a training answer on when prepaid state income tax is deductible under the SALT cap
This is an internal Chief Counsel email answering whether a sample answer in IRS training materials about the state-and-local-tax (SALT) deduction was wrong. The 2017 tax law capped the SALT deduction…
Payments to acquire vehicle and equipment leases must be capitalized
A financial business purchased automobile leases from dealers and equipment leases from manufacturers or vendors. It paid dealers an excess-markup premium tied to a lease's expected profit and paid eq…
Target acquisition fees remained capitalized after the parent sold the target
A parent corporation acquired a target in a taxable stock transaction, and the target capitalized professional and administrative fees that facilitated the acquisition. The IRS advised that those fees…
Proving some kickbacks can support disallowance of related deductions
A taxpayer deducted meal, entertainment, and advertising payments that the IRS believed included illegal kickbacks. Sections 162(c)(1) and 162(c)(2) place the burden on the IRS to prove a payment is a…
Qualified disaster losses use a $500 floor and no AGI threshold
Chief Counsel explained the special deduction limits for qualified disaster-related personal casualty losses. Instead of the ordinary $100 floor for each casualty under section 165(h)(1), a qualifying…
Constructive denial clause does not violate conservation-easement perpetuity rules
Chief Counsel considered a conservation-easement provision requiring the easement holder's express approval for certain land uses. Under the provision, the holder's failure to answer a sufficiently de…
Taxpayer gets 60 days to file omitted success-fee safe-harbor election
A taxpayer acquired a company and used the Rev. Proc. 2011-29 safe harbor to deduct 70 percent of its success-based transaction fees and capitalize the other 30 percent. Its timely filed return report…
Large cash contribution qualifies as an unusual grant
A publicly supported charity promoting a sport sought advance recognition that a large cash contribution would be an unusual grant. The charity served youth, veterans, wheelchair participants, and oth…
Medical-injury settlement excluded from gross income
A taxpayer sued a fertility clinic after an embryo created with an anonymous donor egg resulted in a child born with a genetic condition causing physical, cognitive, and behavioral disabilities. The c…
Cash for malfunctioning transit cards is taxable wages
IRS Chief Counsel advised that restricted transit debit cards qualified as transit passes under section 132(f). Limited cash reimbursements could qualify when a transit provider's enrollment or issuan…
Utility's deferred-tax rate-base methods satisfy normalization rules
A regulated electric utility asked whether several methods of reflecting accumulated deferred income taxes in federal and state rate proceedings complied with the tax normalization rules. The methods …
Method change supports additional solar energy credits
Two energy subsidiaries had claimed section 48 credits on self-constructed solar property. Their parent later changed its accounting method to capitalize additional mixed-service costs, producing a po…
Executive order cannot waive tax on excess premium credits
A taxpayer received a retroactive lump-sum Social Security disability payment covering prior years while also receiving advance premium tax credits for marketplace health insurance. Because section 36…
Taxpayer allowed to revoke bonus depreciation opt-out
A corporate parent had elected for a subsidiary not to claim additional first-year depreciation on qualified property. The parent made that choice because its tax director believed a net operating los…
Vacation fund payments are wages but preserve exemption if properly handled
A tax-exempt employee benefit plan paid vacation benefits when delinquent employers failed to contribute and proposed additional distributions from surplus reserves. The IRS declined to reverse an ear…
Acquisition fee safe-harbor election allowed late
A consolidated corporate group paid a success-based financial advisory fee when acquiring another company. Its tax adviser prepared a transaction-cost analysis concluding that the fee qualified for Re…
Wind facility is not public utility property, loss ruling declined
A regulated utility and a tax-equity investor planned a joint venture to acquire a wind facility and sell most of its electricity to the utility under a long-term wholesale power purchase agreement. A…
Corporate group receives 60 days to attach a success-based fee safe-harbor election
A corporate group paid a success-based advisory fee in connection with a stock acquisition and merger. Its return deducted 70 percent of the fee and capitalized the remaining 30 percent under Revenue …
S corporation may revoke its election out of bonus depreciation for five-year property
An S corporation had historically elected not to claim additional first-year depreciation on five-year property because it expected depreciation recapture when disposing of the property. Its tax advis…
Corporate group receives 60 days to file safe-harbor elections for two acquisition fees
A consolidated corporate group paid success-based advisory fees in two acquisitions, one treated as an asset acquisition through a section 338(h)(10) election and one structured as an asset sale. The …
Homeowners could combine section 121 exclusion with section 1031 deferral after a fire
A married couple lived in a home as their principal residence, later moved out, and rented or offered the property for rent. A fire destroyed the dwelling, and the couple received insurance proceeds b…
Solar farm in a U.S. possession qualifies for domestic-owner depreciation exception
A taxpayer planned to build a solar farm in a U.S. possession through a local disregarded entity. Before the farm entered service, the taxpayer would become a domestic partnership owned entirely by U.…
Partnership received 60 days to elect success-fee safe harbor
A partnership paid financial advisers success-based fees in connection with its acquisition. Its return preparer applied the Revenue Procedure 2011-29 safe harbor, which treats 70 percent of qualifyin…
Community foundation and corporation could file one Form 990
A community foundation organized as a trust was the sole member and original funder of a supporting nonprofit corporation. The organizations proposed amendments placing all gifts under common governin…
Community foundation and corporation could file one Form 990
A community foundation organized as a trust was the sole member and original funder of a supporting nonprofit corporation. The organizations proposed amendments placing all gifts under common governin…
Tax-exempt controlled entity received 45 days for a late election
A private foundation wholly owned a taxable corporation that managed a partnership rehabilitating a historic building. Because the foundation owned more than half of the corporation, the corporation w…
Genetic testing costs qualified only to the extent allocable to medical care
A taxpayer wanted to use a health-care flexible spending account to buy a bundled genetic-testing product that supplied ancestry information, health testing, and reports. The IRS concluded that labora…
Two-year EIC ban can follow a partial child disallowance
Counsel considered whether the two-year earned income credit ban can apply when only one of several claimed children is disallowed. The advice says yes if a final determination finds that the taxpayer…
Late mortgage-credit-certificate election was deemed timely
A state-authorized issuer created a new mortgage credit certificate program and elected to forgo qualified mortgage bonds so it could allocate volume cap to the program. Bond counsel prepared the requ…
Company received 45 days to file safe-harbor election statements
A corporate parent incurred success-based fees in three business transactions and reported them under the Revenue Procedure 2011-29 safe harbor. Its timely filed returns deducted 70 percent of the fee…
Transmission utility received ADFIT normalization guidance
A regulated electric transmission utility used formula rates with projected revenue requirements and later true-up adjustments. After an earlier private letter ruling required corrective action for it…
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.