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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Court-approved restructuring of an insolvent long-term-care insurer's policies is tax-neutral to policyholders
Two affiliated life insurance companies that sold long-term care policies became insolvent and were placed into court-supervised liquidation, and a state court approved a plan to restructure their pol…
A life insurer must use its updated morbidity tables (not the original ones) to compute tax reserves for long-term care policies
Life insurance companies get tax deductions for the reserves they must hold to pay future claims, and Internal Revenue Code § 807(d) sets rules for how those tax reserves are computed, including which…
90-day extension to make a late § 831(b) small-insurance-company election
A newly formed small non-life ("property and casualty") insurance company meant to elect under section 831(b)(2) to be taxed only on its taxable investment income, a favorable election available to ce…
Tax-book asset method approved for interest apportionment
A domestic parent of a consolidated group had long used the fair-market-value method to value assets when apportioning interest expense. Maintaining that method created substantial administrative work…
Captive insurer received 90 days for a late Section 831(b) election
A captive insurer had filed property and casualty insurance company returns without electing the alternative tax available to qualifying small insurers under Section 831(b). Its accounting firm told a…
Mitigation may permit NOL carryback refunds for closed years
Two taxpayers carried net operating losses forward without electing to waive the required carryback periods. Examination of an open year uncovered the errors, but the earlier years that should have re…
Small insurer receives extension for Section 831(b) election
An insurance company had qualified for exemption as a small insurer under Section 501(c)(15) in earlier years. Its return preparer discovered shortly before the filing deadline that gross receipts for…
Rural telephone cooperative's wireless-spectrum gain is patronage-sourced income
A taxable rural telephone cooperative and its wholly owned subsidiary sold wireless-spectrum licenses after concluding that they could not use the licenses effectively before expiration. The cooperati…
Foreign foundation receives late disregarded-entity election for investment vehicle
A foreign tax-exempt private foundation held its U.S. investment portfolio through a single-owner foreign investment vehicle whose custodians had withheld U.S. tax from dividends. The foundation had r…
Remaining family property keeps its pre-1990 transfer status
A married couple and their six children bought real property before October 9, 1990, paying separately for life estates and remainder interests. The life tenants proposed conveying all their interests…
Partial life-estate conveyances are gifts but avoid estate inclusion
A married couple and their six children bought real property before October 9, 1990, paying separately for successive life estates and remainder interests. The life tenants proposed conveying all thei…
Family life-estate transfers are gifts without estate inclusion
A married couple and their six children bought real property before October 9, 1990, paying separately for successive life estates and remainder interests. The life tenants proposed giving the childre…
Captive currency-fluctuation contracts are not insurance
A corporate group used a captive insurance subsidiary to issue contracts covering adverse movements in specified foreign currencies. Chief Counsel concluded that currency fluctuation can create an ins…
Vehicle-service-contract reinsurance qualifies as insurance
A foreign corporation planned to elect treatment as a U.S. insurance company and assume, through a chain of reinsurance agreements, all risk under vehicle service contracts sold to consumers. The cont…
Grain payments qualify as cash per-unit retain allocations
An agricultural cooperative planned to take over grain purchasing from a partnership it partly owned. The cooperative would buy members' grain at market prices under written contracts, pay from its ow…
An insurer's cross-border restructuring received favorable reorganization and insurance tax rulings
A domestic insurance group proposed moving its U.S. business to a new domestic subsidiary and its foreign branch business to a new foreign insurer. The foreign insurer would elect under section 953(d)…
Mineral royalty owners may aggregate qualifying interests by property
Two related corporations owned royalty interests in several U.S. mining and oil and gas properties and sought to aggregate the interests at each property for depletion purposes. They represented that …
A foreign insurer received more time for domestic and small-company elections
A foreign property and casualty insurer intended to elect under section 953(d) to be treated as a domestic corporation and under section 831(b) to be taxed as a small insurance company. Its return inc…
Internal personnel report likely satisfies Privacy Act exceptions
Chief Counsel informally considered whether an IRS office could compile labor information into a new internal report. The advice explained that creating a new record from existing data can be a disclo…
Form 2848 must specifically authorize representation for international information return penalties
Chief Counsel addressed whether a power of attorney covering an income tax return also permits a representative to discuss civil penalties tied to an international information return. Counsel conclude…
Failed-bank assets should not retain carryover basis
A taxpayer acquired assets from a failed bank in a now-closed tax year and later sought to correct errors in applying section 597. The unresolved items included the assets' acquisition basis, post-acq…
Permanent annuity guarantees keep reserves in total reserves
Chief Counsel considered reserves for investment contracts that let retirement-plan participants elect life annuities at guaranteed purchase rates. The contracts made a legally enforceable promise tha…
Vehicle service contracts qualified as insurance
A vehicle manufacturer group's subsidiaries planned to issue optional contracts covering repair costs from mechanical breakdowns, towing, trip disruption, and rental vehicles. The obligors would not p…
Captive insurer receives 90 days to make a late section 831(b) election
A newly formed captive insurance company intended to elect taxation under IRC § 831(b) for its first tax year. Its president directed the CPA to make the election, but the CPA omitted the required sta…
Training explains qualified derivatives dealer responsibilities
Chief Counsel training materials explain the application, documentation, withholding, reporting, and compliance duties of a qualified derivatives dealer (QDD). An eligible entity must be a qualified i…
Training explains section 871(m) and the QDD tax regime
Chief Counsel training materials explain how section 871(m) treats certain dividend-linked payments to foreign persons as U.S.-source dividends. The rules cover securities lending and sale-repurchase …
REIT receives 60 days to make a late consent dividend election
A real estate investment trust relied on an accounting firm to prepare and provide its federal returns for filing. The firm omitted one year's Form 1120-REIT from the package, so the trust neither fil…
Oil hedging results are excluded from property income for the IDC preference
Chief Counsel considered whether gains and losses from oil-price hedges enter the property-income calculation used for the alternative minimum tax preference for excess intangible drilling costs. The …
Spouse may renounce one divided QTIP trust without affecting the other
A marital trust for which a QTIP election had been made proposed dividing into two identical trusts, after which the surviving spouse would renounce all income and principal rights in one trust. The I…
Coal-site testing is mining exploration, not qualified research
A corporation investigated whether coal beneath its land could support a proposed processing plant. Contractors performed geological mapping, core drilling, seismic surveys, and related site-selection…
Small insurance company received extra time to make a section 831(b) election
A member of a series LLC failed to make the section 831(b) election with its first federal tax return for the year it said it qualified as an insurance company. It represented that its manager failed …
Small insurer receives 90 days to make section 831(b) election
A small insurance company failed to make a section 831(b) election with its first federal return. It represented that it relied on its manager to explain the timing requirements, but the manager did n…
Mitigation may not reach a duplicated NOL deduction
Chief Counsel considered whether the mitigation provisions in sections 1311 through 1314 could permit an assessment after a net operating loss deduction had effectively been allowed twice and the ordi…
Variable-contract holders are not owners of insurance-dedicated fund portfolios
Three insurance-dedicated regulated investment company portfolios served as investment options for variable life insurance and annuity contracts. Some portfolio assets would be invested in publicly av…
Rural telephone cooperative's spectrum-sale gain is patronage-sourced income
A taxable rural telephone cooperative used a wholly owned subsidiary to buy wireless spectrum needed to offer advanced telecommunications services to its patrons. Another subsidiary used the spectrum …
Annuity applicant appears to exceed exemption receipts limit
A foreign applicant sought exemption under section 501(c)(15) as an insurance company other than a life insurance company. It received large purchase payments under contracts labeled as deferred varia…
Reformed annuity trusts receive qualified-interest treatment
A grantor created several grantor retained annuity trusts intended to provide qualified interests under section 2702. The drafting attorney omitted a required prohibition against satisfying annuity ob…
Insurer owns variable contract investment portfolio
A life insurer used a partnership-classified investment portfolio for segregated accounts supporting variable contracts. Contract holders could choose among broad subaccounts, but they could not direc…
Insurer owns variable contract investment portfolio
A life insurer used a partnership-classified investment portfolio for segregated accounts supporting variable contracts. Contract holders could select broad subaccounts but could not direct investment…
Insurer could revoke its election to recompute the federal interest rate
A life insurance company had elected under § 807(d)(4)(A)(ii) to recompute every five years the applicable federal interest rate used to calculate its life insurance reserves. Because that election co…
Property insurer received more time to make the small-company tax election
A property and casualty insurer relied on a tax professional to prepare its first Form 1120-PC and the election under § 831(b) to be taxed only on investment income. Oversights at the professional's o…
Uncollectible insurance deductibles treated as bad debts after claim payment
Chief Counsel analyzed an insurer's treatment of unreimbursed deductible amounts under high-deductible liability policies. Because the insurer did not include the deductible layer in gross premiums wr…
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…
State subsidiaries retained Blue Cross Blue Shield treatment under section 833
An existing Blue Cross and Blue Shield organization proposed moving a small federal government insurance business into five newly formed, wholly owned state insurance subsidiaries. The parent would su…
Closed refund years do not prevent open-year insurance adjustments
A property and casualty insurer used section 847 deductions, special loss discount accounts, and matching special estimated tax payments. After a net operating loss carryback generated a refund, the i…
Active restaurant owner is not a limited partner for self-employment tax
A majority owner of a restaurant LLC served as its operating manager, president, and chief executive officer and had ultimate authority over its employees and business decisions. The partnership paid …
Consolidated group may use tax book value for interest allocation
The parent of a consolidated corporate group had used fair market value to value assets when allocating and apportioning interest expense. Because the regulations generally require continued use of th…
Life insurer may stop five-year interest-rate recomputations
A life insurer had elected under section 807(d)(4)(A)(ii) to recompute every five years the federal interest rate used for its life insurance reserves. Because the election applied to later contracts …
Form 8928 excise tax waiver was appropriate
Chief Counsel agreed that the IRS should waive an excise tax reported in Part II of Form 8928. The form instructions permit the Secretary to waive some or all of that tax when payment would be excessi…
Form 8928 excise tax waiver was appropriate
Chief Counsel agreed that the IRS should waive an excise tax reported in Part II of Form 8928. The form instructions permit the Secretary to waive some or all of that tax when payment would be excessi…
Mutual insurer may revoke its small-company tax election
A mutual property and casualty insurer asked to revoke its election under IRC § 831(b) to be taxed only on investment income. The insurer planned to expand its policyholder base, appoint agents, enter…
Form 2848 access follows the authorized examination year
Chief Counsel advised that a representative authorized by Form 2848 for a particular tax year may receive taxpayer return information associated with the examination for that year. This can include do…
Spouse may revoke U.S. residency election and amend related returns
One spouse was a U.S. resident under the substantial presence test, while the other elected to be treated as a resident for the same year so they could file jointly. Their combined ownership caused a …
REIT receives more time to make consent-dividend election
A limited liability company elected real estate investment trust treatment on its first tax return but did not claim the dividends-paid deduction required for REIT qualification. Its accounting firm o…
Settlement did not reopen untimely estate refund claims
An estate filed amended income tax returns seeking refunds after settling litigation over an asset's estate-tax value. The refund claims were otherwise untimely, so the estate relied on the mitigation…
Form 2848 marked only “FOIA” is limited or invalid depending on who signs the request
Chief Counsel distinguished two situations involving a Freedom of Information Act request and a Form 2848 that describes the tax matter only as “FOIA.” If the taxpayer signs the FOIA request, the requ…
Cooperative may obtain patron consent electronically
An agricultural cooperative planned to replace paper patronage-consent forms with an online application. A patron would enter identifying information, choose either consent or waiver, type a name, and…
Coordinate Medicaid insurer definitions before applying compensation deduction limit
Chief Counsel reviewed earlier advice on whether risk-bearing entities serving Medicaid recipients could be subject to the compensation deduction limit in IRC § 162(m)(6). Applying that limit depended…
LLC restructuring does not recapture Gulf Opportunity Zone depreciation
An individual owned two single-member LLCs that were disregarded for federal income tax purposes. One LLC owned qualifying Gulf Opportunity Zone property for which the individual had claimed 50-percen…
Medicaid contractor status depends on insurance risk and beneficiary rights
The IRS analyzed when an entity providing Medicaid services is a health insurance issuer and covered health insurance provider for the compensation-deduction limit in section 162(m)(6). A non-risk-bea…
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.