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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Electric 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…
Government mitigation trust qualified for settlement-fund tax treatment
A court-approved trust received part of a settlement paid by defendants accused of violating federal and state law in connection with a product. The trust would fund projects mitigating the resulting …
Assets-over merger required a downward partnership basis adjustment
Two partnerships merged using the assets-over form, with the terminating partnership deemed to contribute its assets and liabilities and then distribute an interest in the resulting partnership to its…
Utility's revised deferred-tax calculations satisfied normalization rules
A regulated electric transmission utility used formula rates with projected annual revenue requirements and later true-up adjustments. A commission order required it to change how accumulated deferred…
Charitable carryover adjustment uses annual NOL absorption and current contributions first
A corporation had multiple years of net operating loss carryovers and charitable contribution carryovers available in a year when one charitable carryover was about to expire. Chief Counsel advised th…
Affordable-housing LLC received extensions for two related elections
A single-member LLC wholly owned by a section 501(c)(3) organization served as general partner of a low-income housing partnership. Its partnership agreement required it both to elect out of tax-exemp…
Pro rata division of grandfathered trust was tax neutral
An irrevocable pre-September 25, 1985 trust for a son and his issue proposed dividing pro rata into five equal subtrusts, one for each child and that child's issue, because the children had different …
Increased start-up expense deduction applied only in 2010
Chief Counsel advised that the temporarily increased deduction and phaseout amounts in section 195(b)(3) applied only to the taxable year beginning in 2010. The email cited the statutory language and …
Corporation receives 60 days to attach success-fee election
A corporation paid success-based fees in a stock reorganization and reported 70 percent as deductible and 30 percent as capitalized under the Revenue Procedure 2011-29 safe harbor. The corporation and…
Late historic-status application treated as timely for rehabilitation credit
A taxpayer renovated property in a registered historic district but failed to submit Part 1 of the Historic Preservation Certification Application before placing the property in service. The taxpayer …
Solar facilities sold through negotiated rates are not public utility property
A regulated electric utility could acquire solar generating facilities selected for large customers under a state program. The customers and original resource owners negotiated the power price, and th…
Utility’s retroactive bonus-depreciation rate adjustment met normalization rules
A regulated electric utility claimed bonus depreciation and used the resulting accumulated deferred federal income tax balance to reduce its rate base. Congress extended bonus depreciation retroactive…
Late NOL carryback waiver could not be made after automatic extension
Section 172(b)(3) permits a taxpayer to make an irrevocable election to forgo the net operating loss carryback period by the return’s due date, including extensions. Treasury Regulation section 1.9100…
Refundable arena membership amounts were not income on receipt
A professional sports franchise planned to finance a new arena by selling non-equity memberships. Members would receive special access and ticket-purchase rights and would be required to buy season ti…
IRS blesses a port's method for measuring bond-financed property's economic life under the dock-and-wharf bond safe harbor
A public port authority financed dock and wharf improvements with tax-exempt "exempt facility" bonds. Interest on those bonds stays tax-free only if the financed property is government-owned, and a sa…
Family-member 2% S-corp shareholders can still take the § 162(l) health insurance deduction
This Chief Counsel Advice addresses the self-employed health insurance deduction for a family member who is treated as a 2-percent shareholder of an S corporation only because of family attribution. U…
A bond issuer gets more time to fix which affordability test applies to a tax-exempt rental project
Interest on state and local bonds is generally tax-exempt, and one qualifying use is financing a "qualified residential rental project" under section 142(d). To qualify, the project must meet one of t…
A utility that abandoned a half-built nuclear project gets a section 165 abandonment loss
A regulated electric utility set out to build new nuclear generating units at one of its plants, co-owned with an unrelated joint owner. The project ran years behind schedule and far over budget, and …
Partnership received extra time for success-based fee safe harbor election
A partnership paid a success-based fee in a transaction that transferred a controlling interest in the partnership. The fee was omitted from the books and records sent to the return preparer, so the p…
Historic-certification application received filing relief
A property owner hired a consultant to prepare and file an application for historic-status certification before a rehabilitation project was placed in service. The consultant prepared the application …
Basis increases for acquired partnership interests were amortizable
A publicly traded partnership converted to corporate form and transferred interests in lower-tier partnerships that held an intangible subject to section 197's anti-churning rules. The transfer produc…
Closed-year tax-exempt controlled entity election received relief
A corporation owned by a section 501(c)(3) organization was treated as a tax-exempt controlled entity and served as general partner of a low-income housing partnership. The taxpayer intended to elect …
Tax-exempt controlled entity receives late depreciation election relief
A corporation owned by a section 501(c)(3) organization was a general partner in a partnership that developed low-income rental housing. The partnership depreciated its property as though the corporat…
Tax-exempt-controlled corporation gets 75 days to make a late depreciation election
A tax-exempt organization wholly owned a corporation that served as general partner of a low-income housing partnership. Without an election under Section 168(h)(6)(F)(ii), the corporation would be tr…
Reimbursement of a jointly owed drug fee is not the distributor's gross income
A U.S. subsidiary (Taxpayer) is a limited-risk distributor of prescription drugs that are developed and manufactured by two foreign affiliates that hold the drug patents. Together the companies form a…
Most free employee meals are taxable, while snacks and limited emergency meals are excluded
A company provided free meals and snacks to employees at its headquarters and argued that several business reasons made the benefits tax-free. The National Office found that broad goals involving conf…
Clean-energy bond proceeds get an 18-month expenditure extension
A municipal authority issued new clean renewable energy bonds to finance solar and battery systems at a police facility and a public school. It expected to spend all available proceeds within the orig…
Real estate developer gets 45 days to make a late debt-income exclusion election
A real estate developer recognized cancellation-of-debt income after a wholly owned LLC purchased debt that had financed a condominium project. The developer's accountant reported the income on the ti…
IRS grants extra time to file a late accounting-method-change application (Form 3115)
A corporate group that files a consolidated return wanted to change its method of accounting for certain prepaid insurance premium costs. Changing an accounting method usually needs IRS consent, but "…
Producer correctly applies the simplified production method when old inventory carries over
A manufacturer that makes products in large batches uses the FIFO (first-in, first-out) inventory method and the "simplified production method" under section 263A to figure out how much of its indirec…
Publicly traded shares donated to a private foundation qualify as "qualified appreciated stock"
Normally, when someone donates appreciated stock to a private (non-operating) foundation, section 170(e)(1)(B)(ii) trims the charitable deduction down to the donor's cost basis instead of full market …
Airport may use a floating cost allocation to keep tax-exempt bonds away from liquor-store space
An airport authority is rebuilding a boarding area and financing part of the work with tax-exempt exempt-facility bonds (the kind allowed for airports under section 142). A wrinkle: section 147(e) bar…
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…
IRS lets a partnership undo its election to skip bonus depreciation after a preparer error
When a business buys qualifying equipment, § 168(k) normally lets it deduct a big chunk of the cost in the first year ("bonus depreciation"), but a taxpayer can instead elect under § 168(k)(7) not to …
A state retirement system's benefits trust owes no federal income tax on its earnings
Internal Revenue Code § 115(1) excludes from federal gross income any earnings that come from performing an "essential governmental function" and that accrue to a state or its political subdivisions. …
Tax-exempt bonds may advance refund defeased Build America Bonds that had become non-tax-advantaged taxable bonds
This Chief Counsel Advice addresses a wrinkle created by the 2017 Tax Cuts and Jobs Act, which amended section 149(d) to end tax-exempt "advance refundings" (issuing new tax-exempt bonds more than 90 …
A politically active 501(c)(4) can be a section 271 political party, barring a bad-debt deduction
A taxpayer lent money to a section 501(c)(4) organization that later dissolved without repaying the loan, then claimed a worthless-debt deduction under section 166. The organization had reported spend…
Unreceived bonus-depreciation refunds cannot reduce a utility's rate base through ADIT
A rate-regulated electric utility made estimated federal tax payments before Congress retroactively extended bonus depreciation for two tax years. Electing bonus depreciation created overpayments, and…
Partnership gets consent to undo its election out of bonus depreciation after a technical termination
A limited partnership placed depreciable equipment in service and, on its return, elected under § 168(k)(7) NOT to take the 50% bonus (additional first-year) depreciation, because the general partner …
County hospital trust's income is tax-exempt as an essential government function
A county hospital authority, a political subdivision of its state, planned to sell hospital assets to a for-profit operator. State law required it to park the net sale proceeds in an irrevocable trust…
Treats broad offshore development seismic surveys as section 167(h) G&G costs
An offshore oil and gas operator acquired a seismic survey covering broad areas of two fields after development had been approved, then used the data to optimize the placement of development wells. It…
Late election to defer a low-income housing credit period
A partnership placed a single-building low-income housing project in service but inadvertently failed to elect to begin its 10-year credit period in the following taxable year. It asked the IRS for an…
A malpractice settlement that just restores lost capital is not taxable income
A driver caused a fatal accident and lost a large wrongful-death judgment after the insurer's defense law firm failed to settle the case within the auto policy limits. The driver went bankrupt, and th…
Executrix could not disaffirm returns filed before spouse became a surviving spouse
Chief Counsel considered whether an executrix could disaffirm amended returns filed by a decedent's wife for several redacted tax years. Section 6013(a)(3) allows disaffirmance of a return made by a s…
Unsupported fee estimates did not permit deduction of acquisition costs
A taxpayer paid an investment banker a success-based fee for a completed acquisition and did not elect the Revenue Procedure 2011-29 safe harbor. The banker later estimated that 92% of its time relate…
Water agreement does not make reservoir bonds private activity bonds
A government-owned electric utility planned to use tax-exempt bonds to finance part of a reservoir that would improve the reliable supply of water used at its coal-fired energy station. A separate agr…
Parent may claim a worthless-stock deduction using a look-through gross-receipts method
A corporate parent converted an insolvent subsidiary into a disregarded entity and represented that the subsidiary's stock was worthless. The IRS ruled that the parent could claim a worthless-stock de…
Check-the-box liquidation supports affiliated worthless-stock deduction
A corporate group planned a series of check-the-box elections that would liquidate several foreign subsidiaries up a holding-company chain. The lower-tier liquidations were represented to qualify unde…
Different averaging rules would violate utility tax normalization
A regulated electric utility used a 13-month average to calculate rate-base items, including accumulated deferred federal income taxes. An IRS audit settlement reduced a deferred tax asset tied to net…
Affiliate's stock-offering profit is excluded from gross income
A publicly traded parent company sold two classes of preferred stock through an underwriting group that included a disregarded entity owned by a consolidated subsidiary. The parent paid underwriting f…
Index swaps disallow ETF dividends-received deductions
A corporate group bought shares of an exchange-traded fund that tracked a stock index while entering into short swaps tied to the same index. The positions offset the ETF's price and dividend risk, bu…
Grants 45 days for late success-fee safe-harbor election
A corporation paid a success-based financial advisory fee in connection with a stock acquisition. Its tax preparer did not advise it to elect the Revenue Procedure 2011-29 safe harbor, which generally…
Settlement labels did not control Section 162(f) treatment of payments
A taxpayer sought business-expense deductions for payments resolving government lawsuits and for a separate disgorgement payment. Chief Counsel advised that language in the settlement agreement did no…
Market-priced renewable facility share was not public utility property
A regulated electric utility planned to own renewable generation facilities whose output would serve retail customers in two states and wholesale customers. Public utility property status requires reg…
Renewable facility portions received different public utility property treatment
A regulated electric utility planned renewable generation facilities serving State A retail customers, State B retail customers, and wholesale customers. Public utility property status under the norma…
Welfare trust amendment triggered income but not a disqualified-benefit tax
An employer had an overfunded welfare benefit trust originally used for retiree health benefits under a collective bargaining agreement. It proposed amending the trust so its assets could also pay hea…
Utility's post-exchange liability accounting met normalization rules
Two regulated electric utilities planned to exchange transmission and distribution assets in a transaction expected largely to qualify for tax deferral under Section 1031. Each utility would remove fr…
Utility's post-exchange liability accounting met normalization rules
Two regulated electric utilities planned to exchange transmission and distribution assets in a transaction expected largely to qualify for tax deferral under Section 1031. Each utility would remove fr…
Settlement Trust disposition increase is a tax, not a penalty
Chief Counsel addressed an Alaska Native Settlement Trust election under Section 247(g). It concluded that the additional 10 percent due when contributed property is disposed of is a tax, not a penalt…
Taxpayer may revoke elections against additional first-year depreciation
A parent corporation and its subsidiaries elected not to claim additional first-year depreciation for several classes of qualified property in three tax years. The tax department had focused on slowin…
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.