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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Taxpayer receives extension for success-based-fee safe harbor election
A corporation incurred a success-based financial advisory fee when it acquired another company's stock. The taxpayer relied on a return preparer to advise it about elections, but neither the taxpayer …
Public retiree-benefit trust income is excluded and no return is required
A political subdivision created and funded a trust to pay post-employment life and health benefits for retired employees and their eligible dependents and beneficiaries. The employer controlled withdr…
Public retiree-benefit trust income is excluded and no return is required
A political subdivision created and funded a trust to pay post-employment life and health benefits for retired employees and their eligible dependents and beneficiaries. The employer controlled withdr…
Public retiree-benefit trust income is excluded and no return is required
A political subdivision created and funded a trust to pay post-employment life and health benefits for retired employees and their eligible dependents and beneficiaries. The employer controlled withdr…
Planned buyout avoided anti-churning limit on goodwill amortization
An investor bought a majority membership interest in a business holding pre-1993 goodwill, and the transaction was treated as a purchase of part of the business's assets followed by contributions to a…
Police line-of-duty benefits were partly tax-exempt
A public employer's plan paid police officers disability benefits for line-of-duty injuries and paid survivor benefits for line-of-duty deaths. Each benefit generally equaled 50 percent of final avera…
Technical advice request could be returned unanswered after consultation
Chief Counsel discussed the procedure for ending a technical advice request involving a variable annuity. The referenced revenue procedure required a director to notify the taxpayer before withdrawing…
Municipal retiree health trust could fund a VEBA
A city used a trust to fund retiree health and welfare benefits, and the trust's income was excluded under Section 115(1). After settling litigation over retirement-benefit changes, the city created a…
Retiree health trust payment to a VEBA satisfied Section 115
A city funded retiree health and welfare benefits through a trust whose income was excluded under Section 115(1). A lawsuit settlement led to creation of a voluntary employees' beneficiary association…
Utility had to prorate deferred taxes for interim rates
A regulated natural-gas utility used forecasted test periods to set interim and final rates, reducing rate base by accumulated deferred federal income taxes from accelerated depreciation. It had not u…
Health authority qualified as a political subdivision
A public corporation formed under state law to provide health care services asked whether it was a political subdivision for federal tax purposes. State law authorized the authority to exercise eminen…
Utility could leave deferred tax balances unchanged after restructuring
An electric transmission utility treated as a partnership underwent a restructuring in which regulated utility members transferred partnership interests to nonregulated affiliates in their consolidate…
Home hazard-mitigation grants required information reporting
A state entity offered grants to selected homeowners for structural work intended to help their homes withstand a future hazard. Eligibility depended on the home's location, age, physical characterist…
Physician loan-repayment awards were tax-free and unreportable
A state program made student-loan repayment awards to physicians who agreed to practice in designated physician-shortage areas. Awards were limited by the recipients' qualifying undergraduate and medi…
Home hazard-mitigation grants required information reporting
A state-created entity provided grants to qualified homeowners for structural work intended to help their homes withstand a future hazard. Eligibility depended on the home's location, age, and physica…
Excludes a generator-funded utility intertie from income
A regulated electric utility asked how to treat an interconnection funded by an unrelated electricity generator. The generator needed the intertie to move power through the utility's system for sale t…
Grants extra time for a multiple-building housing-credit election
A taxpayer intended three low-income housing buildings to form one multiple-building project but inadvertently failed to make that election on the buildings' Forms 8609. Section 42 ordinarily treats a…
Medical center bonds avoid advance-refunding bar because buyer and university are unrelated
A tax-exempt buyer acquired an academic medical center from a university using taxable debt, and the university used part of the proceeds to defease previously advance-refunded tax-exempt bonds. The i…
Employer-paid expatriate tax-return preparation is taxable compensation
A U.S. employer paid a multinational accounting firm to prepare domestic and foreign tax returns for employees on international assignments as part of a tax-equalization program. Chief Counsel conclud…
Solar-only home battery qualifies for the residential solar credit
A married couple already had a residential solar photovoltaic system and planned to add a battery, inverter, wiring, and control software. The software would ensure that the battery charged only from …
Loan interests recorded in a required book-entry register qualify as obligations in registered form
A business connects borrowers with investors for unsecured, fixed-rate loans originated by a partner bank. Its borrower agreement and promissory note appoint the business as the borrower's agent to ma…
Pension plan's retiree medical account may fund tax-free HRA reimbursements
A bank maintained a qualified defined benefit plan with a separate section 401(h) account for retiree medical benefits. It also maintained an unfunded retiree-only health reimbursement arrangement tha…
Corporate acquirer receives 45 days to make a late success-based-fee safe-harbor election
A corporate group acquired an engineering and design company in a taxable stock purchase and paid a contingent transaction fee to an adviser. An attorney told the foreign parent's tax director that 70…
Generator-funded transmission upgrades qualify as capital contributions
A regulated electric utility agreed to construct transmission upgrades funded by wind-farm operators whose generation was sometimes curtailed by congestion. The utility would own and operate the upgra…
Court-supervised trust qualifies as a settlement fund and transfers are deductible
Related business entities settling employee personal-injury claims planned to fund a court-supervised trust that would support payments over a multiyear class-action settlement. The trust would be cre…
Required post-approval orphan-drug trials qualify for clinical-testing credit
The FDA gave an orphan-designated drug accelerated approval based on a surrogate or intermediate endpoint and required a post-marketing study to confirm its clinical benefit. The drug owner asked whet…
Tax-exempt affiliate's pay counts toward insurer compensation cap
A covered health insurance provider and a tax-exempt hospital belonged to the same aggregated employer group and both paid an employee during one year. The IRS advised that compensation paid by the ta…
Rate-base offset violates depreciation normalization rules
A regulated utility's state commission required shareholders to fund certain safety-related capital investments rather than charging ratepayers. The commission left those assets and their deferred tax…
Late basis-reduction election allowed after adviser missed extension filing
A company emerging from bankruptcy reported cancellation-of-debt income and intended to elect under section 108(b)(5) to reduce the basis of depreciable property first. Its return included Form 982 ma…
Late tax-exempt controlled entity election treated as timely
A taxable corporation wholly owned by a section 501(c)(3) organization invested in a partnership that developed rental real estate. Because the corporation was a tax-exempt controlled entity, it neede…
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…
Exemption revoked because funeral payments served members
A membership organization for older adults paid funeral and burial expenses when a member or a member's spouse or child died. Eligibility depended only on membership and a death, with no financial-har…
Securities-law disgorgement is not deductible after Kokesh
Chief Counsel reconsidered the deductibility of disgorgement paid for violating federal securities law after the Supreme Court's decision in Kokesh v. SEC. Section 162(f) disallows business deductions…
Moline Properties separate-entity doctrine applies to S corporations
Chief Counsel considered whether wholly owned or majority-owned S corporations could be combined with their shareholders and related entities as a unified business enterprise when determining deductio…
A utility's past deferred-tax methods did not violate normalization rules
A regulated electric utility used accumulated deferred federal income tax, or ADFIT, as zero-cost capital in setting base rates and rider charges. It had not applied the required proration methodology…
Waived pension overpayment was not additional taxable income
A retired employee received pension payments that were later found to include an overpayment caused by earlier calculation errors. The pension administrator reduced future payments but waived collecti…
State disability-support payments qualified for the general welfare exclusion
A state agency funded services and items that helped people with intellectual or developmental disabilities remain at home while waiting for Medicaid waiver support. Eligible recipients had to be on t…
Electric utility's deferred-tax rate methods avoided normalization sanctions
A regulated electric utility used accumulated deferred federal income tax from accelerated depreciation as zero-cost capital when setting base rates and cost-recovery riders. It discovered that it had…
Housing project receives 120 days to correct low-income elections
A taxpayer that owned a multiple-building low-income housing project intended to elect the 40-60 minimum set-aside under section 42(g)(1)(B). Its Forms 8609 did not make timely, correct elections for …
City retiree health trust income is excluded under section 115
A city created a trust to fund health and welfare benefits for retired general employees, police officers, firefighters, and eligible family members. The city council served as trustee, and trust asse…
Housing building receives 120 days to correct section 42 election
A taxpayer owned a single-building low-income housing project and intended to make a section 42(g)(1) minimum set-aside election. It inadvertently failed to make a timely, correct election, despite co…
Corporate group receives 45 days for transaction-fee election
A consolidated corporate group incurred success-based fees when another company acquired its parent. Its accounting firm believed it had electronically filed a return extension, but the filing attempt…
State energy corporation qualifies as a political subdivision
A state-created public corporation planned to develop natural gas infrastructure for the benefit of state residents. State law gave it unrestricted eminent domain power, the governor appointed and cou…
Subsidiary receives 75 days for tax-exempt entity election
A corporate subsidiary was indirectly owned by a tax-exempt organization and therefore was a tax-exempt controlled entity under section 168(h). It tried to elect out of that treatment on a timely sepa…
Utility formula rate complies with depreciation normalization rules
A regulated electric utility used a formula rate based mainly on historical-year data, but added a weighted projection of plant additions to rate base. It continued to use historical depreciation expe…
IRS distinguishes projected and historical utility rate calculations
A regulated electric utility used a formula rate based mainly on historical data, with projected plant additions added to rate base, and also maintained three separate riders with projected-rate and t…
Orphan-drug expenses enter research credit base calculation
A drug developer claimed both the orphan drug credit and the alternative simplified research credit but excluded orphan-drug clinical testing expenses from qualified research expenses in the three pri…
Power agreements do not create private business use of bond-financed plant
A public power issuer financed its interest in an electric generating plant with revenue bonds, and a city held a take-or-pay right to a share of the plant's capacity and energy. The city planned to b…
Utility proration depends on when interim and final rates apply
A regulated electric utility used a forecasted test year to set refundable interim rates that began during the test year, while final rates would take effect only after that year ended. The IRS ruled …
Related-party securities transfers produced no deductible losses
An individual and a hedge-fund partnership transferred publicly traded securities to a broker's proprietary trading account and reported tax losses. The individual controlled that account and retained…
Controlled corporation received relief for a late tax-exempt-entity election
A corporation wholly owned by a tax-exempt organization was a managing member in entities involved with rehabilitation and leasing of a historic commercial property. It needed to elect under section 1…
Donor advised fund documentation met the written acknowledgment requirements
Chief Counsel reviewed whether a taxpayer had obtained the contemporaneous written acknowledgment required to substantiate a charitable deduction for a contribution to a donor advised fund. After revi…
Assumption reinsurance did not materially change an employer-owned life insurance policy
A policyholder held a group flexible-premium variable life insurance policy covering directors and highly compensated employees or individuals. The issuing insurer proposed to transfer the policy to a…
Governmental retiree benefit trust income was excluded and no annual return was required
A governmental employer created a trust to prefund medical and death benefits for certain retired employees and their eligible spouses and dependents. Trust assets could be used only for those benefit…
Investment adviser's merger support payment is deductible
An investment adviser paid a target company's shareholders to encourage approval of the target's acquisition by an investment company the adviser managed. The adviser expected the acquisition to incre…
Commuter-rail division is a political subdivision
A state-created division operated commuter rail within a metropolitan transportation system and asked whether it was a political subdivision for federal tax purposes. State and local governments appoi…
Governmental benefits trust has excluded income and no annual return
A county and another political subdivision created separate trusts to fund other post-employment benefits, then used a master trust to pool and invest their assets. The master trust was controlled by …
Tax-exempt controlled corporation received late-election relief
A taxable corporation wholly owned by a section 501(c)(3) organization was a tax-exempt controlled entity for depreciation purposes. It intended to elect under section 168(h)(6)(F)(ii) not to be treat…
Limited interim CFO service did not disqualify outside director
A public company's director temporarily served as interim chief financial officer after an unexpected resignation. The appointment had a fixed expiration, paid no base salary, focused primarily on com…
Trust conversion is nontaxable and not self-dealing but gives no new deduction
A split-interest trust proposed adding a substitution power that would convert it from a nongrantor trust to a grantor trust. The power would be held in a nonfiduciary capacity by the grantor's siblin…
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.