Qualifying Services under IRC 7704

IRS Private Letter Ruling 201213004

This letter responds to a letter dated May 25, 2011, and subsequent correspondence by X’s authorized representative, requesting rulings under § 7704 of the Internal Revenue Code on behalf of X.

FACTS
The information submitted states that X is a State limited liability company that elected to be classified as an association for federal income tax purposes.  X is a registered broker-dealer.  X proposes to operate two separate matching services, the Qualifying Service and the NonQualifying Service (collectively, the “Services”), which facilitate the buying and selling of third party limited partnership interests.  Listings on the Qualifying Service are separate from listings on the NonQualifying Service.  The same interests in a partnership will not be simultaneously listed on both the Qualifying Service and the NonQualifying Service. The Qualifying Service operates in a manner designed to satisfy the qualified matching service requirements set forth in § 1.7704-1(g) of the Procedure and Administration Regulations.  The NonQualifying Service fails to satisfy one or more of the requirements in § 1.7704-1(g).

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Qualifying Income of a Publicly Traded Partnership under IRC 7704

Private Letter Ruling 201206004

This responds to a letter dated June 3, 2011, submitted on behalf of Company, and subsequent correspondence, requesting a ruling concerning the qualifying income exception to the publicly traded partnership rules of § 7704 of the Internal Revenue Code.

FACTS
Company is a limited partnership organized under the laws of State.  Company is a “publicly traded partnership” within the meaning of § 7704(b).  Company, through affiliated limited partnerships or disregarded entities, is principally engaged in the transportation, storage and distribution of refined petroleum products.  This ruling request involves fees Company charges as part of its fuel additization and ethanol blending activities at its refined product terminals.

Company owns X refined product terminals.  Company’s refined product terminals receive petroleum products from refineries, major common-carrier pipelines or other vessels.  Company stores these products at its refined product terminals which it then loads onto delivery vehicles for transportation to the next point in the fuel supply chain.  Company charges a fee for receiving and loading fuels onto delivery vehicles for transportation.  During the loading process, Company also injects fuel additives and blends ethanol into the petroleum products.  Company represents that it acts as a wholesale distributor of refined petroleum products and is not engaged in retail activity

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Michigan: Revised Notice on Michigan Business Tax Treatment of Disregarded Entities Reflects Recently Enacted Legislation

State Tax Matters:

Income/Franchise:
Notice to Taxpayers Regarding Federally Disregarded Entities and the Michigan Business Tax, Mich. Dept. of Treas. (issued 11/29/10; revised 4/30/11; revised 10/3/11; revised 11/15/11; revised 1/26/12). The department has once again updated its notice on the Michigan Business Tax (MBT) treatment of federally disregarded entities to include legislative amendments that were enacted on December 27, 2011 [See previously issued Multistate Tax Alert for more details on this new law], which clarified the manner in which a federally disregarded entity is treated for MBT purposes. The new law clarification is retroactive to January 1, 2008, and provides that a “person” that is a disregarded entity for federal income tax purposes under the Internal Revenue Code shall be classified as a disregarded entity for MBT purposes.

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SEC Issues No-Action Letter Clarifying Position w/r/t Registration Requirements of Special Purpose Vehicles and Affiliated Investment Advisers

On January 18, 2012, the Division of Investment Management (Staff) of the Securities
and Exchange Commission (SEC) issued a no-action letter reaffirming its position that
certain special purpose vehicles (SPVs) created by a registered investment adviser are not
required to separately register as an investment adviser (No-Action Letter).

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Michigan Enacts Legislation Clarifying Treatment of Disregarded Entities for Michigan Business Tax Purposes

State Tax Matters:

Multistate Tax Alerts:

Recently enacted legislation clarifies the manner in which a federally disregarded entity is treated for Michigan Business Tax (MBT) purposes. This clarification, which is retroactive to January 1, 2008, provides that a “person” that is a disregarded entity for federal income tax purposes under the Internal Revenue Code shall be classified as a disregarded entity for purposes of the MBT Act.

This Multistate Tax Alert discusses this new law.

“Multistate Tax Alerts: Michigan Enacts Changes to Corporate Income Tax

State Tax Matters:

On December 27, 2011, Michigan Governor Snyder signed a series of bills amending the Corporate Income Tax (CIT) effective January 1, 2012. The enacted provisions clarify the treatment of a disregarded entity and change the manner in which ownership in a unitary partnership or limited liability company (LLC) affects a taxpayer’s apportionment factor and CIT base.

This Multistate Tax Alert summarizes these law changes.”

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Income/Franchise: California: Franchise Tax Board adopts final rule on apportionment & single sales factor election

State Tax Matters:


Final Regulation Section 25128.5, Cal. FTB (eff. 10/22/11). The California Franchise Tax Board (FTB) has adopted its final regulation reflecting budget legislation enacted during 2009 that permits an “apportioning trade or business” to make an annual election to apportion its business income using a single sales factor effective for taxable years beginning on or after January 1, 2011.

Multistate Tax Alerts: Michigan extends deadline to December 31, 2011 for disregarded entity compliance

State Tax Matters:

A Multistate Tax Alert that was previously issued on November 30, 2010 summarized the Michigan Department of Treasury’s Notice to Taxpayers Regarding Federally Disregarded Entities and the Michigan Business Tax (Nov. 29, 2010) (“Notice”). The Notice, as originally issued, provided generally that a “person” that is a federal disregarded entity (“DRE”) is required to file a separate Michigan Business Tax (“MBT”) return or file as a member of a unitary business group if the tests for unity are met. The Notice also provided that previously filed MBT returns that treated DREs as divisions or branches of their owners would need to be amended and filed by June 30, 2011. On April 30, 2011, the Michigan Department of Treasury revised the Notice to extend the filing deadline to October 31, 2011. On October 3, 2011, the Notice was revised again, extending the filing deadline to December 31, 2011.

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Deloitte | Heads Up: Proposed Council to Improve Standard Setting for Private Companies

Deloitte | Heads Up: Proposed Council to Improve Standard Setting for Private Companies:

“Heads Up: Proposed Council to Improve Standard Setting for Private Companies
Volume 18, Issue 28

The attached issue of Heads Up discusses the recent proposal by the Board of Trustees of the Financial Accounting Foundation to create a council that would work toward improving the accounting standard-setting process for private companies.”

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