The IRS today publicly released a private letter ruling* in which the IRS concluded that gain realized on the sale of shares in a corporation that a telephone cooperative formed with other telephone companies, to provide services to the cooperative’s patrons, is patronage-sourced income and if properly allocated to the telephone cooperative’s patrons would be excluded from the cooperative’s gross income.
Read PLR 201945011 [PDF 55 KB] (released November 8, 2019, and dated August 6, 2019)
*Private letter rulings are taxpayer-specific rulings furnished by the IRS Office of Chief Counsel in response to requests made by taxpayers and can only be relied upon by the taxpayer to whom issued. Pursuant to section 6110(k)(3), written determinations such as private letter rulings are not intended to be relied upon by third parties and may not be cited as precedent. These written determinations may, however, offer an indication of the IRS’s position on the issues addressed.
The IRS, noting that the cooperative’s ownership of the stock in the corporation was directly related to its cooperative business, concluded that the gain from the sale of the cooperative’s stock in the corporation is patronage-sourced income and if properly allocated to the cooperative’s patrons would be excluded from the cooperative’s gross income in the year of the sale.
For more information, contact KPMG’s National Director of Cooperative Tax Services:
David Antoni | +1 (267) 256-1627 | firstname.lastname@example.org
Or Associate National Director of KPMG’s Cooperative Tax Services:
Brett Huston | +1 (916) 554-1654 | email@example.com
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.