PLR: Loss on sale, chargeable to cooperative members

PLR 201529004

The IRS publicly released a private letter ruling* concerning the plan of a cooperative—involved in providing an array of services described as “supply chain optimization,” to help members reduce their supply costs—for handling a loss. PLR 201529004 (release date July 17, 2015, and dated March 27, 2015)

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In PLR 201529004 [PDF 66 KB], the IRS ruled that:

  • The amount of loss that the taxpayer realized on the sale of its interest in an entity was properly chargeable to its members holding special qualified written notices of allocation.
  • Changing the loss to the members, by cancelling special written notices of allocation, will have no tax effect for the taxpayer other than the reduction of the tax loss incurred by reason of its sale of its interest in the entity.



*Private letter rulings are taxpayer-specific rulings furnished by the IRS National Office in response to requests made by taxpayers and can only be relied upon by the taxpayer to whom issued. It is important to note that, pursuant to section 6110(k)(3), such items cannot be used or cited as precedent. Nonetheless, such rulings can provide useful information about how the IRS may view certain issues.

 

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