IRS written determination 201440004

Private letter rulings and published taxpayer determination letters. Native document type is retained separately; a determination letter is not labeled a private letter ruling. These taxpayer-specific releases cannot be used or cited as precedent under 26 USC 6110(k)(3); applicability and current legal force are not independently certified. Keep repeated UILC subjects attached to one actual numbered document.

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 201440004
Release Date: 10/3/2014
Index Number: 453.00-00, 453.08-00
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Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
---------------------------, ID No. ---------------
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Telephone Number:
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Refer Reply To:
CC:ITA:B05
PLR-105095-14
Date:
June 26, 2014
TY:-------
LEGEND
Taxpayer= -------------------------------------------------------------
Owner= ----------------------------
Buyer= -------------------------
Purchase Price= ----------------
Deferred Amount= ----------------
$x= ------------
Tax Year = -------
Dear --------------:
This is in response to your request for a private letter ruling dated January 31, 2014, on
behalf of Taxpayer, a subchapter S corporation. Taxpayer requests a ruling from the
Service granting consent to revoke an election out of the installment method under
§ 453(d) of the Internal Revenue Code (“Code”) for reporting gain realized from the sale
of assets during Tax Year.
FACTS
Taxpayer owned a pharmacy. Owner owned all of the stock in Taxpayer and was the
principal pharmacist at the pharmacy. Owner decided that he would retire and sell the
pharmacy.
In Tax Year, Taxpayer entered into a contract to sell all of its assets in the pharmacy to
Buyer for Purchase Price. Buyer paid $x in cash immediately and issued a 15-year
promissory note to Taxpayer for Deferred Amount. In preparing Taxpayer’s tax return
for Tax Year, Owner determined that Taxpayer would elect out of installment sale
treatment by reporting the entire gain from the asset sale on Taxpayer’s return for Tax
Year.

PLR-105095-14
2
Taxpayer now requests a ruling to permit a revocation of the election out of the
installment method.
LAW AND ANALYSIS
Section 453(a) of the Code provides that a taxpayer shall report income from an
installment sale under the installment method. However, § 453(d)(1) provides that the
installment method will not apply to a disposition if the taxpayer elects to not have the
installment method apply to such disposition.
Section 15A.453-1(d)(3)(i) of the Temporary Regulations provides that a taxpayer who
reports an amount realized equal to the selling price including the full face amount of
any installment obligation on the tax return filed for the taxable year in which an
installment sale occurs will be considered to have made an effective election.
Section 453(d)(3) provides that a taxpayer who has elected out of the installment
method may revoke that election only with the consent of the Secretary.
Section 15A.453-1(d)(4) provides that generally an election out is irrevocable. An
election out may be revoked only with the consent of the Internal Revenue Service. A
revocation, which is retroactive, will not be permitted when one of its purposes is the
avoidance of federal income taxes, or when the taxable year in which any payment was
received has closed.
In this case, Taxpayer has submitted factual information indicating that granting its
request for a ruling will not result in the avoidance of federal income taxes. Moreover,
none of the taxable years in which any affected payment was received is closed.
CONCLUSION
Based on the information submitted and the representations made, Taxpayer is granted
permission to revoke its election out of the installment method for the Tax Year sale of
the assets. Permission to revoke the election is granted for the period that ends 75
days after the date of this letter. Taxpayer must file an amended federal income tax
return for Tax Year and any other previously-filed returns on which a portion of the gain
from the sale is reportable under the installment method and attach this letter to such
amended returns.
CAVEATS
Except as expressly provided above, no opinion is expressed or implied concerning the
tax consequences of any aspect of any transaction or item discussed or referenced in
this letter. No opinion is expressed or implied concerning Taxpayer's eligibility to use

PLR-105095-14
3
the installment method under § 453 and the regulations thereunder and the amount of
gain on the asset sale reported on the installment method.
The rulings contained in this letter are based upon information and representations
submitted by the Taxpayer and accompanied by a penalty of perjury statement
executed by an appropriate party. While this office has not verified any of the material
submitted in support of the ruling request, it is subject to verification on examination.
You must attach a copy of this letter to any income tax return to which it is relevant. If
you file your returns electronically, you may satisfy this requirement by attaching a
statement to the returns that provide the dateand the control number of this letter ruling.
This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code
provides that it may not be used or cited as precedent.
In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representative.
Sincerely,
Amy J. Pfalzgraf
Senior Counsel, Branch 5
Office of Chief Counsel
(Income Tax & Accounting)
cc: