[LAW-LIB:55255] LMSB040907064 - IRS Memorandum

From: Nina Porcella (NPorcella@sheppardmullin.com)
Date: Wed Apr 09 2008 - 15:49:39 PDT

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    I've searched everywhere and haven't been able to find the following IRS
    document. I spoke to someone earlier at an IRS office and have not
    heard back. If anyone has the following document, would greatly
    appreciate getting a copy:

    IRS Emerging Issue: S Corporation Accrued Expenses to ESOP Participants
    a
    Potential Pitfall for the Less Than 100% S Corporation ESOP

    The director for prefiling and technical guidance at the Internal
    Revenue Service (IRS) issued a
    memorandum on September 28, 2007 (LMSB040907064) providing notification
    of an emerging
    issue related to S corporation ESOPs and deductions for certain accrued
    expenses in respect of related
    parties, including accrued compensation for ESOP participants. At issue
    in the memorandum is Section
    267 of the Internal Revenue Code (the Code). The memorandum was
    circulated to all executives and
    managers of the IRS's Large and MidSize Business (LMSB) division, and to
    the chief of the Appeals
    Division Counsel. The memorandum advised any IRS representative who
    identifies a taxpayer who
    may be impacted by the memorandum to refer the matter to the S
    corporation technical advisor.

    Thank you for any help!
    Nina Porcella
    Sheppard Mullin LLP
    415 774-3245
     
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