Rev. Proc. 75-16

Section 1. Purpose.

The purpose of this Revenue Procedure is to set forth a checklist outlining required information that is frequently omitted from requests for rulings under section 301.7701-3 of the Procedure and Administration Regulations, which relates to the classification of organizations for Federal tax purposes.

Sec. 2. Background.

.01 The Internal Revenue Service receives many requests for rulings concerning the classification of arrangements as partnerships for Federal tax purposes. Frequently the information that is necessary for consideration of the issues presented is not included in the initial ruling requests, and since substantive processing of such cases cannot begin until the required information is obtained, this causes unnecessary delays in the issuance of the ruling letters. The use of the checklist set forth in this Revenue Procedure in the preparation of ruling requests concerning partnership classification will facilitate the initial inclusion of necessary information that might otherwise be omitted. However, since the information that is necessary for the issuance of a ruling with regard to any particular transaction depends upon all the facts and circumstances of that case, information in addition to that outlined in the checklist may be required.

.02 The general procedures of the Internal Revenue Service in issuing rulings are described in Rev. Proc. 72-3, 1972-1 C.B. 698. That Revenue Procedure also contains instructions to taxpayers with respect to the submission of requests for rulings. Attention to those instructions, particularly section 6.02, will also serve to avoid delays caused by procedural deficiencies in ruling requests.

.03 If other requests for ruling accompany a request for classification, other relevant documents must be submitted. Thus, for example, where a ruling is requested regarding management fees or guaranteed payments, the management contracts must be submitted.

.04 The conditions under which the Service will issue a ruling concerning the classification of an organization as a limited partnership where a corporation is the sole general partner are set forth in Rev. Proc. 72-13, 1972-1 C.B. 735. See also Rev. Proc. 74-17, 1974-1 C.B. 438, which announces certain operating rules of the Service relating to the issuance of advance ruling letters concerning the classification of organizations formed as limited partnerships.

Sec. 3. General Instructions.

The ruling request should account for all items of information specified in section 4 below. Thus, for example, if no partnership certificate is required to be filed (see section 4.03), the ruling request should so state. If section 4 refers to a specific document, a final copy of the document, together with all exhibits, attachments, and amendments thereto, should be submitted (unless otherwise herein provided). However, submission of the document, together with all exhibits, attachments, and amendments thereto, is not a release from the requirement of section 6.02 of Rev. Proc. 72-3 that relevant facts reflected in documents submitted must be included in the taxpayer's statement and not merely incorporated by reference, and must be accompanied by an analysis of their bearing on the issue or issues, specifying the pertinent provisions.

Sec. 4. Information To Be Submitted.

The information to be submitted in a request for a ruling concerning partnership classification should include, but is not limited to, the following items:

.01 General.

1 The name and identification number of the organization.

2 A description of the business of the organization.

3 The date and place where the partnership certificate was or will be filed.

.02 Partnership Agreement.

1 The partnership agreement and all amendments to it.

2 A statement whether the State in which the organization is formed has adopted, as applicable, the Uniform Partnership Act or the Uniform Limited Partnership Act.

3 A list of all substantial differences between the applicable State Act and the Uniform Act.

4 A copy of the applicable State partnership acts and all amendments thereto pursuant to which the organization was or will be formed.

.03 Partnership Certificate.

The partnership certificate filed or to be filed with the State in which the organization is formed.

.04 Registration Statement.

1 The registration statement filed or to be filed with the Securities and Exchange Commission. (A draft is acceptable.)

2 If a registration statement is not required to be filed with the Securities and Exchange Commission, then documents filed or to be filed with any agency engaged in the regulation of securities, whether Federal or State, and any private offering memorandum. (Drafts are acceptable.)

3 A description of all arrangements made with regard to the marketing of interests in the organization, such as arrangements with brokers, underwriters, and dealers.

.05 Net Worth.

1 A representation of the net worth of the general partner(s).

2 Financial data to support the representation including, for example, audited balance sheets or unaudited balance sheets with a representation that it is prepared in accordance with generally accepted accounting principles.

.06 Promotional Material.

An outline or a highlighted copy of all promotional material used to sell interests in the organization, particularly including statements made regarding the probable tax consequences of the arrangement and the effect of the requested ruling upon such tax consequences.

.07 Creditors' Interests.

1 A detailed description of all creditors' interests in the organization or its assets, other than security interests and rights to repayment.

2 A detailed description of all benefits that creditors may receive, such as rights of conversion or exchange into any other interest, rights of recourse against property other than the property being developed with the loan proceeds, or benefits that accrue to neighboring property owned by creditors because of the loan of money to the organization.

.08 Capital Contribution.

A statement indicating the amount of the capital contribution made or to be made both by the general partner(s) and the limited partner(s) to the organization, and, if a general partner is also a limited partner, the capacity in which the contribution was or will be made.

.09 Profits and Losses.

1 A detailed explanation of the extent of participation of the general partner(s) and the limited partner(s) in the profits and the losses of the organization, and if a general partner is also a limited partner, the capacity in which profits and losses are or will be shared.

2 A statement indicating whether there will be any shift in the proportion of the profit and loss sharing ratio during the course of the operation of the organization and, if so, the details of the shift and the business reasons for it.

.10 Negative Capital Accounts.

A statement indicating whether the amount of any negative capital balance on the part of a general partner or a limited partner will be paid by such partner to the organization upon dissolution, liquidation, or termination of the organization.

.11 Distribution.

1 A statement describing the manner and method of intended distributions of assets, including cash, to the partners.

2 A statement describing the distribution scheme of assets upon termination and/or dissolution of the organization after the payment of debts.

Sec. 5. Inquiries.

Inquiries in regard to this Revenue Procedure should be addressed to the Assistant Commissioner (Technical), Attention: T:I:I, Internal Revenue Service, Washington, D.C. 20224.