Jessica is considering keeping the $300,000 she found in an joint account that h

Question

Jessica is considering keeping the $300,000 she found in an joint account that her ex-husband opened. She is fairly certain that her ex husband has completely forgotten about the money, or he would have taken it and probably already spent it all. And, the more she thinks about it, the more she doesn't think she has to include it in her own income in the 2014 tax year. Her friend, Winnie, got a letter ruling once from the IRS that said some money she had found in her parents' home after they died did not add to her gross income that year.

If Jessica consulted you, the CFP practitioner, regarding whether she can exclude the $300,000 from her gross income in 2014, you should advise her to seek the advice of an attorney. Based on your understanding of the sources of primary and secondary authority,

Select one:

A. Jessica cannot rely on the Letter Ruling her friend Winnie received because Letter Rulings are based on the specific facts and circumstances of a specific taxpayer

B. Jessica can rely on the Letter Ruling her friend Winnie received because Letter Rulings are primary authority

C. Jessica cannot rely on the Letter Ruling because it is secondary authority

D. None of the above

Explanation / Answer

Answer is option A

A private letter ruling, or PLR, is a written statement issued to a taxpayer that interprets and applies tax laws to the taxpayer's represented set of facts. A PLR is issued in response to a written request submitted by a taxpayer. A PLR may not be relied on as precedent by other taxpayers or by IRS personnel.

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