PLR 201202012 – Income excludable When Derived From Essential Government Function

In PLR 201202012, The IRS determined that the income of a city’s trust is excludable for gross income when the trust is established to provide medical benefits for retirees who meet certain eligibility requirements.  The income is excludable under section 115(1) “because the income is derived from the exercise of an essential government function.”

See Andrew Hodes, Three Recent IRS Private Letter Rulings, Wealth Strategies, Jan. 18, 2012; See also IRS Written Determinations.

Special thanks to Jim Hillhouse (Professional Legal Marketing  (PLM, Inc.)) for bringing this article to my attention.