Final answer:
The statement is true; a letter ruling is specific to the taxpayer who requests and receives it from the IRS and cannot be used as precedent by other taxpayers.
Step-by-step explanation:
The statement is true: A letter ruling applies only to the taxpayer who asks for and obtains it. A letter ruling is a written decision by the Internal Revenue Service (IRS) in response to a taxpayer's request for clarification on specific tax matters. The letter ruling interprets and applies the tax laws to the taxpayer's specific set of facts, and it is relied upon by the taxpayer for guidance on the proper tax treatment of the transactions in question.
It is important to note that while a letter ruling provides assurance to the taxpayer who requested it on how the IRS views the tax consequences of their specific circumstances, it cannot be used as precedent by other taxpayers. Its applicability is strictly limited to the taxpayer who received it and the specific transaction it addresses.
This ensures that the taxpayer has clarity on the tax implications of their particular situation without widespread impacts on other tax scenarios that may have differing facts and considerations.