PLR 200003025: Extension granted for dual consolidated loss filings

Plain-English summary

A taxpayer's consolidated returns included losses from a dual resident corporation. Its tax return preparer had not researched the dual consolidated loss rules, and the taxpayer missed required agreement and annual certification filings. The IRS found that the taxpayer met the standards for discretionary filing relief under Treas. Reg. § 301.9100-3. It gave the taxpayer 30 days from the ruling letter to file the agreements for two tax years and the certification for one of those years. The ruling did not address how other Code or regulatory provisions applied to the taxpayer's facts.

Ruling snapshot

• Question: Could the taxpayer file required dual consolidated loss agreements and a certification after their deadlines?
• Outcome: Approved, with a 30-day filing extension.
• Key authorities: Treas. Reg. §§ 1.1503-2(g)(2), 301.9100-1(c), and 301.9100-3(a).

Full text (IRS public release)

Internal Revenue Service                          Department of the Treasury

Index Number: 9100.22-00                          Washington, DC 20224
              1503.04-04
                                                  Person to Contact:

                                                  Telephone Number:
Number: 200003025
Release Date: 1/21/2000                           Refer Reply To:
                                                  CC:INTL:PLR-110895-99
                                                  Date:

                                                  October 25, 1999




                                         LEGEND

Taxpayer                         =

DRC                              =

Date A                           =

Date B                           =

Firm A                           =

Firm B                           =

Individual A                    =

Dear           :

This replies to your letter dated June 10, 1999, in which Taxpayer requests an
extension of time under Treas. Reg. § 301.9100-3 to file (1) the agreement required by
§ 1.1503-2(g)(2)(i) with respect to the losses of DRC reflected in the U.S. consolidated
tax return of Taxpayer for the tax years ended on Dates A and B; and (2) the annual
certification required by § 1.1503-2(g)(2)(vi) with respect to the dual consolidated losses
incurred in the tax year ended on Date A. The information submitted for consideration is
substantially as set forth below.

The ruling contained in this letter is predicated upon facts and representations submitted
by the taxpayer and accompanied by a penalty of perjury statement executed by an
appropriate party. This office has not verified any of the material submitted in support of
the request for a ruling. Verification of the factual information, representations, and other
data may be required as a part of the audit process.
For the tax years ended on Dates A and B, DRC incurred losses that were reflected on

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the consolidated tax returns of Taxpayer.

Taxpayer did not prepare its own consolidated tax returns for the tax years ended on
Dates A and B. Instead, the tax returns were prepared by Firm A for the tax year ended
on Date A, and by Firm B for the tax year ended on Date B. Individual A was the tax
practitioner who was in charge of Taxpayer’s tax return preparation during the entire
period that is relevant to this request as the tax practice of Firm A was acquired by Firm
B. In reviewing the tax returns for the tax years ended on Dates A and B, Individual A
did not research the application of the dual consolidated loss rules to these returns.
Individual A later learned of the failure to file the election and certification from the
manager assigned to Taxpayer‘s tax return.

Treas. Reg. § 301.9100-1(c) provides that the Commissioner has discretion to grant a
reasonable extension of time under the standards set forth in § 301.9100-3 to make a
regulatory election under all subtitles of the Internal Revenue Code except subtitles E,
G, H, and I.

Treas. Reg. § 301.9100 -1(b) defines a regulatory election as an election whose due
date is prescribed by a regulation, a revenue ruling, revenue procedure, notice, or
announcement.

Treas. Reg. § 301.9100-3 provides standards for extensions of time for making
regulatory elections when the deadline for making the election is other than a due date
prescribed by statute.

Treas. Reg. § 301.9100-3(a) provides that requests for relief subject to this section will
be granted when the taxpayer provides the evidence (including affidavits described in
§ 301.9100-3(e)) to establish to the satisfaction of the Commissioner that the taxpayer
acted reasonably and in good faith, and the grant of relief will not prejudice the interests
of the Government.

In the present situation, § 1.1503-2(g)(2) fixes the time to file the agreement and
certification. Therefore, the Commissioner has discretionary authority under
§ 301.9100–1(c) to grant Taxpayer an extension of time, provided that Taxpayer
satisfies the standards set forth in § 301.9100-3(a).

Based on the facts and circumstances of this case, we conclude that Taxpayer satisfies
§ 301.9100-3(a). Accordingly, Taxpayer is granted an extension of time until 30 days
from the date of this ruling letter to file (1) the agreement required by § 1.1503-2(g)(2)(i)
with respect to the losses of DRC reflected in the U.S. consolidated tax return of
Taxpayer for the tax years ended on Dates A and B; and (2) the annual certification
required by § 1.1503-2(g)(2)(vi) with respect to the dual consolidated losses incurred in

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the tax year ended on Date A.

No ruling has been requested, and none is expressed, as to the application of any other
section of the Code or regulations to the facts presented.

A copy of this ruling letter should be associated with the agreement and certification.

This ruling is directed only to the taxpayer who requested it. I.R.C. § 6110(k)(3) provides
that it may not be used or cited as precedent.

Pursuant to a power of attorney on file in this office, a copy of this ruling letter is being
sent to your authorized representative.

Sincerely,

/s/ Allen Goldstein
Allen Goldstein
Reviewer
Office of the Associate Chief Counsel (International)