PLR 200038011: Entity gets more time to elect corporate tax treatment

Plain-English summary

An entity intended to be taxed as a corporation from a specified date but did not file its entity classification election on time. The IRS found that the requirements for discretionary late-election relief were satisfied. It gave the entity 60 days from the ruling letter to file Form 8832 electing corporate treatment effective on the requested date. The ruling addressed the filing deadline and expressed no opinion on other tax consequences.

Ruling snapshot

• Question: Could the entity file a late election to be treated as a corporation from its requested effective date?
• Outcome: Approved, if Form 8832 is filed within 60 days of the letter.
• Key authorities: Treas. Reg. §§ 301.7701-3(c), 301.9100-1, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Index Number: 7701.00-00; 9100.00-00 Washington, DC 20224

Number: 200038011
Person to Contact:
Release Date: 9/22/2000
Telephone Number:

Refer Reply To:
CC:DOM:P&SI:1-PLR-108280-00
Date:
June 14, 2000

Legend:

A
=

Date1 =

This responds to a letter dated April 12, 2000, submitted on behalf of A, requesting an extension of time pursuant to §301.9100-3(a) of the Procedure and Administration Regulations to file an election to be treated as a corporation for federal tax purposes under § 301.7701-3(c).
FACTS

According to the information submitted, A intended to be taxed as a corporation for federal tax purposes as of Date1, but failed to timely elect corporate status.

LAW AND ANALYSIS

Section 301.7701-3(a) provides that a business entity that is not classified as a corporation under section 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) (“an eligible entity”) can elect is classification for federal tax purposes. A “business entity” is any entity recognized for federal tax purposes that is not properly classified as a trust under § 301.7701-4 or otherwise subject to special treatment under the Code. Section 301.7701- 2(a). An eligible entity with at least two members can elect to be classified as either an association (and thus a corporation under § 301.7701-2(b)(2)) or a partnership. Generally, a domestic eligible entity with two or more members is a partnership unless the entity elects to be treated otherwise. § 301.7701-3(b)(1)(i).

Under § 301.7701-3(c)(1), a domestic eligible entity may elect to be classified other than as provided under § 301.7701-3(b)(1) by filing a Form 8832, Entity Classification Election, with the designated service center. An election under § 301.7701-3(c) can be effective on the date specified on the Form 8832 or on the date filed if no date is specified on the form. The effective date specified on the Form 8832 cannot be more than 75 days prior to the date on which the election is filed.

Section 301.9100-1(c) provides that the Commissioner has discretion to grant a

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reasonable extension of time, under the rules set forth in §§ 301.9100-2 and 301.9100-3, to make a regulatory election. Section 301.9100-1(b) defines a regulatory election as an election whose due date is prescribed by a regulation published in the Federal Register, or a revenue ruling, revenue procedure, notice, or announcement published in the Internal Revenue Service Bulletin.

Sections 301.9100-1 through 301.9100-3 provide standards the Commissioner will use to determine whether to grant an extension of time to make an election. § 301.9100- 1(a).

Section 301.9100-2 provides automatic extensions of time for making certain elections. Section 301.9100-3 provides extensions of time for making elections that do not meet the requirements of § 301.9100-2.

Requests for relief under § 301.9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the government. § 301.9100-3(a).

CONCLUSION

Based solely on the facts submitted and representations made, we conclude that the requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. As a result, A is granted an extension of time for making the election to be treated as a corporation for federal tax purposes, effective on Date1, until 60 days following the date of this letter. The election should be made by following the procedure set forth in Form 8832. A copy of this letter should be attached to the election.

Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.

In accordance with the Power of Attorney on file with this office, a copy of this letter is being sent to the taxpayer.
Sincerely,
Paul F. Kugler
Assistant Chief Counsel
(Passthroughs and Special Industries)
Enclosures (2)
Copy of this letter