PLR 200046031: Company gets 60 more days to elect corporate tax treatment

Plain-English summary

A two-member limited liability company intended to elect corporate treatment for federal tax purposes, but missed the deadline to file Form 8832. It asked for more time under the regulatory election relief rules. The IRS concluded, based on the submitted facts and representations, that the company met the requirements for an extension. The company received 60 days from the ruling letter to file Form 8832 for its requested effective date and attach a copy of the letter.

Ruling snapshot

• Question: May the company file a late entity classification election to be taxed as a corporation?
• Outcome: Approved: a 60-day extension to file Form 8832 for the requested effective date.
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200046031
P.O. Box 7604
Ben Franklin Station
Release Date: 11/17/2000
Washington, DC 20044
Index No.: 9100.00-00
Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:5 –– PLR-115463-00
Date:
August 23, 2000

Legend:

Company =

State
=
Member A =

Member B =

a
=
b
=
c
=

Dear :

This letter responds to Company’s letter dated April 13, 2000 requesting an extension of time pursuant to § 301.9100-3 of the Procedure and Administration Regulations for Company to elect to be treated as a corporation for federal tax purposes.

Facts

Company, a State limited liability company, was formed on a by Member A and Member B. On b, Company intended to file Form 8832, Entity Classification Election, to

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elect to be treated as a corporation for federal tax purposes, effective c. However, Company failed to file timely the election.

Law and Analysis

Section 301.7701-3(a) provides, in part, that a business entity that is not classified as a corporation under § 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) (an eligible entity) can elect its classification for federal tax purposes as provided in such section. 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.

Section 301.7701-3(b)(1)(i) provides, in part, that unless a domestic eligible entity elects otherwise it is a partnership if it has two or more members.

Section 301.7701-3(c)(1)(i) provides, in part, that an eligible entity may elect to be classified other than as provided under § 301.7701-3(b) by filing Form 8832, Entity Classification Election, with the applicable service center.

Section 301.7701-3(c)(1)(iii) provides, in part, that an election made under § 301.7701-3(c)(1)(i) will be effective on the date specified by the entity on Form 8832 or on the date filed if no such date is specified on the election form. The effective date specified on Form 8832 can not be more than 75 days prior to the date on which the election is filed and can not be more than 12 months after the date on which the election is filed.

Under § 301.9100-1(c) the Commissioner may grant a reasonable extension of time to make a regulatory election, or a statutory election (but no more than six months except in the case of a taxpayer who is abroad), under all subtitles of the Code, except subtitles E, G, H, and I, if the taxpayer demonstrates to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and that granting the relief will not prejudice the interests of the government.

Sections 301.9100-2 and 301.9100-3 provide the standards the Commissioner will use to determine whether to grant an extension of time to make an election. 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.

Conclusions

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Based solely on the facts and representations submitted, we conclude that the requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. Accordingly, Company is granted an extension of time of 60 days from the date of this letter to file Form 8832 with the appropriate service center, to have its election effective c. A copy of this letter should be attached to the election. A copy is enclosed for that purpose.

Except as specifically set forth above, we express no opinion concerning the federal income tax consequences of the facts described above under any other provisions of the Code.

Pursuant to the power of attorney on file with this office, a copy of this letter is being sent to Company.

This ruling is directed only at the taxpayer who requested it. Section 6110(k)(3) of the Internal Revenue Code provides that it may not be used or cited as precedent.

Sincerely yours,
Paul F. Kugler
Associate Chief Counsel
(Passthroughs and Special Industries)

Enclosures (2): Copy of this letter Copy for § 6110 purposes