PLR 200114031: Late election to be taxed as a corporation

Plain-English summary

A domestic entity planned to elect treatment as an association taxable as a corporation but did not file the election. It asked the IRS for extra time under the regulatory election relief rules. Based on the submitted facts, the IRS found that the relief requirements were met and granted an extension to file Form 8832 within 60 days of the letter. The election could take effect retroactively from the entity's stated establishment date. The IRS did not rule on other federal tax consequences of the entity's transactions.

Ruling snapshot

• Question: May the entity make a late classification election effective from its establishment date?
• Outcome: Approved, with Form 8832 due within 60 days
• Key authorities: Treas. Reg. §§ 301.7701-3(c), 301.9100-1, 301.9100-3

Full text (IRS public release)

INTERNAL REVENUE SERVICE

Number: 200114031
Release Date: 4/6/2001
Index Nos: 9100.00-00, 7701.00-00

CC:PSI:2 - PLR-118108-00

January 8, 2001

X
=

Date 1
=

Dear
This is in reply to your letter dated August 28, 2000, submitted on behalf of X, requesting a ruling that X be given an extension of time to elect to be classif ied as an association taxable as a corporation for federal tax purposes.

The information submitted states that X, a domestic entity, was established on Date 1. X planned to file an election pursuant to § 301.7701-3(c) of the Procedure and Administration Regulations to be classified as an association for federal tax purposes. However, no such election was made.

Section 301.7701-3(a) provides 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. 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 Internal Revenue 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 as a partnership.

To elect to be classified other than as provided in § 301.7701-3(b), an eligible entity must file Form 8832, Entity Classification Election, with the designated service center. Section 301.7701-3(c)(1)(i). An election will be effective on the date specified on the Form 8832 or on the date filed if no such date is specified. The effective date specified on the Form 8832 cannot be more than 75 days prior to the date the election is filed. Section 301.7701-3(c)(2)(iii).

Section 301.9100-1(c) provides that the Commissioner has discretion to grant a reasonable extension of time under the - 2 -

rules set forth in § 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 Bulletin.

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. Section 301.9100- 3(a).

Based solely on the facts submitted and representations made, we conclude that the requirements of § 301.9100-3 have been satisfied. As a result, X is granted an extension of time retroactive to Date 1, to elect to be treated as an association until 60 days following the date of this letter. A copy of this letter should be attached to the Form 8832.
Except as specifically ruled above, we express no opinion concerning the federal tax consequences of the transactions described above under any other provisions of the Code.

This ruling is directed only to the taxpayers who requested it. Section 6110(k)(3) provides that it may not be used or cited as precedent.

Sincerely,
PAUL F. KUGLER
Associate Chief Counsel
(Passthroughs and Special
Industries)

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