PLR 200121053: LLC receives more time to elect corporate tax status

Plain-English summary

A two member limited liability company wanted to be taxed as a corporation from the start of its first tax year. It missed the deadline to file Form 8832 with that effective date, so the default entity classification rules would otherwise apply. The IRS found that the requirements for discretionary relief under Treas. Reg. § 301.9100-3 were satisfied. It gave the company until 60 days after the letter date to file the corporate classification election with the specified IRS service center.

Ruling snapshot

• Question: May the LLC make a late election to be taxed as a corporation from its stated start date?
• Outcome: Approved a 60 day extension from the letter date.
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200121053
Washington, DC 20224
Release Date: 5/25/2001
Index Number: 9100.31-00
Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:2 - PLR-113978-00
Date:
February 26, 2001

X =

D1 =

State =

Y =

Dear
:

This letter responds to your
, 2000, and
subsequent correspondence, written on behalf of X, requesting that X be granted an extension of time to file an election under
§ 301.7701-3(c) of the Procedure and Administration Regulations to be treated as a corporation for its taxable year beginning D1.
The information submitted states that X was organized on D1 as a domestic limited liability company under the laws of State with two members. X did not file a Form 8832, Entity Classification Election, within 75 days of D1.
Section 301.7701-3(b)(1) provides guidance on the classification of domestic eligible entities for federal tax purposes. Generally, a domestic eligible entity with two or more members is classified as a partnership unless the entity elects otherwise, while a domestic eligible entity with a single owner is disregarded as a separate entity unless the entity elects otherwise.

Section 301.7701-3(c)(1)(i) provides 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 appropriate service center. Under § 301.7701- 3(c)(1)(iii), the election under § 301.7701-3(c)(1)(i) will be effective on the date specified on the Form 8832 or on the date filed if no such date is specified on the form. The effective date specified on Form 8832 cannot be more than 75 days prior to the date on which the election is filed and cannot be more than 12 months after the date on which the election is filed.

Section 301.9100-1(c) provides that the Commissioner has

-2-
Ms. Pamela Green Boyer
discretion to grant a 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 Bulletin.

Section 301.9100-2 provides the rules governing automatic extensions of time for making certain elections.

Section 301.9100-3 sets forth the standards the Commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of § 301.9100-2. Under § 301.9100-3, a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the Commissioner that (1) the taxpayer acted reasonably and in good faith, and (2) granting relief will not prejudice the interests of the government.

Based on the information submitted and the representations made, we conclude that the requirements of § 301.9100-3 have been satisfied. As a result, X is granted an extension of time for making the election to be classified as an association taxable as a corporation for federal tax purposes until 60 days following the date of this letter. A copy of this letter should be attached to the Form 8832 and filed with the Y service center.
Except as specifically set forth above, no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the Code.

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

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

Sincerely yours,
Paul F. Kugler
Associate Chief Counsel
(Passthroughs and Special Industries)
Enclosures: 2
Copy of this letter
Copy for § 6110 purposes