PLR 200140066: Foreign entity gets more time to elect disregarded status

Plain-English summary

A foreign eligible entity missed the deadline to elect treatment as an entity disregarded from its owner for U.S. federal tax purposes. It requested discretionary relief under the § 301.9100 regulations. The IRS found the requirements for that relief satisfied and gave the entity 60 days from the letter to file Form 8832, with the election effective from its incorporation date. The ruling addressed the filing deadline and did not decide other tax consequences.

Ruling snapshot

• Question: Could the entity make a late election to be disregarded for federal tax purposes?
• Outcome: Approved: file Form 8832 within 60 days.
• 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: 200140066
Washington, DC 20224
Release Date: 10/5/2001
Index Number: 9100.00-00
Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:B01-PLR-124451-01
Date:
July 9, 2001

X
=

Country =

Date 1 =

This letter responds to a letter, dated April 13, 2001, written on behalf of X, requesting a ruling that X be granted an extension of time under section 301.9100-3 of the Procedure and Administration Regulations to file an election under section 301.7701-3(c) to be treated as a disregarded entity for federal tax purposes.

FACTS

According to the information submitted, X is a Country entity incorporated on Date 1. X is an entity that is eligible to elect, under section 301.7701-3(c) of the Procedure and Administration Regulations, to be treated as an entity separate from its owner for federal income tax purposes. However, X failed to timely elect to be treated as a disregarded entity.

LAW AND ANALYSIS

Section 301.7701-3(b)(2) provides guidance on the classification of a foreign eligible entity for federal tax purposes. Generally, a foreign eligible entity is treated as an association taxable as a corporation if all members have limited liability, unless the entity makes an election to be treated otherwise. If a foreign eligible entity has only one owner, it may elect to be treated as a disregarded entity pursuant to the rules in section 301.7701-3(c). Section 301.7701-3(c) provides that an entity classification election must be filed on Form 8832 and can be effective up to 75 days prior to the date the form is filed or up to 12 months after the date on which the form is filed.

Under section 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. Section 301.9100-1(b) defines the term "regulatory election" as including an election whose deadline is prescribed by a regulation published in the Internal Revenue Bulletin.
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PLR-124451-01

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

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

Requests for relief under section 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).

CONCLUSION

Based solely on the facts submitted and the representations made, the requirements of section 301.9100-3 have been satisfied. As a result, X is granted an extension of time to elect to be treated as a disregarded entity for federal tax purposes effective Date 1. The election should be made by following the procedure for filing Form 8832 within 60 days following the date of this letter. A copy of this letter should be attached to the election.

Except as specifically set forth above, no opinion is expressed or implied as to the federal income tax consequences of the transactions described above under any other provision of the code.

This ruling is directed only to the taxpayer on whose behalf it was requested.
Section 6110(k)(3) 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 your authorized representative.

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