PLR 200205005: LLC receives more time to elect corporate tax status

Plain-English summary

A business reorganized from a corporation into an LLC and intended to keep corporate tax treatment. It missed the deadline to file Form 8832, which elects an entity's federal tax classification. The IRS found good cause and granted an extension under Treasury Regulation § 301.9100-3. The business had 60 days from the ruling date to file the election, effective from its reorganization date, with a copy of the ruling attached. The decision addresses the filing deadline for the classification election, not other tax effects of the reorganization.

Ruling snapshot

• Question: May the LLC file a late election to be classified as a corporation from its reorganization date?
• Outcome: Approved, with 60 days to file Form 8832.
• Key authorities: Treas. Reg. §§ 301.7701-3(b), (c), 301.9100-1, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200205005
Washington, DC 20224
Release Date: 2/1/2002
Index Number: 9100.31-00
Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:3 PLR-113413-01
Date:
October 22, 2001

LEGEND:

X
=

D1
=

State
=

Dear

This letter responds to a letter dated February 22, 2001, written on behalf of X, requesting an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to file an election under § 301.7701-3(c).

FACTS

According to the information submitted, the predecessor of X was organized as a State corporation and at all times was taxed as a C corporation for federal income tax purposes. On D1, X decided to reorganize into an LLC. X intended to file an election on Form 8832, Entity Classification Election, to be classified as a corporation effective D1. However, the Form 8832 was not filed timely.

X requests a ruling that it will be recognized as a corporation effective D1.

LAW AND ANALYSIS

Section 301.7701-3(b)(1)(i) provides that, unless the entity elects otherwise, a domestic eligible entity is classified as a partnership if it has two or more members. Section 301.7701-3(c)(i) provides that an eligible entity may elect to be classified as

PLR-113413-01
2

other than its default classification in § 301.7701-3(b) by filing Form 8832 with the appropriate service center.

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.

Section 301.9100-1(b) defines the term "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.

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 a regulatory 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.

CONCLUSION

In the present situation, based on the information submitted and the representations made, good cause has been shown and the other requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. Consequently, X is granted an extension of time for making the § 301.7701-3(c) election effective D1 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. One is enclosed for that purpose.

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

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

Under the power of attorney on file with this office, we are sending a copy of this letter to X’s authorized representative.

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

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