PLR 200218018: Foreign eligible entity receives more time to elect corporate classification

Plain-English summary

A foreign eligible entity formed as a limited partnership intended to be classified as an association taxable as a corporation. It did not file Form 8832 by the required deadline and requested additional time to make the election effective for the relevant tax year. The IRS concluded that the requirements for relief under § 301.9100-3 were satisfied. It granted 60 days from the letter date to file Form 8832 and make the election under § 301.7701-3(c). The ruling expressed no opinion on other federal tax consequences.

Ruling snapshot

• Question: May the entity receive more time to file Form 8832 and elect classification as an association taxable as a corporation?
• Outcome: Approved: a 60 day extension was granted under the regulatory election relief rules.
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, and 301.9100-1 through 301.9100-3; 26 U.S.C. § 6110(k)(3).

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200218018
Washington, DC 20224
Release Date: 5/3/2002
Index Number: 9100.31-00
Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:B02 - PLR-143895-01
Date:
January 30, 2002

P
=

Country =

Jurisdiction =

D1
=

GP
=

LP
=

X
=

Parent =

This is in reply to your letter dated August 16, 2001, and subsequent correspondence submitted on behalf of P, requesting a ruling that P be given an extension of time to elect under § 301.7701-3(c) of the Procedure and Administration Regulations to be classified as an association taxable as a corporation for federal tax purposes.

The information submitted states that P is a limited partnership formed on D1 in Jurisdiction in Country. The limited partner of P is LP, and the general partner of P is GP. LP and GP are single member entities that are disregarded for federal tax purposes. X, a domestic corporation, is the owner of GP and LP. Parent, a domestic corporation, is the common parent of the affiliated group of corporations that includes X. P is a foreign eligible entity that is not required to be classified as a corporation for federal tax purposes. P intended to be classified as an association taxable as a 2

PLR-143895-01

corporation for federal tax purposes effective on D1. However, a Form 8832, Entity Classification Election, was not filed for P by the due date for the election.

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).

Section 301.7701-3(b)(2)(i) provides that unless a foreign eligible entity elects otherwise, the entity is: (A) a partnership if it has two or more members and at least one member does not have limited liability; (B) an association if all members have limited liability; or (C) disregarded as an entity separate from its owners if it has a single owner that does not have limited liability.

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 rules set forth in § 301.9100-3 to make a regulatory election. Section 301.9100-1(b) defines a regulatory election to include an election whose due date is prescribed by a regulation published in the Federal Register.

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, P is granted an extension of time of 60 days from the date of this letter to file Form 8832 with the appropriate service center and elect under § 301.7701-3(c) to be classified as an association taxable as a corporation for federal tax purposes effective for the taxable year beginning on D1. 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. 3

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

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