PLR 200228004: LLC receives extension to elect corporate classification

Plain-English summary

The members of a limited liability company intended to classify it as a corporation for federal tax purposes but did not file Form 8832. The IRS found that the requirements for discretionary election relief were met. It gave the company 60 days from the letter date to file Form 8832 and elect association status for the tax year beginning on the requested effective date. The extension does not determine whether the company otherwise qualifies to make that election.

Ruling snapshot

• Question: May the LLC file a late election to be treated as an association taxable as a corporation?
• 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
Department of the Treasury

Number: 200228004
Washington, DC 20224
Release Date: 7/12/2002
Index Number: 9100.31-00
Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:2-PLR-164890-01
Date:
March 29, 2002

Legend

LLC
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Date 1
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Date 2
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Dear
:

This letter responds to a letter dated November 7, 2001, submitted on behalf of LLC by its authorized representative, requesting an extension of time for LLC to elect under § 301.7701-3(c) of the Procedure and Administration Regulations to be treated as an association taxable as a corporation.

LLC represents the following facts. LLC was formed on Date 1. The members of LLC intended that LLC be treated as a corporation effective Date 2. However, Form 8832, Entity Classification Election, was not filed by LLC.

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) may elect its classification for federal tax purposes. An eligible entity with at least two members can elect to be classified as either an association (and thus a corporation under section 301.7701-2(b)(2)) or a partnership.

Section 301.7701-3(b)(1)(i) provides in general that, unless it elects otherwise, a domestic eligible entity with two or more members is a partnership.

Section 301.7701-3(c)(1)(i) provides in general that an eligible entity may elect to be classified other than as provided under § 301.7701-3(b) by filing Form 8832 with the applicable service center.

Section 301.7701-3(c)(1)(iii) provides that an election made under § 301.7701- 3(c)(1)(i) will be effective on the date specified by the entity on Form 8832 or on the date filed if no such date is specified on the election 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.

2
PLR-164890-01

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 Internal Revenue Code, except subtitles E, G, H, and I.

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 301.9100-1(a).

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. 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, LLC 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 Date 2. A copy of this letter should be attached to the Form 8832.

Except for the specific ruling above, we express or imply no opinion concerning the federal income tax consequences of the facts of this case under any other provision of the Code. Section 301.9100-1(a) provides that the granting of an extension of time for making an election is not a determination that the taxpayer is otherwise eligible to make the election.

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

Pursuant to the power of attorney on file with this office, a copy of this letter is being sent to LLC’s authorized representative.
Sincerely,
Paul F. Kugler
Associate Chief Counsel
(Passthroughs and Special Industries)
Enclosures:
Copy of this letter
Copy for 6110 purposes