PLR 200230020: Partnership gets more time to elect corporate classification

Plain-English summary

A limited partnership's owners intended to elect corporate tax classification from a specified date, but Form 8832 was not filed on time. The partnership requested relief from the filing deadline. The IRS found that the requirements for discretionary election relief were met and gave it 60 days from the ruling date to file Form 8832 for the requested effective date. The ruling expressed no opinion on other tax consequences of the transaction.

Ruling snapshot

• Question: May the partnership file a late election to be taxed as a corporation?
• Outcome: Approved: a 60 day extension to file Form 8832
• Key authorities: Treas. Reg. §§ 301.7701-3(c) and 301.9100-3

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200230020
Washington, DC 20224
Release Date: 7/26/2002
Index Number: 9100.00-00
Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:2 - PLR-101683-02
Date:
April 23, 2002

X
=

A
=

B
=

D1
=

D2
=

State =

Dear :

This is in reply to the letter dated January 4, 2002, submitted on behalf of X by X’s authorized representative, requesting that X be given an extension of time under § 301.9100 of the Procedure and Administrative Regulations in which to elect to be treated as an association taxable as a corporation for federal tax purposes effective D2.

The information submitted states that X is a limited partnership formed under the laws of State on D1. A and B, the owners of X, intended for X to elect to be treated as an association taxable as a corporation as of D2. However, a Form 8832, Entity Classification Election, was not filed for X 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 as provided in § 301.7701-3. 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)(1) provides, in part, that except as provided in § 301.7701-3(b)(3), unless the entity elects otherwise, a domestic eligible entity is disregarded as an entity separate from its owner if it has a single owner.

-2-
PLR-101683-02

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 the 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, or a revenue ruling, revenue procedure, notice, or announcement published in the Internal Revenue Bulletin.

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 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 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 D2. A copy of this letter should be attached to the Form 8832.

Except as specifically set forth 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 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.

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

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