PLR 200306007: Company granted more time to elect corporate tax classification

Plain-English summary

A business entity intended to be treated as an association taxable as a corporation but did not timely file Form 8832 because of inadvertence. The IRS determined that the requirements for relief under the extension regulations were satisfied. It granted the company 60 additional days from the letter date to make the election effective on the specified date. The company had to file Form 8832 with the appropriate service center and attach a copy of the ruling. The ruling addressed only this extension and expressed no opinion on other federal income tax consequences.

Ruling snapshot

• Question: May the company receive additional time to elect association treatment under the entity classification regulations?
• Outcome: Approved, with a 60-day extension and filing conditions.
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-1 through 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200306007
Washington, DC 20224
Release Date: 02/7/2003
Index Number: 9100.31-00
Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:3 PLR-136570-02
Date:
29 October 2002

Legend

Partnership:

Shareholder:

Date:

Dear :

This letter responds to a letter from your authorized representative dated June 26, 2002, requesting an extension of time for Company to elect under § 301.7701-3(c) of the Procedure and Administration Regulations to be treated as an association taxable as a corporation. Company represents the following facts.

Shareholder intended that Company be treated as a corporation effective Date.
However, due to inadvertence, Company did not file Form 8832, Entity Classification 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) may elect its classification for federal tax purposes as provided in this section. An eligible entity with a single owner may elect to be classified as an association (and thus a corporation under § 301.7701-2(b)(2)) or to be disregarded as an entity separate from its owner. 2 PLR-136570-02

Section 301.7701-3(b)(1)(ii) provides in general that, unless it elects otherwise, a domestic eligible entity with a single owner is disregarded as an entity separate from its owner.

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 can not be more than 75 days prior to the date on which the election is filed and can not be more than 12 months after the date on which the election is filed.

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 on the information submitted and representations made, Company has established that the requirements of §§ 301.9100-1 and 301.9100-3 are satisfied. Consequently, Company is granted an extension of 60 days from the date of this letter for electing under § 301.7701-3 to be treated as an association taxable as a corporation effective Date. Company must file Form 8832 within the extension period with the appropriate service center, with a copy of this letter attached. 3 PLR-136570-02

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.

In accordance with the power of attorney on file with this office, we are sending a copy of this letter to your authorized representative.

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

Sincerely,

/s/

HEATHER C. MALOY
Associate Chief Counsel
(Passthroughs and Special Industries)

Enclosures: Copy of this letter
Copy for § 6110 purposes