PLR 200333021: Partnership gets time to elect corporate tax treatment

Plain-English summary

A corporation converted into a general partnership under state law but intended to keep its federal corporate tax classification. It failed to file Form 8832 by the normal deadline. The IRS found that the entity met the requirements for late election relief under § 301.9100-3. It granted 60 days to file Form 8832, effective from the date of the state law conversion.

Ruling snapshot

• Question: May the entity make a late election to remain classified as a corporation for federal tax purposes?
• Outcome: Approved: 60 days to file Form 8832.
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury

Number: 200333021
Washington, DC 20224
Release Date: 8/15/2003
Index Number: 9100.31-00 Person to Contact:

Telephone Number:

Refer Reply To:
CC:PSI:Br.1-PLR-167576-02
Date:
May 6 2003

X
=

State A =

Date 1 =

Date 2 =

Dear
:

This letter responds to a letter dated November 15, 2002, written on behalf of X requesting a ruling, under section 301.9100-3 of the Procedure and Administration Regulations, that X be granted an extension of time to elect to be treated as an association taxable as a corporation for federal tax purposes under section 301.7701-3(c).

FACTS

According to the information submitted, X, a corporation, was formed on Date 1.
On Date 2, X converted under State A law to a general partnership. X intended to continue to be treated as a corporation for federal tax purposes, but inadvertently failed to timely file a Form 8832, Entity Classification Election.

LAW AND ANALYSIS

Section 301.7701-3(a) provides, in part, that a business entity that is not classified as a corporation under section 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) (an eligible entity) can 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.

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PLR-167576-02

Section 301.7701-3(c)(1)(i) provides, in part, that an eligible entity may elect to be classified other than as provided under section 301.7701-3(b) by filing Form 8832, Entity Classification Election, with the service center designated on the form. Section 301.7701-3(b)(1) provides that unless the entity elects otherwise, a domestic eligible entity is (i) A partnership if it has two or more members; or (ii) Disregarded as an entity separate from its owner if it has a single owner.

Section 301.7701-3(c)(1)(iii) provides, in part, that an election made under section 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 section 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.

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 an election. Section 301.9100-2 provides automatic extension of time for making certain elections. Section 301.9100-3 provides extensions of time for making elections that do not meet the requirements of section 301.9100-2. Requests for relief under section 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.

CONCLUSIONS

Based solely on the facts submitted and the representations made, we conclude that X has satisfied the requirements of section 301.9100-3. As a result, X is granted an extension of time of sixty (60) days from the date of this letter to file a properly executed Form 8832 with the appropriate service center, effective Date 2. A copy of this letter should be attached to the election and is enclosed for that purpose.

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

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PLR-167576-02

This ruling is directed only to the taxpayer 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 X’s authorized representative.

Sincerely,

Heather C. Maloy
Associate Chief Counsel
(Passthroughs and Special Industries)

Enclosures (2)
Copy of this letter
Copy for section 6110 purposes