PLR 200409031: IRS declines separate ruling on bonus depreciation election

Plain-English summary

A corporation omitted an election statement when it filed a return that did not claim 30 percent first-year depreciation for certain qualified property. It requested extra time to elect out of that allowance. The IRS said Revenue Procedure 2003-50 appeared to cover the request and described that procedure's deemed election rule. It declined to issue a separate ruling and began refunding the user fee. The letter does not determine that the taxpayer met every condition of the revenue procedure.

Ruling snapshot

• Question: Is separate late-election relief needed for the omitted depreciation election statement?
• Outcome: Other: the IRS declined to rule because published relief appeared applicable.
• Key authorities: IRC § 168(k)(2)(C)(iii); Rev. Proc. 2003-50.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200409031
Release Date: 2/27/04
Index Number: 9100.04-00

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Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:PSI:B06 – PLR-133426-03
In Re: Request for an Extension of Time to Date:
Make a Regulatory Election
November 21, 2003
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Taxpayer = -----------------------
x = ------------------
y = ---------------------------
z = ---------------------------

Dear ------------:

This letter responds to a letter submitted by Taxpayer, dated x, requesting a letter ruling under § 301.9100-3 of the Procedure and Administration Regulations to extend the time to make the election provided under section 168(k)(2)(C)(iii) of the Internal Revenue Code, not to deduct the 30-percent additional first year depreciation for qualified property placed in service in Taxpayer’s taxable year that included September 11, 2001.

Taxpayer represents that Taxpayer files a consolidated federal income tax return and the return for the taxable year ended y, which included September 11, 2001, was timely filed. On this return, Taxpayer did not deduct the 30-percent additional first year depreciation for all qualified property placed in service during the taxable year ended y, but inadvertently failed to attach the election out statement to the return.

Rev. Proc. 2003-50, 2003-29 I.R.B. 119, amplified and modified Rev. Proc. 2002- 33, 2002-1 C.B. 963, by providing additional time for any taxpayer that timely filed its federal income tax return for the taxable year that included September 11, 2001, to, among other things, elect not to deduct the 30-percent additional first year depreciation for a class of property that is qualified property or qualified New York Liberty Zone property placed in service after September 11, 2001, during the taxable year that 2 PLR-133426-03

included September 11, 2001. Section 3.02(2) of Rev. Proc. 2003-50 provides that such a taxpayer will be deemed as making the election not to deduct the 30-percent additional first year depreciation for a class of property that is qualified property or qualified New York Liberty Zone property placed in service by the taxpayer after September 10, 2001, during the taxable year that included September 11, 2001, if the taxpayer, on the federal income tax return for that taxable year, did not claim the 30- percent additional first year depreciation for that class of property but did claim depreciation, and does not file an amended federal tax return (or a qualified amended return) or a Form 3115, Application for Change in Accounting Method, within the time and the manner prescribed in section 3.01 of Rev. Proc. 2003-50 to claim the 30- percent additional first year depreciation for the class of property for the taxable year that included September 11, 2001.

Based solely on the information provided in Taxpayer’s request and in Taxpayer’s letter dated z, we believe that Taxpayer’s request falls under Rev. Proc. 2003-50. Accordingly, we will not rule on Taxpayer’s request.

We have attached a copy of Rev. Proc. 2003-50. We are taking steps to refund Taxpayer’s user fee and it will be returned under separate cover.

We are sending a copy of this letter to the appropriate Internal Revenue Service official in the operating division that has examination jurisdiction of Taxpayer’s federal tax returns. If you have any questions regarding this matter, contact ---------------------.

Sincerely yours,

KATHLEEN REED

KATHLEEN REED
Senior Technician Reviewer, Branch 6
Office of Associate Chief Counsel
(Passthroughs and Special Industries)

Attachment (1) copy of Rev. Proc. 2003-50