PLR 200444011: Entity receives time to elect corporate tax treatment

Plain-English summary

An entity wanted to be taxed as a corporation from the date it was formed, but it inadvertently missed the deadline for the entity classification election. The IRS concluded that the requirements for discretionary filing relief were met. It granted 60 days from the ruling letter to file Form 8832 electing treatment as an association taxable as a corporation effective from formation. The letter did not decide any other tax consequences.

Ruling snapshot

• Question: Could the entity make a late election for corporate tax treatment effective from its formation date?
• Outcome: Approved; a 60-day extension was granted to file Form 8832.
• 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
Washington, DC 20224
Number: 200444011
Third Party Communication: None
Release Date: 10/29/04
Date of Communication: Not Applicable
Index Number: 9100.31-00
Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:PSI:B01
PLR-130711-04
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Date:
July 12, 2004

Legend:

X = -------------------------------------------------------
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D1 = -------------------

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

This letter responds to your letter dated May 31, 2004, submitted on behalf of X, requesting a ruling that X be granted an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to file an election under § 301.7701-3(c) to be treated as an association taxable as a corporation for federal tax purposes.

Facts

According to the information submitted, X was formed on D1. X intended to elect to be treated as an association taxable as a corporation effective D1. However, X inadvertently failed to timely file the proper election.

Law and Analyisis

Section 301.7701-3(b)(2) provides guidance on the classification of a domestic eligible entity for federal tax purposes. Generally, a domestic eligible entity is treated as a partnership if it has two or more members, unless the entity makes an election to be classified otherwise. A domestic eligible entity with two or more members may elect to be classified as an association taxable as a corporation pursuant to the rules under § 301.7701-3(c). Section 301.7701-3(c) provides that an entity classification election must be filed on Form 8832 and can be effective up to 75 days prior to the date the form is filed or up to 12 months after the date on which the form is filed.

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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 6 months except in the case of a taxpayer who is abroad), under all subtitles of the Code, except subtitles E, G, H, and I. Section 301.9100-1(b) defines the term “regulatory election” as including an election whose deadline is prescribed by a regulation published in the Internal Revenue Bulletin.

Sections 301.9100-1 through 301.9100-3 provide the standards that the Commissioner will use to determine whether to grant an extension of time to make an 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).

Conclusion

Based solely on the facts 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 make an election to be treated as an association taxable as a corporation for federal tax purposes effective D1. X should make the election by filing a properly executed Form 8832 with the appropriate service center. A copy of this letter should be attached to the form.

Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.

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In accordance with 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 § 6110 purposes