PLR 200449004: Foreign company gets time for entity classification election

Plain-English summary

A foreign limited company wanted a U.S. tax classification different from its default classification, effective from its incorporation date. It had inadvertently missed the deadline to file Form 8832. The IRS found that the requirements for discretionary late election relief were met and granted 60 days from the letter to file the election with that effective date. The letter does not identify which alternative classification the company sought.

Ruling snapshot

• Question: May the company file a late entity classification election effective from incorporation?
• Outcome: Approved; Form 8832 must be filed within 60 days.
• Key authorities: Treas. Reg. §§ 301.7701-3(c), 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200449004
Release Date: 12/3/04
Index Number: 9100.31-00

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Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:PSI:B01 – PLR-104403-04
Date:
Aug 3 2004

X = -----------------------------------------------------
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Country A = -----------

Date 1 = ------------------

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

This letter responds to a letter dated December 30, 2003, and subsequent correspondence, 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 file an election under section 301.7701-3(c).

FACTS

According to the information submitted, X , a Country A limited company, was incorporated on Date 1. X desires to be treated as other than its default classification; however, due to inadvertence, X failed to file a timely election, Form 8832, Entity Classification Election, effective Date 1.

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 as provided in this

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PLR-104403-04

section. An eligible entity with a single owner can elect to be classified as either an association (and thus a corporation under section 301.7701-2(b)(2)) or a disregarded entity. An eligible entity with more than one owner can elect to be classified as either an association (and thus a corporation under section 301.7701- 2(b)(2)) or a partnership.

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 with the service center designated on the form.

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 representations made, we conclude that the requirements of § 301.9100-3 are satisfied. As a result, X is granted an extension of time of 60 days from the date of this letter to make an entity classification election by filing a Form 8832, effective Date 1, with the appropriate service center. A copy of this letter should be attached to the election. A copy of this letter is attached for this purpose.

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

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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.

In accordance with the Power of Attorney on file with this office, a copy of this letter is being mailed to the taxpayer.

Sincerely,

/s/ Heather C. Maloy

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

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

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