PLR 200450025: Late dual consolidated loss election agreement allowed

Plain-English summary

A corporation used an entity's dual consolidated loss on its consolidated return, but its tax preparer failed to attach the required election agreement. The preparer later discovered the omission. The IRS found that the corporation met the requirements for regulatory election relief and granted 45 days from the letter's date to file the agreement under § 1.1503-2(g)(2)(i). The extension did not determine whether the corporation was otherwise eligible to make the election.

Ruling snapshot

• Question: Could the corporation file the omitted dual consolidated loss election agreement late?
• Outcome: Approved; a 45 day extension was granted.
• Key authorities: IRC § 1503; Treas. Reg. §§ 1.1503-2(g), 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200450025
Release Date: 12/10/04
Index Number: 9100.22-00, 1503.04-04

-----------------
Person To Contact:
----------------------------------------------- -----------------------, ID No. ------------- Telephone Number:
--------------------------------------------------- ---------------------
-----------------------------
Refer Reply To:
----------------------------
CC:INTL – PLR-124754-03
Date:
August 26, 2004

LEGEND

Taxpayer = ----------------------------------------------------------------------------------------------
-----------------------
Entity = ----------------------------------
Individual = ----------------
A
CPA Firm = ---------------------------------------- Date One = --------------------------

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

This replies to a letter dated April 8, 2003, in which Taxpayer requests an extension of time under Treas. Reg. § 301.9100-3 to file the election agreement described in
§1.1503-2(g)(2)(i) with respect to Entity for the tax year ended on Date One. Additional information was electronically transmitted on March 29, 2004. The information submitted for consideration is substantially as set forth below.

The ruling contained in this letter is predicated upon facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. This office has not verified any of the material submitted in support of the request for a ruling. Verification of the factual information, representations, and other data may be required as a part of the audit process.

PLR-124754-03
2

Individual A is a partner in CPA Firm, and is the engagement partner for the review of Taxpayer’s consolidated federal income return. The affidavit of Individual A and the facts submitted indicate that CPA Firm reviewed the tax return for the tax year ended on Date One, and CPA Firm signed the tax return as the preparer. Later, CPA Firm discovered that the election and agreement described in § 1.1503-2(g)(2)(i) was inadvertently not filed with the tax return for the tax year ended on Date One. The filing of the election and agreement was required by § 1.1503-2(g) of the income tax regulations in order for Taxpayer to properly claim the dual consolidated loss of Entity that was used in Taxpayer’s consolidated tax return for Date One.

Treas. Reg. § 301.9100 -1(b) provides that an election includes an application for relief in respect of tax, and defines a regulatory election as an election whose due date is prescribed by a regulation, a revenue ruling, revenue procedure, notice, or announcement.

Treas. Reg. § 301.9100-1(c) provides that the Commissioner has discretion to grant a taxpayer a reasonable extension of time, under the rules set forth in § 301.9100-3, to make a regulatory election under all subtitles of the Internal Revenue Code, except subtitles E, G, H, and I.

Treas. Reg. § 301.9100-3(a) provides that requests for relief subject to this section will be granted when the taxpayer provides evidence (including affidavits described in
§ 301.9100-3(e)) to establish to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith within the meaning of § 301.9100-3(b), subject to the conditions set forth in § 301.9100-3(b)(3), and the grant of relief will not prejudice the interests of the Government within the meaning of § 301.9100-3(c).

In the present situation, the election agreement described in § 1.1503-2(g)(2)(i) is a regulatory election as defined in § 301.9100-1(b). Therefore, the Commissioner has discretionary authority under § 301.9100-1(c) to grant Taxpayer an extension of time, provided that Taxpayer satisfies the standards for relief as set forth in § 301.9100-3.

Based on the facts and information submitted, we conclude that Taxpayer satisfies
§ 301.9100-3(a). Accordingly, Taxpayer is granted an extension of time of 45 days from the date of this ruling letter to file the election agreement described in §1.1503-2(g)(2)(i) with respect to Entity for the tax year ended on Date One.

The granting of an extension of time is not a determination that Taxpayer is otherwise eligible to file the election agreement. § 301.9100-1(a).

PLR-124754-03
3

A copy of this ruling letter should be associated with the election agreement.

This ruling is directed only to the taxpayer who requested it. I.R.C. § 6110(k)(3) provides that it may not be used or cited as precedent.

No ruling has been requested, and none is expressed, as to the application of any other section of the Code or regulations to the facts presented.

Pursuant to a power of attorney on file in this office, a copy of this ruling letter is being furnished to your authorized representatives.

Sincerely,

Associate Chief Counsel (International)

By: /s/ Allen Goldstein
Allen Goldstein
Reviewer

Enclosure:
Copy for 6110 purposes