PLR 200503019: LLC gets more time to elect corporate tax classification

Plain-English summary

A single-member LLC intended to elect treatment as a corporation for federal tax purposes from its formation date, but it failed to file Form 8832 on time. The IRS found that the requirements for discretionary filing relief were met. It gave the LLC 60 days from the ruling date to file the election and make it effective from the earlier formation date. The letter addresses the filing deadline only and expresses no opinion on other federal tax consequences.

Ruling snapshot

• Question: Could the LLC file a late entity classification election effective on its formation date?
• Outcome: Approved: 60 days to file Form 8832 with the ruling attached.
• 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: 200503019
Release Date: 01/21/2005
Index Number: 7701.00-00, 9100.31-00

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CC:PSI:2 – PLR-142198-04
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Date:
October 6, 2004

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Legend

X: ---------------------------------------------
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Y: ------------------------
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State 1: -------------

State 2: --------

d1: ----------------------

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

This responds to your letter dated August 5, 2004, and subsequent correspondence submitted on behalf of X, requesting that the Service grant X an extension of time to elect to be treated as an association taxable as a corporation under § 301.7701-3(c) of the Procedure and Administration Regulations.

The information submitted states that X is a limited liability company formed under the laws of State 1 on d1. X is wholly owned by Y, a corporation formed under

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the laws of State 2. Y is wholly owned by Z, a corporation formed under the laws of State 1. Z intended that X elect under § 301.7701-3(c) to be treated as an association taxable as a corporation effective d1. However, X inadvertently failed to timely file a Form 8832, Entity Classification Election.

Section 301.7701-3(b)(1) provides guidance on the classification of a domestic eligible entity for federal tax purposes. Generally, a domestic eligible entity is disregarded as an entity separate from its owner if it has a single owner unless the entity elects otherwise. To elect to be classified other than as provided in § 301.7701- 3(b), an eligible entity must file a Form 8832, with the service center designated on that form.

Section 301.7701-3(c) provides that an entity classification election must be filed on Form 8832 and can be effective up to seventy-five (75) days prior to the date the form is filed or up to twelve (12) months after the date on which the form is filed.

Section 301.9100-1(c) provides that 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 Internal Revenue Code except subtitles E, G, H, and I. Section 301.9100-1(b) defines the term “regulatory election” as an election whose due date is prescribed by a regulation published in the Federal Register or a revenue ruling, revenue procedure, notice, or announcement published in the Internal Revenue Bulletin.

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 the election.

Section 301.9100-2 provides the rules governing automatic extensions of time for making certain elections.

Section 301.9100-3 provides the standards the Commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of § 301.9100-2. Under § 301.9100-3, a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the Commissioner that (1) the taxpayer acted reasonably and in good faith, and (2) granting relief will not prejudice the interests of the government.

Based solely on the information submitted and the representations made, we conclude that the requirements of § 301.9100-1 and § 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 file a Form 8832 with the appropriate service center and elect to treat X as an

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association taxable as a corporation effective d1. A copy of this letter should be attached to the Form 8832. A copy is enclosed for that purpose.

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

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

Pursuant to a power of attorney on file with this office, a copy of this letter is being sent to X’s authorized representatives.

Sincerely,

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

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