PLR 200520007: Late dual resident loss elections and certifications allowed

Plain-English summary

A corporation relied on its CPA firm to prepare consolidated tax returns but omitted elections, agreements, and annual certifications for an entity under the dual resident corporation loss rules. The IRS found that the corporation met the standards for discretionary filing relief. It gave the corporation 45 days to file the documents specified in Schedule A. The IRS expressly left open whether the corporation was otherwise eligible to file them and whether the entity's liquidation and asset disposition triggered a tax consequence under the cited regulation.

Ruling snapshot

• Question: Could the corporation file omitted dual resident loss elections and annual certifications after the deadline?
• Outcome: A 45 day extension was granted for the Schedule A filings; underlying eligibility was not decided.
• Key authorities: Treas. Reg. §§ 1.1503-2(g)(2), 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200520007
[Third Party Communication:
Release Date: 5/20/2005
Date of Communication: Month DD, YYYY]
Index Number: 9100.22-00, 1503.04-04
Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:INTL
In Re: PLR-142194-04
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Date:
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February 15, 2005
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LEGEND

Taxpayer = ----------------------------------------------------------------------------------------------
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Entity = ----------------------------------
Individual = --------------------------
A
Individual = ------------------------
B
CPA Firm = --------------------------

Dear -------------------

This replies to a letter dated July 30, 2004, in which Taxpayer requests an extension of time under Treas. Reg. § 301.9100-3 to file the election and agreement described in
§ 1.1503-2(g)(2)(i) and the annual certification described in §1.1503-2(g)(2)(vi) with respect to Entity in accordance with Schedule A, which is attached to and made a part of this ruling letter. 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.

Individual A is the chief financial officer of Taxpayer, and Individual B is a partner with CPA Firm. Individual B is responsible for coordinating all of the tax service that CPA Firm provides to Taxpayer.

PLR-142194-04
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CPA Firm prepared Taxpayer’s U.S. federal consolidated income tax return for the tax years at issue in this ruling letter. Taxpayer relied on CPA Firm to advise it about necessary elections that were required to be filed with these tax returns. The facts submitted and the affidavits of Individual A and B describe the circumstances that led to the discovery that the election agreements and the annual certifications were not attached to the respective tax returns of Taxpayer, and set forth the reasons for their omission.

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 and agreement described in § 1.1503-2(g)(2)(i), and the annual certification described in § 1.1503-2(g)(2)(vi) are regulatory elections 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 and agreement described in
§ 1.1503-2(g)(2)(i) and the annual certification described in §1.1503-2(g)(2)(vi) with respect to Entity in accordance with Schedule A.

The granting of an extension of time is not a determination that Taxpayer is otherwise eligible to file the elections and agreements, and the annual certifications.
§ 301.9100-1(a).

A copy of this ruling letter should be associated with the elections and agreements, and the annual certifications.

PLR-142194-04
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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. Specifically, no opinion is expressed as to whether the liquidation of Entity and the disposition of its assets is a triggering event under § 1.1503-2(g)(2)(iii)(A)(5).

Pursuant to a power of attorney on file in this office, a copy of this ruling letter is being furnished to Taxpayer and the other authorized representative.

Sincerely,

Associate Chief Counsel (International)

By: /s/ Allen Goldstein
Allen Goldstein
Reviewer

Enclosures:
Schedule A
Copy for 6110 purposes

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SCHEDULE A

A = Ruling requested to file the election and agreement described in § 1.1503-2(g)(2)(i).

B = Ruling requested to file the annual certification described in § 1.1503-2(g)(2)(vi).

   Entity           -------------          -------------             -------------

--------------------- A A and B (with A and B (with
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respect to the --------- respect to the ---------
-------- loss) ----------------------------
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