PLR 200615008: Partnership gets more time to elect corporate tax treatment

Plain-English summary

A limited partnership intended to be taxed as a corporation from the date it was formed, but it did not file Form 8832 on time. It asked for an extension to make that entity classification election. The IRS found that the partnership met the requirements for discretionary relief under Treasury Regulation section 301.9100-3. The partnership received 60 days from the ruling date to file Form 8832 and elect corporate treatment effective on its formation date. The IRS expressed no view on other federal tax consequences.

Ruling snapshot

• Question: Could the partnership make a late election for corporate tax classification effective on its formation date?
• Outcome: Approved a 60 day extension to file Form 8832.
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200615008
Release Date: 4/14/2006
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:B02 – PLR-131894-05
Date:
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December 2, 2005

LP = --------------------------------------------------------
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GP = ---------------------------------------

A = -------------------------

d1 = --------------------

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

This letter responds to a letter dated June 8, 2005, and subsequent correspondence, submitted on behalf of LP by its authorized representative, requesting an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to elect to be treated as an association taxable as a corporation for federal tax purposes.

The information submitted states that LP is a limited partnership formed on d1.
A, an officer of GP, the general partner of LP, represents that LP was intended to be classified as an association taxable as a corporation for federal tax purposes effective d1. However, Form 8832, Entity Classification Election, was not filed timely for LP.

Section 301.7701-3(a) provides that a business entity that is not classified as a corporation under § 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) (an "eligible entity") can elect its classification for federal tax purposes. 2 PLR-131894-05

Section 301.7701-3(b)(1) provides that an eligible entity with at least two owners will be classified as a partnership unless it elects otherwise.

Section 301.7701-3(c)(1)(i) provides that to elect to be classified other than as provided in 301.7701-3(b), an eligible entity must file Form 8832 with the designated service center. Section 301.7701-3(c)(1)(iii) provides that an election made under § 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 cannot be more than 75 days prior to the date on which the election is filed and cannot be more than 12 months after the date on which the election is filed.

Section 301.9100-1(c) gives the Commissioner discretion to grant reasonable extensions of time to make regulatory elections under the rules of §§ 301.9100-2 and 301.9100-3. Under § 301.9100-1(b), a regulatory election includes an election whose due date is prescribed by a regulation published in the Federal Register, or a revenue ruling, revenue procedure, notice or an announcement published in the Internal Revenue Bulletin.

Section 301.9100-3 sets forth the standards which the Commissioner uses to determine whether to grant a discretionary extension of time. These standards indicate that the Commissioner should grant relief when the taxpayer provides evidence proving to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the Government.

Based solely on the facts submitted and representations made, we conclude that the requirements of ' 301.9100-3 have been satisfied. As a result, LP 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 be treated as an association taxable as a corporation for federal tax purposes effective d1. A copy of this letter should be attached to the Form 8832. A copy is included 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 Code.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that it may not be used or cited as precedent. 3 PLR-131894-05

In accordance with the power of attorney on file with this office, a copy of this letter is being sent to LP’s authorized representative.

Sincerely,
Heather C. Maloy
Associate Chief Counsel
(Passthroughs & Special Industries)

Enclosure (2)
Copy of this letter
Copy for § 6110 purposes cc-: