PLR 200716018: Taxpayer gets more time for dual consolidated loss filings

Plain-English summary

A taxpayer reported dual consolidated losses from an interest in a foreign partnership on two years of U.S. returns. It failed to attach the required elections and agreements for both years and an annual certification for the second year, primarily because of changes in its tax department. The IRS found that the taxpayer met the standards for a discretionary extension under Treasury Regulation § 301.9100-3. It gave the taxpayer 60 days from the ruling date to file the missing documents. The extension did not determine whether the taxpayer was otherwise eligible for the elections, agreements, or certification.

Ruling snapshot

• Question: May the taxpayer file late dual consolidated loss elections, agreements, and an annual certification?
• Outcome: Approved; 60-day extension for the specified filings.
• Key authorities: Treas. Reg. §§ 1.1503-2T(g)(2), 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200716018
Release Date: 4/20/2007
Index Number: 9100.22-00, 1503.04-04

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Person To Contact:
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Telephone Number:
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Refer Reply To:
CC: INTL

• PLR-152148-06
  Date:
  January 16, 2007

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Taxpayer = -----------------------------------------
EIN: ----------------
Entity 1 = ---------------------------------------------------------------
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Year 1 = -------
Year 2 = -------
aa = -----------------
bb = -----------------

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

This is in response to a letter from your representative dated June 28, 2006, requesting an extension of time under Treas. Reg. § 301.9100-3 to file the elections and agreements required under Treas. Reg. § 1.1503-2T(g)(2)(i) for Years 1 and 2 and the annual certification required under Treas. Reg. § 1.1503-2T(g)(2)(vi)(B) for Year 2. Additional information was received in a letter dated November 6, 2006.

The ruling contained in this letter is predicated upon facts and representations submitted by 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.

In Years 1 and 2, Taxpayer owned an interest in Entity 1 that was a hybrid entity separate unit as described in Treas. Reg. § 1.1503-2(c)(4). Entity 1 is a foreign partnership in which Taxpayer holds an indirect interest through another foreign partnership. Entity 1 incurred dual consolidated losses of amounts aa and bb for Years 1 and 2, respectively, that are attributable to Taxpayer’s interest in Entity 1. Taxpayer reported those losses on its U.S. income tax returns for Years 1 and 2. However,

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In re: PLR-152148-06

Taxpayer failed to include the elections and agreements required under Treas. Reg. § 1.1503-2T(g)(2)(i) for Years 1 and 2 and the annual certification required under Treas. Reg. § 1.1503-2T(g)(2)(vi)(B) for Year 2 with those returns primarily because of key personnel changes in Taxpayer’s tax department in those years.

Taxpayer represents that it filed this application for relief before the Internal Revenue Service discovered the failure to file the elections and agreements required under Treas. Reg. § 1.1503-2T(g)(2)(i) for Years 1 and 2 and the annual certification required under Treas. Reg. § 1.1503-2T(g)(2)(vi)(B) for Year 2. Treas. Reg. § 301.9100- 3(b)(1)(i).

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, 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 Treas. Reg. § 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 the evidence (including affidavits described in Treas. Reg. § 301.9100-3(e)) to establish to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice the interests of the Government.

In the present situation, the elections and agreements required under Treas. Reg. § 1.1503-2T(g)(2)(i) for Years 1 and 2 and the annual certification required under Treas. Reg. § 1.1503-2T(g)(2)(vi)(B) for Year 2 are regulatory elections as defined in Treas. Reg. § 301.9100-1(b). Therefore, the Commissioner has discretionary authority under Treas. Reg. § 301.9100-1(c) to grant Taxpayer an extension of time, provided that Taxpayer satisfies the rules set forth in Treas. Reg. § 301.9100-3(a).

Based on the facts and information submitted, we conclude that Taxpayer satisfies Treas. Reg. § 301.9100-3(a). Accordingly, Taxpayer is granted an extension of time of 60 days from the date of this ruling letter to file the elections and agreements required under Treas. Reg. § 1.1503-2T(g)(2)(i) for Years 1 and 2 and the annual certification required under Treas. Reg. § 1.1503-2T(g)(2)(vi)(B) for Year 2 for the dual consolidated losses attributable to Taxpayer’s interest in Entity 1 for Years 1 and 2.

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In re: PLR-152148-06

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

A copy of this ruling letter should be associated with the election agreements and the annual certifications that are the subject of this ruling.

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 Taxpayer’s authorized representatives.

Sincerely,

Associate Chief Counsel (International)

By:
Richard L. Chewning
Senior Counsel
Office of the Associate Chief Counsel (International)

Enclosure:
Copy for 6110 purpose-s