PLR 200726019: Annual loss certifications were unnecessary for a foreign branch

Plain-English summary

A taxpayer asked for extra time to file annual certifications for dual consolidated losses from a foreign branch of a disregarded entity. The IRS found that the losses belonged to the branch as a separate unit under the applicable regulation. That classification meant annual certifications were not required for those losses, so the taxpayer needed no filing extension.

Ruling snapshot

• Question: Was an extension needed to file annual certifications for the branch's dual consolidated losses?
• Outcome: No extension needed because the certifications were not required.
• Key authorities: Treas. Reg. §§ 1.1503-2(c)(3)(i)(A), 1.1503-2(g)(2)(vi)(C)

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 200726019
Third Party Communication: None
Release Date: 6/29/2007
Date of Communication: Not Applicable
Index Number: 9100.22-00, 1503.04-04
Person To Contact:
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Telephone Number:
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Refer Reply To:
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CC:INTL
PLR-139942-06
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Date:
March 28, 2007

Taxpayer = ------------------------------------------------------------
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Entity 1 = -----------------------------------
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Year 1 = ---------------------------

Year 2 = ---------------------------

Year 3 = ---------------------------

Year 4 = ---------------------------

Country A = ------------

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

This is in response to a letter dated June 14, 2006, requesting an extension of time under Treas. Reg. § 301.9100-3 to file annual certifications under Treas. Reg. § 1.1503- 2(g)(2)(vi)(B) or under Treas. Reg. § 1.1503-2T(g)(2)(vi)(B), as applicable, for Years 2 through 4 with respect to dual consolidated losses attributable to Entity 1 in Years 1 through 3. Additional information was submitted in a letter dated January 7, 2007. 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
PLR-139942-06
2

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.

FACTS

Entity 1 is a disregarded as an entity separate from its owner. Taxpayer’s interest in Entity 1 is a hybrid entity separate unit as described in Treas. Reg. § 1.1503-2(c)(4). Entity 1 has activities in Country A that constitute a foreign branch (“Entity 1 Branch”) within the meaning of Treas. Reg. § 1.367(a)-6T(g) and dual consolidated losses incurred by Entity 1 Branch in Years 1 through 3 were attributable to those activities. Entity 1 Branch was a separate unit described in Treas. Reg. § 1.1503-2(c)(3)(i)(A) during the years in which the losses were incurred. No dual consolidated losses were attributable to Taxpayer’s interest in Entity 1.

HOLDING

Taxpayer is not required to file annual certifications with respect to the dual consolidated losses incurred by Entity 1 Branch because the losses are attributable to a separate unit described in Treas. Reg. § 1.1503-2(c)(3)(i)(A) and, therefore, an extension of time is not necessary in this regard. Treas. Reg. § 1.1503-2(g)(2)(vi)(C).

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 representative.

Sincerely,

________
Thomas D. Beem
Senior Technical Reviewer
CC:INTL:Br1

Enclosure:
Copy for 6110 purposes