PLR 200734017: Late S corporation election accepted for incorporation date

Plain-English summary

A newly incorporated company intended to elect S corporation status from its incorporation date but did not file the election on time. The IRS found reasonable cause and said it would treat the election as timely if the company filed a completed election with a copy of the ruling within 60 days. The IRS did not decide whether the company otherwise qualified as a small business corporation. The letter identifies the election form as Form 2553 in its facts but calls it Form 2533 in its final filing instruction; the full text preserves both references as published.

Ruling snapshot

• Question: Could the company make its S corporation election effective from its incorporation date despite a late filing?
• Outcome: Approved, conditioned on filing the election within 60 days.
• Key authorities: IRC § 1362(b)(5).

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200734017
Release Date: 8/24/2007
Index Number: 1362.01-03

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Person To Contact:
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Telephone Number:
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Refer Reply To:
CC: PSI: B02
PLR-154589-06
Date:
May 17, 2007

X = -----------------------------
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State = -------------------
Date 1 = --------------------------

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

This responds to a letter dated April 25, 2006, and subsequent correspondence, submitted by X requesting relief under § 1362(b)(5) of the Internal Revenue Code.

The information submitted states that X was incorporated on Date 1 under the laws of State. It was intended for X to be an S corporation effective Date 1. However, no Form 2553, Election by a Small Business Corporation, was timely filed for X.

Section 1362(b)(5) provides that if: (A) an election under § 1362(a) is made for any taxable year after the date prescribed by § 1362(b) for making such election for such taxable year or no such election is made for any taxable year, and (B) the Secretary determines that there was reasonable cause for the failure to timely make such election, then the Secretary may treat such an election as timely made for such taxable year.

Based solely on the facts and the representations submitted, we conclude that X has established reasonable cause for failing to make a timely election to be an S corporation effective Date 1. Accordingly, provided that X makes an election be an S corporation by filing a completed Form 2533 effective Date 1, along with a copy of this letter, with the appropriate service center within 60 days from the date of this letter, then such election will be treated as timely made for Date 1.
PLR-154589-06
2

Except as specifically set forth above, no opinion is expressed concerning the federal income tax consequences of the facts described above under any other provision of the Code, including whether X was or is a small business corporation under § 1361(b) of the Code.

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

Sincerely,

Bradford R. Poston
Senior Counsel, Branch 2
Office of the Associate Chief Counsel
(Passthroughs and Special Industries)

Enclosures (2):
Copy of this letter
Copy for section 6110 purposes

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