PLR 200735005: Foreign corporation gets more time to file nonrecognition notice

Plain-English summary

A foreign corporation distributed stock of a U.S. real property holding corporation to its foreign parent in a complete liquidation under section 332. Neither company timely filed the notice required for a nonrecognition transfer under the withholding regulations. The IRS concluded that the corporation met the standards for late filing relief and gave it 60 days from the ruling date to furnish the notice. The letter grants extra time to file; it expresses no opinion on other tax consequences of the liquidation.

Ruling snapshot

• Question: Could the liquidating corporation file its notice of nonrecognition transfer after the deadline?
• Outcome: Approved: 60 additional days to furnish the notice.
• Key authorities: IRC §§ 332, 897, 1445; Treas. Reg. §§ 1.1445-5(b)(2)(ii), 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200735005
Third Party Communication: None
Release Date: 8/31/2007
Date of Communication: Not Applicable
Index Number: 897.00-00, 897.05-00,
897.05-01, 1445.02-00,
Person To Contact:
1445.07-02, 1445.07-04,
-----------------------, ID No. -------------
9100.00-00, 9100.22-00
Telephone Number:
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Refer Reply To:
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CC:INTL:B04
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Date:
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June 04, 2007
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LEGEND

Taxpayer = ---------------------------------------
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Parent = ------------------------
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Sub 1 = -----------------------------------
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Date1 = ----------------------

Date 2 = ------------------

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

This replies to a letter dated April 16, 2007, requesting an extension of time under Treas. Reg. § 301.9100-3 to furnish to the Internal Revenue Service a notice of nonrecognition transfer required by Treas. Reg. § 1.1445-5(b)(2)(ii) with respect to a liquidating distribution of Taxpayer to Parent pursuant to § 332 of the Internal Revenue Code. The information for consideration is substantially as set forth below.
PLR-118866-07
2

The ruling contained in this letter is predicated upon facts and representations submitted by Taxpayer and accompanied by penalty of perjury statements executed by appropriate parties. This office has not verified any of the above 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.

Taxpayer is a foreign corporation and a wholly-owned subsidiary of Parent, a foreign corporation. Sub 1 is a U.S. real property holding corporation as defined in § 897(c)(2). On Date 1, the stock of Sub 1 was distributed by Taxpayer to Parent in a liquidating distribution in full redemption of all of Taxpayer’s outstanding stock in a complete liquidation meeting the requirements of § 332.

On Date 2, the affiliated foreign owner of Parent was acquired by Acquiror, a foreign corporation. Neither Parent nor Taxpayer timely filed a notice of nonrecognition transfer under Treas. Reg. § 1.1445-5(b)(2)(ii).

Treas. Reg. § 301.9100-1(c) provides that the Commissioner has discretion to grant 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. § 301.9100-1(b) defines a regulatory election as an election whose due date is prescribed by a regulation, revenue ruling, revenue procedure, notice, or announcement. An election includes an application for relief in respect of tax.

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, and that the grant of relief will not prejudice the interests of the government.

Based on the facts and circumstances of this case, we conclude that the standards of
§301.9100-3(a) have been satisfied. Accordingly, Taxpayer is granted an extension of time until 60 days from the date of this ruling letter to furnish to the Internal Revenue Service a notice of nonrecognition transfer required by Treas. Reg. § 1.1445-5(b)(2)(ii) with respect to the liquidation of Taxpayer pursuant to § 332.

No opinion is expressed as to the application of any other section of the Code or regulations to the facts presented.

A copy of this ruling letter should be attached with the statements and the notices mailed to the IRS.
PLR-118866-07
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This ruling is directed to the taxpayer who requested it. Section 6110(k)(3) provides that it may not be used or cited as precedent.

Pursuant to the power of attorney on file in this office, a copy of this letter is being sent to your authorized representatives.

Sincerely

____
David Bailey
Assistant to the Branch Chief
Associate Chief Counsel
(International, Branch 4)