PLR 200804007: LLC gets time to elect corporate tax classification

Plain-English summary

Four owners formed a limited liability company and intended it to be taxed as a corporation from its formation date. The company did not file Form 8832 on time, so it requested an extension for the classification election. The IRS granted 60 days from the ruling letter to file a properly executed Form 8832 electing association treatment effective on the intended, redacted date. The IRS gave no opinion on other tax consequences.

Ruling snapshot

• Question: Could the LLC make a late election to be taxed as a corporation from its intended effective date?
• Outcome: Approved; a properly executed Form 8832 could be filed within 60 days.
• Key authorities: Treas. Reg. §§ 301.7701-3(c), 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200804007
Release Date: 1/25/2008
Index Number: 9100.31-00, 7701.02-00
Person To Contact:
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Refer Reply To:
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CC:PSI:2
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PLR-127062-07
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Date:

October 12, 2007

Legend

X: ------------------------------
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A: ---------------------------

B: -----------------------

C: -----------------------

D: -----------------------------

State: --------

Date: ----------------------

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

This responds to a letter dated May 9, 2007 and subsequent correspondence submitted on behalf of X, requesting that the Service grant X an extension of time pursuant to § 301.9100-3 of the Procedure and Administration Regulations to make an election under § 301.7701-3(c) to be treated as an association taxable as a corporation for federal tax purposes.

According to the information submitted, A, B, C, and D formed X on Date as a limited liability company under the laws of State. A, B, C, and D intended that X be treated as an association taxable as a corporation but a Form 8832, Entity Classification Election, was not timely filed for X to be treated as a corporation effective Date. 2 PLR-127062-07

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.

Section 301.7701-3(b)(1)(ii) provides that unless a domestic entity elects otherwise, the entity is a partnership if it has two or more members.

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) provides that the Commissioner may grant a reasonable extension of time to make a regulatory election, or a statutory election (but no more than 6 months except in the case of a taxpayer who is abroad), under all subtitles of the Internal Revenue Code except subtitles E, G, H, and I. Section 301.9100-1(b) defines the term “regulatory election” as an election whose due date is prescribed by a regulation published in the Federal Register or a revenue ruling, revenue procedure, notice, or announcement published in the Internal Revenue Bulletin.

Section 301.9100-3 provides the standards the Commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of § 301.9100-2. Under § 301.9100-3, a request for relief will be granted when the taxpayer provides evidence to establish 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.

As a result, X is granted an extension of time of 60 days from the date of this letter to file a properly executed Form 8832 with the appropriate service center, electing to be treated as an association taxable as a corporation for federal tax purposes effective Date. A copy of this letter should be attached to the election.

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-127062-07

Pursuant to a power of attorney on file with this office, a copy of this letter is being sent to X’s authorized representative.

Sincerely,

William P. O'Shea
Associate Chief Counsel
Passthroughs & Special Industries

Enclosures (2)
Copy of this letter
Copy for § 6110 purposes