PLR 200811001: Foreign limited partnership receives time to elect partnership classification

Plain-English summary

A foreign limited partnership with five members was classified by default as a corporation for U.S. federal tax purposes. It intended to elect partnership classification but missed the Form 8832 filing deadline. The IRS found that it met the requirements for discretionary relief and gave it 60 days from the letter date to file the election with its intended effective date. The IRS did not decide whether the entity was otherwise eligible to make the election or address other tax consequences.

Ruling snapshot

• Question: May the foreign entity file a late election to be classified as a partnership for U.S. tax purposes?
• Outcome: Approved: a 60-day extension to file Form 8832, subject to other eligibility requirements.
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200811001
Release Date: 3/14/2008
Index Numbers: 7701.00-00, 9100.31-00

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Person To Contact:
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Telephone Number:
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Refer Reply To:
-------------------------------------------- CC:PSI:3 – PLR-118395-07 Date:
November 29, 2007

LEGEND

X = ------------------------
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A = ----------------------------------
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B = --------------------------------------------------------------------

C = --------------------------------------------------------------------

D = -------------------------------------------------------------

E = ---------------------------------------

Country = ------------

d1 = -------

d2 = ---------------------

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

This letter responds to a letter dated April 17, 2007, and subsequent correspondence, written on behalf of X, requesting a ruling under §' 301.9100-1 and
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301.9100-3 of the Procedure and Administration Regulations that X be granted an extension of time to file an election to be classified as a partnership under ' 301.7701-3.

FACTS

According to the information submitted, X was formed in d1 as a limited partnership under the laws of Country. X has five members, A, B, C, D, and E. X’s default classification was as an association taxable as a corporation for federal tax purposes. X intended to elect to be treated as a partnership for federal tax purposes effective d2. However, a Form 8832, Entity Classification Election, electing to be treated as a partnership was not timely filed.

LAW AND ANALYSIS

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 as provided in ' 301.7701-3. Under § 301.7701-3(a), an eligible entity with at least two members can elect to be classified as either an association (and thus a corporation under § 301.7701-2(b)(2)) or a partnership.

Section 301.7701-3(b)(2)(i)(B) provides, in part, that, unless an entity elects otherwise, a foreign eligible entity is an association if all members have limited liability.

Section 301.7701-3(c)(1)(i) provides that an eligible entity may elect to be classified other than as provided in ' 301.7701-3(b), or to change its classification, by filing Form 8832 with the service center designated on Form 8832.

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 date is specified on the election form. The effective date specified on Form 8832 can not be more than 75 days prior to the date on which the election is filed and can not 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 under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a regulatory election, or a statutory election (but no more than six months except in the case of a taxpayer who is abroad), under all subtitles of the Code, except subtitles E, G, H, and I. Section 301.9100-1(b) defines a regulatory election to include an election whose due date is prescribed by a regulation published in the Federal Register.
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Section 301.9100-2 provides the rules governing automatic extensions of time for making certain elections.

Section 301.9100-3 provides extensions 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 the evidence (including affidavits described in § 301.9100-3(e)) to establish to the satisfaction of the Commissioner that (1) the taxpayer acted reasonably and in good faith, and (2) the grant of relief will not prejudice the interests of the Government.

CONCLUSION

Based on the facts submitted and the representations made, we conclude that the requirements of '' 301.9100-1 and 301.9100-3 have been satisfied. As a result, X is granted an extension of time of 60 days from the date of this letter to file Form 8832 with the appropriate Service Center and elect to be classified as a partnership for federal tax purposes effective d2. A copy of this letter should be attached to the Form 8832.

Except as specifically set forth above, no opinion is expressed or implied concerning the federal tax consequences of the transaction described above under any other provision of the Code. Specifically, no opinion is expressed or implied as to whether X is otherwise eligible to make the election.

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.

In accordance with a power of attorney on file with this office, we are sending a copy of this letter to X=s authorized representative.

Sincerely,

/s/

William P. O'Shea
Associate Chief Counsel
(Passthroughs and Special Industries)

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