PLR 200811011: Limited liability company gets 60 more days to file partnership classification election

Plain-English summary

A state law limited liability company intended to elect partnership classification for federal tax purposes but did not file Form 8832 on time. The IRS concluded, based on the submitted facts and representations, that the company met the requirements for discretionary filing relief. It granted 60 days from the letter date to file a properly executed election with the requested effective date. The IRS gave no opinion on other federal tax consequences.

Ruling snapshot

• Question: May the company file a late Form 8832 to elect partnership classification as of its intended date?
• Outcome: Approved: a 60-day extension to file the election.
• 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: 200811011
Third Party Communication: None
Release Date: 3/14/2008
Date of Communication: Not Applicable
Index Number: 9100.00-00, 7701.00-00
Person To Contact:
-------------------------------------------- ----------------------, ID No. -------------
--------------------------
Telephone Number:
-------------------
---------------------
--------------------------------
Refer Reply To:
CC:PSI:B03
PLR-137711-07
Date:
November 29, 2007

LEGEND:

X = -------------------------------------
-----------------------

State = ----------

D1 = -------------------

D2 = ------------------

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

This letter responds to a letter dated August 13, 2007, and subsequent correspondence, written on behalf of X, requesting a ruling under § 301.9100-3 of the Procedure and Administration Regulations.

Facts:

The information submitted provides that X was organized on D1 as a State law limited liability company. X represents that it intended to be classified as a partnership effective D2. However, a Form 8832, Entity Classification Election, to elect to treat X as a partnership was not timely filed.

Law and Analysis:

Section 301.7701-3(a) provides, in part, 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. An eligible entity with at least two members can elect to be classified as
PLR-137711-07
2

either an association (and thus a corporation under § 301.7701-2(b)(2)) or a partnership.

Section 301.7701-3(b)(1)(i) provides, in part, that except as provided in § 301.7701-3(b)(3), unless the entity elects otherwise, a domestic eligible entity is (A) a partnership if it has two or more members, or (B) disregarded as an entity separate from its owner if it has a single member.

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

Section 301.7701-3(c)(1)(iii) provides that an election under § 301.7701-3(c)(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 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. If an election specifies an effective date more than 75 days prior to the date on which the election is filed, it will be effective 75 days prior to the date it was 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 not 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 301.9100-2 provides the standards the Commissioner will use to determine whether to grant an automatic extension of time for making certain elections.

Section 301.9100-3 provides the guidelines for granting extensions of time for making elections that do not meet the requirements of § 301.9100-2. Section 301.9100- 3(a) provides that requests for relief subject to § 301.9100-3 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 the grant of relief will not prejudice the interests of the Government.

Conclusion:

Based solely on the facts submitted and the representations made, we conclude that X has satisfied the requirements of § 301.9100-1 and § 301.9100-3. As a result, X is granted an extension of sixty (60) days from the date of this letter to file a properly
PLR-137711-07
3

executed Form 8832 with the appropriate service center, to elect to be classified as a partnership, effective D2. A copy of this letter should be attached to the Form 8832.

Except as specifically set forth above, we express no opinion concerning the federal tax consequences of the above described facts under any other provision of the Internal Revenue Code.

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

Sincerely,

/s/

William P. O’Shea
Associate Chief Counsel
(Passthroughs & Special Industries)

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

cc: