PLR 200813024: LLC gets 60 days to file late corporate classification election

Plain-English summary

A two-member LLC intended to be taxed as a corporation from its formation date but did not file Form 8832 on time. The IRS found that the LLC met the reasonable-conduct and government-interest standards for an extension under the election relief regulations. It granted 60 days from the letter date to file Form 8832 with the intended effective date and a copy of the ruling. The IRS did not decide whether the LLC was otherwise eligible for the election.

Ruling snapshot

• Question: May the LLC file a late election to be taxed as a corporation from its formation date?
• Outcome: Approved, subject to filing Form 8832 and the ruling copy within 60 days.
• 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: 200813024
Release Date: 3/28/2008
Index Number: 7701.00-00, 9100.00-00

-----------------------
Person To Contact:
----------------------------------------- --------------------------, ID No. -------------
-------------------------
Telephone Number:
---------------------
---------------------
--------------------------------
Refer Reply To:
CC:PSI:3 – PLR-134282-07
Date:
December 20, 2007

LEGEND

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

A = -------------------
-----------------------------------------------------

B = -----------------
--------------------------

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

d1 = -------------------

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

This letter responds to a letter dated June 19, 2007, and subsequent correspondence, submitted on behalf of X, requesting a ruling under §' 301.9100-1 and 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 an association under ' 301.7701- 3.

FACTS

X was formed on d1 as a limited liability company under the laws of State. X has two members, A and B. X intended to elect to be treated as an association for federal
PLR-134282-07
2

tax purposes effective d1. However, a Form 8832, Entity Classification Election, electing to be treated as an association was not timely filed.

LAW

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

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

Section 301.7701-3(c)(1)(i) provides, in part, 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 a Form 8832 with the service center designated on the 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 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 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 301.9100-2 provides the rules governing automatic extensions of time for making certain elections. Section 301.9100-3 provides extensions of time for making regulatory elections that do not meet the requirements of § 301.9100-2.

Under § 301.9100-3(a), a request for relief 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 (1) the taxpayer acted reasonably and in good faith, and (2) the grant of relief will not prejudice the interests of the Government.
PLR-134282-07
3

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 an association taxable as a corporation for federal tax purposes effective d1. 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) 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 & Special Industries)

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

cc: