PLR 200825015: LLC gets time to elect corporate tax treatment

Plain-English summary

A single member limited liability company intended to be taxed as a corporation from its formation date, but its Form 8832 election was filed late. The IRS found that the requirements for discretionary election relief were met. It gave the LLC 60 days from the ruling date to file Form 8832 with the appropriate service center, electing corporate treatment effective from the requested date. The ruling did not address other tax consequences of the entity or its transactions.

Ruling snapshot

• Question: Could the LLC make a late election to be classified as a corporation from formation?
• Outcome: Yes, with 60 days to file Form 8832 and attach the ruling.
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200825015
Third Party Communication: None
Release Date: 6/20/2008
Date of Communication: Not Applicable
Person To Contact:
Index Number: 7701.00-00
------------------, ID No. -------------
Telephone Number:

------------------------------------
---------------------
Refer Reply To:
-----------------------------
CC:PSI:03
--------------------------------------
PLR-141870-07
---------------------------------------
Date:
----------------------------------------- March 03, 2008

LEGEND

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

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

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

Date = -------------------

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

We received your letter dated September 13, 2007, 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. This letter responds to your request.

FACTS

X is a limited liability company formed under the laws of State on Date. A is the sole member of X. X intended to elect to be treated as an association taxable as a corporation for federal tax purposes effective on Date. However X’s Form 8832 Entity Classification Election electing to be treated as a corporation was not filed timely.

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

PLR-141870-07
2

elect its classification for federal tax purposes as provided in § 301.7701-3. Under
§ 301.7701-3(a), an eligible entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner.

Section 301.7701-3(b)(1)(ii) provides that, unless a domestic eligible entity elects otherwise, it is a disregarded entity if it has a single owner.

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) by filing Form 8832, Entity Classification Election. Under § 301.7701-3(c)(1)(iii), this election will be effective on the date specified by the entity on Form 8832 or on the date filed if no such date is specified. The date specified on Form 8832 cannot be more than 75 days prior to 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.

Section 301.9100-2 provides the rules governing automatic extensions of time for making certain elections. 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.

Section 301.9100-3(a) provides that requests for relief subject to § 301.9100-3 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 the taxpayer acted reasonably and in good faith, and 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 sixty (60) days from the date of this letter to elect to be classified as a corporation for federal tax purposes effective Date. The election should be made by filing Form 8832 with the appropriate service center. A copy of this letter should be attached to the election.

Except as expressly provided herein, we express or imply no opinion concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter.

PLR-141870-07
3

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 the Power of Attorney on file with this office, a copy of this letter is being sent to your authorized representative.

The rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. While this office has not verified any of the material submitted in support of the request for rulings, it is subject to verification on examination.

Sincerely,

/s/

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

Enclosures (3)

cc: