PLR 200826020: Taxpayer gets more time to elect a ten year write off of tax preferences

Plain-English summary

A taxpayer timely filed its income tax return, but an officer responsible for the return omitted an election under section 59(e). That provision allows an optional ten year write off of certain qualified expenditures. The IRS found the standards for late election relief satisfied and gave the taxpayer 60 days from the ruling's date to make the election for the year at issue. It did not decide whether the expenditures qualify for section 59(e) treatment.

Ruling snapshot

• Question: May the taxpayer make a late section 59(e) election?
• Outcome: Approved; the election must be made within 60 days.
• Key authorities: IRC § 59(e); Treas. Reg. §§ 1.59-1(b)(1), 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200826020
Third Party Communication: None
Release Date: 6/27/2008
Date of Communication: Not Applicable
Index Number: 59.00-00, 9100.00-00
Person To Contact:
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Telephone Number:
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Refer Reply To:
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CC:PSI:B06
PLR-142355-07
Date:
March 14, 2008

LEGEND

Taxpayer: ----------------------------------------------
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Dear ----------------:

We received a letter from your authorized representative, requesting an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to file an election under § 59(e) of the Internal Revenue Code for the a taxable year. This letter responds to that request.

According to the information submitted, Taxpayer timely filed its income tax return for the a taxable year. A duly authorized officer of Taxpayer was responsible for the preparation and filing of Taxpayer’s return. However, the officer failed to make the election under § 59(e).

Section 59(e) provides an optional ten year write-off of certain tax preferences.
Section 59(e)(4) provides that an election may be made under § 59(e)(1) with respect to any portion of any qualified expenditure.

Section 1.59-1(b)(1) provides that an election under § 59(e) can only be made by attaching a statement to the taxpayer’s income tax return (or amended return) for the taxable year in which the amortization of the qualified expenditures subject to the § 59(e) election begins. The statement must be filed no later than the date prescribed by law for filing the taxpayer’s original income tax return (including any extensions of time) for the taxable year in which the amortization of the qualified expenditures subject to the § 59(e) election begins.

PLR-142355-07
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Section 301.9100-1(c) provides that the Commissioner, in an exercise of discretion, may grant a reasonable extension of time under 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.

Sections 301.9100-2 and 301.9100-3 provide the standards the Commissioner will use to determine whether to grant an extension of time to make the election under § 301.9100-1(a).

Requests for relief under § 301.9100-3 will be granted when the taxpayer provides the evidence to establish that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the government.

Based on the facts and representations submitted with your request, we have determined that the requirements of § 301.9100-3 have been satisfied with respect to the a taxable year. Therefore, an extension of time is granted, until 60 days from the date of this ruling, for making an election under § 59(e) for the a taxable year.

Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter. Specifically, we express or imply no opinion concerning whether the expenditures are qualified expenditures under § 59(e)(2).

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.

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.

PLR-142355-07
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In accordance with the Power of Attorney on file with this office, we are sending a copy of this letter to your authorized representatives. A copy of this ruling must be attached to any income tax return to which it is relevant. Alternatively, taxpayers filing their returns electronically may satisfy this requirement by attaching a statement to their return that provides the date and control number of the letter ruling.

Sincerely,

/s/

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