PLR 200829004: Foreign LLC gets more time to elect partnership classification

Plain-English summary

A limited liability company formed under foreign law inadvertently failed to file Form 8832 to elect partnership treatment from its formation date. It asked for more time under the regulations governing late elections. The IRS concluded that the requirements for discretionary relief were met. It gave the company 60 days from the letter date to file Form 8832 with the appropriate service center and attach a copy of the ruling. The letter expresses no view on other federal tax consequences.

Ruling snapshot

• Question: Could the company file a late entity classification election effective from formation?
• Outcome: Approved; Form 8832 must be filed within 60 days of the letter.
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1 through 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200829004
Third Party Communication: None
Release Date: 7/18/2008
Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.31-00
Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:PSI:B02
PLR-101291-08
Date:
April 14, 2008

Legend:

X: ----------------------------------------
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Date 1: -------------------------

Country: ---------------

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

This responds to a letter dated December 4, 2007, submitted on behalf of X, requesting that the Internal Revenue Service grant X an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to file an entity classification election.

The information submitted states that X is a limited liability company formed on Date 1 under the laws of Country. X inadvertently failed to file a Form 8832, Entity Classification Election, electing to treat X as a partnership for federal tax purposes effective Date 1.

Section 301.7701-3(a) provides that a business entity that is not classified as a corporation under § 301.7707-2(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. A “business entity” is any entity recognized for federal tax purposes that is not properly classified as

PLR-101291-08
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a trust under § 301.7701-4 or otherwise subject to special treatment under the Internal Revenue Code.

Section 301.7701-3(b)(2) provides guidance on the classification of a foreign entity for federal tax purposes. § 301.7707-3(b)(2)(i) generally provides that, unless it elects otherwise, a foreign eligible entity is (A) a partnership if it has two or more members and at least one member does not have limited liability; (B) an association if all members have limited liability; or (C) disregarded as an entity separate from its owner if it has a single owner that does not have limited liability.

Section 301.7701-3(c) provides that an eligible entity may elect to be classified other than as provided under § 301.7701-3(b) by filing Form 8832, Entity Classification Election. The effective date of the election can not be more than seventy-five (75) days prior to the date the form is filed and cannot be more than twelve (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 to make a regulatory election, or a statutory election (but no 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 301.9100-1(b) defines the term “regulatory election” as an election whose due date is prescribed by a regulation published in the Federal Register or a revenue ruling, revenue procedure, notice, or announcement published in the Internal Revenue Bulletin.

Sections 301.9100-1 through 301.9100-3 provide the standards the Commissioner will use to determine whether to grant an extension of time to make the election. 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. Under § 301.9100-3, a request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the Commissioner that (1) the taxpayer acted reasonably and in good faith, and (2) granting relief will not prejudice the interests of the government.

Based solely on the information submitted and the representations made, we conclude that the requirements of § 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 a Form 8832 with the appropriate service center to elect to be treated as a partnership for U.S. tax purposes effective Date 1. A copy of this letter should be attached to the Form 8832. A copy is enclosed for that purpose.

Except as specifically set forth above, no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the Code.

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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.

Pursuant to a power of attorney on file with this office, a copy of this letter is being sent to X’s authorized representatives.

Sincerely,

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

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

cc: