PLR 200843010: Foreign entity received an extension to elect partnership status

Plain-English summary

A foreign eligible entity intended to be treated as a partnership from its formation date but inadvertently failed to file Form 8832 on time. A foreign entity whose owners all have limited liability is ordinarily classified as a corporation unless it elects another classification. The IRS concluded from the submitted information and representations that the entity had acted reasonably and in good faith and that late relief would not prejudice the government. It granted the entity 60 days from the ruling date to file Form 8832 and elect partnership treatment effective from the requested formation date. The IRS did not independently decide whether the entity otherwise qualified as a partnership.

Ruling snapshot

• Question: Could the foreign eligible entity receive extra time to elect partnership classification effective from its formation date?
• Outcome: Approved. The IRS granted 60 days to file Form 8832 with the requested effective date.
• Key authorities: Treas. Reg. §§ 301.7701-2(c)(1), 301.7701-3(b)(2), 301.7701-3(c), 301.9100-1 through 301.9100-3

Full text (IRS public release)

 Internal Revenue Service                                     Department of the Treasury
                                                              Washington, DC 20224

Number: 200843010                                            Third Party Communication: None
Release Date: 10/24/2008                                      Date of Communication: Not Applicable
                                                              Person To Contact:
Index Number: 9100.31-00, 7701.00-00                          ----------------------, ID No. -------------
                                                              Telephone Number:
                                                              ---------------------
------------------------------                                Refer Reply To:
----------------------                                        CC:PSI:B02
---------------------------------------------------------     PLR-106998-08
--------------------------------                              Date:
 -------------------------------------                        July 07, 2008




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

 Country = ------------

 Date 1       = -------------------------


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

 This responds to a letter dated February 13, 2008, submitted on behalf of X by X’s
 authorized representative, requesting that the Service grant X an extension of time
 under § 301.9100-3 of the Procedure and Administration Regulations to elect to be
 treated as a partnership under § 301.7701-3(c).

 The information submitted states that X was formed under the laws of Country on Date

    1. X represents that X is a foreign entity eligible to elect to be treated as a partnership.
 However, X inadvertently failed to timely file a Form 8832, Entity Classification Election,
 electing to treat X as a partnership effective Date 1.

 Section 301.7701-3(b)(2) provides guidance on the classification of a foreign eligible
 entity for federal tax purposes. Generally, a foreign eligible entity is treated as an
 association taxable as a corporation if all members have limited liability, unless the
 entity makes an election to be treated otherwise. If the foreign eligible entity has more
 than one owner, it may elect to be treated as a partnership pursuant to the rules in
 § 301.7701-3(c).

 Section 301.7701-3(c) provides that an entity classification election must be filed on
 Form 8832 and can be effective up to seventy-five (75) days prior to the date the form is
PLR-106998-08                                 2

filed or up to twelve (12) months after the date on which the form 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 and elect to be treated as a partnership 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.
In particular, we express no opinion on whether X is properly classified as a partnership
within the meaning of § 301.7701-2(c)(1).

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.
PLR-106998-08                                  3


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


                                        Sincerely,



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

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



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