PLR 200843020: Converted partnership received extra time for corporate election

Plain-English summary

A domestic corporation converted into a limited partnership under state law but intended to remain classified as an association taxable as a corporation for federal tax purposes. It inadvertently failed to file Form 8832 on time. The regulations ordinarily classify a domestic eligible entity with at least two owners as a partnership unless it elects otherwise. Late-election relief requires reasonable and good-faith conduct and no prejudice to the government. Based on the submitted facts and representations, the IRS granted 60 days from the ruling date to file Form 8832 with the intended effective date and attach the ruling.

Ruling snapshot

• Question: Could the converted limited partnership make a late election to remain taxable as a corporation from the conversion date?
• Outcome: Approved, with 60 days to file Form 8832 and attach the ruling.
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, 301.7701-4, 301.9100-1, 301.9100-2, 301.9100-3

Full text (IRS public release)

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Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 200843020 Third Party Communication: None
Release Date: 10/24/2008 Date of Communication: Not Applicable
Person To Contact:
Index Number: 9100.31-00 -------------------, ID No. -------------
Telephone Number:
---------------------
------------------------------------ Refer Reply To:
----------------------------------------------- CC:PSI:B01
------------------ PLR-115100-08
------------------------- Date:
July 18, 2008

Legend:

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

State = --------

D1 = ------------------

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

    This letter is in response to the letter dated December 21, 2007, submitted on

behalf of X, requesting a ruling that X be granted an extension of time under
§ 301.9100-3 of the Procedure and Administration Regulations to file an election under
§ 301.7701-3(c) to be treated as an association taxable as a corporation for federal tax
purposes.

Facts

    The information submitted states that on D1, X was converted from a State

corporation into a State limited partnership pursuant to the laws of State. X intended to
be treated as an association taxable as a corporation for federal tax purposes effective
D1. However, X inadvertently failed to timely file a Form 8832, Entity Classification
Election.

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
elect its classification for federal tax purposes. A “business entity” is any entity
PLR-115100-08 2

recognized for federal tax purposes that is not properly classified as a trust under
§ 301.7701-4 or otherwise subject to special treatment under the Internal Revenue
Code. Section 301.7701-2(a). An eligible entity with at least two members can elect to
be classified as an association (and thus a corporation under § 301.7701-2(b)(2)) or a
partnership.

  Section 301.7701-3(b)(1) provides that a domestic eligible entity with at least two

owners will be classified as a partnership unless it elects otherwise.

   Section 301.7701-3(c) provides that an entity classification election must be filed

on Form 8832 and can be effective up to 75 days prior to the date the form is filed or up
to 12 months after the date on which the form is filed.

    Under § 301.9100-1(c), the Commissioner may grant a reasonable extension of

time 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 the term “regulatory election” as
including an election whose due date is prescribed by a regulation published in the
Federal Register.

   Sections 301.9100-1 through 301.9100-3 provide the standards that the

Commissioner will use to determine whether to grant an extension of time to make an
election. Section 301.9100-1(a).

   Section 301.9100-2 provides automatic extensions of time for making certain

elections. Section 301.9100-3 provides extensions of time for making elections that do
not meet the requirements of section 301.9100-2.

   Requests for relief under § 301.9100-3 will be granted when the taxpayer

provides evidence to establish that the taxpayer acted reasonably and in good faith, and
that granting relief will not prejudice the interests of the government. Section 301.9100-
3(a).

Conclusion

   Based solely on the facts 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 make an election to be treated
as an association taxable as a corporation for federal tax purposes effective D1. X
should make the election by filing a properly executed Form 8832 with the appropriate
service center. A copy of this letter should be attached to the form.
PLR-115100-08 3

   Except as specifically provided herein, no opinion is expressed or implied

concerning the federal tax consequences of the facts described above under any other
provision of the Code.

  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.

                                             Sincerely,

                                             William P. O’Shea

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

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

cc:
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