PLR 200950033: IRS grants more time to make section 59(e) elections

Plain-English summary

The IRS granted a taxpayer an extension of time to make elections under IRC § 59(e) for three taxable years. The taxpayer timely filed its returns, but its authorized officer did not make the elections. The IRS found that the taxpayer satisfied the standards for relief under Treas. Reg. § 301.9100-3, including acting reasonably and in good faith without prejudicing the government. The taxpayer received 60 days from the ruling date to make the elections. The ruling did not determine whether the underlying expenditures were qualified expenditures under § 59(e)(2).

Ruling snapshot

• Question: Could the taxpayer receive additional time to make § 59(e) elections for three taxable years?
• Outcome: Approved
• Key authorities: IRC § 59(e); Treas. Reg. §§ 1.59-1(b)(1), 301.9100-1(c), 301.9100-2, and 301.9100-3

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 200950033
Third Party Communication: None
Release Date: 12/11/2009
Date of Communication: Not Applicable
Index Number: 9100.02-00
Person To Contact:
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Telephone Number:
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Refer Reply To:
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CC:PSI:B06
PLR-127013-09
Date:
September 03, 2009

LEGEND:

Taxpayer = ---------------- (EIN: ----------------)
a = -------
b = -------
c = -------

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

We received a letter from your authorized representative dated ------------------, 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, b, and c taxable years. This letter responds to that request.

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

Section 59(e) provides an optional write-off of certain tax preferences over an applicable period. 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-127013-09
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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).

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 § 301.9100-2.

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 information submitted and the representations made, we have determined that the requirements of § 301.9100-3 have been satisfied with respect to the a, b, and c taxable years. 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, b, and c taxable years.

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. 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) 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.

In accordance with the Power of Attorney on file with this office, we are sending a copy of this letter to your authorized representatives.
PLR-127013-09
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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,

Curt G. Wilson
Deputy Associate Chief Counsel
(Passthroughs and Special Industries)