PLR 1028002: The IRS granted more time to elect corporate classification for an LLC

Plain-English summary

The IRS granted a limited liability company 60 more days to file Form 8832 and elect to be treated as an association taxable as a corporation. The LLC had converted under state law but did not timely file the entity classification election for its intended effective date. The IRS concluded that the requirements for relief under Treas. Reg. §§ 301.9100-1 and 301.9100-3 were satisfied. The LLC had to attach a copy of the ruling to the election.

Ruling snapshot

• Question: Could the LLC receive more time to elect corporate tax classification?
• Outcome: approved
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201028002 Third Party Communication: None
Release Date: 7/16/2010 Date of Communication: Not Applicable
Person To Contact:
Index Number: 7701.00-00, 9100.00-00 ----------------------, ID No. -----------------
Telephone Number:
--------------------
----------------------------------------------- Refer Reply To:
----------------------- CC:PSI:B01
------------------------------------------------------- PLR-102550-10
------------------------------- Date:
April 09, 2010

Legend

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

State = -------------

D = -----------------

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

    This letter responds to your letter dated -----------------------, and subsequent

correspondence, written on behalf of X, requesting an extension of time under
§ 301.9100-1 and § 301.9100-3 of the Procedure and Administration Regulations to file
an entity classification election.

                                                  FACTS

     The information submitted states that X converted to a limited liability company

under the laws of State on D. X failed to file Form 8832, Entity Classification Election,
electing to treat X as an association taxable as a corporation for federal tax purposes
effective D.

                                        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. Elections are necessary only when an
PLR-102550-10 2

eligible entity does not want to be classified under the default classification or when an
eligible entity chooses to change its classification.

    Section 301.7701-3(b)(1) provides that, except for certain existing entities

described in § 301.7701-3(b)(3), unless a domestic eligible entity elects otherwise, the
entity is: (i) a partnership if it has two or more members; or (ii) disregarded as an entity
separate from its owner if it has a single owner.

    Section 301.7701-3(c)(1)(i) 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, with the appropriate service center. Under § 301.7701-
3(c)(1)(iii), this election will be effective on the date specified by the entity on Form 8832
or on the date filed if no such date is specified. The date specified on Form 8832
cannot be more than 75 days prior to the date on which the election 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
E, G, H, and I. Section 301.9100-1(b) defines the term “regulatory election” as including
an election whose deadline is prescribed by a regulation published in the Federal
Register.

   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 an
election. Sections 301.9100-2 provides automatic extensions of time for making certain
elections. Sections 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 evidence to establish that the taxpayer acted
reasonably and in good faith, and that granting relief will not prejudice the interests of
the government.

                                   CONCLUSION

  Based solely on the facts submitted and representations made, we conclude that

X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3 and, therefore, it is
granted an extension of time of sixty (60) days from the date of this letter to file a Form
8832 to elect to be treated as an association taxable as a corporation for federal tax
purposes, effective D. A copy of this letter should be attached to the election. A copy is
enclosed for that purpose.

   Except as specifically set forth above, we express no opinion concerning the

federal tax consequences of the facts described above under any other provision of the
Internal Revenue Code.
PLR-102550-10 3

  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.

     In accordance with the Power of Attorney on file with this office, a copy of this

letter is being sent to your authorized representative.

                                   Sincerely,

                                   Associate Chief Counsel
                                   (Passthroughs & Special Industries)

                                      /s/

                               By: ___________________________
                                   David R. Haglund
                                   Branch Chief, Branch 1
                                   Office of the Associate Chief Counsel
                                   (Passthroughs & Special Industries)

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

cc: