PLR 1031017: IRS granted an extension to elect partnership treatment

Plain-English summary

The IRS granted a foreign entity an extension of time to file Form 8832 and elect to be treated as a partnership for federal tax purposes. The entity was formed under foreign law and represented that it was eligible for partnership treatment effective on its formation date. The IRS concluded that the requirements for relief under Treas. Reg. § 301.9100-3 were satisfied and granted 60 days from the letter date to file. The election was to be effective on the specified formation date.

Ruling snapshot

• Question: Could the foreign entity receive additional time to elect partnership treatment?
• Outcome: Approved
• Key authorities: Treas. Reg. §§ 301.7701-3 and 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201031017 Third Party Communication: None
Release Date: 8/6/2010 Date of Communication: Not Applicable
Index Number: 9100.31-00
Person To Contact:
--------------------------------------------------------- --------------------, ID No. -------------
--------------------------------------------------- Telephone Number:
------------------------------------------------------------ ---------------------
---- Refer Reply To:
------------------------------------------------------------ CC:PSI:02

• PLR-130195-09
  Date:
  February 19, 2010

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

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

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

    This responds to a letter dated June 30, 2009, and subsequent correspondence,

submitted on behalf of X, requesting that the Service grant X an extension of time under
§ 301.9100-3 of the Procedure and Administration Regulations to make an entity
classification election.

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

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

   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
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 301.7701-3(b)(2) provides guidance on the classification of a foreign

entity for federal income 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).
PLR-130195-09 2

   Section 301.7701-3(c) provides that to elect to be classified other than as

provided in § 301.7701-3(b), an eligible entity must file Form 8832 with the designated
service center and 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 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 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 expressly provided herein, we express or imply no opinion concerning

the federal tax consequences of any aspect of any transaction or item discussed or
referenced in this letter.

  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.
PLR-130195-09 3

   In accordance with a power of attorney on file with this office, a copy of this letter

is being sent to X’s authorized representatives.

                                              Sincerely,



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

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