PLR 201037007: IRS granted extra time for a corporate classification election

Plain-English summary

The IRS granted a limited liability company a 60-day extension to file Form 8832 and elect to be treated as an association taxable as a corporation. The company had failed to make the election on time, and the requested treatment was to apply from the specified effective date. Based on the submitted facts, affidavits, and representations, the IRS concluded that the requirements for relief under Treas. Reg. § 301.9100-3 were satisfied. The ruling addresses only the taxpayer's request and expresses no opinion on other tax consequences.

Ruling snapshot

• Question: Could the limited liability company obtain extra time to elect corporate tax treatment?
• Outcome: Approved
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, 301.9100-1, 301.9100-2, and 301.9100-3

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201037007
Third Party Communication: None
Release Date: 9/17/2010
Date of Communication: Not Applicable
Index Numbers: 7701.00-00; 9100.00-00
Person To Contact:
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CC:PSI:B01
PLR-105726-10
Date:
June 14, 2010

LEGEND

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

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

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

This letter responds to a letter dated February 1, 2010, requesting 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 X was a limited liability company formed under the laws of State. X failed to timely file an election to be treated as an association taxable as a corporation for federal tax purposes effective Date 1.

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

Section 301.7701-3(b)(1)(i) provides that unless a domestic eligible entity elects otherwise, the entity is a partnership if it has two or more members.

Section 301.7701-3(c)(1)(i) provides that an eligible entity may elect to be classified other than as provided under Section 301.7701-3(b) by filing Form 8832 with the appropriate service center. Under Section 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 Internal Revenue 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 301.9100-2 provides automatic extensions of time for making certain elections. Section 301.9100-3 provides rules for requesting extensions of time for regulatory 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 and information submitted, including the affidavits submitted and the representations that have been made, we conclude that the requirements of § 301.9100-3 have been satisfied. As a result, X 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 classified as an association taxable as a corporation for federal tax purposes, effective Date 1. A copy of this letter should be attached to the form.

Except as expressly provided herein, no opinion is expressed or implied concerning the 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) provides that it may not be used or cited as precedent.
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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)

By: Faith Colson
Faith Colson, Senior Counsel
Branch 1
Office of Associate Chief Counsel
(Passthroughs & Special Industries)

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