PLR 1042009: IRS grants more time to make a section 59(e) election

Plain-English summary

The IRS considered a taxpayer's request for more time to make an election under IRC § 59(e) for a taxable year that had already ended. The election provides an optional 10-year write-off for certain tax preferences and generally must be made by attaching a statement to the taxpayer's timely filed return. The IRS concluded that the requirements of Treas. Reg. § 301.9100-3 were satisfied and granted an extension until 60 days after the ruling date. The ruling did not determine whether the taxpayer's expenditures were qualified expenditures under § 59(e)(2).

Ruling snapshot

• Question: May the taxpayer receive more time to make a late § 59(e) election?
• Outcome: Approved
• Key authorities: IRC §§ 59(e), 59(e)(1), 59(e)(2), 59(e)(4), and 6110(k)(3); Treas. Reg. §§ 1.59-1(b)(1), 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: 201042009 Third Party Communication: None
Release Date: 10/22/2010 Date of Communication: Not Applicable
Index Number: 59.00-00, 9100.00-00
Person To Contact:
-------------------------------------------------- ------------------------, --------------------
------------------------------------------- Telephone Number:
---------------------------- ---------------------
------------------------------------ Refer Reply To:
CC:PSI:06
PLR-105449-10
Date:
July 12, 2010

LEGEND:

Taxpayer = ---------------------------------------------------------------------------------

Date = --------------------------

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

   This letter responds to a letter dated -----------------------, requesting an extension

of time pursuant to § 301.9100-3 of the Procedure and Administration Regulations for
Taxpayer to make an election under § 59(e) of the Internal Revenue Code for the
taxable year ending Date.

   According to the information submitted, Taxpayer did not timely make the

election under § 59(e) for the taxable year ending Date. Taxpayer has made
representations explaining why the election under § 59(e) was not timely filed.

  Section 59(e) provides an optional 10-year write-off of certain tax preferences.

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) of the Income Tax Regulations provides that an election

under § 59(e) can only be made by attaching a statement to the taxpayer’s income tax
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.

   Under § 301.9100-1, the Commissioner has discretion to grant a reasonable

extension of time under the 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
PLR-105449-10 2

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 an 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.

    Section 301.9100-3(a) provides that requests for relief under § 301.9100-3 will be

granted when the taxpayer provides evidence to establish to the satisfaction of the
Commissioner that the taxpayer acted reasonably and in good faith, and the grant of
relief will not prejudice the interests of the Government.

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

requirements of § 301.9100-3 have been satisfied with respect to the taxable year
ending Date. Accordingly, an extension of time is hereby granted, until 60 days from
the date of this ruling, for Taxpayer to make an election under § 59(e) for the taxable
year ending Date.

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

the federal income 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).

  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, we are sending copies of this letter to

Taxpayer’s authorized representatives. We also are sending a copy of this letter to the
appropriate Industry Director, LMSB. 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.
PLR-105449-10 3

  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.

                                             Sincerely,

                                             Associate Chief Counsel
                                             (Passthroughs & Special Industries)


                                       By: ______________________
                                           Brenda M. Stewart
                                           Senior Counsel, Branch 6
                                           Office of Associate Chief Counsel
                                           (Passthroughs & Special Industries)

Enclosures (2):
copy of this letter
copy for section 6110 purposes