PLR 1104011: IRS grants more time to elect association classification

Plain-English summary

A business entity asked for more time to file Form 8832 and elect to be classified as an association taxable as a corporation for federal tax purposes. The entity intended the election to be effective when it was formed but inadvertently failed to file the form on time. The IRS concluded that the requirements of § 301.9100-3 were satisfied and granted 120 days from the letter date to file a properly executed Form 8832. The ruling was limited to the specific facts and did not address other tax consequences.

Ruling snapshot

• Question: May the entity make a late election to be treated as an association taxable as a corporation?
• Outcome: Approved.
• Key authorities: Treas. Reg. §§ 301.7701-2 and 301.7701-3; Treas. Reg. §§ 301.9100-1 through 301.9100-3.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201104011 Third Party Communication: None
Release Date: 1/28/2011 Date of Communication: Not Applicable
Person To Contact:
Index Number: 9100.31-00, 7701.00-00 --------------------, ID No. -------------
Telephone Number:
---------------------
-------------------------------------------- Refer Reply To:
------------------ CC:PSI:B02
------------------------------------ PLR-120885-10

                                                    Date:
                                                    October 13, 2010

Legend

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

D1 = -----------------------

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

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

This is in response to a letter dated March 31, 2010, and subsequent correspondence
submitted by X, requesting an extension of time under § 301.9100-3 of the Procedure
and Administration Regulations to file an election to be classified as an association
taxable as a corporation for Federal tax purposes.

FACTS

According to the information submitted, X was formed on D1 under the laws of State. X
intended to be treated as an association taxable as a corporation for Federal tax
purposes effective D1. However, X inadvertently failed to timely file a Form 8832, Entity
Classification Election, electing to treat X as an association taxable as a corporation
effective D1.

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
PLR-120885-10 2

elect its classification for Federal tax purposes. Section 301.7701-3(b)(1)(ii) provides
that unless the entity elects otherwise, a domestic eligible entity is a partnership if it has
two or more members or is 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 with the service
center designated on the form. Section 301.7701-3(c)(1)(iii) provides that an election
made under § 301.7701-3(c)(1)(i) will be effective on the date specified by the entity on
Form 8832 or on the date filed, if no such date is specified on the election form. The
effective date specified on Form 8832 can not be more than 75 days prior to the date on
which the election is filed and can not be more than 12 months after the date on which
the election 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
six months except in the case of a taxpayer who is abroad), under all subtitles of the
Code, except subtitles E, G, H, and I. Section 301.9100-1(b) defines the term
regulatory election as including an election with a deadline prescribed by a regulation
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 an election. 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 request 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 the 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 120 days from the date of this letter to make an election to be
treated as an association taxable as a corporation for Federal tax purposes effective
D1. X should make the election by filing a properly executed Form 8832 with the
appropriate service center. 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.
PLR-120885-10 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 and Special Industries)




                                     By:       _____________________________
                                               Bradford R. Poston
                                               Senior Counsel, Branch 2
                                               Office of Associate Chief Counsel
                                               (Passthroughs & Special Industries)

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