PLR 201120007: late entity-classification election granted

Plain-English summary

The IRS granted an entity 120 days to make a late election to be classified as an association taxable as a corporation for federal tax purposes. The entity had intended the classification to apply from an earlier date but had not timely filed Form 8832. The IRS concluded that the taxpayer acted reasonably and in good faith and that granting relief would not prejudice the government. The election had to be made by filing a properly executed Form 8832 with the appropriate service center and attaching a copy of the ruling.

Ruling snapshot

• Question: May the entity receive additional time to make its federal tax classification election?
• 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: 201120007
Third Party Communication: None
Release Date: 5/20/2011
Date of Communication: Not Applicable
Person To Contact:
Index Numbers: 7701.00-00; 9100.31-00
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Telephone Number:
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Refer Reply To:
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PLR-135425-10
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Date:
February 03, 2011

LEGEND

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

Date 2 = ----------------------

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

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

This responds to a letter dated August 12, 2010, and subsequent correspondence, submitted on behalf of X, 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 classified as an association taxable as a corporation for federal tax purposes.

FACTS

According to the information submitted, X was formed under the laws of State on Date

1. X intended to be treated as an association taxable as a corporation for federal tax
   purposes effective Date 2. However, X failed to timely file Form 8832, Entity Classification Election, electing to treat X as an association taxable as a corporation effective Date 2.
   PLR-135425-10 2

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.

Section 301.7701-3(b)(1) provides guidance on the classification of a domestic eligible entity for federal tax purposes. Generally, a domestic eligible entity is treated as a partnership if it has two or more members, or disregarded as an entity separate from its owner if it has a single owner, unless the entity makes an election to be treated otherwise. Section 301.7701-3(a) provides that an eligible entity with at least two members can elect to be classified as either an association (and thus a corporation under §301.7701-2(b)(2) or a partnership, and an eligible entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner.

Section 301.7701-3(c) provides that an entity classification election must be filed on Form 8832 and can be effective up to 75 days prior to the date the form is filed or up to 12 months after the date the form 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 301.9100-1(a).

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 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
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treated as an association taxable as a corporation for federal tax purposes effective Date 2. X shall 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.

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.

In accordance with the Power of Attorney on file with this office, a copy of this letter is being sent to your authorized representatives.

Sincerely,

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

By: Barbara J. Campbell
Barbara J. Campbell, Senior Technician Reviewer Branch 1
Office of the Associate Chief Counsel
(Passthroughs & Special Industries)

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

cc: