PLR 1314015: IRS grants an LLC more time to elect partnership classification

Plain-English summary

A limited liability company asked for more time to file Form 8832 and elect to be treated as a partnership for federal tax purposes. The LLC was eligible for partnership treatment but missed the filing deadline for its election. The IRS found that the LLC acted reasonably and in good faith and that the extension would not prejudice the government. It granted 120 days from the date of the letter to file Form 8832, with the election effective on the requested date. The ruling did not decide whether the LLC was otherwise eligible to make the election.

Ruling snapshot

• Question: Can the LLC receive more time to file Form 8832 and elect partnership classification?
• Outcome: Approved, with a 120-day extension.
• 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: 201314015 Third Party Communication: None
Release Date: 4/5/2013 Date of Communication: Not Applicable
Index Number: 9100.31-00, 7701.00-00
Person To Contact:
--------------------------------------------------- -----------------------, ID No. --------------
------------------------------------------------------------ Telephone Number:
-------- ----------------------
------------------- Refer Reply To:
------------------------------------------ CC:PSI:B02
PLR-133103-12
Date:
December 06, 2012

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

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

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

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

Dear -----------------

This letter responds to your letter dated July 31, 2012 submitted on behalf of X,
requesting that the Service grant X and extension of time under § 301.9100-3 of the
Procedure and Administration Regulations to elect to be treated as a partnership under
§ 301.7701-3(c).

The information submitted states that X formed on Date 1 as a limited liability company
under the laws of State. Although X was eligible to be taxed as a partnership for federal
tax purposes as of Date 2, X did not timely file a Form 8832, Entity Classification
Election, electing to treat X as a partnership effective Date 2.

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 as provided in § 301.7701-3. An eligible
entity with at least two members can elect to be classified as either an association (and
a corporation under § 301.7701-2(b)(2)) or a partnership.

Section 301.7701-3(b)(1) provides that unless the entity elects otherwise, a domestic
eligible entity is a partnership if it has two or more members.
PLR-133103-12 2

Section 301.7701-3(c)(i) provides that an eligible entity may elect to be classified other
than as provided under paragraph § 301.7701-3(b), or to change its classification, by
filling Form 8832, Entity Classification Election, with the service center designated on
the Form 8832.

Section 301.7701-3(c)(iii) provides that an election made under paragraph 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 con not be more than 12 months after the date on which the election is filed. If
an election specifies an effective date more than 75 days prior to the date on which the
election is filed, it will be effective 75 days prior to the date it was filed. If an election
specifies an effective date more than 12 months from the date on which the election is
filed, it will be effective 12 months after the date it was filed.

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 301.9100-1(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.

Section 301.9100-1(c) provides that the Commissioner may grant a reasonable
extension of time under the rules set forth in § 301.9100-3 to make a regulatory election
under all subtitles of the Internal Revenue Code except subtitles E, G, H, and I.

Section 301.9100-3(a) provides that a request for relief will be granted when the
taxpayer provides the evidence (including affidavits described in paragraph § 301.9100-
3(e) 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 on the facts submitted and representations made, we conclude that X has
satisfied the requirements of § 301.9100-3. As a result, X is granted an extension of
time of 120 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 2. A copy of this
letter should be attached to the Form 8832.

Except as expressly provided herein, we express or imply no opinion concerning the tax
consequences of any aspect of any transaction or item discussed or referenced in this
letter. Specifically, we express or imply no opinion regarding whether X is otherwise
eligible to make the election.
PLR-133103-12 3

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the
Internal Revenue Code provides that it may not be used or cited as precedent.

Under a power of attorney on file with this office, we are sending a copy of this letter to
X’s authorized representative.

The ruling contained in this letter is 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 ruling request, it is subject to verification on examination.

                                   Sincerely,

                                   Associate Chief Counsel
                                   (Passthroughs & Special Industries)



                             By: ____________________________
                                 Bradford R. Poston
                                 Senior Counsel, Branch 2
                                 (Passthroughs & Special Industries)

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

cc: