Ezel / IRS Rulings / 201526006

Invalid S election barred flow-through loss deduction

Number
201526006
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Termination of Election
Topics
S corporations
Code sections
§ 1362
Ruling dated
January 13, 2015
Publicly released
June 26, 2015
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2015, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2015
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel concluded that a revenue agent could and should deny a taxpayer's claimed loss deduction on an alternative ground. Because the corporation's S election was invalid, there was no flow-through business loss available to the taxpayer. The factual details and the identity of the loss were redacted from the public release.

Ruling snapshot

  • Question: Could the taxpayer claim a flow-through business loss when the corporation's S election was invalid?
  • Outcome: Advice given to deny the loss deduction.
  • Key authorities: IRC § 1362.

Full text (IRS public release)

ID: CCA-1131414-15
Office: ----------------
UILC: 1362.02-00
Number: 201526006
Release Date: 6/26/2015
From: --------------------
Sent: Tuesday, January 13, 2015 14:14
To: ---------------
Cc: -----------------
Subject: -----------------------

Hi ------,

We have reviewed the facts presented and the relevant law and conclude that the
Revenue Agent can and should deny ---- loss deduction for ------ on the alternative
ground that there was no flow-thru business loss because the “S” election was invalid.

Please let us know if there is anything else you need. Otherwise, we will go close our
WLI.

Thanks,

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