Late partnership-classification election granted

Plain-English summary

An eligible domestic entity intended to be treated as a partnership for federal tax purposes but did not file Form 8832. The IRS concluded that the requirements for discretionary election relief under Treasury Regulation section 301.9100-3 were satisfied. It granted the entity 120 days to file Form 8832 and elect partnership treatment from the requested effective date. The ruling did not address any other federal tax consequences.

Ruling snapshot

• Question: Whether the entity should receive more time to elect partnership classification
• Outcome: Approved, with 120 days to file Form 8832
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, 301.9100-1 through 301.9100-3

Full text (IRS public release)

 Internal Revenue Service                                    Department of the Treasury
                                                             Washington, DC 20224

 Number: 201539004                                           Third Party Communication: None
 Release Date: 9/25/2015                                     Date of Communication: Not Applicable
 Index Number: 7701.00-00, 9100.31-00
                                                             Person To Contact:
 -------------------------------------                       ---------------------------, ID No. ---------------
 -------------------------------------                       ------------------
 -----------------------------------------                   Telephone Number:
 -------------------------------                             ----------------------
                                                             Refer Reply To:
                                                             CC:PSI:B03
                                                             PLR-104485-15
                                                             Date:
                                                             June 8, 2015


LEGEND

X:                 ---------------------------------------
-----------------------------------------

State:            --------------

D1:               ----------------------------



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


          This responds to a letter dated January 27, 2015, and subsequent
 correspondence submitted on behalf of X, requesting that the Service grant X an
 extension of time under § 301.9100-3 of the Procedure and Administration Regulations
 to file an entity classification election.

         The information submitted states that X was formed as a State entity on D1
 eligible to be treated as a partnership for federal tax purposes. However, Form 8832,
 Entity Classification Election, electing to be treated as a partnership, was not filed for X.

       Section 301.7701-2(a) generally provides that a business entity is any entity
 recognized for federal tax purposes that is not properly classified as a trust under
 § 301.7701-4 or otherwise subject to special treatment under the Internal Revenue
 Code.

       Section 301.7701-3(a) provides that an eligible entity with at least two members
 may elect to be classified as either an association (and thus a corporation under
PLR-104485-15                                 2

§ 301.7701-2(b)(2)) or as 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(a) further provides that so long as a business entity is not
classified as a corporation under § 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) (an
eligible entity), it may elect its classification for federal tax purposes.

       Section 301.7701-3(c) provides that an entity classification election must be filed
on Form 8832 and can be effective up to seventy-five (75) days prior to the date the
form is filed or up to twelve (12) months after the date on which the form 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
6 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 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.

        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 301.9100-2 provides the rules governing automatic extensions of time
for making certain elections. Section 301.9100-3 provides the standards the
Commissioner will use to determine whether to grant an extension of time for regulatory
elections that do not meet the requirements of § 301.9100-2. Under § 301.9100-3, a
request for relief will be granted when the taxpayer provides evidence to establish to the
satisfaction of the Commissioner that (1) the taxpayer acted reasonably and in good
faith, and (2) granting relief will not prejudice the interests of the government.

       Based solely on the information 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 file a Form 8832
with the appropriate service center to elect to be treated as a partnership for U.S.
income tax purposes effective D1. A copy of this letter should be attached to the Form
8832. A copy is enclosed for that purpose.

       Except as specifically set forth above, no opinion is expressed concerning the
federal tax consequences of the facts described above under any other provision of the
Code.

      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.
PLR-104485-15                                  3


       Pursuant to a power of attorney on file with this office, a copy of this letter is
being sent to X’s authorized representative.


                                               Sincerely,




                                               Bradford R. Poston
                                               Senior Counsel, Branch 3
                                               Associate Chief Counsel
                                               (Passthroughs and Special Industries)


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