Entity receives more time to elect corporate classification

Plain-English summary

A business entity intended from its formation date to be treated as an association taxable as a corporation for federal tax purposes. It inadvertently failed to file Form 8832 by the deadline. The IRS found that the entity met the standards for discretionary election relief. It granted 120 days to file a properly executed Form 8832 with the intended retroactive effective date.

Ruling snapshot

• Question: Should the entity receive more time to elect treatment as an association taxable as a corporation?
• Outcome: Approved, with 120 days to file Form 8832
• 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: 201628001                                          Third Party Communication: None
Release Date: 7/8/2016                                     Date of Communication: Not Applicable
Index Numbers: 7701.00-00; 9100.31-00
                                                           Person To Contact:
--------------------------------------------------------   --------------, ID No. ----------------
---------------------------                                Telephone Number:
-----------------------------------------                  --------------------
--------------------------------                           Refer Reply To:
                                                           CC:PSI:B01
                                                           PLR-100258-16
                                                           Date:
                                                           March 15, 2016




LEGEND

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

D                 =        ---------------------

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



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

This is in response to a letter dated November 26, 2015, 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 treated as an association taxable as a corporation for federal tax
purposes.

FACTS

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

LAW AND ANALYSIS
PLR-100258-16                                  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. 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)(1)(i) provides that an eligible entity may elect to 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 301.7701-3(c)(2)(i) provides that such an election must be signed by either (A)
each member of the electing entity who is an owner at the time the election is filed; or
(B) any officer, manager, or member of the electing entity who is authorized (under local
law or the entity’s organization documents) to make the election and who represents to
having such authorization under penalties of perjury. Section 301.7701-3(c)(2)(iii)
provides that if an election is to have a retroactive effective date, each person who was
an owner between the date the election is to be effective and the date the election is
filed, and who is not an owner at the time the election is filled, must also sign the
election.

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.
PLR-100258-16                                  3

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 D.
X must 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 representative.

                                       Sincerely,



                                       Associate Chief Counsel
                                       (Passthroughs & Special Industries)



                                       By: David R. Haglund
                                       David R. Haglund
                                       Branch Chief, Branch 1
                                       Office of the Associate Chief Counsel
                                       (Passthroughs & Special Industries)



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


cc: