Three LLCs receive late partnership election relief

Plain-English summary

Three limited liability companies intended to elect partnership classification from the date they were formed but did not timely file Form 8832. Each company represented that it was eligible for partnership treatment and had filed its income tax returns consistently with that treatment. They also represented that the missed filing was not motivated by tax avoidance or retroactive tax planning. The IRS found that the regulatory relief requirements were satisfied and gave each company 120 days to file its election with retroactive effect.

Ruling snapshot

• Question: May three LLCs file late entity-classification elections to be treated as partnerships from their formation date?
• Outcome: approved
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                      Department of the Treasury
                                                              Washington, DC 20224

Number: 201740004                                             Third Party Communication: Private Firm
Release Date: 10/6/2017                                       Date of Communication: July 5, 2017
Index Number: 9100.31-00
                                                              Person To Contact:
--------------------                                          --------------------, ID No. ------------------
--------------                                                Telephone Number:
--------------------------------------                        ----------------------
-------------------------------------------                   Refer Reply To:
------------------------------                                CC:PSI:B03
                                                              PLR-104972-17
                                                              Date:
                                                              July 5, 2017




X        =    ---------------------------------------------------------
Y        =    --------------------------------------------------------
Z        =    ---------------------------------------------------------
Date     =    --------------------
State    =    ---------------


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

This letter responds to a letter dated January 30, 2017, requesting an extension of time
under § 301.9100-3 of the Procedure and Administration Regulations to file an election
under § 301.7701-3 to be treated as partnerships for federal tax purposes.

                                                     FACTS

The information submitted states that X, Y, and Z were formed on Date as limited
liability companies under the laws of State. X, Y, and Z represent that they were eligible
to elect to be treated as partnerships. However, X, Y and Z failed to file the election
timely.

X, Y and Z intended to elect to be treated as partnerships for federal tax purposes as of
Date. X, Y, and Z represent that since Date each of them have filed income tax returns
consistent with the treatment of these entities as partnerships. X, Y, and Z also
represent that the failure to timely file the election was not motivated by tax avoidance
or retroactive tax planning.
PLR-104972-17                                 2


                                  LAW AND ANALYSIS

Section 301.7701-3(a), provides, in part, that a business entity that is not classified as a
corporation under § 301.7701-2(b)(1),(3),(4),(5),(6),(7), or (8) can elect its classification
for federal tax purposes as provided in this section.

Section 301.7701-3(a) provides that an eligible entity with at least two member can elect
be classified as a partnership.

Section 301.7701-3(c)(1)(iii) 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 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 Code, except subtitles
E,G, H, and I. Section 301.9100-1(b) provides that the term “regulatory election”
includes an election whose due date is prescribed by a regulation published in the
Federal Register.

Section 301.9100-3 provides the standard the Commissioner will use to determine
whether to grant an extension of time for the regulatory election if the taxpayer
demonstrates to the satisfaction of the Commissioner that the taxpayer acted
reasonably and good faith, and that the granting the relief will prejudice the interests of
the government.

                                        Conclusion

Based solely on the facts and representations submitted we conclude that X, Y, and Z
have satisfied the requirements of §§ 301.9100-1 and 301.9100-3. Accordingly, X, Y,
and Z are each granted an extension of time of 120 days from the date of this letter to
elect to be treated as partnerships for federal tax purposes effective Date. X, Y and Z
must each make such an election by filing a properly executed Form 8832 with the
appropriate service center. A copy of this letter should be attached to each of those
elections.

Except as specifically set forth above, we express no opinion concerning the federal
income tax consequences of the facts described above under any other provision of the
Code.
PLR-104972-17                                3

This ruling is directed only to the taxpayers requesting it. Section 6110(k)(3) of the
Code provides that it may not be used or cited as precedent. Pursuant to a power of
attorney on file with this office, a copy of this letter is being sent to the authorized
representative of X, Y, and Z.


                                      Sincerely,


                                      _________________________
                                      Richard T. Probst
                                      Senior Technician Reviewer, Branch 3
                                      Office of the Associate Chief Counsel
                                      (Passthroughs & Special Industries)

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