Surviving LLC received 120 days to elect corporate status

Plain-English summary

A domestic LLC survived a merger with an entity already taxed as a corporation. The LLC intended to be treated as an association taxable as a corporation from a specified date but inadvertently failed to file Form 8832 on time. It represented that it acted in good faith, was not using hindsight, and that relief would not prejudice the government. The IRS found the regulatory relief requirements satisfied and granted 120 days to file the election retroactively. The ruling did not decide whether the LLC was otherwise eligible to elect corporate classification.

Ruling snapshot

• Question: Could the surviving LLC make a late election to be taxed as a corporation?
• Outcome: approved, with 120 days to file Form 8832
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, 301.9100-1, 301.9100-2, 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                      Department of the Treasury
                                                              Washington, DC 20224

Number: 201930002                                             Third Party Communication: None
Release Date: 7/26/2019                                       Date of Communication: Not Applicable
Index Number: 9100.00-00
                                                              Person To Contact:
--------------------------------                              -----------------------, ID No. -------------------
----------------                                              ---------------------------------------------------
--------------------------------                              Telephone Number:
-------------------------                                     ----------------------
                                                              Refer Reply To:
                                                              CC:PSI:B01
                                                              PLR-101763-19
                                                              Date:
                                                              April 18, 2019

LEGEND:


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

Y                 =    ---------------------------------------------------------------------------------------------
                       -------------------------------------------

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

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

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

Date 3            =    ----------------------


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

This letter responds to a letter dated January 30, 2019, submitted on behalf of X by its
authorized representative, requesting an extension of time under § 301.9100-3 of the
Procedure and Administration Regulations to file an election to under § 301.7701-3 to
be treated as an association taxable as a corporation for federal tax purposes.

Facts

According to the information submitted and representations within, X was formed as a
limited liability company under the laws of State on Date 1. On Date 3, Y, an association
taxable as a corporation, merged with and into X, with X surviving. X represents that it
intended to be treated as a corporation effective Date 2. However, due to inadvertence,

X failed to timely file Form 8832, Entity Classification Election, to be classified as an
association taxable as a corporation effective Date 2.

X represents that it acted in good faith and that no hindsight is involved in seeking this
relief. X further represents that granting the requested relief will not prejudice the
interests of the government.

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) (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
thus a corporation under § 301.7701-2(b)(2)) or 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(b)(1)(i) provides that except as provided in § 301.7701-3(b)(3),
unless the entity elects otherwise, a domestic eligible entity is (i) a partnership if it has
two or more members, or (ii) disregarded as an entity separate from its owner if it has a
single owner.

Section 301.7701-3(c)(1)(i) provides, in part, that an eligible entity may elect to be
classified other than as provided under § 301.7701-3(b), or to change its classification,
by filing Form 8832 with the service center designated on Form 8832.

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. 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.

Section 301.9100-1(c) provides that the Commissioner may grant a reasonable
extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a
regulatory election, or a statutory election (but not more than 6 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 301.9100-2 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.

Section 301.9100-3(a) provides that requests for relief subject to § 301.9100-3 will be
granted when the taxpayer provides the evidence (including affidavits described in
§ 301.9100-3(e)) to establish to the satisfaction of the Commissioner that (1) the
taxpayer acted reasonably and in good faith, and (2) the grant of relief will not prejudice
the interests of the Government.

Conclusion

Based solely on the facts submitted and representations made, we conclude that the
requirements of § 301.9100-3 have been satisfied. Accordingly, X is granted an
extension of time of 120 days from the date of this letter to file Form 8832 with the
appropriate service center to elect to be classified as an association taxable as a
corporation for federal tax purposes, effective Date 2. A copy of this letter should be
attached to the Form 8832. A copy is enclosed for that purpose.

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. Specifically, no opinion is expressed or implied concerning whether X is
otherwise eligible to make the election.

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 the 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.

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 X’s authorized representatives.

                                       Sincerely,

                                       Holly Porter
                                       Associate Chief Counsel
                                       (Passthroughs & Special Industries)


                                       Laura C. Fields
                                       Laura C. Fields
                                       Senior Technician Reviewer, Branch 1
                                       (Passthroughs & Special Industries)


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