Trust receives 120-day extension for charitable-contribution election

Plain-English summary

A trust made charitable contributions during one tax year and intended to elect under section 642(c) to treat them as paid in the preceding year. Its tax adviser inadvertently failed to file the trust's return and election by the required deadline. The trust asked for relief under Treasury Regulations section 301.9100-3. Based on the submitted facts and representations, the IRS found that the trust met the standards for an extension. It granted 120 days from the ruling date to file the section 642(c) election and claim the deduction for the earlier year.

Ruling snapshot

• Question: Could the trust receive extra time to elect to treat charitable contributions paid in a later year as paid in the preceding year?
• Outcome: Approved, with a 120-day extension.
• Key authorities: IRC §§ 170 and 642; Treas. Reg. §§ 1.642(c)-1, 301.9100-1, and 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 202001013
Third Party Communication: None
Release Date: 1/3/2020
Date of Communication: Not Applicable
Index Number: 642.03-00, 9100.26-00
Person To Contact:
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-------------------------------------------------------- Refer Reply To:
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CC:PSI:B03
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PLR-111862-19
Date:
October 01, 2019
Legend:

Trust: -----------------------------------------------
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Trustees: -----------------------------------------------
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Year 1: ------------------
Year 2: ------------------
$x: ---------------

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

This letter responds to a letter dated May 7, 2019, and subsequent correspondence, submitted on behalf of Trust, requesting that the Service grant Trust an extension of time pursuant to § 301.9100-3 of the Procedure and Administration Regulations to make an election under § 642(c) of the Internal Revenue Code.

Facts

The Trustees of Trust made charitable contributions in the total amount of $x (the Contributions) during the tax year ending Year 2. Trust intended to have the Contributions treated as though paid in Year 1 as permitted under § 642(c). However, due to inadvertence, Trust’s tax advisor failed to timely file Trust’s Year 2 tax year Form 1041 which included the § 642(c) election.
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Law and Analysis

Section 642(c) provides that, in the case of an estate or trust, there shall be allowed as a deduction in computing its taxable income (in lieu of the deduction allowed by § 170(a), relating to the deduction for charitable, etc., contributions and gifts) any amount of the gross income, without limitation, which pursuant to the terms of the governing instrument is, during the taxable year, paid for a purpose specified in § 170(c) (determined without regard to § 170(c)(2)(A)). If a charitable contribution is paid after the close of such taxable year and on or before the last day of the year following the close of such taxable year, then the trustee may elect to treat such contribution as paid during such taxable year. The election shall be made at such time and in such manner as the Secretary prescribes by regulation.

Section 1.642(c)-1(b)(1) provides that for purposes of determining the deduction allowed under § 1.642(c)-1(a), the fiduciary (as defined in § 7701(a)(6)) of an estate or trust may elect under § 642(c)(1) to treat as paid during the taxable year (whether or not such year begins before January 1, 1970) any amount of gross income received during such taxable year or any preceding taxable year which is otherwise deductible under such taxable year or any preceding taxable year and which is paid after the close of such taxable year but on or before the last day of the next succeeding taxable year of the estate or trust. The preceding sentence applies only in the case of payments actually made in a taxable year which is a taxable year beginning after December 31, 1969. No election shall be made, however, in respect of any amount which was deducted for any previous taxable year or which is deducted for the taxable year in which such amount is paid.

Section 1.642(c)-1(b)(2) provides that the election under § 1.642(c)-1(b)(1) shall be made not later than the time, including extensions thereof, prescribed by law for filing the income tax return for the succeeding taxable year.

Section 1.642(c)-1(b)(3) provides that the election shall be made by filing with the income tax return (or amended return) for the taxable year in which the contribution is treated as paid a statement which (1) states the name and address of the fiduciary, (ii) identifies the estate or trust for which the fiduciary is acting, (iii) indicates that the fiduciary is making an election under § 642(c)(1) in respect of contributions treated as paid during such taxable year, (iv) gives the name and address of each organization to which any contribution is paid, and (v) states the amount of each contribution and date of actual payment, or if applicable, the total amount of contributions paid to each organization during the succeeding taxable year, to be treated as paid in the preceding taxable year.

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
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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) defines the term “regulatory election” as including an election whose due date is prescribed by a regulation published in the Federal Register.

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 the taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice the interests of the Government.

Conclusion

Based solely on the facts submitted and the representations made, we conclude that Trust has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. Accordingly, Trust is granted an extension of time of 120 days from the date of this letter to file an election under § 642(c) to claim a deduction in Trust’s Year 1 taxable year for charitable contributions made in the tax year ending Year 2. The election should be made by filing, with the appropriate service center, a copy of the original income tax return filed for Trust for the tax year ending Year 2 with the election and a copy of this letter.

Except for the specific ruling above, no opinion is expressed or implied 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) of the Code provides that it may not be used or cited as precedent.
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In accordance with the power of attorney on file with this office, a copy of this letter is being sent to Trust’s authorized representative.

Sincerely,

Associate Chief Counsel
(Passthroughs & Special Industries)

By:_______
Adrienne M. Mikolashek
Branch Chief, Branch 3
Office of the Associate Chief Counsel
(Passthroughs & Special Industries)

Enclosures (2)
Copy of Letter
Copy for 6110 purposes

cc: