IRS gives a limited partnership 120 days to make a late corporate election

Plain-English summary

A domestic limited partnership intended to be classified as an association taxable as a corporation from a specified effective date. It failed to timely file Form 8832 and requested an extension under Treas. Reg. § 301.9100-3. The entity represented that it acted reasonably and in good faith and that relief would not prejudice the government's interests. The IRS found the extension requirements satisfied and granted 120 days to file Form 8832 with the intended effective date. The extension did not determine whether the entity otherwise qualified to make the election.

Ruling snapshot

• Question: Could the limited partnership make a late Form 8832 election to be taxed as a corporation from its intended effective date?
• Outcome: approved (a 120-day extension was granted)
• Key authorities: IRC § 7701; Treas. Reg. §§ 301.7701-2, 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: 202037003                                            Third Party Communication: None
 Release Date: 9/11/2020                                      Date of Communication: Not Applicable
 Index Numbers: 7701.00-00, 9100.00-00,
               9100.31-00                                     Person To Contact:
                                                              -------------------, ID No. -----------------
 ------------------------------------                         Telephone Number:
 ---------------------------------------------                --------------------
 ------------------------------------------                   Refer Reply To:
 -------------------------------                              CC:PSI:B03
                                                              PLR-100882-20
                                                              Date:
                                                              June 16, 2020




                                                  LEGEND

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

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

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

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



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

       This letter responds to a letter dated December 17, 2019 and subsequent
correspondence, submitted on behalf of X by X's authorized representative, 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 an association
taxable as a corporation for federal tax purposes.

                                                   FACTS

       According to the information submitted, X was formed on Date 1 as a State
limited partnership. X intended to be classified as an association taxable as a
corporation for federal tax purposes effective Date 2. However, X did not timely file
Form 8832, Entity Classification Election, to elect to be classified as an association
taxable as a corporation effective Date 2.
                                             2
PLR-100882-20



       X represents that it acted reasonably and in good faith. Further, X represents
that the interests of the Government will not be prejudiced for all taxable years affected
by the election by granting the relief sought.

                                  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) provides that, unless the entity elects otherwise, a
domestic eligible entity is classified as a partnership if it has two or more members or is
disregarded as an entity separate from its owner if it has a single owner.

        Section 301.7701-3(c)(1)(i) provides 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 appropriate service center. Under § 301.7701-3(c)(1)(iii),
this election will be effective on the date specified by the entity on Form 8832 or on the
date filed if no such date is specified. The date specified on Form 8832 cannot be more
than 75 days prior to the date on which the election is filed and cannot be more than 12
months after the date on which the election 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 (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.

       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 an
election. Section 301.9100-2 provides the standards the Commissioner will use to
determine whether to grant an automatic extension 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 (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.
                                             3
PLR-100882-20

                                      CONCLUSION

        Based solely on the information submitted and the representations made, we
conclude that X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. 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 and 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.

       Except as specifically set forth above, we express or imply no opinion concerning
the federal tax consequences of the facts described above under any other provision of
the Code and the regulations thereunder. In addition, § 301.9100-1(a) provides that the
granting of an extension of time for making an election is not a determination that the
taxpayer 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 an 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) of
the Code provides that it may not be used or cited as precedent.

      In accordance with the power of attorney on file with this office, we are sending a
copy of this letter to X's authorized representatives.

                                       Sincerely,

                                       Associate Chief Counsel
                                       (Passthroughs & Special Industries)




                                   By:_________________________
                                      Mary Beth Carchia
                                      Senior Technician Reviewer, Branch 3
                                      Office of Associate Chief Counsel
                                      (Passthroughs & Special Industries)




Enclosures (2)
      A copy of this letter
      A copy for § 6110 purposes


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