IRS clarifies the limited scope of an earlier late § 338(g) election ruling

Plain-English summary

The IRS had previously given a purchaser 45 days to file a late § 338(g) election for a stock acquisition. A question later arose about whether that ruling provided anything beyond extra time to file the election. This supplemental letter states that the earlier ruling expressed no opinion about tax consequences from the election or the failure to make it timely. It also did not consent to an accounting-method change or provide any other relief needed to report the transaction as if the election had been timely made. The supplement therefore confirms that the original relief was limited strictly to the filing extension.

Ruling snapshot

• Question: Did the earlier ruling grant any relief beyond additional time to file the purchaser's § 338(g) election?
• Outcome: other (the supplemental letter clarified that the earlier ruling granted only a filing extension)
• Key authorities: IRC § 338(g); Treas. Reg. § 301.9100-3

Full text (IRS public release)

 Internal Revenue Service                                       Department of the Treasury
                                                                Washington, DC 20224

 Number: 202037010                                              Third Party Communication: None
 Release Date: 9/11/2020                                        Date of Communication: Not Applicable
 Index Number: 9100.06-00, 338.01-02
                                                                Person To Contact:
 ----------------------------                                   --------------------, ID No. -----------------
 --------------------------------                               Telephone Number:
 ------------------------                                       --------------------
                                                                Refer Reply To:
 -----------------------------                                  CC:CORP:1
 ------------------------------------------------------------   PLR-135582-18
 --                                                             Date:
                                                                June 17, 2020




Legend

Purchaser                  =         -----------------------------
-----------------------------------------------------------

Target                     =         --------------------------------------------------------------------------------
                           -------------------------------------------
-----------------------------------------------------------

Date A                     =        -------------------


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

This letter supplements a private letter ruling issued by the Internal Revenue Service to
Purchaser on March 19, 2019 (PLR-135582-18, the “Letter Ruling”).

The Letter Ruling responded to a request by Purchaser for an extension of time under
§301.9100-3 of the Procedure and Administration Regulations to file an election under
section 338(g) with respect to Purchaser's acquisition of the stock of Target on Date A
(the “Election”). The Letter Ruling granted Purchaser an extension of time to file the
Election. Specifically, the Letter Ruling ruled that “an extension of time is granted under
§301.9100-3, until 45 days from the date on [the Letter Ruling], for Purchaser to file the
Election with respect to the acquisition of the stock of Target, as described [in the Letter
Ruling].”

A question has arisen regarding whether the Letter Ruling addressed any matter other
than an extension of time to file the Election. The Letter Ruling did not rule or otherwise
PLR-135582-18                                  2

express any opinion on any matter beyond the extension of time to file the Election. No
opinion was expressed with respect to any tax consequences arising from the Election
or the failure to make the Election in a timely manner. Specifically, the Letter Ruling did
not grant any consent or permission with respect to any change in method of
accounting. Nor did the Letter Ruling grant any other relief, consent, or permission in
order to report the transaction on any return consistently with the making of the Election
had the Election been timely made. This letter supplements the Letter Ruling
accordingly.

This letter is directed only to the taxpayer(s) who requested it. Section 6110(k)(3)
provides that it may not be used or cited as precedent.

Pursuant to the power of attorney on file in this office, copies of this letter are being sent
to your authorized representatives.

                                        Sincerely,



                                        Thomas I. Russell
                                        Chief, Branch 1
                                        Office of Associate Chief Counsel (Corporate)




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