Foreign entity received 120 days to elect corporate classification

Plain-English summary

A foreign eligible entity intended to be classified as an association taxable as a corporation from its formation date but inadvertently failed to file Form 8832 on time. It represented that the error was not motivated by tax avoidance or retroactive tax planning. The IRS found the discretionary extension requirements satisfied and granted 120 days to file Form 8832 with the intended effective date. The ruling does not determine whether the entity is otherwise eligible for the election or provide penalty relief for late returns. If applicable, the election is disregarded to the extent it otherwise would change section 965 elements of a United States shareholder.

Ruling snapshot

• Question: May the foreign eligible entity make a late Form 8832 election to be treated as a corporation from the intended effective date?
• Outcome: Approved, with 120 days to file Form 8832
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, 301.9100-1, 301.9100-3; Treas. Reg. § 1.965-4(c)(2)

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202449003 Third Party Communication: None
Release Date: 12/6/2024 Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.00-00,
9100.31-00 Person To Contact:
--------------------, ID No. -----------------
-------------------------------------------------------- Telephone Number:
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-------------------- Refer Reply To:
------------------------ CC:PSI:B01
------------- PLR-104872-24
------------------------------- Date:
-------------------------------------------------------- September 09, 2024

LEGEND

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

Country = ----------------------

Date = -------------------------

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

   This responds to a letter dated March 5, 2024, submitted on behalf of X by X’s

authorized representatives, requesting an extension of time under § 301.9100-3 of the
Procedure and Administration Regulations to file an entity classification election under
§ 301.7701-3(c) to be treated as an association taxable as a corporation for federal
income tax purposes.

                                                  FACTS

   According to the information submitted, X is an entity organized under the laws of

Country on Date. X represents that it is a foreign eligible entity under § 301.7701-3 and
intended to elect to be classified as an association taxable as a corporation, effective
Date. However, X inadvertently failed to timely file Form 8832, Entity Classification
Election, electing to be an association taxable as a corporation for federal income tax
purposes, effective Date. X represents that the failure to timely file the election was not
motivated by tax avoidance or retroactive tax planning.
PLR-104872-24 2

                               LAW AND ANALYSIS

    Section 301.7701-3(a) provides, in pertinent 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)(2)(i) provides that, except as provided in § 301.7701-

3(b)(3), unless the entity elects otherwise, a foreign eligible entity is – (A) a partnership
if it has two or more members and at least one member does not have limited liability;
(B) an association if all members have limited liability; or (C) disregarded as an entity
separate from its owner if it has a single owner that does not have limited liability.

   Section 301.7701-3(b)(2)(ii) provides, in part, that for purposes of § 301.7701-

3(b)(2)(i), a member of a foreign eligible entity has limited liability if the member has no
personal liability for the debts of or claims against the entity by reason of being a
member.

    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 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 in exercising the

Commissioner’s discretion 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 Internal Revenue 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, or a revenue ruling,
revenue procedure, notice, or announcement published in the Internal Revenue Bulletin.

    Section 301.9100 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
PLR-104872-24 3

301.9100-2 provides automatic extensions of time for making certain elections. Section
301.9100-3 provides extensions of time for making elections that do not meet the
requirements of § 301.9100-2.

   Requests for relief under § 301.9100-3 will be granted when the taxpayer

provides evidence (including affidavits described in § 301.9100-3(e)) to establish that
the taxpayer acted reasonably and in good faith, and that granting relief will not
prejudice the interests of the Government.

                                  CONCLUSION

    Based solely on the facts submitted and the representations made, we conclude

that X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. As a result, we
grant X an extension of time of one hundred twenty (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. 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 of this case 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.

     We express or imply no opinion concerning the assessment of any interest,

additions to tax, additional amounts, or penalties for failure to file a timely income tax or
information return with respect to any taxable year that may be affected by this ruling.
For example, we express or imply no opinion as to whether a taxpayer is entitled to
relief from any penalty on the basis that the taxpayer had reasonable cause for failure to
file timely any income tax or information returns.

   If applicable, X’s election to be classified as an association taxable as a

corporation is disregarded for purposes of determining the amounts of all § 965
elements of all United States shareholders of X if the election otherwise would change
the amount of any § 965 element of any such United States shareholder. See § 1.965-
4(c)(2) of the Income Tax Regulations.

  We are directing this ruling only to the taxpayer that requested it. Section

6110(k)(3) of the Code provides that it may not be used or cited as precedent.

   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 requested ruling, it is subject to verification on examination.
PLR-104872-24 4

    Pursuant to a 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:       /s/
                                                            Joy C. Spies
                                                            Senior Technician Reviewer, Branch 1
                                                            Office of the Associate Chief Counsel
                                                            (Passthroughs & Special Industries)

Enclosure
Copy of this letter for § 6110 purposes

cc: ---------------------------

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