Foreign entity received 120 days to elect partnership classification

Plain-English summary

A foreign eligible entity intended to be classified as a partnership and filed its federal tax reports consistently with that treatment, but inadvertently failed to file Form 8832. The IRS concluded that the entity met the standards for late regulatory-election relief and granted 120 days to file Form 8832 with the requested retroactive effective date. The entity and its owners must also file all necessary federal income and information returns, including amended returns and potentially Forms 8865, consistently within the same period. If relevant, the election is disregarded when calculating IRC § 965 elements to the extent it otherwise would change a U.S. shareholder’s transition-tax amounts. The ruling does not determine substantive eligibility or grant penalty relief.

Ruling snapshot

• Question: May the foreign eligible entity receive additional time to elect partnership classification?
• Outcome: Approved, with a 120-day extension and consistent-return condition
• 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: 202509009 Third Party Communication: None
Release Date: 2/28/2025 Date of Communication: Not Applicable
Index Numbers: 7701.00-00, 9100.00-00, Person To Contact:
9100.31-00 -----------------, ID No. -----------------
Telephone Number:
--------------------
Refer Reply To:
CC:PSI:B03
PLR-110974-24
Date:
November 26, 2024

LEGEND ---------------------------------------------

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

                   ------------------------

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

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

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

Dear ------------------

   This letter responds to a letter dated May 24, 2024, and subsequent

correspondence, submitted on behalf of X by its authorized representatives, requesting
an extension of time under § 301.9100-3 of the Procedure and Administration
Regulations for X to file an election under § 301.7701-3 to be classified as a partnership
for federal tax purposes.

                                                 FACTS

    According to the information submitted, X was formed on Date 1 under the laws

of Country. X represents that it is a foreign entity eligible to elect to be classified as an
as a partnership for federal tax purposes effective Date 2. X further represents it has
filed all federal tax reports consistent with X being classified as a partnership effective
Date 2. However, due to inadvertence, X failed to file Form 8832, Entity Classification
Election, electing to be classified as a partnership effective Date 2.
PLR-110974-24 2

                                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)(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 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 the 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 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 no more than six 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) defines a regulatory
election to include 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 sets forth the standards the Commissioner will use to

determine whether to grant an extension of time for regulatory elections that do not
PLR-110974-24 3

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 (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

X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. As a result, we
grant X an extension of time of 120 days from the date of this letter to file Form 8832
with the appropriate service center to be classified as a partnership for federal tax
purposes effective Date 2. A copy of this letter should be attached to the Form 8832.

    This ruling is contingent on X and its owners filing, within 120 days from the date

of this letter to the extent necessary or appropriate, all required federal income tax
returns and information returns (including amended returns) consistent with the request
relief granted in this letter. These returns include, but are not limited to Forms 8865,
Return of U.S. Persons with Respect to Certain Foreign Partnerships, such that these
forms reflect the consequences of the relief granted in this letter. A copy of this letter
should be attached to any such returns.

   If applicable, X’s election to be classified as a partnership effective Date 2 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.

   Except as specifically set forth above, we express or imply no opinion concerning

the facts of this case under any other provision of the Code. 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.

   This ruling is directed 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
PLR-110974-24 4

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.

  In accordance with a power of attorney on file with this office, we are sending a

copy of this letter to your authorized representative.

                                            Sincerely,

                                            Associate Chief Counsel
                                            (Passthroughs & Special Industries)



                                   By:---------------------------------------------------------
                                           Christiaan T. Cleary
                                           Senior Technician Reviewer, Branch 1
                                           Office of Associate Chief Counsel
                                           (Passthroughs & Special Industries)

Enclosure:
Copy of this letter for § 6110 purposes

cc: