LLC received 120 days to elect disregarded-entity status

Plain-English summary

A limited liability company had elected corporate tax treatment when it was formed. After a restructuring, it became eligible to elect treatment as an entity disregarded from its owner but did not timely file Form 8832. The company represented that it acted reasonably and in good faith, had not been fully informed about the election and its consequences, and that relief would not prejudice the government. The IRS granted 120 days to file Form 8832 with the requested retroactive effective date. The relief is conditioned on the company and its owner filing all required open-year returns consistently with disregarded-entity treatment within the same 120-day period. The ruling does not determine whether the company is otherwise eligible to make the election.

Ruling snapshot

• Question: May the LLC receive additional time to elect disregarded-entity treatment after its restructuring?
• 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

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 202511003
Third Party Communication: None
Release Date: 3/14/2025
Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.00-00;
9100.31-00
Person To Contact:
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Telephone Number:
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------------------------------------------------------- Refer Reply To:
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CC:PSI:B03
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PLR-106621-24
Date:
December 13, 2024

LEGEND

X = -------------------------------
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State = -------------

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

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

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

This letter responds to a letter dated April 3, 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 to file an election under § 301.7701-3 to be classified as a disregarded entity for federal tax purposes.

FACTS

According to the information submitted, X was formed under the laws of State as a limited liability company on Date 1. X elected to be treated as an association taxable as a corporation for federal tax purposes effective Date 1. Following and with respect to a restructuring, X was eligible to elect to be treated as a disregarded entity for federal tax purposes effective Date 2. However, X failed to timely file a Form 8832, entity classification election, electing to be treated as a disregarded entity for federal tax purposes effective Date 2.
PLR-106621-24
2

X represents that it acted reasonably and in good faith. X also represents that it was not informed in all material respects of the election and tax consequences. X also represents that granting relief requested will not prejudice the interests of the government.

LAW AND ANALYSIS

Section 301.7701-3(a) provides in part that a business entity that is not classified as a corporation under section 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) (an eligible entity) can elect its classification for federal tax purposes. A domestic eligible entity with at least two members can elect to be classified as either an association or a partnership, and a domestic 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(c)(1) provides that an entity classification election, or change in entity classification, must be filed on Form 8832 and can be effective up to 75 days prior to the date the form is filed or up to 12 months after the date the form is filed.

Section 301.7701-3(c)(1)(iv) states, in part, if an eligible entity makes an election to change its classification, the entity cannot change its classification by election again during the sixty months succeeding the effective date of the election. An election by a newly formed eligible entity that is effective on the date of formation is not considered a change for purposes of this paragraph (c)(1)(iv).

Section 301.7701-3(c)(2)(i) provides, in general, that an election made under § 301.7701-3(c)(1)(i) must be signed by (A) each member of the electing entity who is an owner at the time the election is filed; or (B) any officer, manager, or member of the electing entity who is authorized (under local law or the entity's organizational documents) to make the election and who represents to having such authorization under penalties of perjury.

Section 301.7701-3(c)(2)(ii) provides that, for purposes of § 301.7701-3(c)(2)(i), if an election under § 301.7701-3(c)(1)(i) is to be effective for any period prior to the time that it is filed, each person who was an owner between the date the election is to be effective and the date the election is filed, and who is not an owner at the time the election is filed, must also sign the election.

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 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.
PLR-106621-24
3

Section 301.9100-2 provides the rules governing automatic extensions 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.

Section 301.9100-3(a) provides that requests for relief subject to § 301.9100-3 will be granted when a taxpayer provides the 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 information submitted and the representations made, we conclude that the requirements of § 301.9100-3 have been satisfied. 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 to elect to be treated as a disregarded entity 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 the owner of X filing within 120 days from the date of this letter all required returns for all open years consistent with the request relief. A copy of this letter should be attached to any such returns.

Except as specifically set 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 rulings contained in this letter are 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 request for rulings, 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.
PLR-106621-24
4

Pursuant to a power of attorney on file with this office, copies of this letter are being sent to X's authorized representatives.

Sincerely,

Associate Chief Counsel
(Passthroughs & Special Industries)

/S/
By:_______
Robert D. Alinsky
Branch Chief, Branch 3
Office of Associate chief Counsel
(Passthroughs & Special Industries)

Enclosure:
Copy of this letter for § 6110 purposes

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