Twenty-three foreign entities receive late disregarded-entity elections

Number

202517006

Outcome

Approved

Document type

Private Letter Ruling

IRS subject

Reg. 301.7701-3 Classification of Certain Business Entities

Topics

Entity classification Late election relief (§ 9100)

Code sections

§ 965, § 7701

Ruling dated

January 24, 2025

Publicly released

April 25, 2025

Source

View Official PDF

Apply this to your situation

This page covers one taxpayer's ruling, issued in 2025, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.

About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.

View official IRS release (PDF)

Plain-English summary

Twenty-three foreign eligible entities were classified by default as associations taxable as corporations. Each intended to change to disregarded-entity status on the same effective date but failed to timely file Form 8832. Based on the facts and representations, the IRS concluded that every entity satisfied the requirements for relief under the § 301.9100 regulations. It granted each entity 120 days to file Form 8832 with the intended effective date. The entities and their owner must also file all required original or amended returns consistently, including the deemed liquidation that accompanies a change from association to disregarded status. If relevant, the elections are ignored when calculating § 965 elements to the extent they otherwise would alter a United States shareholder's § 965 amounts, and the ruling did not decide the entities' other filing obligations or eligibility.

Ruling snapshot

Question: May twenty-three foreign entities receive extra time to change from association to disregarded-entity classification?
Outcome: Approved, with 120 days to file Forms 8832 and consistent returns.
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: 202517006
Third Party Communication: None
Release Date: 4/25/2025
Date of Communication: Not Applicable
Index Numbers: 7701.00-00, 9100.00-00,
9100.31-00
Person To Contact:
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CC:PT&E:3
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PLR-113894-24
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PLR-113896-24
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PLR-113898-24
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PLR-113900-24
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PLR-113902-24
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PLR-113912-24
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PLR-113914-24
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PLR-113916-24
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PLR-113918-24
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PLR-113923-24
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January 24, 2025
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LEGEND

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PLR-113893-24 through PLR-113903-24
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PLR-113912-24 through PLR-113921-24
PLR-113923-24 through PLR 113924-24

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PLR-113893-24 through PLR-113903-24
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PLR-113912-24 through PLR-113921-24
PLR-113923-24 through PLR 113924-24

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Owner = ---------------------------------------------
PLR-113893-24 through PLR-113903-24
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PLR-113912-24 through PLR-113921-24
PLR-113923-24 through PLR 113924-24

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Country 1 = ----------------------

Country 2 = --------

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

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

Date 3 = ----------------------

Date 4 = -----------------------

Date 5 = --------------------------

Date 6 = ------------------

Date 7 = ----------------------

Date 8 = ----------------------

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

This letter is in response to a letter dated August 1, 2024, and subsequent correspondence, submitted on behalf of A, B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, and W (Entities) by their authorized representatives, requesting an extension of time under § 301.9100-3 of the Procedure and Administration Regulations for each of the Entities to file an election under § 301.7701-3 to be classified as a disregarded entity for federal tax purposes.

FACTS

The information submitted states that A, B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, and V were formed under the laws of Country 1 on Date 2, Date 2, Date 2, Date 2, Date 2, Date 2, Date 2, Date 2, Date 2, Date 2, Date 2, Date 5, Date 5, Date 4, Date 6, Date 3, Date 4, Date 3, Date 6, Date 7, Date 4, and Date 2, respectively. W was formed under the laws of Country 2 on Date 1. Each of the Entities’ default classification was an association taxable as a corporation for federal tax purposes.
PLR-113893-24 through PLR-113903-24
6
PLR-113912-24 through PLR-113921-24
PLR-113923-24 through PLR 113924-24

Each of the Entities represents that it is a foreign entity eligible to elect to change its classification and that it intended to elect to change its classification from an association to a disregarded entity for federal tax purposes effective Date 8. However, each of the Entities failed to file a Form 8832, Entity Classification Election, electing to be disregarded as an entity separate from its owner for federal tax purposes effective Date 8.
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, 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 301.7701-3(g)(1)(iii) provides that if an eligible entity classified as an association elects under § 301.7701-3(c)(1)(i) to be disregarded as an entity separate from its owner, the following is deemed to occur: the association distributes all of its assets and liabilities to its single owner in liquidation of the association. PLR-113893-24 through PLR-113903-24 7 PLR-113912-24 through PLR-113921-24 PLR-113923-24 through PLR 113924-24

Section 301.7701-3(g)(3)(i) provides that an election under § 301.7701-3(c)(1)(i) that changes the classification of an eligible entity for federal tax purposes is treated as occurring at the start of the day for which the election is effective. Any transactions that are deemed to occur under § 301.7701-3(g) as a result of a change in classification are treated as occurring immediately before the close of the day before the election is effective.
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 not more than 6 months except in the case of a taxpayer who is abroad), under all subtitles of the Internal Revenue Code (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.

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 the 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 facts submitted and representations made, we conclude that each of the Entities has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. As a result, we grant each of the Entities 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 disregarded as an entity separate from its owner for federal tax purposes effective Date

A copy of this letter should be attached to each Form 8832.

This ruling is contingent on the Entities and their Owner filing, within 120 days
from the date of this letter, all required federal income tax and information returns (including amended returns) for all years consistent with the granted relief (including the application of § 301.7701-3(g)(1)(iii)). A copy of this letter should be attached to any such returns.

If applicable, the Entities’ elections to be classified as disregarded entities are
disregarded for purposes of determining the amounts of all § 965 elements of all United States shareholders of the Entities if the elections otherwise would change the amount
PLR-113893-24 through PLR-113903-24 8
PLR-113912-24 through PLR-113921-24
PLR-113923-24 through PLR 113924-24

of any § 965 element of any such United States shareholder. See § 1.965-4(c)(2) of the Income Tax Regulations.

Except as expressly provided herein, we express or imply no opinion concerning the federal tax consequences of any aspect of any transaction or item discussed or referenced in this letter. Specifically, we express or imply no opinion on the federal income tax filing obligations of the Entities for taxable years beginning before Date 8, or with respect to the Internal Revenue Service’s ability to exam such years and impose penalties. 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.

Further, 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.

The ruling contained in this letter is based upon information and representations submitted by the taxpayers 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.

This ruling is directed only to the taxpayers requesting it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.

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

Sincerely,

Associate Chief Counsel
(Passthroughs, Trusts, and Estates)

By:
Mary Beth Carchia
Senior Technician Reviewer, Branch 3
Office of the Associate Chief Counsel
(Passthroughs, Trusts, and Estates)
PLR-113893-24 through PLR-113903-24
9
PLR-113912-24 through PLR-113921-24
PLR-113923-24 through PLR 113924-24

Enclosure:
Copy of this letter for § 6110 purposes

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