Corporation received 120 days to make a late GILTI high-tax election

Plain-English summary

A domestic corporation intended to make the GILTI high-tax exclusion election for a group of 29 controlled foreign corporations. Its timely return reported zero GILTI consistently with that intent, but employees failed to attach the required election statement. External auditors discovered the omission after the 24-month amended-return window had closed. The corporation represented that the affected years remained open, the IRS had not discovered the failure, and relief would not lower its aggregate tax liability or rely on hindsight. The IRS granted 120 days to attach the election statement to an amended Form 1120X.

Ruling snapshot

• Question: May the corporation make a late GILTI high-tax exclusion election for its CFC group?
• Outcome: Approved
• Key authorities: IRC § 951A; Treas. Reg. §§ 1.951A-2(c)(7), 1.964-1, and 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202524012 Third Party Communication: None
Release Date: 6/13/2025 Date of Communication: Not Applicable
Index Number: 9100.00-00, 9100.22-00,
951A.00-00, 951A.02-00 Person To Contact:
--------------, ID No. -----------------
------------------- Telephone Number:
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--------------------------------------- Refer Reply To:
--------------------------- CC:INTL:B02
------------------------- PLR-120541-24
Date:
March 11, 2025

TY: -------


                                      LEGEND

Taxpayer                                = ----------------------------------------------------------
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P                                       = ---------------
U                                       = --------------------------------------------------------
CFC 1                                   = -----------------------------------------------------
Members of Taxpayer’s CFC Group         = ---------------------------
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PLR-120541-24 2

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Tax Year 1 = -----------------------------------------------
Tax Year 2 = ------------------------------------------------------
Date 1 = ----------------------------
Date 2 = -----------------------
Date 3 = --------------------
Accounting Firm 1 = --------------------------
Accounting Firm 2 = --------------------------
Tax Director = ----------------------------------------------------------
Tax VP = ----------------------------------------------------------
--------------------------
Country A = ----------------
Country B = -----------

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

This letter responds to a revised letter dated Date 1 and supplemental
correspondence submitted on behalf of Taxpayer by its authorized
representatives, requesting an extension of time under Treas. Reg. §301.9100-3
of the Procedure and Administration Regulations for Taxpayer to file a global
intangible low-taxed income (“GILTI”) high-tax exclusion election (“GILTI HTE
Election”) under Treas. Reg. §1.951A-2(c)(7)(viii) with respect to each controlled
foreign corporation (as defined in section 957(a)) (“CFC”) that is a member of a
CFC Group as defined in Treas. Reg. §1.951A-2(c)(7)(viii)(E)(2)(i), for the CFC
inclusion year (as defined in Treas. Reg. §1.951A-1(f)(1)) with respect to Taxpayer
that ends with or within Taxpayer’s U.S. shareholder inclusion year (as defined in
Treas. Reg. §1.951A-1(f)(7)), Tax Year 1.

FACTS

Taxpayer, a domestic corporation, is a direct or indirect shareholder with respect
to twenty-nine (29) foreign subsidiaries which comprise Taxpayer’s CFC Group.
All of these foreign subsidiaries are corporations organized under the laws of
Country B. Taxpayer is the controlling domestic shareholder (as defined in Treas.
Reg. §1.964-1(c)(5)) of each member of Taxpayer’s CFC Group.

In Tax Year 1, Taxpayer was wholly owned by P, the parent company of the P
Group organized under the laws of Country A. During Tax Year 1, Taxpayer
PLR-120541-24 3

directly owned 100 percent of the issued and outstanding equity in U, a company
also organized under the laws of Country B and classified as a disregarded entity
for U.S. federal income tax purposes.

U owned 100 percent of the issued and outstanding stock in CFC 1. CFC 1 in turn
directly owned all the outstanding stock of twenty-four (24) foreign subsidiaries,
and directly or indirectly owned a 55 percent interest in four (4) additional foreign
subsidiaries. These 28 foreign subsidiaries, together with CFC 1, comprised the
Taxpayer’s CFC Group.

With respect to each of the 4 foreign subsidiaries that is not wholly owned by CFC 1,
the remaining 45 percent interest was owned, directly or indirectly, by a single
corporation which is not a U.S. person.

For Tax Year 1, Taxpayer filed a standalone Form 1120, U.S. Federal Income Tax
Return. The return was timely filed on extension on Date 2.

The Form 1120 for Tax Year 1 as prepared and filed by Taxpayer reported a zero
GlLTI inclusion for Tax Year 1, consistent with Taxpayer’s intention to make the
GILTI HTE. However, the return as filed did not include the election statement
required under Treas. Reg. §1.951A-2(c)(7)(viii). In the absence of a GILTI HTE
Election, Taxpayer would have had a non-zero GILTI inclusion for Tax Year 1.

According to Taxpayer, the employees responsible for preparing and reviewing the
Form 1120 for Tax Year 1 did not appreciate that an election statement was
required by Treasury regulations to effectuate the GILTI HTE Election. As a result
of this oversight, the statement was omitted from the return as filed.

During Tax Year 2, auditors at Accounting Firm 1 conducted a carve-out financial
audit that included Taxpayer’s Form 1120 for Tax Year 1. On Date 3, auditors at
Accounting Firm 1 contacted Tax Director, stating that they had discovered that
the GILTI HTE Election statement had not been attached to Taxpayer’s Form 1120
for Tax Year 1. Tax Director notified Tax VP on the following day about the omitted
election statement.

By Date 3, the 24-month window prescribed in Treas. Reg. §1.951A-
2(c)(7)(viii)(A)(2)(i) for making a GlLTI HTE Election on an amended return had
lapsed. Shortly after Date 3, Taxpayer consulted Accounting Firm 2, which
advised Taxpayer about the possibility of requesting relief under Treas Reg. §§
301.9100-1 and 301.9100-3 to make a late GILTI HTE Election for Tax Year 1.

In connection with this ruling request, Taxpayer has made the following
representations:
PLR-120541-24 4

1. Taxpayer is not currently under examination for Tax Year 1, or any other
   year in which any issue with respect to the GILTI HTE Election is presented
   on a return.

2. Tax Year 1, and any other taxable year that would be affected by the GILTI
   HTE Election had it been timely made, remain open for assessment as of
   the date of this letter.

3. Taxpayer is the sole “United States shareholder” within the meaning of
   section 951(b) that directly or indirectly, within the meaning of section
   958(a), owns stock with respect to each member of Taxpayer’s CFC Group.

4. The request for relief was filed before the failure to make the GILTI HTE
   Election was discovered by the IRS.

5. Granting the relief will not result in Taxpayer having a lower tax liability in
   the aggregate for all taxable years affected by the GILTI HTE Election than
   it would have had if the election had been timely made.

6. Taxpayer does not seek to alter a return position for which an accuracy-
   related penalty has been or could be imposed under section 6662 at the
   time this request for relief was made.

7. Taxpayer is not using hindsight in making the decision to seek the relief
   requested. No specific facts have changed since the due date for making
   the election that would make the election more advantageous to Taxpayer.

LAW AND ANALYSIS

Section 951A(a) provides that a U.S. shareholder of any CFC for any taxable year
of the U.S. shareholder must include in gross income the shareholder’s GILTI for
that taxable year.

Section 951A(b) provides that the term GILTI means, with respect to any U.S.
shareholder for any taxable year of such U.S. shareholder, the excess (if any) of
such shareholder’s net CFC tested income for such taxable year, over such
shareholder’s net deemed tangible income return for such taxable year.

Section 951A(c)(1) generally provides that the term “net CFC tested income”
means, with respect to any U.S. shareholder for any taxable year, the excess (if
any) of the aggregate of such shareholder’s pro rata share of the tested income of
each CFC with respect to which such shareholder is a U.S. shareholder for such
taxable year of such U.S. shareholder, over the aggregate of such shareholder’s
PLR-120541-24 5

pro rata share of the tested loss of each CFC with respect to which such
shareholder is a U.S. shareholder for such taxable year of such U.S. shareholder.

Section 951A(c)(2)(A) provides that the term “tested income” means, with respect
to any CFC for any taxable year of such CFC, the excess (if any) of the gross
income of such corporation determined without regard to certain items of income,
including any gross income excluded from the foreign base company income (as
defined in section 954) and the insurance income (as defined in section 953) of
such corporation by reason of section 954(b)(4), over the deductions (including
taxes) properly allocable to such gross income under rules similar to the rules of
section 954(b)(5) (or to which such deductions would be allocable if there were
such gross income).

Treas. Reg. §1.951A-2(c)(7)(i) generally provides that for purposes of determining
the tested income of a CFC, a tentative gross tested income item (determined
under Treas. Reg. §1.951A-2(c)(7)(ii)(A)) qualifies for the GILTI HTE Election only
if that election is effective with respect to the CFC for the CFC inclusion year and
the tentative tested income item with respect to the tentative gross tested income
item was subject to an effective rate of foreign tax that is greater than 90 percent
of the maximum rate of tax specified in section 11.

Treas. Reg. §1.951A-2(c)(7)(viii)(A)(1) provides that the GILTI HTE Election is
made by the controlling domestic shareholder with respect to a CFC for a CFC
inclusion year by filing the statement required under Treas. Reg. §1.964-1(c)(3)(ii)
with a timely filed original federal income tax return, or with an amended federal
income tax return, for the U.S. shareholder inclusion year of each controlling
domestic shareholder in which or with which such CFC inclusion year ends;
providing any notices required under Treas. Reg. §1.964-1(c)(3)(iii); and providing
any additional information required by applicable administrative pronouncements.

Treas. Reg. §1.951A-2(c)(7)(viii)(A)(2)(i) generally provides that a controlling
domestic shareholder may make the GILTI HTE Election with an amended federal
income tax return, duly filed within 24 months of the unextended due date of the
original federal income tax return for the U.S. shareholder inclusion year with or
within which the CFC inclusion year ends.

Treas. Reg. §1.951A-2(c)(7)(viii)(E)(1) provides that if a CFC is a member of a
CFC Group, the GILTI HTE Election is made with respect to all CFCs that are
members of the CFC Group.

Treas. Reg. §1.951A-2(c)(7)(viii)(E)(2)(i) provides that a CFC Group means an
affiliated group as defined in section 1504(a) without regard to section 1504(b)(1)
through (6), except that section 1504(a) is applied by substituting “more than 50
percent” for “at least 80 percent” each place it appears, and section 1504(a)(2)(A)
PLR-120541-24 6

is applied by substituting “or” for “and.” For purposes of Treas. Reg. §1.951A-
2(c)(7)(viii)(E)(2)(i), stock ownership is determined by applying the constructive
ownership rules of section 318(a), other than section 318(a)(3)(A) and (B), by
applying section 318(a)(4) only to options (as defined in Treas. Reg. §1.1504-4(d))
that are reasonably certain to be exercised as described in Treas. Reg. §1.1504-
4(g), and by substituting in section 318(a)(2)(C) “5 percent” for “50 percent.”

Treas. Reg. §1.951A-2(c)(7)(viii)(D) provides that a GILTI HTE Election is valid
only if all the requirements in Treas. Reg. §1.951A-2(c)(7)(viii)(A) are satisfied.

Treas. Reg. §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 six 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.

Treas. Reg. §301.9100-1(b) defines the term “regulatory election” as 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.

Treas. Reg. §301.9100-2 provides automatic extensions of time for making certain
elections.

Treas. Reg. §301.9100-3 provides rules for requesting extensions of time for
regulatory elections that do not meet the requirements of Treas. Reg. §301.9100-

2. It provides that these requests for relief are granted when the taxpayer provides
   the evidence (including affidavits) to establish to the satisfaction of the
   Commissioner that the taxpayer acted reasonably and in good faith, and the grant
   of relief will not prejudice the interests of the Government.

Treas. Reg. §301.9100-3(b)(1)(i) provides that a taxpayer is deemed to have acted
reasonably and in good faith if, among other factors, the taxpayer requests relief
before the failure to make the regulatory election is discovered by the IRS.
Alternatively, Treas. Reg. §301.9100-3(b)(1)(v) provides that a taxpayer is also
deemed to have acted reasonably and in good faith if the taxpayer reasonably
relied on a qualified tax professional, including a tax professional employed by the
taxpayer, and the tax professional failed to make, or advise the taxpayer to make,
the election.

Treas. Reg. §301.9100-1(a) provides that granting an extension of time for making
an election is not a determination that a taxpayer is otherwise eligible to make the
election or that a taxpayer complied with the other requirements for a valid election.
CONCLUSION
PLR-120541-24 7

Based on the facts provided and representations made, we conclude that the
requirements of Treas. Reg. §§301.9100-1 and 301.9100-3 have been satisfied.
Taxpayer is hereby granted an extension of time of one hundred twenty (120)
days from the date of this letter to make a GILTI HTE Election with respect to
Taxpayer’s CFC Group for the CFC inclusion year that ends with or within
Taxpayer’s U.S. shareholder inclusion year, Tax Year 1. Taxpayer should make
the election in a written statement attached to a duly filed Form 1120X for Tax
Year 1.

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 request for ruling, it is subject to verification on
examination.

Except as expressly provided herein, no opinion is expressed or implied
concerning the tax consequences of any aspect of any transaction or item
discussed or referenced in this letter.

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

A copy of this letter must be attached to any income tax return to which it is
relevant. Alternatively, taxpayers filing their returns electronically may satisfy this
requirement by attaching a statement to their return that provides the date and
control number of the letter ruling.

In accordance with the Power of Attorney on file with this office, a copy of this letter
is being sent to your authorized representative.

                                            Sincerely,

                                            /s/ Mallory Mendrala

                                            Mallory Mendrala
                                            Senior Technical Reviewer, Branch 2
                                            Associate Chief Counsel (International)

Cc: ----------------------------------------