Corporate group received 120 days to make late GILTI high-tax exclusion election

Plain-English summary

A U.S. corporate group intended to elect the high-tax exclusion when calculating global intangible low-taxed income for its controlled foreign corporations. Its timely return consistently computed GILTI as though the election applied, and the related Forms 5471 showed affirmative selections, but its accounting firm accidentally omitted the formal election statement. The omission was discovered only after the normal 24-month period for making the election on an amended return had expired. The taxpayer requested relief before the IRS found the error, had relied on a qualified tax professional, and represented that it was not using hindsight or gaining a lower aggregate tax liability than a timely election would have produced. The IRS found that the taxpayer acted reasonably and in good faith and that relief would not prejudice the government. It granted 120 days to attach the election statement to a Form 1120X.

Ruling snapshot

• Question: May the corporate group receive extra time to make a GILTI high-tax exclusion election omitted from its timely return by its accounting firm?
• Outcome: Approved, with a 120-day extension
• Key authorities: IRC § 951A; Treas. Reg. §§ 1.951A-2(c)(7), 1.964-1(c), 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202547013 Third Party Communication: None
Release Date: 11/21/2025 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:

------------------------------------------- Refer Reply To:
----------------------------------- CC:INTL:B02
PLR-113355-25
Date:
August 25, 2025

TY: -------

LEGEND

Taxpayer = -----------------------------------------------
Members of Taxpayer’s CFC Group = 1. --------------------------------------------------

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Tax Year 1 = -----------------------------------------------
Date 1 = ------------------
Date 2 = ------------------
Accounting Firm = ---------------

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

This letter responds to a letter dated Date 1 and supplemental correspondence submitted
on behalf of Taxpayer and the U.S. consolidated group of which Taxpayer is the common
parent, by its authorized representatives, requesting an extension of time under Treas.
Reg. §301.9100-3 of the Procedure and Administration Regulations. The request

PLR-113355-25 2

pertains to Taxpayer’s desire 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

For Tax Year 1, Taxpayer, a domestic corporation, is the common parent of a U.S.
consolidated group (“Taxpayer consolidated group”). Taxpayer and other members of
the Taxpayer consolidated group owned, within the meaning of section 958(a), all of the
stock with respect to each of the foreign corporations which comprise Taxpayer’s CFC
Group. As a result, Taxpayer and the Taxpayer consolidated group were the only United
States shareholders within the meaning of section 951(b), as well as the controlling
domestic shareholders (as defined in Treas. Reg. §1.964-1(c)(5)), of each member of
Taxpayer’s CFC Group.

Taxpayer and the Taxpayer consolidated group timely filed on extension a Form 1120,
U.S. Federal Income Tax Return for Tax Year 1. The Form 1120 reported a GILTI
inclusion for Tax Year 1 that was consistent with Taxpayer’s intention to make the GILTI
HTE. Consistent with its expressed intention to make a GILTI HTE Election, Taxpayer
did not report any tested income from certain CFCs in its CFC Group when calculating its
GILTI inclusion for Tax Year 1. However, the return as filed did not include the election
statement required under Treas. Reg. §1.951A-2(c)(7)(viii).

Beginning several years before Tax Year 1 and continuing after Tax Year 1, Taxpayer
engaged Accounting Firm to perform tax compliance services, including preparation of
Forms 1120, Forms 5471, and required elections related to the return. In addition,
Taxpayer separately engaged Accounting Firm to perform international tax modeling and
analysis, which included analysis of the impact of the GILTI HTE Election. Prior to the
filing of the Tax Year 1 return, Taxpayer independently prepared its tax provision for Tax
Year 1 consistent with the position that the GILTI HTE Election would be made. Further,
Taxpayer and Accounting Firm had discussions regarding international tax modeling and
analysis for Tax Year 1 that contributed to the decision that the GILTI HTE Election would
be made for Tax Year 1.

Taxpayer provided Accounting Firm with the tax provision for Tax Year 1 and instructed
Accounting Firm to make the GILTI HTE Election with the Form 1120. As filed, the Form
1120 included Forms 5471 showing affirmative selections on Schedule Q in column xiv
concerning a desire to make the GILTI HTE Election whenever there was an item of
income to which the election would be applicable. Nevertheless, Accounting Firm
inadvertently neglected to include the formal election statement with the Tax Year 1 filing.

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On Date 2, Accounting Firm conducted a review of Taxpayer’s Tax Year 1 Form 1120
and discovered that the GILTI HTE Election statement had not been prepared or attached
to the returns. As of that date, 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 thereafter, after internal discussions, Accounting Firm 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:

1. Taxpayer and the Taxpayer consolidated group are 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. With respect to Tax Year 1, Taxpayer and other members of the Taxpayer
   consolidated group are the sole “United States shareholders” within the meaning
   of section 951(b) that directly or indirectly, within the meaning of section 958(a),
   own stock with respect to each member of Taxpayer’s CFC Group. Further,
   Taxpayer and the Taxpayer consolidated group are the only taxpayers affected by
   the GILTI HTE Election.

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.

PLR-113355-25 4

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 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
(i) 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; (ii) providing any notices required under Treas. Reg.
§1.964-1(c)(3)(iii); and (iii) 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.

PLR-113355-25 5

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) 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.

PLR-113355-25 6

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

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/ Kevin J. Liss

Kevin J. Liss
Senior Counsel, Branch 2
Associate Chief Counsel (International)

PLR-113355-25 7

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