9100 extension to file a late section 336(e) election on the sale of an S corporation's stock (336)

Plain-English summary

An S corporation was owned by a single shareholder who sold all of its stock to a corporate buyer. A section 336(e) election lets a qualifying stock sale be treated, for tax purposes, as if the company had instead sold its assets, which can give the buyer a stepped-up basis in those assets. To make the election for an S corporation, all the shareholders and the company must sign a binding agreement and attach an election statement to the company's timely filed return. The parties intended to make the election but missed the deadline. They asked the IRS for more time under Treas. Reg. § 301.9100-3, which forgives a late regulatory election when the taxpayer acted reasonably and in good faith and relief will not prejudice the government. The IRS granted 75 days to file the election statement, conditioned on everyone's combined tax not ending up lower than if the election had been made on time. The ruling does not decide whether the sale actually was a "qualified stock disposition" or address any other tax consequence of the election.

Ruling snapshot

• Question: Should the parties get an extension of time under Treas. Reg. § 301.9100-3 to file a late § 336(e) election statement for the sale of the S corporation's stock?
• Outcome: Approved (75-day extension granted, subject to conditions)
• Key authorities: IRC § 336(e); Treas. Reg. §§ 1.336-1(b)(6) and 1.336-2(h)(3); Treas. Reg. §§ 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 202550014
Release Date: 12/12/2025
Index Number: 9100.22-00, 336.05-00

Third Party Communication: None
Date of Communication: Not Applicable

Person To Contact:
----------------------------, ID No. --------------
Telephone Number:

Refer Reply To:
CC:CORP:BO5
PLR-114155-25

Date: September 10, 2025

Legend

S Corporation Target = -------------------------------------------------------------------------
Seller Shareholder = ------------------------
Purchaser Corporation = -------------------------------------------------------------------------
Purchaser Shareholder = -------------------------
Company Official = -------------------------------------------------------------------------
Date 1 = ---------------------
Tax Professionals = -------------------------------------------------------------------------

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

This letter responds to a letter dated June 27, 2025, submitted on behalf of Purchaser Corporation, Purchaser Shareholder (together the "Purchasers"), S Corporation Target, and Seller Shareholder (collectively, with Purchasers, the "Parties"), requesting an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to file an election. The Parties are requesting an extension of time to file an election statement under § 1.336-2(h)(3)(iii) ("Election Statement") with respect to Purchasers' acquisition of all the stock of S Corporation Target on Date 1. The material information submitted is summarized below.

Prior to Date 1, S Corporation Target was wholly owned by Seller Shareholder. On Date 1, Purchaser Corporation acquired all of the stock of S Corporation Target pursuant to a Stock Purchase Agreement dated Date 1 (the "Stock Disposition"). The Stock Disposition qualified as a "qualified stock disposition" as defined in Treas. Reg. § 1.336-1(b)(6).

The Parties intended to make a 336(e) election for the Stock Disposition but, for various reasons, a timely election was not made. Subsequently, a request was submitted under § 301.9100-3 of the Procedure and Administration Regulations for an extension of time to file the Election Statement. The Parties each represented that they are not seeking to alter a return position for which an accuracy-related penalty has been or could be imposed under section 6662 at the time of the request for relief.

Regulations promulgated under section 336(e) permit certain sales, exchanges, or distributions of stock of a corporation to be treated as asset dispositions if: (1) the disposition is a "qualified stock disposition" as defined in § 1.336-1(b)(6); and (2) a section 336(e) election is made.

Section 1.336-2(h)(3) provides that a section 336(e) election for an S corporation target is made by: (i) all of the S corporation shareholders, including those who do not dispose of any stock in the qualified stock disposition, and the S corporation target entering into a written, binding agreement, on or before the due date (including extensions) of the federal income tax return of the S corporation target for the taxable year that includes the disposition date, to make a section 336(e) election; (ii) the S corporation target retaining a copy of the written agreement; and (iii) the S corporation target attaching the section 336(e) election statement, described in § 1.336-2(h)(5) and (6), to its timely filed (including extensions) federal income tax return for the taxable year that includes the disposition date.

Under § 301.9100-1(c), the Commissioner has discretion to 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.

Sections 301.9100-1 through 301.9100-3 provide the standards the Commissioner will use to determine whether to grant an extension of time to make a regulatory election. Section 301.9100-1(a). Section 301.9100-2 provides automatic extensions of time for making certain elections. Requests for relief under § 301.9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the government. Section 301.9100-3(a).

The time for filing the Election Statement is fixed by the regulations (i.e., § 1.336-2(h)(3)(iii)). Therefore, the Commissioner has discretionary authority under § 301.9100-3 to grant an extension of time to file the Election Statement, provided the Parties acted reasonably and in good faith, the requirements of §§ 301.9100-1 and 301.9100-3 are satisfied, and granting relief will not prejudice the interests of the government.

Information, affidavits, and representations submitted by the Parties and the Parties' Tax Professionals explain the circumstances that resulted in the failure to timely file the Election Statement. The information provided establishes that the request for relief was filed before the failure to file the Election Statement was discovered by the Internal Revenue Service. See § 301.9100-3(b)(1)(i).

Based on the facts and information submitted, including the representations made, we conclude that the Parties have acted reasonably and in good faith, the requirements of §§ 301.9100-1 and 301.9100-3 are satisfied, and granting relief will not prejudice the interests of the government. Accordingly, an extension of time is granted under § 301.9100-3, until 75 days from the date on this letter, to file the Election Statement with respect to the Stock Disposition.

WITHIN 75 DAYS OF THE DATE ON THIS LETTER, S Corporation Target must file the Election Statement in accordance with § 1.336-2(h)(3)(iii). The Election Statement must be attached to S Corporation Target's tax return for the taxable year including Date 1. In addition, a copy of this letter must be attached to S Corporation Target's return. Alternatively, if S Corporation Target files its return electronically, it may satisfy the requirement of attaching a copy of this letter to the return by attaching a statement to its return that provides the date on, and control number (PLR-114155-25) of, this letter ruling.

WITHIN 150 DAYS OF THE DATE ON THIS LETTER, all relevant parties must file or amend, as applicable, all returns and amended returns (if any) necessary to report the transaction consistently with the making of a section 336(e) election for the taxable year in which the transaction was consummated (and for any other affected taxable year). The above extension of time is conditioned on the Parties' tax liabilities (if any) being not lower, in the aggregate, for all years to which the section 336(e) election applies than such liabilities would have been if the Election Statement had been timely filed (taking into account the time value of money). No opinion is expressed as to the taxpayers' tax liabilities for the years involved. A determination thereof will be made by the applicable Director's office upon audit of the federal income tax returns involved.

We express no opinion as to: (1) whether the Stock Disposition qualifies as a "qualified stock disposition"; or (2) any other tax consequences arising from the section 336(e) election. In addition, we express no opinion as to the tax consequences of filing the return or making the section 336(e) election late under the provisions of any other section of the Code and regulations, or as to the tax treatment of any conditions existing at the time of, or resulting from, filing the section 336(e) election late that are not specifically set forth in the above ruling. For purposes of granting relief under § 301.9100-3, we have relied on certain statements and representations made by the Parties, Company Official, and Tax Professionals. However, the Director should verify all essential facts. In addition, notwithstanding that an extension is granted under § 301.9100-3 to file the section 336(e) election, penalties and interest that would otherwise be applicable, if any, continue to apply.

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.

Pursuant to the Power of Attorney on file with this office, copies of this letter are being sent to your authorized representatives.

Sincerely,

Gerald B. Fleming
Senior Technician Reviewer, Branch 2
Office of Associate Chief Counsel (Corporate)

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