9100-3 relief, 60 days for a late 168(h)(6)(F)(ii) election not to be treated as a tax-exempt controlled entity

Plain-English summary

When a tax-exempt organization owns property (directly or through certain
entities), the depreciation rules are less favorable, using slower "alternative
depreciation." A corporation that is at least 50% owned by tax-exempt entities
is a "tax-exempt controlled entity," but it can elect under section
168(h)(6)(F)(ii) not to be treated as tax-exempt, which preserves normal
depreciation (and binds the tax-exempt owners). Here, an LLC taxed as a
corporation, wholly owned by a tax-exempt entity, intended to make that election
but missed it because it filed its tax return late: it mistakenly thought its
advisor was handling the return, and the late return meant the attached election
was late too. The taxpayer asked the IRS for relief under the "9100" regulation
(Treas. Reg. § 301.9100-3). Finding the taxpayer acted reasonably and in good
faith (it reasonably relied on its advisor) and that relief would not prejudice
the government, the IRS granted 60 days from the date of the letter to file the
election statement so the election is effective for the intended year. A copy of
the ruling must be attached to the election and to the tax-exempt owners'
returns.

Ruling snapshot

• Question: Should the taxpayer get an extension of time to make a late
  election under § 168(h)(6)(F)(ii) not to be treated as a tax-exempt
  controlled entity?
• Outcome: Approved (9100-3 relief; 60 days to file the election statement).
• Key authorities: IRC § 168(h)(6)(F); IRC §§ 167, 168(g); Treas. Reg. §
  301.9100-7T; Treas. Reg. §§ 301.9100-1, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service                       Department of the Treasury
                                               Washington, DC 20224

Number: 202612001                  Third Party Communication: None
Release Date: 3/20/2026            Date of Communication: Not Applicable
Index Number: 9100.04-00
                                               Person To Contact:
                                               ----------, ID No. --------
                                               Telephone Number:
                                               --------
                                               Refer Reply To:
                                               CC:ITA:B07
                                               PLR-101801-25
                                               Date:
                                               December 22, 2025


In re: --------
         Request for an extension of time to make an election not to be treated as a tax-
         exempt entity

Legend

            Taxpayer                    = --------
            Tax-exempt Entity           = --------
            Fee Owner                   = --------
            Advisor1                    = --------
            Advisor2                    = --------
            Date1                       = --------
            Date2                       = --------
            Year1                       = --------
            Month1                      = --------
            Period1                     = --------
            Z                           = --------

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

        This letter ruling responds to Taxpayer's letter received Date1, and subsequent
correspondence. Taxpayer requests an extension of time under § 301.9100-1 and
§ 301.9100-3 of the Procedure and Administration Regulations to make the election not
to be treated as a tax-exempt entity under § 168(h)(6)(F)(ii) of the Internal Revenue
Code for Taxpayer's Year1.

      This letter ruling is being issued electronically in accordance with section 7.02(5)
of Rev. Proc. 2024-1, 2024-1 I.R.B. 1, 34.

                                    FACTS

       Taxpayer represents the facts are as follows:

       Taxpayer is a limited liability company, treated as a corporation for federal
income tax purposes, and formed under the state laws of Z. Taxpayer uses an accrual
method as its overall accounting method and the calendar year as its annual accounting
period. Taxpayer directly owns a 1% membership interest in Fee Owner.

      Tax-exempt Entity owns all of the membership interests of Taxpayer. Taxpayer
represents that it is therefore a tax-exempt controlled entity within the meaning of
§ 168(h)(6)(F)(iii).

       Taxpayer represents that its investors specifically expected that Taxpayer would
make the election not to be treated as a tax-exempt controlled entity under
§ 168(h)(6)(F)(ii). Further, Taxpayer represents that its Amended and Restated
Operating Agreement reflects that Taxpayer intended to make the election not to be
treated as a tax-exempt controlled entity under § 168(h)(6)(F)(ii) beginning with Year1.

       Advisor1 was engaged to prepare Fee Owner's tax returns for Year1. Taxpayer
mistakenly believed Advisor1 was also engaged to prepare Taxpayer's tax returns for
Year1. As a result, Taxpayer did not timely file its federal income tax return for Year1.
During Month1, Taxpayer engaged Advisor2 to prepare its Year1 tax returns, and
Taxpayer's Year1 tax returns were filed on Date2, which was after the due date.
Because an extension request was not timely filed, Taxpayer Year1 tax return was filed
late. Advisor2 explained that the failure to timely file the tax return for Year1 meant the
election not to be treated as a tax-exempt entity under §168(h)(6)(F)(ii) was not timely
filed. However, because of changes in Taxpayer's personnel, Taxpayer was unable to
prepare this private letter ruling request until after Period1. Taxpayer engaged Advisor2
to submit this private letter ruling request.

       Taxpayer represents that, in failing to make the election, it acted reasonably and
in good faith because Taxpayer exercised reasonable diligence and reasonably relied
on the expertise of Advisor1, and that granting an extension of time to make the election
under § 168(h)(6)(F)(ii) will not prejudice the interests of the Government.

                              RULING REQUESTED

      Taxpayer requests that the Internal Revenue Service grant it an extension of time
under § 301.9100-1 and § 301.9100-3 to make the election under § 168(h)(6)(F)(ii) for
Taxpayer's Year1.

                                     LAW

        Section 167(a) generally provides for a depreciation deduction for property used
in a trade or business. The depreciation deduction provided by § 167(a) for tangible
property placed in service after 1986 is generally determined under § 168. Under
§ 168(g), the alternative depreciation system must be used for any tax-exempt use
property as defined in § 168(h).

       Section 168(h)(6)(A) provides that, for purposes of § 168(h), if any property not
tax-exempt property is owned by a partnership having both a tax-exempt entity and non-
exempt entity as partners and any allocation to the tax-exempt entity is not a qualified
allocation, then an amount equal to such tax-exempt entity's proportionate share of
such property is treated as tax-exempt use property.

       Section 168(h)(6)(F)(i) provides generally that any tax-exempt controlled entity is
treated as a tax-exempt entity for purpose of §§ 168(h)(5) and (h)(6). Under
§ 168(h)(6)(F)(iii)(I), a corporation (without regard to that subparagraph and
§ 168(h)(2)(E)) constitutes a "tax-exempt controlled entity" if 50-percent or more (in
value) of the corporation's stock is held by one or more tax-exempt entities (other than a
foreign person or entity).

       Under § 168(h)(6)(F)(ii), a tax-exempt controlled entity may elect to not be
treated as a tax-exempt entity. Once made, the election is irrevocable and will bind all
tax-exempt entities holding an interest in the tax-exempt controlled entity.

        Under § 301.9100-7T(a)(1), a § 168(h)(6)(F)(ii) election must be made in
accordance with the rules provided in §§ 301.9100-7T(a)(2) and (a)(3). Under
§ 301.7701-7T(a)(2)(i), a § 168(h)(6)(F)(ii) election must be made by the due date of the
tax return for the first taxable year for which the election is to be effective. Section
301.9100-7T(a)(3)(i) provides that the § 168(h)(6)(F)(ii) election must be made by
attaching a statement to the tax return for the taxable year in which the election is to be
effective.

      Section 301.9100-1(c) provides that the Commissioner has the discretion to grant
a reasonable extension of time under the rules set forth in § 301.9100-2 and
§ 301.9100-3 to make certain regulatory elections.

       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 301.9100-2 provides automatic extensions of time for
certain elections. Section 301.9100-3 provides extensions of time for making elections
that do not meet the requires of § 301.9100-2.

       Section 301.9100-1(b) defines a regulatory election as one whose due date is
prescribed by regulations published in the Federal Register, a revenue ruling, revenue
procedure, notice, or announcement published in the Internal Revenue Bulletin.
Because the due date of the § 168(h)(6)(F)(ii) election is prescribed by § 301.9100-
7T(a)(2)(i), the requested § 168(h)(6)(F)(ii) election is a regulatory election.

        Section 301.9100-3(a) provides that requests for relief subject to § 301.9100-3
will be granted when a taxpayer provides evidence to establish to the satisfaction of the
Commissioner that the taxpayer acted reasonably and in good faith, and that the
granting of relief will not prejudice the interests of the Government.

       Section 301.9100-3(c)(1)(ii) provides that the interests of the Government are
ordinarily prejudiced if the taxable year in which the regulatory election should have
been made or any taxable years that would have been affected by the election had it
been timely made are closed by the period of limitations on assessment under
§ 6501(a) before the taxpayer's receipt of a ruling granting relief under § 301.9100-3.
The Service may condition a grant of relief on the taxpayer providing the Service with a
statement from an independent auditor (other than an auditor providing an affidavit
pursuant to § 301.9100-3(e)(3)) certifying that the interests of the Government are not
prejudiced under the standards set forth in § 301.9100-3(c)(1)(i).

                                 CONCLUSION

       Based solely on the facts as represented and the applicable law, we conclude
that the requirements of § 301.9100-1 and § 301.9100-3 have been satisfied. Taxpayer
is granted an extension of 60 calendar days from the date of this letter ruling to file the
election statement with the appropriate service center containing the information
required by § 301.9100-7T(a)(3) for the election to be effective Year1.

        Taxpayer must attach a copy of this letter ruling to the election statement.
Further, this letter ruling should be attached to all subsequent returns (and amended
returns) for all taxable years to which this letter ruling is relevant. If Taxpayer files its
amended return electronically, it may satisfy this requirement by attaching a statement
to its amended return that provides the date and control number of this letter ruling.
Pursuant to § 301.9100-7T(a)(3)(ii), a copy of this letter ruling as the § 168(h)(6)(F)(ii)
election statement also should be attached to the Federal income tax returns of each of
the tax-exempt shareholders or beneficiaries of Taxpayer.

        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, all material 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) of
the Code provides that it may not be used or cited as precedent.

         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,



                                               DEENA M. DEVEREUX
                                               Branch Chief, Branch 7
                                               Office of Chief Counsel
                                               (Income Tax & Accounting)


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