9100 extension to make a late QSub election for a subsidiary (1361(b)(3))
Plain-English summary
An S corporation (X) owns 100 percent of another corporation (Sub) and wanted to treat Sub as a "qualified subchapter S subsidiary," or QSub. A QSub is ignored as a separate corporation, so its assets, income, and deductions are folded into the parent S corporation's tax return. To get that treatment, the parent must file Form 8869 by a deadline, and X missed it. X asked the IRS for more time under the section 301.9100-3 relief rules, which allow a late election if the taxpayer acted reasonably and in good faith and relief will not prejudice the government. The IRS agreed and gave X 120 days from the date of the letter to file the QSub election, effective back to the date the parent originally became an S corporation. The IRS did not rule on whether X is a valid S corporation or whether Sub is otherwise eligible to be a QSub. The relief is a deadline extension only, and it binds just this taxpayer.
Ruling snapshot
- Question: May an S corporation that missed the deadline to file Form 8869 get more time to elect QSub treatment for its wholly owned subsidiary?
- Outcome: approved
- Key authorities: IRC § 1361(b)(3); Treas. Reg. §§ 1.1361-3, 301.9100-1, 301.9100-3
Full text (IRS public release)
Internal Revenue Service Department of the Treasury
Washington, DC 20224
Number: 202622005 Third Party Communication: None
Release Date: 5/29/2026 Date of Communication: Not Applicable
Index Number: 1362.01-03, 9100.00-00
Person To Contact:
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-------------------------------------------- Telephone Number:
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--------------------------- Refer Reply To:
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PLR-116311-25
Date:
February 27, 2026
Legend
X = ----------------------------------------
Sub = -----------------
State 1 = -------------
State 2 = ----------------
Date 1 = --------------------------
Date 2 = ----------------------
Date 3 = ----------------
Dear -------------:
This letter responds to a letter dated September 8, 2025, and subsequent
correspondence, submitted on behalf of X by its authorized representative requesting
that the Service grant X an extension of time under § 301.9100-3 of the Procedure and
Administration Regulations to elect to treat Sub as a qualified subchapter S subsidiary
(“QSub”) under § 1361(b)(3) of the Internal Revenue Code (“Code”).
PLR-116311-25 2
FACTS
The information submitted states that X, a State 1 corporation, was incorporated
on Date 1, and elected to be an S corporation effective Date 2. X wholly owns Sub, a
State 2 corporation incorporated on Date 3. X represents that it intended to elect to treat
Sub as a QSub effective Date 2. However, X failed to timely file Form 8869, Qualified
Subchapter S Subsidiary Election, for Sub.
LAW AND ANALYSIS
Section 1361(b)(3)(A) provides that except as provided in regulations prescribed
by the Secretary, for purposes of Title 26, (i) a corporation that is a QSub shall not be
treated as a separate corporation, and (ii) all assets, liabilities, and items of income,
deduction, and credit of a QSub shall be treated as assets, liabilities, and such items (as
the case may be) of the S corporation.
Section 1361(b)(3)(B) defines the term “qualified subchapter S subsidiary” as a
domestic corporation that is not an ineligible corporation (as defined in § 1361(b)(2)), if
100 percent of the stock of the corporation is held by an S corporation, and the S
corporation elects to treat the corporation as a QSub.
Section 1.1361-3(a) of the Income Tax Regulations provides the time and
manner of making a QSub election. An S corporation makes a QSub election for a
subsidiary by filing Form 8869 with the appropriate service center.
Section 1.1361-3(a)(4) provides that a QSub election cannot be effective more
than two months and 15 days prior to the date of filing.
Section 1.1361-3(a)(6) provides that an extension of time to make a QSub
election may be available under §§ 301.9100-1 and 301.9100-3.
Under § 301.9100-1(c), 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 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.
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 an
election. Section 301.9100-2 provides automatic extensions of time for making certain
elections. Section 301.9100-3 provides extensions of time for regulatory elections that
do not meet the requirements of § 301.9100-2.
PLR-116311-25 3
Section 301.9100-3(a) provides that requests for relief under § 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 the
taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice the
interests of the Government.
CONCLUSION
Based on the facts submitted and representations made, we conclude that X has
satisfied the requirements of §§ 301.9100-1 and 301.9100-3 with respect to the QSub
election for Sub. Accordingly, we grant X an extension of time of 120 days from the date
of this letter to elect to treat Sub as a QSub effective Date 2. The election should be
made for Sub by filing Form 8869 with the appropriate service center and a copy of this
letter should be attached to the election.
Except for the specific ruling above, we express or imply no opinion concerning
the federal income tax consequences of the facts of this case under any other provision
of the Code. Specifically, we express or imply no opinion concerning whether X is a
valid S corporation or whether Sub is eligible to be a QSub.
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 requested ruling, it is subject to verification on examination.
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 a power of attorney on file with this office, we are sending a
copy of this letter to X’s authorized representatives.
Sincerely,
Associate Chief Counsel
(Passthroughs, Trusts, and Estates)
Richard T. Probst
By: _____________________________
Richard T. Probst
Senior Technician Reviewer, Branch 3
Office of the Associate Chief Counsel
(Passthroughs, Trusts, and Estates)
PLR-116311-25 4
Enclosure:
Copy of this letter for § 6110 purposes
cc: -------------------
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