9100 extension to make a late § 754 election after a partner's death

Plain-English summary

A limited liability company taxed as a partnership had a partner die. A
partner's death transfers the partnership interest, which can leave the
partnership's basis in its assets (inside basis) out of step with the
successor's basis in the interest (outside basis). A Section 754 election lets
the partnership adjust the inside basis under § 743(b) (and § 734(b) for
distributions) to align the two, typically giving the successor added
depreciation or a smaller future gain. This LLC failed to make the § 754
election for the year the partner died because its tax advisors at the time
did not tell it the election was available. It asked the IRS for "9100
relief." The IRS found the LLC acted reasonably and in good faith and that
relief will not prejudice the government, and granted 120 days from the date
of the letter to make the election on an amended partnership return (Form
1065-X or Form 8082). The relief carries the usual conditions: the basis
adjustments must be made as if the election had been timely (even for closed
years), any BBA administrative-adjustment-request steps under § 6227(b) must
be followed, and the affected partners must conform their outside basis. The
extension is not a ruling that the LLC is otherwise eligible to make the
election. (This is a companion to PLR 202623010, issued the same day.)

Ruling snapshot

• Question: May the LLC get an extension of time to make a late § 754 election for the year a partner died?
• Outcome: Approved (9100 relief granted; 120 days from the date of the letter to make the election)
• Key authorities: IRC § 754; § 734(b); § 743(b); Treas. Reg. § 1.754-1(b); 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: 202623009                                Third Party Communication: None
Release Date: 6/5/2026                           Date of Communication: Not Applicable
Index Number: 9100.15-00, 754.00-00
                                                 Person To Contact:
-------------------------                        -----------------------------------, ID No. -------
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--------------------------                       Telephone Number:
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---------------------------                      Refer Reply To:
-----------------------------                    CC:PSI:B03
                                                 PLR-116876-25
                                                 Date:
                                                 March 05, 2026

LEGEND

X            = -------------------------
               ----------------------

State        = ---------------

A            = -------------------------
               ------- -----------------

Date 1       = ----------------

Date 2       = ---------------------------

Date 3       = --------------------------

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

       This letter responds to a letter dated September 12, 2025, submitted on behalf of
X by its authorized representatives, requesting an extension of time under § 301.9100-3
of the Procedure and Administration Regulations to file an election under § 754 of the
Internal Revenue Code ("Code").

                                         FACTS

       The information submitted states X is a limited liability company formed under the
laws of State and is classified as a partnership for federal tax purposes. A, a partner in
X, died on Date 1. X failed to make a § 754 election for taxable year ended Date 2
because its tax advisors at the time failed to advise X about the availability of making
the election. X represents that it has acted reasonably and in good faith, and that
granting relief will not prejudice the interests of the Government.

                                          LAW

       Section 754 provides that if a partnership files an election, in accordance with the
regulations prescribed by the Secretary, the basis of partnership property is adjusted, in
the case of a distribution of property, in the manner provided in § 734 and, in the case of
a transfer of a partnership interest, in the manner provided in § 743. Such an election
shall apply with respect to all distributions of property by the partnership and to all
transfers of interests in the partnership during the taxable year with respect to which the
election was filed and all subsequent taxable years.

        Section 1.754-1(b) of the Income Tax Regulations provides that an election
under § 754 to adjust the basis of partnership property under §§ 734(b) and 743(b), with
respect to a distribution of property to a partner or a transfer of an interest in a
partnership, shall be made in a written statement filed with the partnership return for the
taxable year during which the distribution or transfer occurs. For the election to be
valid, the return must be filed not later than the time prescribed by § 1.6031(a)-1(e)
(including extensions thereof) for filing the return for that taxable year.

       Section 301.9100-1(c) provides that the Commissioner may grant a reasonable
extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a
regulatory election, or a statutory election (but no more than 6 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 that 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 rules for requesting extensions of time for
regulatory elections that do not meet the requirements of § 301.9100-2.

       Section § 301.9100-3 provides that requests for relief 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 (1) the taxpayer acted reasonably
and in good faith, and (2) the grant of relief will not prejudice the interests of the
Government.

                                   CONCLUSION

      Based solely on the information submitted and the representations made, we
conclude that the requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied.
As a result, X is granted an extension of time of 120 days from the date of this letter to
make an election under § 754 effective for X's taxable year ending on Date 2 and
thereafter. The election should be made in a written statement filed with the appropriate
service center accompanying Form 1065-X, Amended Return or Administrative
Adjustment Request (AAR), or Form 8082, Notice of Inconsistent Treatment or AAR,
and for any related filings as instructed in Form 1065-X or Form 8082, as appropriate,
for X's taxable year ended Date 3, to be associated with X's return for its taxable year
ended Date 2. A copy of this letter should be attached to the relevant filing.

        This ruling is contingent on X's relevant filing(s) containing adjustments to the
basis of X's properties to reflect any § 734(b) or § 743(b) adjustments that would have
been made if the § 754 election had been timely made. These basis adjustments must
reflect any additional deductions for recovery of basis related to X's property that would
have been allowable if the § 754 election had been timely made, regardless of whether
the statutory period of limitations on assessment or filing a claim for refund has expired
for any year subject to this grant of late relief. Any deductions for recovery of basis
allowable for an open year are to be computed based on the remaining useful life or
recovery period and using property basis adjusted by the greater of such deductions
allowed or allowable in any prior year had the § 754 election been timely made.

       If the partnership is required to file an AAR to properly amend a partnership
return, then this ruling is also contingent on X filing Form 1065-X or Form 8082 and
accounting for the adjustments required by § 6227(b).

        Additionally, the affected partners of X must adjust the basis of their interests in X
to reflect what the basis would be if the § 754 election had been timely made,
regardless of whether the statutory period of limitations on assessment or filing a claim
for refund has expired for any year subject to this grant of late relief. Specifically, the
partners of X must reduce the basis of their interests in X in the amount of any
additional deductions for the recovery of basis related to X's property that would have
been allowable if the § 754 election had been timely made.

       Except for the specific ruling above, we express or imply no opinion concerning
the federal tax consequences of the facts of this case under any other provision of the
Code. In addition, § 301.9100-1(a) provides that the granting of an extension of time for
making an election is not a determination that the taxpayer is otherwise eligible to make
the election.

         Further, we express or imply no opinion concerning the assessment of any
interest, additions to tax, additional amounts, or penalties for failure to file a timely
income tax or information return with respect to any taxable year that this ruling may
affect. For example, we express or imply no opinion as to whether a taxpayer is entitled
to relief from any penalty on the basis that the taxpayer has reasonable cause for failure
to file timely any income tax or information returns.

       The ruling contained in this letter is based on 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 ruling request, 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 your authorized representatives.

                                         Sincerely,

                                         Associate Chief Counsel
                                         (Passthroughs, Trusts, and Estates)



                                   By:   _______________________________
                                         Brian J. Barrett
                                         Senior Technician Reviewer, Branch 3
                                         Office of the Associate Chief Counsel
                                         (Passthroughs, Trusts, and Estates)

Enclosure:
    Copy for § 6110 purposes

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