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 one of its partners
die. When a partnership interest transfers (including at death), the
partnership's basis in its own assets (inside basis) can drift out of line
with the new owner's basis in the interest (outside basis). A Section 754
election lets the partnership adjust the inside basis under § 743(b) (and
under § 734(b) for distributions) to close that gap, which usually gives the
successor extra depreciation or a smaller gain later. This LLC inadvertently
failed to make the § 754 election for the year the partner died, so it asked
the IRS for "9100 relief," an extension of time to make a missed election. The
IRS found the taxpayer acted reasonably and in good faith and that relief will
not prejudice the government, and it 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 comes with the usual strings: the basis adjustments
must be made as if the election had been timely, even for closed years, and
the affected partners must conform their outside basis accordingly. Granting
the extension is not a ruling that the LLC is otherwise eligible to make the
election.

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)(1); Treas. Reg. § 301.9100-1 and § 301.9100-3

Full text (IRS public release)

Internal Revenue Service                         Department of the Treasury
                                                 Washington, DC 20224

Number: 202623012                                Third Party Communication: None
Release Date: 6/5/2026                           Date of Communication: Not Applicable
Index Numbers: 754.00-00, 754.02-00,
               9100.00-00, 9100.15-00            Person To Contact:
                                                 --------------------, ID No. -----------------
------------------------------------             Telephone Number:
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-------------------------------------------      Refer Reply To:
-------------------------------                  CC:PT&E:B03
-----------------------------------              PLR-117052-25
                                                 Date:
                                                 March 06, 2026

LEGEND

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

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

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

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

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

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

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

      This letter responds to a letter dated August 20, 2025, and subsequent
correspondence, submitted on behalf of X, by its authorized representative, requesting
an extension of time under §§ 301.9100-1 and 301.9100-3 of the Procedure and
Administration Regulations for X to file an election under § 754 of the Internal Revenue
Code (Code).

                                         FACTS

      The information submitted states that X, a State limited liability company formed
on Date 1, is classified as a partnership for federal tax purposes. A, a partner in X, died
on Date 2. However, X inadvertently failed to make a § 754 election for its taxable year
ended Date 3.

                                          LAW

        Section 754 provides, in part, 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 applies 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)(1) of the Income Tax Regulations provides, in part, 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, must 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 the taxable year.

       Section 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
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) 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.

       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 the rules governing automatic extensions of time
for making certain elections. Section 301.9100-3 provides the standards the
Commissioner will use to determine whether to grant an extension of time for regulatory
elections that do not meet the requirements of § 301.9100-2.

        Under § 301.9100-3, a request 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 upon the facts 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 one hundred-twenty (120) days from
the date of this letter to make a § 754 election for its taxable year ended Date 3. 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, to be associated with
X's return for its taxable year ended Date 3. A copy of this letter should be attached to
the statement filed.

        This ruling is contingent on X adjusting the basis of its 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
the 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 limitation
on assessment or filing a claim for refund has expired for any year subject to this grant
of late relief. Any deductions for the 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 as adjusted by the greater of any such deductions allowed or allowable in any
prior year had the § 754 election been timely made.

        Additionally, affected partner(s) of X must adjust the basis of their interests in X
to reflect what that basis would be if the § 754 election had been timely made,
regardless of whether the statutory period of limitation on assessment or filing a claim
for refund has expired for any year subject to this grant of late relief. Specifically, the
affected partner(s) 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 as specifically ruled upon above, we express or imply no opinion
concerning the tax consequences of any facts discussed or referenced in this letter. 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.

      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.

       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.

      In accordance with a power of attorney on file with this office, we are sending a
copy of this letter ruling to your authorized representative.

                                         Sincerely,

                                         Associate Chief Counsel
                                         (Passthroughs, Trusts, and Estates)



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

Enclosure:
    Copy of this letter for § 6110 purposes

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