S corporation receives extra time for QSub election

Plain-English summary

An S corporation acquired all of a subsidiary and intended to treat it as a qualified subchapter S subsidiary, or QSub, as of the acquisition date. It failed to file Form 8869 on time and requested relief under Treas. Reg. § 301.9100-3. Based on the submitted facts and representations, the IRS found that the parent satisfied the standards for late-election relief. It granted 120 days from the ruling date to file Form 8869 with a copy of the letter and elect QSub status effective as intended. The IRS did not rule on whether the parent was a valid S corporation or whether the subsidiary was otherwise eligible to be a QSub.

Ruling snapshot

• Question: Could the S corporation make its QSub election after the normal filing deadline?
• Outcome: Approved, with 120 days to file Form 8869
• Key authorities: IRC § 1361(b)(3); Treas. Reg. §§ 1.1361-3(a), 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202631006 Third Party Communication: None
Release Date: 7/31/2026 Date of Communication: Not Applicable
Index Number: 1361.00-00, 1361.05-00,
1362.00-00, 1362.01-03, Person To Contact:
9100.00-00 ---------------------------- , ID No. -------------
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Date:
April 29, 2026

LEGEND

X = -------------------------
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Y = --------------------------------------------
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State = ----------

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

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

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

Date 4 = ----------------------

Date 5 = -----------------

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

  This letter responds to a letter dated September 8, 2025, 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 Y as a qualified subchapter S subsidiary (“QSub”) under § 1361(b)(3) of the
Internal Revenue Code (“Code”).

PLR-118924-25 2

                                     FACTS

   The information submitted states that X, a State corporation, was incorporated

on Date 1 and elected to be an S corporation effective Date 2. Y, a State limited liability
company, was organized on Date 3 and elected to be an S corporation effective Date 4.
On Date 5, X acquired a 100 percent interest in Y. X represents that it intended to elect
to treat Y as a QSub effective Date 5. However, X failed to timely file Form 8869,
Qualified Subchapter S Subsidiary Election, for Y.

                             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-118924-25 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 Y. Accordingly, we grant X an extension of time of 120 days from the date of
this letter to elect to treat Y as a QSub effective Date 5. The election should be made for
Y 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 Y 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 representative.

                                 Sincerely,

                                 Associate Chief Counsel
                                 (Passthroughs, Trusts, and Estates)



                              By: ________________________
                                 Richard T. Probst
                                 Senior Technician Reviewer, Branch 3
                                 Office of the Associate Chief Counsel
                                 (Passthroughs, Trusts, and Estates)

PLR-118924-25 4

Enclosure:
Copy of this letter for § 6110 purposes

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