IRS Written Determinations
Free IRS private letter rulings, technical advice memoranda, and Chief Counsel advice with plain-English summaries and the official IRS release on every page.
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Corporation keeps S status after missed ESBT election
A shareholder placed S corporation stock in a revocable grantor trust and later died. The trust remained an eligible S corporation shareholder for two years after the death, but its trustee failed…
Partnership-style provisions did not defeat S status after correction
A limited liability company elected S corporation status while its operating agreement still contained partnership provisions that created different distribution or liquidation rights and therefore…
Corporation received relief for two inadvertent S election terminations
An S corporation's election terminated when a trust shareholder transferred shares to a partnership, which was not an eligible S corporation shareholder. A second trust also would have caused…
S corporation received inadvertent-termination relief
An S corporation issued shares first to an LLC taxed as a corporation and later to two LLCs taxed as partnerships. Those entities were ineligible S corporation shareholders, so the stock issuances…
IRS grants inadvertent-relief for an invalid S corporation election
An entity's S corporation election may have been ineffective because it had an ineligible shareholder and a possible second class of stock. The entity transferred the shares to an eligible…
Corporation receives inadvertent S election termination relief
Two trusts became shareholders of a parent S corporation after a merger but failed to make new qualified subchapter S trust elections effective on the merger date. That failure terminated the parent…
Corporation receives inadvertent S election termination relief
An S corporation's trust shareholder was intended to be a qualified subchapter S trust, but the beneficiary did not file a timely QSST election and the trust temporarily failed the…
Late QSST election does not end corporation's S status
A trust became a shareholder of an S corporation and qualified as a qualified subchapter S trust, but its beneficiary did not file the required QSST election on time. That failure made the trust an…
S status restored after trust election and income failures
An S corporation's stock passed to a trust that was eligible to be a qualified subchapter S trust, but the beneficiary did not timely make the QSST election. The trustee also failed for several…
S status restored after late ESBT election
An S corporation's shares were held by a qualified subchapter S trust when the trust's income beneficiary died. The trust could remain an eligible shareholder for two years after the death, but its…
S status survives a possible second class of stock during entity conversions
An S corporation converted first into a limited partnership that elected corporate tax treatment and then into another corporation. The first conversion may have created a prohibited second class of…
Corporation receives relief for a late S election
A corporation intended to be taxed as an S corporation from a specified effective date but did not timely file the required election. The IRS found reasonable cause for the late filing and granted…
Late QSST election does not end the corporation's S status
After an S corporation shareholder died, the shareholder's stock passed under a will to a trust intended to qualify as a qualified Subchapter S trust. The trust beneficiary did not timely file the…
Trust qualifies as a qualified Subchapter S trust
A trust held stock in an S corporation and sought confirmation that it could be a qualified Subchapter S trust. The trust required all income to be paid at least quarterly to one United States…
Trust qualifies as a qualified Subchapter S trust
A trust held stock in an S corporation and sought confirmation that it could be a qualified Subchapter S trust. The trust required all income to be paid at least quarterly to one United States…
Late trust election does not end S corporation status
An S corporation shareholder was a grantor trust until the grantor died. The trust remained an eligible S corporation shareholder for two years after the death, but its trustee did not timely elect…
S corporation receives more time to elect QSub status
An S corporation acquired all the stock of another corporation and intended to treat the subsidiary as a qualified subchapter S subsidiary from the acquisition date. It failed to file Form 8869…
Ineligible shareholders and preferred stock do not end S status
An S corporation transferred stock to a corporate creditor, later created preferred stock with different dividend and liquidation rights, and issued preferred shares to two partnerships. The…
Entity receives late corporate and S corporation elections
An eligible entity intended to be classified as a corporation and elect S corporation status from the same effective date. It failed to timely file both Form 8832 and Form 2553. The IRS found that…
S corporation receives relief for six late trust elections
After a shareholder died, shares of an S corporation passed to six trusts. The trusts were intended to become qualified subchapter S trusts, but their beneficiaries did not timely file the required…
S corporation receives relief for an inadvertent termination
An S corporation transferred all its shares to an entity owned by a married couple as community property. Because that entity was treated as a partnership, it was an ineligible S corporation…
Corporation receives relief for missing S election consent and QSST election
A corporation intended to elect S corporation status while its shares were held by two trusts. A required shareholder consent may have been missing, and the beneficiary of one trust did not timely…
Late QSST election does not end corporation's S status
S corporation stock passed from a grantor retained annuity trust to a successor trust that met the requirements for a qualified subchapter S trust. The successor trust's beneficiary failed to make a…
Corrected disproportionate distributions do not terminate S election
An S corporation paid state composite and withholding taxes for certain nonresident shareholders but mistakenly reduced all shareholders' cash tax distributions ratably. That error produced…
Repaid disproportionate distributions do not terminate S election
An S corporation made disproportionate distributions to certain shareholders to cover their anticipated taxes on pass-through income. Its governing documents and state law provided identical…
Parent receives 120 days to make late QSub election
An S corporation owned all of a subsidiary and intended to elect qualified subchapter S subsidiary status for it, but failed to timely file Form 8869. The IRS concluded that the requirements for…
S corporation survives redemption-price defect
An S corporation issued nonvoting shares under agreements that allowed it to redeem those shares above their current fair market value. Because voting and nonvoting shares may differ only in voting…
Excessive compensation does not create second stock class
An S corporation may have paid excessive compensation to a shareholder who worked as an at-will employee without a written compensation agreement. The corporation's governing documents gave every…
Inadvertent multiple stock classes do not defeat S election
A corporation's articles and shareholder agreement allowed liquidation proceeds to vary by stock class and by the length of a shareholder's employment. Those binding provisions meant the corporation…
S corporation receives extension for QSub election
An S corporation owned all the stock of another domestic corporation and intended to treat it as a qualified subchapter S subsidiary from the parent's S-election effective date. Because of…
Late QSST elections receive inadvertent-termination relief
After an S corporation shareholder died, a formerly eligible trust needed a qualified subchapter S trust election to remain an eligible shareholder. The beneficiary failed to timely elect QSST…
Untimely QSST elections receive inadvertent-termination relief
After an S corporation shareholder died, a trust's temporary eligibility expired and the beneficiary failed to timely elect qualified subchapter S trust treatment. A second trust later received some…
Corporation receives late S election relief
A corporation's owners believed an S election had been filed before the intended effective date, but the IRS had no record of a timely Form 2553. The IRS found reasonable cause for the failure and…
Late ESBT election receives inadvertent-termination relief
After an S corporation shareholder died, the shareholder's grantor trust eventually ceased to be an eligible shareholder because the trustee did not timely elect electing small business trust…
Two late ESBT elections receive inadvertent-termination relief
An S corporation shareholder transferred shares to two trusts that were eligible to elect electing small business trust treatment, but neither trustee made the election. Both trusts became…
Second stock class defect does not invalidate S status
A corporation's original operating agreement created a second class of stock, making its S corporation election invalid. After discovering the problem, the corporation adopted a new agreement that…
Corrected transfers do not end S corporation status
An S corporation made transfers to shareholders and shareholder-owned entities that its adviser believed might be disproportionate distributions violating the one-class-of-stock rule. The…
Late trust elections do not end S corporation status
Stock in an S corporation was transferred to seven trusts, but the beneficiaries or their guardians did not timely elect qualified subchapter S trust status. The trusts therefore became ineligible…
Missing ESBT and QSST elections do not end S corporation status
A corporation’s S election was ineffective because one shareholder trust did not timely elect electing small business trust status. A second shareholder trust later failed to make a qualified…
Corporation may reelect S status before five-year waiting period ends
An S corporation's election terminated when two shareholders sold their shares to an ineligible foreign corporation without the corporation or remaining shareholder having a right to stop the sale.…
Late QSST election receives inadvertent S termination relief
After the owner of a grantor trust died, the trust continued holding S corporation shares for a beneficiary but did not timely elect qualified subchapter S trust status. That failure terminated the…
S corporation receives more time to elect QSub status
An S corporation acquired all the stock of another S corporation but did not timely elect to treat the subsidiary as a qualified subchapter S subsidiary. The parent and its shareholders said they…
S corporation receives more time for four QSub elections
An S corporation owned four subsidiaries but failed to timely elect qualified subchapter S subsidiary status for them. The parent and its shareholders said they did not know the elections were…
LLC receives relief for a late S corporation election
A limited liability company elected corporate tax classification and intended to elect S corporation status, but it did not properly and timely file Form 2553. The IRS found reasonable cause for the…
Corporation receives inadvertent S election termination relief
An individual transferred some S corporation stock to another S corporation, an ineligible shareholder, which terminated the target corporation's S election. The parties did not know the transfer…
Corporation receives relief for rejected S election
A domestic corporation intended to elect S corporation status, but the IRS rejected its initial election and the corporation did not learn of the rejection until later. Its shareholders had filed…
Missed QSST elections do not end S status
An irrevocable trust held stock in an S corporation through separate shares for five individual beneficiaries. Each share was represented to qualify as a qualified subchapter S trust, but the…
Corporation receives relief for missed ESBT election
A trust acquired stock in an S corporation and otherwise met the requirements for an electing small business trust, but its trustees did not make a timely ESBT election. That failure terminated the…
Corporation receives relief for missed ESBT election
A trust acquired stock in an S corporation and otherwise met the requirements for an electing small business trust, but its trustees did not make a timely ESBT election. That failure terminated the…
Missed trust elections receive coordinated S corporation relief
An S corporation began with three trust shareholders, but required ESBT and QSST elections were not filed on time. The missed elections made the corporation's S election ineffective and would also…
Corporation receives relief for ineligible S corporation shareholder
A corporation elected S corporation status effective on its formation date, but one shareholder was not eligible to own S corporation stock. After discovering the problem, that shareholder promptly…
GRAT ownership causes inadvertent S election termination
Two grantor retained annuity trusts acquired stock in an S corporation while they were eligible grantor-trust shareholders. The trusts later ceased to be grantor trusts but continued holding the…
Trust ownership causes inadvertent S election termination
Shares of an S corporation passed from a grantor retained annuity trust to two successor trusts that were intended to remain grantor trusts but did not qualify during a short period before their…
Late ESBT elections receive inadvertent termination relief
Two trusts acquired shares of an S corporation and otherwise qualified as electing small business trusts, but their trustees failed to file timely ESBT elections. The corporation and its…
Multiple trust defects receive S corporation relief
An S corporation discovered several defects involving its trust shareholders and original election. One trust missed its ESBT election, another omitted potential beneficiaries and later had a…
Preferred units receive inadvertent S termination relief
An LLC taxed as an S corporation amended its operating agreement to give Class A units a preferential distribution right while Class B units shared only after that preference. Because the governing…
Missed ESBT and QSST elections receive S corporation relief
An S corporation’s grantor-trust shareholder ceased to qualify after the grantor died, but the trustee did not timely elect ESBT status. Shares were later transferred to individuals and two trusts…
Extensions granted for QSub and entity-classification elections
An S corporation failed to timely elect qualified subchapter S subsidiary status for a wholly owned entity, and related entity-classification elections also were not timely made. The IRS concluded…
Two corporations retain S status after restructuring
An S corporation planned to become a state-law general partnership owned by two other S corporations. Its shareholders would become shareholders of one of the two corporate owners, which would have…
Inadvertent invalid S election and termination relieved
A limited liability company’s S corporation election was initially ineffective because some owners did not properly consent. Interests were then issued to three individual retirement accounts, which…
What these documents are
- Private letter rulings (PLRs): A taxpayer asked the IRS to rule on a planned transaction before doing it. The ruling shows exactly how the IRS applied the Code to those facts.
- Technical advice memoranda (TAMs): The IRS National Office answering a question raised during an audit or other proceeding.
- Chief Counsel advice (CCAs): IRS lawyers advising their own field staff on how to apply the law.
- Determination letters: Rulings on exempt-organization matters, such as whether an organization qualifies under § 501(c)(3) or a foundation's grant procedures pass § 4945.
- Not precedent, still useful: Under 26 U.S.C. § 6110(k)(3) none of these can be cited as precedent. They remain the best public window into how the IRS actually rules on facts like yours, and practitioners read them for exactly that.