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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Transitory merger removes minority owner without ending S status
The continuing owners of an S corporation planned to form a temporary corporation, contribute their shares to it, and merge it back into the original corporation while cashing out a minority…
Inadvertent S corporation termination relief granted
An S corporation may have had an ineligible shareholder for a period, which could have terminated its S election. The corporation represented that its eligible shareholders filed returns consistent…
Corporation receives 120 days to file a late S election
A corporation's sole shareholder intended the company to be an S corporation from its formation date, but Form 2553 was not timely filed. IRC § 1362(b)(5) permits the IRS to treat a late S election…
Missed ESBT election causes only inadvertent S termination
An S corporation shareholder trust transferred its stock to a newly created trust with the same sole beneficiary, but the new trust's trustees failed to make a timely electing small business trust…
Missed QSub election receives 120-day filing extension
An S corporation acquired a subsidiary and elected to treat it as a qualified subchapter S subsidiary, but discovered during restructuring that no Form 8869 had been filed for that subsidiary's…
Late S corporation election receives reasonable-cause relief
A corporation intended S corporation treatment from its formation date but did not timely file Form 2553. The IRS concluded that the corporation established reasonable cause under § 1362(b)(5).…
S corporation gets late QSub election relief
An S corporation intended to treat its wholly owned subsidiary as a qualified subchapter S subsidiary but did not timely file Form 8869. The corporation represented that it, the subsidiary, and its…
Corporation gets inadvertent S election relief for missing QSST consent
A corporation timely filed an S corporation election, but a shareholder trust did not include the required qualified subchapter S trust election and its beneficiary did not properly consent to the…
Restricted employee shares do not end S corporation status
An S corporation issued restricted nonvoting shares to employees who did not make § 83(b) elections, but the corporation mistakenly treated them as outstanding shares and the employees as…
Corporation gets late S election relief
A corporation intended to be treated as an S corporation from its incorporation date but did not timely file the election. The IRS found reasonable cause for the missed deadline and granted relief…
Late ESBT election does not end S corporation status
An S corporation transferred shares to a trust that qualified to be an electing small business trust, but the trustee did not timely make the ESBT election. That omission made the trust an…
Housing grant income increases S corporation stock basis
An S corporation held a limited partnership interest in a low-income apartment project. The project received cash subawards under section 1602 of the American Recovery and Reinvestment Tax Act of…
Mistaken trust election does not end S corporation status
Stock of an S corporation was transferred to a trust that qualified to be an electing small business trust and was treated that way in practice. The trustee mistakenly filed a qualified subchapter S…
Untimely QSST elections and income distributions receive inadvertent-termination relief
An S corporation had three trust shareholders. Separate shares of one trust and a third trust failed to make timely qualified subchapter S trust elections, while a separate share of another QSST…
Ineligible shareholder causes only an inadvertent S termination
An S corporation's shareholder sold shares to an ineligible shareholder despite an agreement intended to prevent transfers that could end S status. The buyer later assigned all of the shares to an…
Late QSST election does not end S corporation status
Shares of an S corporation passed from a deceased shareholder's revocable trust to another trust that was eligible to elect qualified subchapter S trust status. The beneficiary did not make the QSST…
Late ESBT election does not end S corporation status
A grantor trust held shares of an S corporation, but its grantor-trust status later ended and the trustee failed to elect electing small business trust status. The trust then became an ineligible…
Grantor-trust remainder sale does not bar ESBT status
An individual planned to contribute S corporation stock to a new grantor trust that would elect to be an electing small business trust, then sell the new trust's remainder interest to another trust…
Grantor-trust remainder sale does not bar ESBT status
An individual planned to contribute S corporation stock to a new grantor trust that would elect to be an electing small business trust, then sell the new trust's remainder interest to another trust…
Corporation receives late S election relief
A corporation intended to elect S corporation status from a specified date but did not file its election on time. The IRS found reasonable cause for the late filing and granted relief under §…
Preferred stock caused inadvertent S corporation termination
An S corporation that owned a qualified subchapter S subsidiary issued preferred stock with distribution and liquidation preferences, creating a prohibited second class of stock. It later amended…
Convertible debenture receives inadvertent S election relief
An S corporation issued a convertible debenture that may have created a prohibited second class of stock and terminated its S election. The corporation later retired the debenture and ended the…
Late QSST and ESBT elections receive S corporation relief
After a shareholder died, S corporation shares passed from a revocable trust to two successor trusts. One trust qualified to be a QSST and the other to be an ESBT, but their beneficiary and trustee…
Late QSST and ESBT elections receive S corporation relief
After a shareholder died, S corporation shares passed from a revocable trust to two successor trusts. One trust qualified to be a QSST and the other to be an ESBT, but their beneficiary and trustee…
Late QSST and ESBT elections receive S corporation relief
After a shareholder died, S corporation shares passed from a revocable trust to two successor trusts. One trust qualified to be a QSST and the other to be an ESBT, but their beneficiary and trustee…
Late QSST and ESBT elections receive S corporation relief
After a shareholder died, S corporation shares passed from a revocable trust to two successor trusts. One trust qualified to be a QSST and the other to be an ESBT, but their beneficiary and trustee…
Late QSST and ESBT elections receive S corporation relief
After a shareholder died, S corporation shares passed from a revocable trust to two successor trusts. One trust qualified to be a QSST and the other to be an ESBT, but their beneficiary and trustee…
Former QSub cannot prorate post-termination items with its parent
An S corporation revoked its election during the year, causing its qualified subchapter S subsidiary (QSub) to become a separate C corporation. The IRS advised that the former QSub is treated as a…
Transfers to ineligible shareholders caused an inadvertent S termination
An S corporation transferred shares to two ineligible shareholders, terminating its election, but later moved those shares to eligible shareholders. The corporation represented that no one intended…
Repeated transfers to an ineligible shareholder were inadvertent S terminations
An S corporation twice transferred shares to an ineligible shareholder because its owners did not know the shareholder was prohibited from holding S corporation stock. After discovering the problem,…
Corporation received inadvertent invalid S election relief
A corporation's S election was invalid because two shareholder trusts intended to qualify as electing small business trusts, but their trustees failed to file the required ESBT elections. The…
Inadvertently invalid S corporation election received retroactive relief
A limited partnership elected to be taxed as a corporation and also filed an S corporation election. The IRS initially rejected the S election because one shareholder was an ineligible corporation.…
Inadvertently invalid S corporation election received retroactive relief
A limited partnership elected to be taxed as a corporation and also filed an S corporation election. The IRS initially rejected the S election because one shareholder was an ineligible corporation.…
Corporation kept S status despite two trusts' missing ESBT elections
A corporation elected S corporation status while two shareholder trusts failed to make timely and effective electing small business trust elections. That failure made the corporation's S election…
Corporation retained S status after a trust missed its QSST election
After a shareholder died, the shareholder's estate eventually distributed S corporation shares to a trust. The trust remained an eligible shareholder for two years after the transfer, but it then…
Corporation retained S status after a partnership briefly held its stock
An S corporation's election terminated when a partnership, which was not an eligible S corporation shareholder, acquired some of its stock. After discovering the error, the partnership transferred…
Corporation retained S status after three years of excess passive investment income
An S corporation had accumulated C corporation earnings and profits and received more than 25 percent of its gross receipts from passive investment income for three consecutive years. That…
Corporation kept S status after ineligible shareholders and uneven distributions
An S corporation's election terminated when stock was transferred to an LLC, an ineligible shareholder. Stock was also transferred to a trust whose income beneficiary did not make the required…
QSub spin-off qualified for tax-free treatment and preserved S eligibility
An S corporation proposed distributing its wholly owned qualified subchapter S subsidiary to its shareholders so two businesses could operate separately. The distribution would terminate the…
Corporation received S election relief after twelve trusts were modified
Twelve testamentary trusts held stock when a corporation elected S status. Each trust beneficiary could appoint trust income to someone else, which prevented the trusts from qualifying as qualified…
Corporation received relief for a late S corporation election
A corporation and its sole shareholder intended the corporation to be an S corporation from a specified date, but its Form 2553 was not filed on time. The IRS found reasonable cause for the late…
Corporation preserved S status after missed QSST elections
An S corporation's stock was held through grantor trusts and later successor trusts whose beneficiaries failed to timely make qualified subchapter S trust elections. Those failures made the original…
Late QSST elections did not end the corporation's S status
Shares of an S corporation were held by three grantor trusts. When the grantor stopped being treated as the trusts' owner, each trust was eligible to become a qualified subchapter S trust, but its…
Corporation received 120 days to file late S election
A corporation intended to be treated as an S corporation from its incorporation date but did not timely file the required election. It requested late-election relief under section 1362(b)(5). The…
Corporation retains S status after trust missed its ESBT election
An S corporation shareholder died, and the shareholder's stock eventually passed from the estate to a trust. The trust was represented to be eligible as an electing small business trust, but its…
Disallowed property-distribution loss reduces S corporation basis and AAA
Chief Counsel advised that an S corporation's permanently disallowed loss under IRC § 311(a) is a nondeductible, noncapital expense under § 1367(a)(2)(D). When an S corporation distributes…
Ineligible shareholder caused inadvertent S election termination
The IRS ruled that an S corporation's election terminated when an ineligible shareholder acquired its stock, but that the termination was inadvertent under IRC § 1362(f). The corporation represented…
Ineligible shareholder caused inadvertent S election termination
The IRS ruled that an S corporation's election terminated when an ineligible shareholder acquired its stock, but that the termination was inadvertent under IRC § 1362(f). The corporation represented…
Ineligible shareholder caused inadvertent S election termination
The IRS ruled that an S corporation's election terminated when an ineligible shareholder acquired its stock, but that the termination was inadvertent under IRC § 1362(f). The corporation represented…
S corporation termination from ineligible shareholder treated as inadvertent
An S corporation's election terminated when an ineligible shareholder acquired its stock. After discovering the problem, that shareholder distributed the stock proportionately to its members, who…
Expired QSST grace period causes inadvertent S corporation termination
Three qualified subchapter S trusts held stock in an S corporation for one income beneficiary. After that beneficiary died, the trusts remained permissible shareholders for two years, but became…
Corporation receives 120 days to file late S election
A corporation intended to be treated as an S corporation from a redacted effective date but did not timely file the required election. The IRS found reasonable cause for the late filing under IRC §…
Passive-income termination treated as inadvertent with corrective conditions
An S corporation had accumulated C corporation earnings and profits and received more than 25 percent of its gross receipts from passive investment income for three consecutive years. Those…
Trust defects and late ESBT elections receive inadvertent-termination relief
An S corporation had multiple trust shareholders whose governing terms or distributions failed the qualified subchapter S trust requirements, while several additional trusts missed…
Court-modified trust qualifies as an S corporation shareholder
A trust sought confirmation that it could qualify as a qualified Subchapter S trust and hold stock in a corporation electing S status. The trust originally allowed principal to be distributed during…
Pro rata QTIP trust division preserves QSST and tax treatment
A surviving spouse proposed dividing an irrevocable QTIP trust that held S corporation stock into two equal successor trusts. The assets would be divided pro rata, the spouse would remain trustee…
Ineligible shareholder caused an inadvertent S election termination
An S corporation's election terminated when an ineligible shareholder acquired its stock. The corporation corrected the problem by having that shareholder distribute the shares to eligible…
Ineligible shareholder caused an inadvertent S election termination
An S corporation's election terminated when an ineligible shareholder acquired its stock. The corporation corrected the problem by having that shareholder distribute the shares to eligible…
Corporation preserved S status after a missed QSST election
A corporation's S election was ineffective because the beneficiary of a shareholder trust did not timely elect qualified subchapter S trust treatment. The trust was represented to have met the…
Corporation preserved S status after a trust held stock too long
After a shareholder died, the estate distributed S corporation shares to a trust that was temporarily eligible to hold them. The trust failed to transfer the shares to eligible shareholders before…
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.