Corporation receives 60 days to file IC-DISC election

Plain-English summary

A domestic corporation was formed to serve as an interest charge domestic international sales corporation for its parent, which sold farming and agricultural products. Its accounting and law firms miscommunicated about when the corporation had been formed, causing Form 4876-A to be filed late. The IRS concluded that the corporation met the standards for discretionary late-election relief. It granted 60 days from the ruling date to file the form, which would be treated as a timely IC-DISC election for the corporation's first taxable year. The ruling did not determine whether the corporation was otherwise eligible for IC-DISC status or benefits.

Ruling snapshot

• Question: Could a corporation receive extra time to file Form 4876-A and elect IC-DISC status for its first taxable year?
• Outcome: approved
• Key authorities: IRC § 992(b)(1); Temp. Treas. Reg. § 1.921-1T(b)(1); Treas. Reg. §§ 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                      Department of the Treasury
                                                              Washington, DC 20224

Number: 201735003                                             Third Party Communication: None
Release Date: 9/1/2017                                        Date of Communication: Not Applicable
Index Number: 9100.22-00, 992.01-02
                                                              Person To Contact:
--------------------                                          ----------------------------, ID No. --------------
------------------------                                      -----------------
---------------------------------                             Telephone Number:
                                                              ----------------------
In Re: ------------                                           Refer Reply To:
                                                              CC:INTL:B06
                                                              PLR-104059-17
                                                              Date:
                                                              May 31, 2017



Taxpayer                =   ----------------------------
Accounting Firm         =   ----------------------
Law Firm                =   -------------------------------
Parent                  =   -----------------------------
Date 1                  =   ----------------------

Dear -------------------

This responds to a letter dated January 24, 2017, submitted by Accounting Firm
requesting that the Internal Revenue Service (“Service”) grant Taxpayer an extension of
time under Treas. Reg. §§ 301.9100-1 and 301.9100-3 to file Form 4876-A (“Election To
Be Treated as an Interest Charge DISC”) for Taxpayer’s first taxable year.

The rulings contained in this letter are based upon information and representations
submitted by Taxpayer and Accounting Firm, and accompanied by penalties of perjury
statements executed by the appropriate parties. This office has not verified any of the
materials submitted in support of the request for rulings. They are subject to verification
on examination.

                                                    FACTS

Taxpayer is a domestic corporation wholly owned by Parent. Parent sells farming and
agricultural products, including grain. Taxpayer was incorporated on Date 1 to serve as
an interest charge domestic international sales corporation (“IC-DISC”) and has
established a commission arrangement with Parent. Accounting firm advised Parent on
the establishment of an IC-DISC. Parent engaged Law Firm to form Taxpayer, and
Accounting Firm was expected to file Form 4876-A.

Due to a miscommunication between Accounting Firm and Law Firm regarding when
Taxpayer was formed, Form 4876-A was not timely filed. Accounting Firm submitted
PLR-104059-17                                         2

this request for relief on behalf of Taxpayer under Treas. Reg. § 301.9100-3 for an
extension of time to file a correct Form 4876-A.

                                        LAW AND ANALYSIS

Section 992(b)(1)(A) of the Internal Revenue Code (“Code”) provides that an election by
a corporation to be treated as a DISC1 shall be made by such corporation for a taxable
year at any time during the 90-day period immediately preceding the beginning of the
taxable year, except that the Secretary may give his consent to the making of an
election at such other times as he may designate.

Section 992(b)(1)(B) of the Code provides that such election shall be made in such
manner as the Secretary shall prescribe and shall be valid only if all persons who are
shareholders in such corporation on such first day of the first taxable year for which
such election is effective consent to such election.

Temp. Treas. Reg. § 1.921-1T(b)(1) provides, in part, that a corporation electing IC-
DISC status must file Form 4876-A and that a corporation electing to be treated as an
IC-DISC for its first taxable year shall make its election within 90 days after the
beginning of that year.

Treas. Reg. § 301.9100-1(c) provides, in part, that the Commissioner, in exercising the
Commissioner’s discretion, may grant a reasonable extension of time under the rules
set forth in Treas. Reg. §§ 301.9100-2 and 301.9100-3 to make a regulatory election
under all subtitles of the Code except subtitles E, G, H, and I.

Treas. Reg. § 301.9100-1(b) provides that a regulatory election is 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. For this purpose, an election includes an application for relief in respect of tax.

Treas. Reg. § 301.9100-3(a) provides that requests for extensions of time for regulatory
elections that do not meet the requirements of Treas. Reg. § 301.9100-2 (automatic
extensions) must be made under the rules of Treas. Reg. § 301.9100-3. Requests for
relief subject to Treas. Reg. § 301.9100-3 will be granted when the taxpayer provides
the evidence (including affidavits described in Treas. Reg. § 301.9100-3(e)) to establish
to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good
faith, and that the grant of relief will not prejudice the interests of the Government.

In the present situation, the election described in Temp. Treas. Reg. § 1.921-1T(b)(1) is
a regulatory election as defined in Treas. Reg. § 301.9100-1(b). Therefore, the
Commissioner has discretionary authority under Treas. Reg. § 301.9100-1(c) to grant

1
    As used in this letter, the terms “IC-DISC” and “DISC” have the same meaning.
PLR-104059-17                                   3

Taxpayer an extension of time, provided that Taxpayer satisfies the standards for relief
set forth in Treas. Reg. § 301.9100-3.

Based on the facts and representations submitted with Taxpayer’s ruling request, we
conclude that Taxpayer satisfies Treas. Reg. § 301.9100-3(a). Accordingly, Taxpayer is
granted an extension of time of 60 days from the date of this ruling letter to file
Form 4876-A. Such filing will be treated as a timely election to be treated as an
IC-DISC for Taxpayer’s first taxable year.

The granting of an extension in this ruling letter is not a determination that Taxpayer is
in fact eligible to make the election or to claim IC-DISC status or benefits. See Treas.
Reg. § 301.9100-1(a). Taxpayer should attach a copy of this ruling letter to its Federal
income tax return for the taxable years to which this letter applies.

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. Except as expressly provided
herein, this letter does not express or imply any opinion concerning the tax
consequences of any aspect of any transaction or item discussed or referenced in this
letter. In accordance with the Power of Attorney on file with this office, a copy of this
letter is being sent to your authorized representative.


                                   Sincerely,


                                   _____________________________________
                                   Marissa K. Rensen
                                   Senior Counsel, Branch 6
                                   Office of Associate Chief Counsel (International)
Enclosures (2)
Copy of this letter
Copy for § 6110 purposes


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