LLC receives extra time to elect corporate tax classification

Plain-English summary

A single-owner domestic limited liability company intended to be treated as an association taxable as a corporation, but inadvertently failed to file Form 8832 on time. The IRS found that the company met the standards for discretionary filing relief under the Section 9100 regulations. It granted the company 120 days to file Form 8832 with the intended effective date. The relief is contingent on timely filing all required returns, including amended returns, for all years consistently with the requested classification.

Ruling snapshot

• Question: Could the LLC receive extra time to elect classification as an association for federal tax purposes?
• Outcome: Approved, with 120 days to file Form 8832 and all required consistent returns.
• Key authorities: IRC § 7701; Treas. Reg. §§ 301.7701-2, 301.7701-3, 301.9100-1, 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201826002 Third Party Communication: None
Release Date: 6/29/2018 Date of Communication: Not Applicable
Index Number: 9100.31-00, 7701.00-00
Person To Contact:
------------------------------------------------------- -----------------------, ID No. --------------
-------------------------------------------------- Telephone Number:
--------------------------------- ----------------------
---------------------------------- Refer Reply To:
CC:PSI:B01
PLR-130507-17
Date:
April 03, 2018

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

Y = ---------------------------------------------------------------------------------------------
----------------

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

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

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

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

This responds to a letter dated October 2, 2017, and subsequent information, submitted
on behalf of X by its authorized representative, requesting an extension of time under
§ 301.9100-3 of the Procedure and Administration Regulations to file an election under
§ 301.7701-3 to treat X as an association for federal tax purposes.

FACTS

The information submitted states that X is a State limited liability company formed on
Date 1. Since Date 1, X has been wholly owned by Y. X intended to be classified as an
association effective Date 2. However, due to inadvertence, X failed to timely file a form
8832, Entity Classification Election, effective Date 2.

LAW AND ANALYSIS

Section 301.7701-3(a) provides that a business entity that is not classified as a
corporation under § 301.7701-2(b)(1), (3), (4), (5), (6), (7) or (8) (an eligible entity) can
elect its classification for federal tax purposes as provided in § 301.7701-3. An eligible
PLR-130507-17 2

entity with at least two members can elect to be classified as either an association (and
thus a corporation under § 301.7701-2(b)(2)) or a partnership, and an eligible entity with
a single owner can elect to be classified as an association or to be disregarded as an
entity separate from its owner.

Section 301.7701-3(b)(1)(ii) provides that unless a domestic eligible entity elects
otherwise, the entity is disregarded as an entity separate from its owner if it has a single
owner.

Section 301.7701-3(c)(1)(i) provides, in part, that an eligible entity may elect to be
classified other than as provided under § 301.7701-3(b), or to change its classification,
by filing Form 8832 with the service center designated on Form 8832.

Section 301.7701-3(c)(1)(iii) provides that an election made under § 301.7701-3(c)(1)(i)
will be effective on the date specified by the entity on Form 8832 or on the date filed if
no such date is specified on the election form. The effective date specified on Form
8832 can not be more than 75 days prior to the date on which the election is filed and
can not be more than 12 months after the date on which the election is filed.

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
six months except in the case of a taxpayer who is abroad), under all subtitles of the
Internal Revenue Code (Code), except subtitles E, G, H, and I. Section 301.9100-1(b)
defines a regulatory election as an election whose due date is prescribed by a
regulation published in the Federal Register, or revenue ruling, revenue procedure,
notice or announcement published in the Internal Revenue Bulletin.

Section 301.9100-2 provides the rules governing automatic extensions of time for
making certain elections.

Section 301.9100-3 provides extensions of time for making regulatory elections that do
not meet the requirements of § 301.9100-2. Section 301.9100-3(a) provides that
requests for relief subject to § 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 solely on the information submitted and the representations made, we conclude
that X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. As a result, X
is granted an extension of time of 120 days from the date of this letter to file a Form
8832 with the appropriate service center electing to be classified as an association for
U.S. income tax purposes effective Date 2. A copy of this letter should be attached to
PLR-130507-17 3

the Form 8832.

This ruling is contingent upon X filing within 120 days of this letter all required federal
income tax and information returns (including amended returns) for all years consistent
with the requested relief. A copy of this letter should be attached to any such returns.

Except for the specific ruling above, we express or imply no opinion concerning the
federal tax consequences of the facts of this case under any other provision of the
Code. 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(s) requesting it. Section 6110(k)(3) of the
Code provides that it may not be used or cited as precedent.

Pursuant to a power of attorney on file with this office, we are sending a copy of this
letter ruling to X’s authorized representatives.

                                   Sincerely,

                                   Associate Chief Counsel
                                   (Passthroughs & Special Industries)


                                 Wendy L. Kribell
                             By: ____________________________
                                 Wendy L. Kribell
                                 Assistant to the Branch Chief, Branch 1
                                 (Passthroughs & Special Industries)

Enclosures (2)
Copy of this letter
Copy for § 6110 purposes