Estate received 120 days for late 65-day distribution election

Plain-English summary

An estate made a distribution during the first 65 days of a fiscal year and intended under section 663(b) to treat it as paid or credited on the last day of the preceding fiscal year. The election was not timely filed because of inadvertence. The IRS concluded that the regulatory-extension requirements were satisfied and granted 120 days to amend the estate's return for the preceding year to include the election. The ruling did not determine whether the distribution otherwise qualified or was in the proper amount.

Ruling snapshot

• Question: Could the estate make a late section 663(b) election for a distribution made within the first 65 days of its fiscal year?
• Outcome: Approved for 120 days by filing an amended return with the election and a copy of the ruling.
• Key authorities: IRC § 663(b); Treas. Reg. §§ 1.663(b)-2 and 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                    Department of the Treasury
                                                            Washington, DC 20224

Number: 201928010                                           Third Party Communication: None
Release Date: 7/12/2019                                     Date of Communication: Not Applicable
Index Number: 663.00-00, 9100.00-00
                                                            Person To Contact:
-----------------------------------                         ---------------------, ID No. -----------------
---------------------------------                           Telephone Number:
----------------------------                                ---------------------
------------------------------                              Refer Reply To:
                                                            CC:PSI:B01
                                                            PLR-127915-18
                                                            Date:
                                                            March 26, 2019

LEGEND:


Estate            =    ----------------------------------

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

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

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

x                 =    -----------


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

This letter responds to a letter dated September 18, 2018, submitted on behalf of Estate
by its authorized representative, requesting that the Service grant Estate an extension
of time pursuant to § 301.9100-3 of the Procedure and Administration Regulations to
make an election under § 663(b) of the Internal Revenue Code.

Facts

Estate files its federal income tax return on a fiscal year basis with the year ending
Date 1. Estate made a distribution in the amount of $x (the Distribution) within the first
sixty-five days of the fiscal year ending on Date 3, and intended to have the Distribution
considered to be paid or credited on the last day of the fiscal year ending on Date 2 as
permitted under § 663(b). However, due to inadvertence, the § 663(b) election was not
timely filed.

PLR-127915-18                                 2

Law and Analysis

Section 663(b)(1) provides that in general, if within the first 65 days of any taxable year
of an estate or a trust, an amount is properly paid or credited, such amount shall be
considered paid or credited on the last day of the preceding taxable year. Section
663(b)(2) provides that § 663(b)(1) shall apply with respect to any taxable year of an
estate or a trust only if the executor of such estate or the fiduciary of such trust (as the
case may be) elects, in such manner and at such time as the Secretary prescribes by
regulations, to have § 663(b)(1) apply for such taxable year.

Section 1.663(b)-2(a)(1) of the Income Tax Regulations provides that if a trust return is
required to be filed for the taxable year of the trust for which the election is made, the
election shall be made in the appropriate place on such return. The election under
§ 1.663(b)-2(a)(1) shall be made not later than the time prescribed by law for filing such
return (including extensions thereof). Such election shall become irrevocable after the
last day prescribed for making it.

Section 301.9100-1(c) provides that the Commissioner may grant a reasonable
extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a
regulatory election, or a statutory election (but not more than 6 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.

Section 301.9100-2 provides the rules governing automatic extensions of time for
making certain elections. Section 301.9100-3 provides the standards the Commissioner
will use to determine whether to grant an extension of time for 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 (1) the
taxpayer acted reasonably and in good faith, and (2) the grant of relief will not prejudice
the interests of the Government.

Conclusion

Based solely on the facts submitted and representations made, we conclude that Estate
has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. As a result, Estate is
granted an extension of time of 120 days from the date of this letter to file an election
under § 663(b). The election should be made by filing an income tax return for the year
ending on Date 2, amended to include the election, with the appropriate service center.
A copy of this letter should be attached to the amended return.

PLR-127915-18                                  3

Except as specifically set forth above, we express or imply no opinion concerning the
federal tax consequences of the facts described above 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. Finally, we express or imply no opinion concerning whether the
distributions were property paid or credited and in the proper amounts.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that
it may not be used or cited as precedent.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent Estate’s authorized representative.


                                       Sincerely,



                                       Faith Colson
                                       Faith Colson
                                       Senior Counsel, Branch 1
                                       (Passthroughs & Special Industries)

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