LLC received 120 days to elect corporate tax status

Plain-English summary

A limited liability company reorganized in a second state and intended to be treated as an association taxable as a corporation from the reorganization date. It failed to file Form 8832 on time because of inadvertence, but represented that its filings had been consistent with the requested corporate treatment. The IRS concluded that the standards for discretionary late-election relief were satisfied and granted 120 days to file Form 8832 with the intended effective date. The company and its owners also had to file any required original or amended returns consistently with the election within that period. If they failed to meet that condition, the ruling would be null and void.

Ruling snapshot

• Question: Could the LLC file a late Form 8832 election to be taxed as a corporation from its reorganization date?
• Outcome: approved (120-day extension, subject to consistent return filings)
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1, and 301.9100-3

Full text (IRS public release)

 Internal Revenue Service                             Department of the Treasury
                                                      Washington, DC 20224

 Number: 202250001                                    Third Party Communication: None
 Release Date: 12/16/2022                             Date of Communication: Not Applicable
 Index Number: 7701.00-00, 9100.00-00,
               9100.31-00                             Person To Contact:
                                                      --------------------------, ID No. ----------------
 ----------------------------------                   Telephone Number:
 ----------------------------------                   --------------------
 ------------------------                             Refer Reply To:
 ------------------------                             CC:PSI:B01
 ------------------------------                       PLR-104292-22
                                                      Date:
                                                      September 21, 2022




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

 State 1 = --------

 State 2 = -------------

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

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




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

This letter responds to a letter dated February 18, 2022, and subsequent
correspondence, submitted on behalf of X, requesting a ruling under §§ 301.9100-1 and
301.9100-3 of the Procedure and Administration Regulations that X be granted an
extension of time to file an election to be classified as an association taxable as a
corporation under § 301.7701-3(c), effective Date 2.

                                              Facts

Based on the material submitted, X is an entity formed as a limited liability company
under the laws of State 1 on Date 1. On Date 2, X reorganized as a limited liability
company in State 2. X intended to be treated as an association taxable as a corporation
for U.S. federal tax purposes effective Date 2. However, due to inadvertence, X failed to
file a timely Form 8832, Entity Classification Election. X represents that it has filed
consistently with the requested relief since Date 2.
PLR-104292-22                                  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. 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) provides that except as provided in § 301.7701-3(b)(3), unless
the entity elects otherwise, a domestic eligible entity is (i) a partnership if it has two or
more members; or (ii) 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)(iv) provides that if an eligible entity makes an election under
§ 301.7701-3(c)(1)(i) to change its classification (other than an election made by an
existing entity to change its classification as of the effective date of § 301.7701-3), the
entity cannot change its classification by election again during the sixty months
succeeding the effective date of the election. However, the Commissioner may permit
the entity to change its classification by election within the sixty months if more than fifty
percent of the ownership interests in the entity as of the effective date of the subsequent
election are owned by persons that did not own any interests in the entity on the filing
date or on the effective date of the entity's prior election. An election by a newly formed
eligible entity that is effective on the date of formation is not considered a change for
purposes of § 301-7701-3(c)(1)(iv).

                                         Conclusion

Based on the facts submitted and the representations made, we conclude that the
requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. As a result, X is
granted an extension of time of 120 days from the date of this letter to file Form 8832
with the appropriate service center to elect to be classified as an association taxable as
a corporation for federal tax purposes, effective Date 2. A copy of this letter should be
attached to the Form 8832.

This ruling is contingent on X and its owners filing, within 120 days from the date of this
letter, any required returns (including amended returns) consistent with the requested
relief effective on Date 2. A copy of this letter should be attached to any such returns or
amended returns. If this condition is not met, then this ruling is null and void. A copy of
this letter should be attached to any such returns.
PLR-104292-22                                 3


Except as expressly set forth above, we express or imply no opinion concerning the
federal tax consequences of the facts discussed above under any other provision of the
Code.

The ruling contained in this letter is based upon information and representations
submitted by X and accompanied by a penalty of perjury statement executed by an
appropriate party. While this office has not verified any of the material submitted in
support of the ruling request, it is subject to verification on examination.

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 a power of attorney on file with this office, we are sending a copy of
this letter to X's authorized representative.


                                      Sincerely,

                                      Holly Porter
                                      Associate Chief Counsel
                                      (Passthroughs and Special Industries)


                                   By: __________/s/_______________
                                       Laura Fields
                                       Chief, Branch 1
                                       Office of the Associate Chief Counsel
                                       (Passthroughs and Special Industries)


Enclosure
      Copy for § 6110 purposes


cc: