LLC received relief for late corporate classification election

Plain-English summary

A single-owner limited liability company intended to be taxed as a corporation from its formation date but did not timely file Form 8832. Without the election, the company was disregarded as separate from its owner by default. Based on the submitted facts and representations, the IRS found that the company met the standards for discretionary late-election relief. It granted 120 days to file Form 8832 electing corporate classification effective as of the company's formation date.

Ruling snapshot

• Question: Could the LLC make a late election to be taxed as a corporation from its formation date?
• Outcome: approved
• Key authorities: Treas. Reg. §§ 301.7701-2, 301.7701-3, and 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service                                          Department of the Treasury
                                                                  Washington, DC 20224

Number: 202413007                                                 Third Party Communication: None
Release Date: 3/29/2024                                           Date of Communication: Not Applicable
Index Number: 7701.00-00, 9100.00-00,
              9100.31-00                                          Person To Contact:
                                                                  --------------------, ID No. -----------------
--------------------------                                        Telephone Number:
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-----------------------------------------------                   Refer Reply To:
--------------------------                                        CC:PSI:B01
------------------------------------------------------------      PLR-113370-23
---------                                                         Date:
                                                                  December 29, 2023




LEGEND

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

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

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

Country           =                 ------------

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


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

This responds to a letter dated June 23, 2023, submitted on behalf of X, by X’s authorized
representative, requesting an extension of time under § 301.9100-3 of the Procedure and
Administration Regulations to file an entity classification election under § 301.7701-3 to
be treated as an association taxable as a corporation for Federal income tax purposes.

                                                    FACTS

The information submitted states that X was organized as a limited liability company
under the laws of State on Date 1, and is a wholly owned subsidiary of Y, a business trust
organized under the laws of Country. As of Date 1, X’s default classification for Federal
income tax purposes was an entity disregarded as separate from its owner, Y. X
represents that it is an eligible entity under § 301.7701-3 and intended to elect to be an

PLR-113370-23                                  2

association taxable as a corporation, effective Date 1. However, X failed to timely file a
Form 8832, Entity Classification Election, electing to be an association taxable as a
corporation for Federal income tax purposes, effective Date 1.

                                  LAW AND ANALYSIS

Section 301.7701-3(a) provides, in part, 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. Elections are
necessary only when an eligible entity chooses to be classified initially as other than the
default classification or when an eligible entity chooses to change its classification.

Section 301.7701-3(b)(1) provides that 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.

An eligible entity with at least two owners 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(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 specified on the election form. The effective date specified on Form 8832
cannot be more than 75 days prior to the date on which the election is filed and cannot
be more than 12 months after the date on which the election is filed. If an election specifies
an effective date more than 75 days prior to the date on which the election is filed, it will
be effective 75 days prior to the date it was filed.

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 Internal Revenue Code (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 301.9100-1 through 301.9100-3 provide the standards the Commissioner will use
to determine whether to grant an extension of time to make the election.

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Section 301.9100-2 provides the standards the Commissioner will use to determine
whether to grant an automatic extension of time for making certain elections.

Section 301.9100-3 provides the guidelines for granting extensions of time for making
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 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 facts submitted and 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, Entity
Classification Election, with the appropriate service center to elect to be treated as an
association taxable as a corporation for Federal tax purposes, effective Date 1. A copy of
this letter should be attached to the Form 8832.

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 and regulations thereunder. 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.

In addition, we express no opinion concerning the assessment of any interest, additions
to tax, additional amounts, or penalties for failure to file a timely income tax or information
return with respect to any taxable year that may be affected by this ruling. For example,
we express no opinion as to whether a taxpayer is entitled to relief from any penalty on
the basis that the taxpayer had reasonable cause for failure to file timely any income tax
or information returns.

The rulings contained in this letter are based upon information and representations
submitted by the taxpayer 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 request for rulings, it is subject to verification on examination.

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

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In accordance with a power of attorney on file with this office, we are sending a copy of
this letter ruling to your authorized representative.


                                                Sincerely,

                                                Holly Porter
                                                Associate Chief Counsel
                                                (Passthroughs & Special Industries)


                                                By: /s/
                                                    Jennifer N. Keeney
                                                    Senior Counsel, Branch 1
                                                    Office of the Associate Chief Counsel
                                                    (Passthroughs & Special Industries)


Enclosure
      Copy for § 6110 purposes




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