9100 relief to make late GILTI high-tax-exclusion elections for a CFC group across three years

Plain-English summary

This letter gives a corporate group more time to make a tax election tied to the GILTI rules for foreign subsidiaries. GILTI (global intangible low-taxed income) requires U.S. shareholders of controlled foreign corporations (CFCs) to include certain foreign income currently, but the "high-tax exclusion" (HTE) election lets a group leave out income that was already taxed abroad above a threshold rate. The election has to be made for all CFCs in the group and attached to a timely return. Here, after the 2017 tax law changed the constructive-ownership rules (repealing section 958(b)(4) and adding "downward attribution"), the taxpayer discovered during due diligence for a sale that additional entities were actually CFCs that should have been included in its HTE elections, and that its prior elections for two years were incomplete and none was made for the first year. Relying on the fact that it depended on its tax advisor, was not under examination, and that the election only increases a net operating loss carryforward without lowering tax in any closed year, the IRS found the taxpayer acted reasonably and in good faith. It granted 120 days to make the late GILTI HTE elections for all three years via amended returns.

Ruling snapshot

• Question: May the taxpayer get an extension of time to make late GILTI high-tax-exclusion elections for its CFC group for three tax years?
• Outcome: approved (120-day extension granted)
• Key authorities: Treas. Reg. §§ 301.9100-1, -3; IRC § 951A; Treas. Reg. § 1.951A-2(c)(7)

Full text (IRS public release)

 Internal Revenue Service                        Department of the Treasury
                                                 Washington, DC 20224

 Number: 202502003                               Third Party Communication: None
 Release Date: 1/10/2025                         Date of Communication: Not Applicable
 Index Number: 9100.00-00, 9100.22-00,
               951A.00-00, 951A.02-00            Person To Contact:
                                                 ------------------, ID No. -----------------
 --------------------                            Telephone Number:
 ---------------------------------               --------------------
 -----------------------                         Refer Reply To:
                                                 CC:INTL:B02
                                                 PLR-108271-24
                                                 Date:
                                                 October 15, 2024




TY: -----------------------

Legend

 Taxpayer                            = ----------------------------------------------------------
 Members of Taxpayer’s CFC Group     =      1. ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
                                                ----------------------------------------------------
PLR-108271-24         2

                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            ----------------------------------------------------
                            --------------------------------------

Date 1          = ------------------
Tax Year 1      = -----------------------------------------------
Tax Year 2      = -----------------------------------------------
Tax Year 3      = -----------------------------------------------
A               = -
B               = -------------------------------------------------------------
                  -------------------------------------------------------------
                  ----------------------------------
C               = ---
D               = -
E               = ---
F               = ---
Year 4          = -------
Tax Advisor     = -----------------------
PLR-108271-24                                         3

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

This letter responds to a letter dated Date 1 and supplemental correspondence submitted
on behalf of Taxpayer and the U.S. consolidated group of which Taxpayer is the common
parent, by its authorized representatives, requesting an extension of time under
§301.9100-3 for Taxpayer to file a global intangible low-taxed income (“GILTI") high-tax
exclusion election (“GILTI HTE Election”) under §1.951A-2(c)(7)(viii) with respect to each
controlled foreign corporation (as defined in section 957(a)) (“CFC”) that is a member of
Taxpayer’s CFC Group as defined in Treas. Reg. §1.951A-2(c)(7)(viii)(E)(2)(i), for the
CFC inclusion years (as defined in Treas. Reg. §1.951A-1(f)(1)) that end with or within
Taxpayer’s U.S. shareholder inclusion years (as defined in Treas. Reg. §1.951A-1(f)(7)),
Tax Year 1, Tax Year 2, and Tax Year 3.

FACTS

Taxpayer, a domestic corporation, is the common parent of a U.S. consolidated group
(“Taxpayer consolidated group”). During Tax Year 1, Tax Year 2, and Tax Year 3,
Taxpayer, directly or indirectly through members of the Taxpayer consolidated group: (1)
wholly owned A of the B members of its CFC Group; (2) owned C percent of the stock of
D members of its CFC Group; and (3) owned E percent of the stock of the remaining
members of the CFC Group. Any member of the CFC Group that was E percent-owned
by Taxpayer and the Taxpayer consolidated group had as its other owner a non-U.S.
person that owned F percent of the stock of that member of the CFC Group. There are
no U.S. shareholders of any CFC in the Taxpayer CFC Group that are not members of
the Taxpayer consolidated group. Taxpayer and members of the Taxpayer consolidated
group are controlling domestic shareholders (as defined in Treas. Reg. §1.964-1(c)(5))
for each CFC in the Taxpayer CFC Group.

Taxpayer’s federal tax compliance was the responsibility of both its internal tax
department and Tax Advisor. Taxpayer did not have significant in-house tax expertise in
U.S. international tax matters, therefore, Taxpayer engaged the tax consulting and tax
preparation services of Tax Advisor. Tax Advisor prepared Taxpayer’s federal income
tax returns for Tax Year 1, Tax Year 2, and Tax Year 3. Taxpayer timely filed (before the
issuance of the final GILTI HTE Election regulations1) a Form 1120 for Tax Year 1 without
making a GILTI HTE Election. For Tax Year 2 and Tax Year 3, Taxpayer timely filed
Forms 1120 that included statements reflecting the choice to make the GILTI HTE
Election.

In Year 4, with Tax Advisor assisting, Taxpayer began a due diligence review in
anticipation of selling various wholly-owned companies to an unrelated third party. During
this review, Taxpayer and Tax Advisor gained a full understanding of the implications of
the application of section 958(b) as modified by the Tax Cuts and Jobs Act. This resulted

1 T.D. 9902, 85 F.R. 44620.  At the time of the filing of Taxpayer’s original Form 1120 for Tax Year 1,
Taxpayer could not make the GILTI HTE Election because the GILTI HTE regulations had not been
finalized and the election was not available.
PLR-108271-24                                4

in the discovery of additional members of Taxpayer’s CFC Group that should have been
reflected in GILTI HTE Elections for Tax Year 2 and Tax Year 3. However, in the course
of the due diligence review, Taxpayer did not receive the information with respect to these
additional members necessary to timely make the GILTI HTE Election prior to the election
due date for Tax Year 3. In its prior GILTI HTE Elections for Tax Year 2 and Tax Year 3,
relying on organizational charts prepared internally by Taxpayer before the repeal of
section 958(b)(4), Tax Advisor had not identified CFCs in Taxpayer’s organizational
structure that were CFCs by virtue of the modified constructive ownership rules under
section 958(b). Prior to the Tax Cuts and Jobs Act, section 958(b) had not applied section
318(a)(3)(C)’s “downward attribution” rules. Therefore, Taxpayer did not file some Forms
5471 that were required to be filed with Taxpayer’s Tax Year 1, Tax Year 2, and Tax Year
3 returns with respect to the CFC Group. In addition, GILTI HTE Elections were not
properly filed for Tax Year 2 and Tax Year 3. Taxpayer did not file a GILTI HTE Election
for Tax Year 1 either on its original return or on an amended return; however, due to the
discovery of additional CFCs in the CFC Group, Taxpayer is seeking to make a GILTI
HTE Election for Tax Year 1 as well.

Taxpayer and the Taxpayer consolidated group are not currently under examination for
Tax Year 1, Tax Year 2, Tax Year 3, or any other year in which any issue with respect to
the election is presented on a return. Taxpayer represents that granting the relief
requested will not result in Taxpayer having a lower tax liability in the aggregate for all
affected years than Taxpayer would have had if the election had been timely made.
Taxpayer represents that no facts have changed that would indicate the use of hindsight
and that the election would have been beneficial from the beginning. Taxpayer
represents that making the GILTI HTE Election for Tax Year 1, Tax Year 2, and Tax Year
3 will not result in any additional tax liability for Tax Year 1, Tax Year 2, Tax Year 3, or
any other year for which assessment is barred under section 6501(a), such that there
would be a tax liability that could not be assessed or collected as a result of the GILTI
HTE Election. Taxpayer also represents that the effect of the election is an increase to
the amount of its consolidated net operating loss carryforward into open tax years and
the election does not produce any underpayment (or overpayment) in any closed year.
Further, Taxpayer and the Taxpayer consolidated group comprise all of the U.S.
shareholders that directly or indirectly own stock in each member of Taxpayer’s CFC
Group, therefore, Taxpayer and the U.S. consolidated group are the only taxpayers
affected by the GILTI HTE Election.

LAW AND ANALYSIS

Section 951A(a) provides that a U.S. shareholder of any CFC for any taxable year of the
U.S. shareholder must include in gross income the shareholder’s GILTI for that taxable
year.

Section 951A(b) provides that the term “GILTI” means, with respect to any U.S.
shareholder for any taxable year of such U.S. shareholder, the excess (if any) of such
PLR-108271-24                                 5

shareholder’s net CFC tested income for such taxable year, over such shareholder’s net
deemed tangible income return for such taxable year.

Section 951A(c)(1) generally provides that the term “net CFC tested income” means, with
respect to any U.S. shareholder for any taxable year, the excess (if any) of the aggregate
of such shareholder’s pro rata share of the tested income of each CFC with respect to
which such shareholder is a U.S. shareholder for such taxable year of such U.S.
shareholder, over the aggregate of such shareholder’s pro rata share of the tested loss
of each CFC with respect to which such shareholder is a U.S. shareholder for such
taxable year of such U.S. shareholder.

Section 951A(c)(2)(A) provides that the term “tested income” means, with respect to any
CFC for any taxable year of such CFC, the excess (if any) of the gross income of such
corporation determined without regard to certain items of income, including any gross
income excluded from the foreign base company income (as defined in section 954) and
the insurance income (as defined in section 953) of such corporation by reason of section
954(b)(4), over the deductions (including taxes) properly allocable to such gross income
under rules similar to the rules of section 954(b)(5) (or to which such deductions would
be allocable if there were such gross income).

Section 1.951A-2(c)(7)(i) generally provides that for purposes of determining the tested
income of a CFC, a tentative gross tested income item (determined under §1.951A-
2(c)(7)(ii)(A)) qualifies for the exception described in section 954(b)(4) only if a GILTI HTE
Election is effective with respect to the CFC for the CFC inclusion year (as defined in
§1.951A-1(f)(1)) and the tentative tested income item with respect to the tentative gross
tested income item was subject to an effective rate of foreign tax that is greater than 90
percent of the maximum rate of tax specified in section 11.

Section 1.951A-2(c)(7)(viii) provides that the GILTI HTE Election is made by the
controlling domestic shareholders with respect to a CFC for a CFC inclusion year by filing
the statement required under §1.964-1(c)(3)(ii) with a timely filed original federal income
tax return, or with an amended federal income tax return, for the U.S. shareholder
inclusion year of each controlling domestic shareholder in which or with which such CFC
inclusion year ends; providing any notices required under §1.964-1(c)(3)(iii); and
providing any additional information required by applicable administrative
pronouncements.

Section 1.951A-2(c)(7)(viii)(E)(1) provides that if a CFC is a member of a CFC group, the
GILTI HTE Election is made with respect to all CFCs that are members of the CFC group.

Section 1.951A-2(c)(7)(viii)(E)(2)(i) provides that a CFC group means an affiliated group
as defined in section 1504(a) without regard to section 1504(b)(1) through (6), except that
section 1504(a) is applied by substituting “more than 50 percent” for “at least 80 percent”
each place it appears, and section 1504(a)(2)(A) is applied by substituting “or” for “and.”
For purposes of §1.951A-2(c)(7)(viii)(E)(2)(i), stock ownership is determined by applying
PLR-108271-24                                  6

the constructive ownership rules of section 318(a), other than section 318(a)(3)(A) and
(B), by applying section 318(a)(4) only to options (as defined in §1.1504-4(d)) that are
reasonably certain to be exercised as described in §1.1504-4(g), and by substituting in
section 318(a)(2)(C) “5 percent” for “50 percent.”

Section 1.951A-2(c)(7)(viii)(A)(2)(i) generally provides that a controlling domestic
shareholder may make the election with an amended federal income tax return, duly filed
within 24 months of the unextended due date of the original federal income tax return for
the U.S. shareholder inclusion year with or within which the CFC inclusion year ends.

Section 1.951A-2(c)(7)(viii)(D) provides that a GILTI HTE Election is valid only if all of the
requirements in Treas. Reg. §1.951A-2(c)(7)(viii)(A) are satisfied.

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, except subtitles E, G, H, and I.

Section 301.9100-1(b) defines the term “regulatory election” as 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.

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

Section 301.9100-3 provides rules for requesting extensions of time for regulatory
elections that do not meet the requirements of Treas. Reg. §301.9100-2. It provides that
these requests for relief are granted when the taxpayer provides the evidence (including
affidavits) 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. A taxpayer is deemed to have acted reasonably and in good faith if, among
other factors, the taxpayer requests relief before the failure to make the regulatory
election is discovered by the IRS. Treas. Reg. §301.9100-3(b)(i). A taxpayer is also
deemed to have acted reasonably and in good faith if the taxpayer reasonably relied on
a qualified tax professional, including a tax professional employed by the taxpayer, and
the tax professional failed to make, or advise the taxpayer to make, the election. Treas.
Reg. §301.9100-3(b)(v).

Section 301.9100-3(b)(3)(ii) provides that a taxpayer is not deemed to have acted
reasonably and in good faith if the taxpayer was informed in all material respects of the
required election and related tax consequences, but chose not to file the election.

Section §301.9100-1(a) provides that granting an extension of time for making an election
is not a determination that a taxpayer is otherwise eligible to make the election or that a
taxpayer complied with the other requirements for a valid election.
PLR-108271-24                                         7

CONCLUSION

Based on the facts provided and representations made, we conclude that the
requirements of Treas. Reg. §§301.9100-1 and 301.9100-3 have been satisfied.
Taxpayer is hereby granted an extension of time of one hundred twenty (120) days from
the date of this letter to make GILTI HTE Elections with respect to the Taxpayer CFC
Group for the CFC inclusion years that end with or within Taxpayer’s U.S. shareholder
inclusion years, Tax Year 1, Tax Year 2, and Tax Year 3. Taxpayer should make the
elections in written statements attached to duly filed Forms 1120X for Tax Year 1, Tax
Year 2, and Tax Year 3.

The ruling contained in this letter is 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 ruling, it is subject to verification on examination.

Except as expressly provided herein, no opinion is expressed or implied concerning the
tax consequences of any aspect of any transaction or item discussed or referenced in this
letter.

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.

A copy of this letter must be attached to any income tax return to which it is relevant.

Alternatively, taxpayers filing their returns electronically may satisfy this requirement by
attaching a statement to their return that provides the date and control number of the letter
ruling.

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,

                                                  /s/ Pierce W. Pandolph

                                                  Pierce W. Pandolph
                                                  Senior Technical Reviewer, Branch 2
                                                  Associate Chief Counsel (International)

 Cc: ----------------------------------------
     ----------------------------------------------