Foreign single-owner entity gets more time to elect disregarded-entity status

Plain-English summary

Under the "check-the-box" rules, an eligible business entity can choose how it is taxed by filing Form 8832. A foreign entity with a single owner can elect to be disregarded, meaning it is treated as if it did not exist separately from its owner for U.S. tax purposes. Here a foreign entity owned entirely by one person meant to make that election effective from a specific date but inadvertently failed to file Form 8832 on time. It asked the IRS for relief under the section 301.9100 regulations, which allow extra time for a missed regulatory election when the taxpayer acted reasonably and in good faith and relief will not prejudice the government. The IRS granted a 120-day extension from the letter to file the election. The relief is conditioned on the entity and its owner filing all consistent U.S. returns and information returns within 120 days, including Forms 8858 (foreign disregarded entities) and 5471 (certain foreign corporations), and on the owner filing Form 926 for certain capital contributions; if those conditions are not met, the ruling is void. This is a routine cure for a missed entity-classification election with foreign-reporting strings attached.

Ruling snapshot

• Question: Should a foreign single-owner entity get an extension of time under § 301.9100-3 to file a late Form 8832 electing disregarded-entity treatment?
• Outcome: Approved (120-day extension, conditioned on consistent foreign-information return filings)
• Key authorities: Treas. Reg. § 301.7701-3(a), (b), (c); Treas. Reg. §§ 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202507001 Third Party Communication: None
Release Date: 2/14/2025 Date of Communication: Not Applicable
Index Number: 9100.31-00, 7701.00-00
Person To Contact:
---------------------------- ----------------------, ID No. -----------------
-------------------------------------------- Telephone Number:
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------------------------------------------------------- Refer Reply To:
----------------------------------- CC:PSI:B03
PLR-109331-24
Date:
November 13, 2024

Legend

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

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

Z = -----------------

A = --------

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

Date = ------------------

Year 1 = -------

Year 2 = -------

Year 3 = -------

Dear --------:

    This letter responds to a letter submitted May 16, 2024, and subsequent

correspondence, 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 election under § 301.7701-3(c) to be classified as a disregarded
entity for federal tax purposes, effective Date.

                                        FACTS

   According to the information submitted, X was formed under the laws of Country

on Date as a foreign eligible entity for federal tax purposes. Since Date, all shares in X
have been owned by A. X inadvertently failed to timely file Form 8832, Entity
Classification Election, to elect to be treated as a disregarded entity for federal tax
purposes effective Date.

                                  LAW & 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 income tax purposes. An eligible
entity with at least two members can elect to be classified as either an association (and
thus taxed as 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)(2)(i) provides that, except as provided in § 301.7701-

3(b)(3), unless the entity elects otherwise a foreign eligible entity is (A) a partnership if it
has two or more members and at least one member does not have limited liability; (B)
an association if all members have limited liability; or (C) disregarded as an entity
separate from its owner if it has a single owner that does not have limited liability.
Section 301.7701-3(b)(2)(ii) provides that, for purposes of § 301.7701-3(b)(2)(i), a
member of a foreign eligible entity has limited liability if the member has no personal
liability for the debts of or claims against the entity by reason of being a member.

    Section 301.7701-3(c)(1)(i) provides, in part, that an eligible entity may elect to

be classified other than provided under § 301.7701-3(b), or to change its classification,
by filing Form 8832 with the IRS Service Center designated on the form.

    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 the Form 8832 or on the
date filed if no date is 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.

   Section 301.9100-1(c) provides that the Commissioner has discretion to 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 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
the term "regulatory election" as including 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.

   Sections 301.9100-1 through 301.9100-3 provide the standards that the

Commissioner will use to determine whether to grant an extension of time to make an
election. 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 § 301.9100-2.

   Section 301.9100-3(a) provides that a request for relief 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 (1) the taxpayer acted reasonably
and in good faith, and (2) granting relief will not prejudice the government.

                                     CONCLUSION

    Based solely on the information 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 under § 301.7701-3 to be
treated as a disregarded entity for federal tax purposes effective Date. A copy of this
letter should be attached to the Form 8832 filed for X.

    This ruling is contingent upon X and A filing, within 120 days from the date of this

letter, all required federal income tax returns and information returns (including
amended returns) consistent with the requested relief granted in this letter. These
returns include, but are not limited to, Forms 8858, Return of U.S. Persons with Respect
to Foreign Disregarded Entities and Foreign Branches, and Forms 5471, Return of U.S.
Persons with Respect to Certain Foreign Corporations, for all required taxable years
such that these forms reflect the consequences of the relief granted in this letter. 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.

  Relief is also contingent upon A's filing of Form 926 with respect to the Year 1,

Year 2 and Year 3 capital contributions to Y and Z.

    If applicable, this election is disregarded for purposes of determining the amounts

of all § 965 elements of all United States shareholders of X if the election otherwise
would change the amount of any § 965 element of any United States shareholder. See
§ 1.965-4(c)(2) of the Income Tax Regulations.

   X represents that it would have made the entity classification election as of the

election due date regardless of the enactment of the Tax Cuts and Jobs Act (TCJA),
Pub. L. No. 115-97, and the issuance of regulations relating to the TCJA.

   Except as specifically set forth above, we express or imply no opinion concerning

the federal tax consequences of any aspect of any transaction or item discussed or
referenced in this letter. In addition, § 301.9100-1(a) provides that the granting of the
extension of time for making an election is not a determination that the taxpayer is
otherwise eligible to make the election.

    Further, we express or imply 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 or imply 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.

  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.

   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 the office has not verified any of the material submitted
in support of the ruling request, it is subject to verification on examination.

     In accordance with the Power of Attorney on file with this office, a copy of this

letter is being sent to X's authorized representative.

                                   Sincerely,

                                   Holly Porter
                                   Associate Chief Counsel
                                   (Passthroughs & Special Industries)

                                By: __________________________________
                                   Richard T. Probst
                                   Senior Technician Reviewer, Branch 3
                                   Office of the Associate Chief Counsel
                                   (Passthroughs & Special Industries)

Enclosure:
Copy for § 6110 purposes

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