Loss corporation receives 75 days for a late closing-of-the-books election

Plain-English summary

A loss corporation underwent a § 382 ownership change, which limited its use of pre-change losses against later income. It missed the deadline to elect the closing-of-the-books method for dividing income and losses between the pre-change and post-change parts of that year. The taxpayer requested relief before the IRS discovered the omission and represented that it was not changing a position subject to an accuracy-related penalty. Based on the submitted affidavits and representations, the IRS found that the taxpayer acted reasonably and in good faith and that relief would not prejudice the government. It granted 75 days to amend the return and attach the required election statement. The relief is conditioned on aggregate tax liability not being lower than it would have been with a timely election, and the IRS did not decide whether the taxpayer otherwise qualified to make the election.

Ruling snapshot

• Question: May a loss corporation receive extra time to make the § 1.382-6(b) closing-of-the-books election after an ownership change?
• Outcome: Approved, with 75 days to amend the return and file the election.
• Key authorities: IRC § 382; Treas. Reg. §§ 1.382-6(b), 1.382-11, 301.9100-1, 301.9100-3.

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202517013 Third Party Communication: None
Release Date: 4/25/2025 Date of Communication: Not Applicable
Index Number: 9100.22-00, 382.02-05
Person To Contact:
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------------------------------------ Refer Reply To:
CC:CORP:BO1
PLR-115091-24
Date:
January 22, 2025

Legend

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

Year 1 = -------

Company Official = --------------------
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Tax Professionals = ------------------------------------------
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Dear -----------:

This ruling letter responds to a letter from your authorized representative, dated August
23, 2024, requesting an extension of time under §§301.9100-1 and 301.9100-3 of the
Procedure and Administration Regulations to file an election. The extension is being
requested for Taxpayer to file a closing-of-the-books election under §1.382-6(b) of the
Income Tax Regulations (the “Election”) with respect to an ownership change within the
meaning of section 382 of the Internal Revenue Code (the “Code”). The material
information provided is summarized below.
PLR-115091-24 2

On Date 1, Taxpayer experienced an ownership change as defined in section 382(g)
(the “ownership change”) and, consequently, section 382(a) limited its ability to offset
post-change taxable income by pre-change losses.

An election under §1.382-6(b) to close its books with respect to the ownership change
was due by the due date (including extensions) of Taxpayer’s tax return for the Year 1
taxable year but, for various reasons, Taxpayer did not make the Election.
Subsequently, Taxpayer submitted this request, under §301.9100-3, for an extension of
time to file the Election. Taxpayer has represented that it is not seeking to alter a return
position for which an accuracy related penalty has been or could be imposed under
section 6662.

Section 1.382-6(a)(1) provides that except as provided in §1.382-6(b) and (d), a loss
corporation must allocate its net operating loss or taxable income, and its net capital
loss or modified capital gain net income, for the change year between the pre-change
period and the post-change period by ratably allocating an equal portion to each day in
the year.

Section 1.382-6(b)(1) allows a loss corporation to elect to allocate its net operating loss
or taxable income and its net capital loss or modified capital gain net income for the
change year between the pre-change period and the post-change period as if the loss
corporation’s books were closed on the change date.

Section 1.382-6(b)(2)(i) provides that a loss corporation makes the closing-of-the-books
election by including the following statement on the information statement required by
§1.382-11(a) for the change year: “THE CLOSING-OF-THE-BOOKS ELECTION
UNDER §1.382-6(b) IS HEREBY MADE WITH RESPECT TO THE OWNERSHIP
CHANGE OCCURRING ON [INSERT DATE].” The election must be made on or before
the due date (including extensions) of the loss corporation’s income tax return for the
change year.

Under §301.9100-1(c), the Commissioner has discretion to 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
Code except subtitles E, G, H, and I.

Sections 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 a regulatory election.
Section 301.9100-1(a). Section 301.9100-2 provides automatic extensions of time for
making certain elections. Requests for relief under §301.9100-3 will be granted when
the taxpayer provides evidence that it acted reasonably and in good faith, and that
granting relief will not prejudice the interests of the government. Section 301.9100-3(a).

In this case, the time for filing the Election is fixed by the regulations (i.e., §1.382-
6(b)(2)(i)). Therefore, the Commissioner has discretionary authority under §301.9100-3
PLR-115091-24 3

to grant an extension of time for Taxpayer to file the Election, provided that Taxpayer
shows it acted reasonably and in good faith, the requirements of §§301.9100-1 and
301.9100-3 are satisfied, and granting relief will not prejudice the interests of the
government.

Information, affidavits, and representations submitted by Taxpayer, Company Official,
and Tax Professionals explain the circumstances that resulted in the failure to timely file
the Election. The information establishes that the request for relief was filed before the
failure to make the Election was discovered by the Internal Revenue Service. See
§301.9100-3(b)(1)(i).

Based on the facts and information submitted, including the affidavits submitted and
representations made, we conclude that Taxpayer has shown it acted reasonably and in
good faith, the requirements of §§301.9100-1 and 301.9100-3 are satisfied, and
granting relief will not prejudice the interests of the government. Accordingly, we grant
an extension of time under §301.9100-3, for 75 days from the date on this letter, for
Taxpayer to file the Election.

The above extension of time is conditioned on the Taxpayer’s tax liability (if any) being
not lower, in the aggregate, for the year to which the Election applies, and all
subsequent years, than it would have been if the Election had been timely made (taking
into account the time value of money). No opinion is expressed as to the amount of the
Taxpayer’s tax liability for the year involved. A determination thereof will be made by
the applicable Director’s office upon audit of the federal income tax return involved.

Taxpayer should file the election in accordance with §1.382-6(b)(2). Taxpayer’s return
must be amended to attach the election statement required by §§1.382-6(b)(2) and
1.382-11. A copy of this letter should be attached to the election statement.
Alternatively, if Taxpayer files its amended return electronically, Taxpayer may satisfy
this latter requirement by attaching to the return a statement that provides the date on,
and control number (PLR-115091-24) of, this ruling letter.

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. In particular, we express no opinion with respect to whether Taxpayer
qualifies substantively to make the Election. In addition, we express no opinion as to
the tax effects or any other tax consequences of filing the Election late under the
provisions of any other section of the Code and regulations, or as to the tax treatment of
any conditions existing at the time of, or effects resulting from, filing the Election late
that are not specifically set forth in the above ruling.

For purposes of granting relief under §301.9100-3, we relied on certain statements and
representations made by Taxpayer, Company Official, and Tax Professionals.
However, the Director should verify all essential facts. In addition, notwithstanding that
PLR-115091-24 4

an extension is granted under §301.9100-3 to file the Election, penalties and interest
that would otherwise be applicable, if any, continue to apply.

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, copies of this letter are
being sent to your authorized representatives.

                                                Sincerely,


                                                ___________________
                                                Thomas I. Russell
                                                Senior Technician Reviewer, Branch 4
                                                Office of Associate Chief Counsel (Corporate)

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