Foreign entity received extra time to elect partnership status

Plain-English summary

A foreign entity intended to be classified as a partnership for U.S. federal tax purposes from its formation date but inadvertently failed to file Form 8832 on time. The IRS found that the entity met the standards for regulatory-election relief and granted 120 days to file the election with the intended effective date. The entity and its owners must also file all required original or amended returns for open years consistently with the relief, including applicable Forms 5471, 8865, and 8858. If the election would change a U.S. shareholder's section 965 elements, it is disregarded for that calculation under the cited regulation. The ruling does not determine whether the entity is otherwise eligible to elect partnership status.

Ruling snapshot

• Question: May the foreign entity make a late election to be classified as a partnership?
• Outcome: Approved, with 120 days to file Form 8832 and consistent returns
• Key authorities: Treas. Reg. §§ 301.7701-3, 301.9100-1, and 301.9100-3; Treas. Reg. § 1.965-4(c)(2)

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202518013 Third Party Communication: None
Release Date: 5/2/2025 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:PT&E:B01
PLR-116548-24
Date:
January 31, 2025

                                                 LEGEND

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

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

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

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

This letter is in response to your request dated September 16, 2024, submitted on
behalf of X by its 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 to be treated as a partnership for U.S. federal tax purposes.

                                                 FACTS

The information submitted states that X was organized under the laws of Country on
Date 1. X represents that X intended to be classified as a partnership for federal tax
purposes effective Date 1. However, X inadvertently failed to timely file a Form 8832,
Entity Classification Election, to elect to be treated as a partnership 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. An eligible
entity with at least two members can elect to be classified as either an association (and
PLR-116548-24 2

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(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 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 appropriate service center.

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 is specified. The 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 may grant a reasonable
extension of time to make a regulatory election, or a statutory election (but no 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.

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 an election. 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 standards the Commissioner will use to determine whether to grant an
extension of time for regulatory elections that do not meet the requirements of
§ 301.9100-2.

Under § 301.9100-3, 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 the taxpayer acted reasonably and in good faith,
and the grant of relief will not prejudice the interests of the Government.
PLR-116548-24 3

                                  CONCLUSION

Based solely on the information submitted and the 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 with the appropriate service center and elect to be classified as a partnership for
federal tax purposes, effective Date 1. A copy of this letter should be attached to the
Form 8832.

This ruling is contingent on X and the owners of X filing within 120 days of this letter all
required returns for all open years consistent with the requested relief. These returns
may include, but are not limited to, the following forms: (i) Forms 5471, Information
Return of U.S. Persons With Respect to Certain Foreign Corporations, (ii) Forms 8865,
Return of U.S. Persons With Respect to Certain Foreign Partnerships, and (iii) Forms
8858, Information Return of U.S. Persons With Respect to Disregarded Entities, such
that these forms reflect the consequences of the relief granted in this letter. A copy of
this letter should be attached to any such returns.

If applicable, the election to classify X as a partnership effective Date 1 is disregarded
for purposes of determining the amounts of all section 965 elements of all United States
shareholders of X if the election otherwise would change the amount of
any § 965 element of any such United States shareholder. See § 1.965-4(c)(2) of the
Income Tax Regulations.

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 the 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.

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 ruling request, it is subject to verification on examination.

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.
PLR-116548-24 4

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

                                                Sincerely,

                                                Associate Chief Counsel
                                                (Passthroughs, Trusts, and Estates)




                                          By: ____/s/___________________________
                                              Caroline E. Hay
                                              Senior Technician Reviewer, Branch 1
                                              Office of Associate Chief Counsel
                                              (Passthroughs, Trusts, and Estates)


    Enclosure:
    Copy of this letter for section 6110 purposes

cc: ----------------------------------------
-----------------------
------------------------------------------------
----------------------------------
----------------------------

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

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