Extension granted for late section 336(e) election

Plain-English summary

A consolidated group's parent distributed all the stock of several target corporations and intended the qualified stock disposition to be treated as an asset sale under section 336(e), but the parties did not timely execute the required agreement or file the election statement. The IRS found reasonable action, good faith, and no prejudice to the government. It granted 75 days to complete the agreement and election filings and 150 days to file or amend all affected returns. The relief is conditioned on the parent's aggregate tax liabilities not being lower than they would have been with a timely election.

Ruling snapshot

• Question: Should the parties receive additional time to execute and file a section 336(e) election for a stock disposition?
• Outcome: Approved, with 75 days for the election steps and 150 days for consistent return filings
• Key authorities: IRC § 336(e); Treas. Reg. §§ 1.336-1, 1.336-2, 301.9100-1, and 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202523001 Third Party Communication: None
Release Date: 6/6/2025 Date of Communication: Not Applicable
Index Number: 9100.00-00, 9100.22-00,
336.05-00 Person To Contact:
-----------------------, ID No. -----------------
------------------ Telephone Number:
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----------------------- Refer Reply To:
------------------------------ CC:CORP:B02
-------------------------------------- PLR-115797-24
Date:
March 07, 2025

Legend

Parent = ------------------------------------------------------------
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Targets = ------------------------------------------------------------
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Date 1 = -----------------------

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

This letter responds to a letter dated August 29, 2024, submitted on behalf of Targets
and Parent (collectively, the “Parties”), requesting an extension of time under

PLR-115797-24 2

§301.9100-3 of the Procedure and Administration Regulations to file an election. The
Parties are requesting an extension of time to properly execute the agreement
referenced in §1.336-2(h)(1)(i) (the “Agreement”) and for Parent to file the election
statement under §1.336-2(h)(1)(iii) of the Income Tax Regulations (“Election
Statement”) with respect to Parent’s disposition of all the stock of Targets on Date 1.
The material information submitted is summarized below.

Parent was the common parent of a consolidated group. On Date 1, Parent distributed
all of the stock in Targets to its shareholders (the “Stock Disposition”). It has been
represented that the Stock Disposition qualified as a “qualified stock disposition” as
defined in §1.336-1(b)(6).

The Parties intended for the stock sale to be treated as an asset sale, but for various
reasons, a timely election was not made. Subsequently, a request was submitted under
§301.9100-3 for an extension of time to enter into the Agreement and file the Election
Statement. The Parties each represented that they are not seeking to alter a return
position for which an accuracy-related penalty has been or could be imposed under
section 6662.

Regulations promulgated under section 336(e) permit certain sales, exchanges, or
distributions of stock of a corporation to be treated as asset dispositions if: (1) the
disposition is a “qualified stock disposition” as defined in §1.336-1(b)(6); and (2) a
section 336(e) election is made.

Section 1.336-2(h)(1) provides that if the seller and target corporations are members of
the same consolidated group, a section 336(e) election is made by completing the
following requirements: (i) seller and target must enter into a written, binding agreement,
on or before the due date (including extensions) of the consolidated group’s
consolidated Federal income tax return for the taxable year that includes the disposition
date, to make a section 336(e) election; (ii) the common parent of the consolidated
group must retain a copy of the written agreement; (iii) the common parent must attach
the section 336(e) election statement, described in §1.336-2(h)(5) and (6), to its timely
filed (including extensions) consolidated Federal income tax return for the taxable year
that includes the disposition date; and, (iv) the common parent must provide a copy of
the section 336(e) election statement to target(s) on or before the due date (including
extensions) of the consolidated parent group’s consolidated Federal income tax return.

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
Internal Revenue 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

PLR-115797-24 3

making certain elections. Requests for relief under §301.9100-3 will be granted when
the taxpayer provides evidence to establish to the satisfaction of the Commissioner that
the taxpayer acted reasonably and in good faith and that granting relief will not prejudice
the interests of the government. Section 301.9100-3(a).

The time for entering into the Agreement and filing the Election Statement is fixed by the
regulations (i.e., §1.336-2(h)(1)(i) and (iii)). Therefore, the Commissioner has
discretionary authority under §301.9100-3 to grant an extension of time to enter into the
Agreement and file the Election Statement, provided the Parent 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 the Parties, Company Official
and Tax Professionals explain the circumstances that resulted in the failure to timely
enter into the Agreement and file the Election Statement. The information establishes
that the request for relief was filed before the failure to enter into the Agreement and file
the Election Statement was discovered by the Internal Revenue Service. See
§301.9100- 3(b)(1)(i).

Based on the facts and information submitted, including the representations made, we
conclude that the Parties have 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, an extension of time is granted under
§301.9100-3, until 75 days from the date on this letter, to enter into the Agreement and
file the Election Statement with respect to the Stock Disposition.

WITHIN 75 DAYS OF THE DATE ON THIS LETTER, Parent and Targets must enter
into a written, binding agreement in accordance with §1.336-2(h)(1)(i) to make the
section 336(e) election, Parent must file the Election Statement in accordance with
§1.336-2(h)(1)(iii), and Parent must provide Targets with a copy of the Election
Statement in accordance with §1.336-2(h)(1)(iv). The Election Statement must be
attached to Parent’s tax return for the taxable year including Date 1. Alternatively, if
Parent files its return electronically, it may satisfy the requirement of attaching a copy of
this letter to the return by attaching a statement to its return that provides the date on,
and control number (PLR-115797-24) of, this letter ruling.

WITHIN 150 DAYS OF THE DATE ON THIS LETTER, all relevant parties must file or
amend, as applicable, all returns and amended returns (if any) necessary to report the
transaction consistently with the making of a section 336(e) election for the taxable year
in which the transaction was consummated (and for any other affected taxable year).

The above extension of time is conditioned on the Parent tax liabilities (if any) being not
lower, in the aggregate, for all years to which the section 336(e) election applies than
such liabilities would have been if the Agreement had been timely entered into and the
Election Statement had been timely filed (taking into account the time value of money).

PLR-115797-24 4

No opinion is expressed as to the taxpayers’ tax liabilities for the years involved. A
determination thereof will be made by the applicable Director's office upon audit of the
Federal income tax returns involved.

We express no opinion as to: (1) whether the Stock Disposition qualifies as a “qualified
stock disposition”; or (2) any other tax consequences arising from the section 336(e)
election. In addition, we express no opinion as to the tax consequences of making the
section 336(e) 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
resulting from, filing the section 336(e) late that are not specifically set forth in the above
ruling. For purposes of granting relief under §301.9100-3, we have relied on certain
statements and representations made by the Parties, Company Official, and Tax
Professionals. However, the Director should verify all essential facts. In addition,
notwithstanding that an extension is granted under §301.9100-3 to file the section
336(e) election, penalties and interest that would otherwise be applicable, if any,
continue to apply.

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

Pursuant to the Power of Attorney on file with this office, copies of this letter are being
sent to your authorized representatives.

Sincerely,

Gregory J. Galvin
Branch Chief, Branch 1
Office of Associate Chief Counsel (Corporate)

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