Single-member LLC receives relief for a late S election

Plain-English summary

A single-member limited liability company intended to be taxed as an S corporation from a specified date but did not timely file Form 2553. The IRS found reasonable cause for the missed election and granted relief under IRC § 1362(b)(5). The company will be recognized as an S corporation from the intended effective date if it otherwise qualifies and submits a properly completed Form 2553 within 120 days of the ruling. The IRS did not decide whether the company otherwise satisfies the requirements for S corporation status.

Ruling snapshot

• Question: May the company make its S election effective from the originally intended date despite missing the filing deadline?
• Outcome: Approved, subject to filing Form 2553 within 120 days
• Key authorities: IRC §§ 1362(a), 1362(b)(2), 1362(b)(3), 1362(b)(5)

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202538002 Third Party Communication: None
Release Date: 9/19/2025 Date of Communication: Not Applicable
Index Number: 1362.00-00, 1362.01-03
Person To Contact:
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Refer Reply To:
CC:PT&E:B01
PLR-101168-25
Date:
June 18, 2025

                                                 LEGEND

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

A = ------------------------------------------

State = ------------------

Date = ----------------------
1
Date = ----------------------
2

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

This responds to a letter dated December 11, 2024, submitted on behalf of X, by
X’s authorized representative, requesting relief under § 1362(b)(5) of the Internal
Revenue Code (Code).

                                                 FACTS

According to the information submitted, X was formed as a single member limited
liability company organized under the laws of State on Date 1. A, the sole shareholder
of X, intended for X to be an S corporation for federal tax purposes effective Date 2.
However, X inadvertently failed to timely file a Form 2553, Election by a Small Business
Corporation. Accordingly, X requests a ruling that it will be treated as an S corporation
effective Date 2.

PLR-101168-25 2

                              LAW AND ANALYSIS

Section 1362(a) provides that a small business corporation may elect to be an S
corporation. Section 1362(b) provides the rule on when an S election will be effective.

Section 1362(b)(2) provides that if an S election is made within the first two and
one-half months of a corporation's taxable year, then the corporation will be treated as
an S corporation for the year in which the election is made.

Section 1362(b)(3) provides that if the election is made after the first two and
one-half months of a corporation's taxable year, then the corporation will not be treated
as an S corporation until the taxable year after the year in which the S election is made.

Section 1362(b)(5) provides that if no election is made pursuant to § 1362(a), or,
if made, the election is made after the date prescribed for making such an election, and
the Secretary determines there was reasonable cause for the failure to timely make the
election, then the Secretary may treat such election as timely made for such taxable
year and effective as of the first day of that year.

X did not file a timely election to be treated as an S corporation under § 1362(a)
effective Date 2. X has, however, established reasonable cause for not making a timely
election and is entitled to relief under § 1362(b)(5).

                                 CONCLUSION

Based solely on the facts submitted and representations made, and provided that
X otherwise qualifies as a subchapter S corporation, we conclude that X will be
recognized as an S corporation effective Date 2 if, within 120 days from the date of this
letter, X submits a properly completed Form 2553, with a copy of this letter attached, to
the appropriate service center.

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. Specifically, no opinion is expressed or implied concerning
whether X otherwise qualifies as an S corporation for federal tax purposes.

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 upon 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-101168-25 3

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,

                                                ____/s/ Laura C. Fields___________
                                                Laura C. Fields
                                                Branch Chief, Branch 1
                                                Office of Associate Chief Counsel
                                                (Passthroughs, Trusts, and Estates)

Enclosure:

Copy of this letter for section 6110 purposes

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