IRS Written Determinations
Free IRS private letter rulings, technical advice memoranda, and Chief Counsel advice with plain-English summaries and the official IRS release on every page.
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Grants relief for an inadvertent S corporation termination
An S corporation's election terminated when a partnership acquired its stock because a partnership is not an eligible S corporation shareholder. The owners had formed the partnership to simplify admin…
Grants relief for an inadvertent S corporation termination
An S corporation's election terminated when a partnership acquired its stock because a partnership is not an eligible S corporation shareholder. The owners had formed the partnership to simplify admin…
Grants relief for an inadvertent S corporation termination
An S corporation's election terminated when a partnership acquired its stock because a partnership is not an eligible S corporation shareholder. The owners had formed the partnership to simplify admin…
Grants relief for an inadvertent S corporation termination
An S corporation's election terminated when a partnership acquired its stock because a partnership is not an eligible S corporation shareholder. The owners had formed the partnership to simplify admin…
Grants relief for an inadvertent S corporation termination
An S corporation's election terminated when a partnership acquired its stock because a partnership is not an eligible S corporation shareholder. The owners had formed the partnership to simplify admin…
Grants relief for an inadvertent S corporation termination
An S corporation's election terminated when a partnership acquired its stock because a partnership is not an eligible S corporation shareholder. The owners had formed the partnership to simplify admin…
Grants relief after an equity agreement created a second stock class
An S corporation granted equity to a person under an agreement that provided different rights to distribution and liquidation proceeds from those held by the existing shareholders. The corporation rep…
Grants relief after two equity agreements created a second stock class
An S corporation granted equity to two people under separate agreements that gave them different distribution and liquidation rights from the existing shareholders. The corporation represented that th…
Grants relief after an equity agreement created a second stock class
An S corporation granted equity to a person under an agreement that provided different rights to distribution and liquidation proceeds from those held by the existing shareholders. The corporation rep…
Treats managed farm leases as active and approves ESBT status
An S corporation farm owner asked whether income from four crop-share leases was passive investment income and whether a shareholder trust qualified as an electing small business trust. Under the leas…
S corporation keeps status after shares briefly pass to an ineligible shareholder
An S corporation's election terminated when all of its shares were transferred to an ineligible shareholder. After discovering the problem, the ineligible shareholder transferred the shares in equal p…
Corporation receives relief after trust misses ESBT election
A corporation's S election was ineffective because a shareholder trust did not timely elect to be an electing small business trust and was therefore an ineligible shareholder. The corporation represen…
S corporation keeps its status after promptly undoing an ineligible partnership shareholder transfer
An S corporation issued stock to a partnership even though its governing documents prohibited the transfer and a partnership generally cannot be an S corporation shareholder. The corporation discovere…
S corporation receives 120 days to make a late QSub election
An S corporation intended to elect qualified subchapter S subsidiary status for its wholly owned subsidiary but did not timely file the required election form. It nevertheless filed its returns consis…
Corporation receives 120 days to file late S election
A corporation intended to be treated as an S corporation from a specified effective date but did not timely file the election. The released letter does not describe why the deadline was missed. The IR…
Trust may revoke ESBT election and restore QSST treatment
A trust that owned stock in an S corporation had originally elected qualified Subchapter S trust treatment. Its trustee later converted the trust to an electing small business trust and then asked to …
Shareholder trust may switch back from ESBT to QSST status
A trust holding S-corporation stock originally elected qualified Subchapter S trust treatment, then later converted to an electing small business trust. The trustee asked the IRS to revoke the ESBT el…
Trust receives consent to replace ESBT status with QSST status
A trust that held shares in an S corporation had used qualified Subchapter S trust status before its trustee elected electing small business trust treatment. The trustee later sought consent to revoke…
Corporation receives inadvertent-election relief after five trusts miss ESBT elections
A corporation attempted to elect S corporation status before its organizers owned any stock, making the election ineffective. When the corporation later issued stock, four shareholder trusts failed to…
Corporation retains S status after two trusts miss QSST elections
An S corporation's stock passed through several family trusts after two shareholders transferred stock and later died. Two trusts intended to qualify as qualified subchapter S trusts, but their income…
Corporation receives inadvertent-election relief after consent, stock-class, and allocation defects
A corporation's S election was ineffective because it did not obtain every required shareholder consent. Its original operating agreement also created a second class of stock, and the corporation made…
Corporation receives relief for a missed ESBT election
An S corporation had stock held by a grantor trust. After the grantor died, that trust became irrevocable and later transferred the shares to a second trust, but the second trust did not timely elect …
S corporation receives relief for stock held by two partnerships
All shares of an S corporation were transferred first to one partnership and then to another. Because a partnership is not an eligible S corporation shareholder, the first transfer terminated the corp…
Corporation receives relief for invalid S and Qsub elections
A company attempted to elect S corporation status but did not obtain every required shareholder consent. A later amendment to its operating agreement also created a second class of stock, and the comp…
Corporation receives relief for missed ESBT election
An S corporation's election terminated when a trust became a shareholder but failed to make a timely electing small business trust election. The trust was otherwise eligible to make the election, and …
Corporation preserves S status after issuing preferred stock
An S corporation issued preferred stock with dividend, liquidation, conversion, and voting rights different from its common stock. That issuance created a prohibited second class of stock and terminat…
S corporation status preserved after shares passed to ineligible trusts
An S corporation shareholder transferred shares to seven trusts that were not eligible S corporation shareholders, terminating the company's S election. After the problem was discovered, the trustee m…
S status preserved after unequal health-plan benefits created second stock class
An S corporation allowed nonemployee shareholders, including a trust beneficiary and family members, to participate in its medical and dental plans. They paid the employee portion of the premiums but …
S corporation receives 120 days for late QSub election
An S corporation formed a domestic subsidiary and owned all of its stock from the subsidiary's incorporation date. The parent intended to treat the subsidiary as a qualified subchapter S subsidiary, o…
Five subsidiary elections receive inadvertent or late-filing relief
An S corporation intended five wholly owned subsidiaries to be qualified subchapter S subsidiaries, or QSubs. Elections filed for four subsidiaries were ineffective, and the parent inadvertently faile…
Missed QSST election does not terminate S corporation status
An S corporation shareholder died, and shares passed from the estate to a trust intended to qualify as a qualified subchapter S trust. The trustee failed to make the required QSST election, which caus…
S corporation termination was inadvertent after stock reached an ineligible shareholder
An S corporation issued stock under an option agreement to a nonresident alien, who was not an eligible S corporation shareholder. The corporation discovered the problem later and promptly repurchased…
Missed ESBT election caused an inadvertent S corporation termination
After a shareholder died, the shareholder's estate transferred S corporation stock to a trust intended to qualify as an electing small business trust. The trustee failed to make the required ESBT elec…
Moline Properties separate-entity doctrine applies to S corporations
Chief Counsel considered whether wholly owned or majority-owned S corporations could be combined with their shareholders and related entities as a unified business enterprise when determining deductio…
Missed ESBT election caused an inadvertent S corporation termination
Two shareholders transferred S corporation stock to a trust intended to qualify as an electing small business trust. The trustee did not make the required ESBT election, leaving the trust ineligible t…
Late ESBT elections did not permanently terminate an S corporation election
Two shareholders transferred S corporation stock to three nongrantor trusts that qualified to elect treatment as electing small business trusts, or ESBTs. The trustees failed to file timely ESBT elect…
An S corporation received relief after three trusts missed ESBT elections
Shareholders transferred stock in an S corporation to three nongrantor trusts whose beneficiaries were U.S. citizens. Although each trust qualified to make an electing small business trust election, t…
Missed ESBT filings were treated as an inadvertent S election termination
Two individual shareholders transferred S corporation shares to three nongrantor trusts. The trusts qualified to elect as electing small business trusts, but their trustees failed to file the election…
Three late ESBT elections received inadvertent termination relief
Two shareholders placed S corporation stock in three nongrantor trusts, each of which qualified to elect as an ESBT. The trustees missed the election deadline, causing the corporation's S election to …
A missed ESBT election did not invalidate S corporation status permanently
A trust held stock when a corporation elected S status but did not timely elect treatment as an electing small business trust. Because the trust was then an ineligible shareholder, the corporation's S…
Corporation received relief for a late S corporation election
A corporation intended to be treated as an S corporation from a specified tax year and filed returns consistently with that treatment. Its Form 2553 election, however, was not filed on time. The IRS f…
Missed ESBT election caused an inadvertent S corporation termination
After an S corporation shareholder died, the shareholder's stock passed to a testamentary trust that could hold S corporation stock for two years. The trustee failed to elect electing small business t…
Five missed QSST elections caused an inadvertent S corporation termination
Five trusts acquired shares of an S corporation, and each trust was represented as eligible for qualified subchapter S trust treatment. The trusts' beneficiaries did not file the required QSST electio…
Partnership's beneficial ownership caused an inadvertent S termination
An individual wanted to buy all of a departing owner's units in an S corporation but needed financing from three other people. Those three formed a partnership that lent funds and obtained long-term b…
State-law formation error received late S corporation election relief
An owner attempted to form a corporation and filed Form 2553, but the entity had not been properly formed under state law, making the S election invalid. The corporation was later formed correctly, an…
Late ESBT election does not end S corporation status
A trust became a shareholder of an S corporation, but its trustee did not timely elect electing small business trust status. That made the trust an ineligible shareholder and technically terminated th…
Mistaken QSST filing does not terminate S corporation status
Stock in an S corporation was transferred to a trust that the trustee and corporation intended to treat as an electing small business trust. Instead, a qualified subchapter S trust election was inadve…
Wrong trust election is treated as an inadvertent S termination
An S corporation transferred stock to a trust that was intended and treated as an electing small business trust. The trustee inadvertently filed a qualified subchapter S trust election instead, even t…
Corporation receives relief for inadvertent S election termination
An S corporation's shareholders transferred stock to an irrevocable trust intended to qualify as a qualified subchapter S trust, but the beneficiary did not timely file a QSST election. That failure t…
Missing shareholder consent receives S corporation relief
A corporation's Form 2553 lacked the signature of the income beneficiary of a shareholder trust, making the corporation's S election ineffective. That failure also made its later election to treat a w…
Missing shareholder consent receives S corporation relief
A corporation's Form 2553 lacked the signature of the income beneficiary of a shareholder trust, making its S corporation election ineffective. The corporation and its shareholders consistently filed …
Late QSub election relief granted
An S corporation acquired all the stock of a subsidiary but did not timely file Form 8869 to elect qualified subchapter S subsidiary status. It represented that it intended QSub treatment and that bot…
Late QSub election relief granted
An S corporation formed a subsidiary and intended to elect qualified subchapter S subsidiary status from the formation date but did not timely file Form 8869. The parent represented that it had filed …
Late QSub election relief granted after stock acquisition
An S corporation acquired all the stock of another corporation and intended to elect qualified subchapter S subsidiary status from the acquisition date. It continued to own all the subsidiary's stock …
Ineligible trust ownership treated as inadvertent S termination
An eligible trust transferred S corporation shares to a complex trust without realizing that the receiving trust was not an eligible S corporation shareholder. The company and its shareholders continu…
Two trust eligibility failures treated as inadvertent S terminations
An S corporation's shares remained in a former grantor trust for more than two years after the grantor's death, making that trust an ineligible shareholder and terminating the S election. The trustee …
Active rental services kept real estate income from being passive investment income
A corporation planning to elect S corporation status had accumulated earnings and profits and earned rent through real estate held directly and through limited liability companies. It and its affiliat…
Corporation kept S status after a trust missed its ESBT election
After a shareholder died, the shareholder's estate transferred S corporation stock to a trust under the will. The trust could hold the shares temporarily but failed to make a timely electing small bus…
S corporation receives 120 days for late QSub election
An S corporation formed a wholly owned domestic subsidiary and intended to treat it as a qualified subchapter S subsidiary, or QSub, from the subsidiary's formation date. The parent inadvertently fail…
Missed QSST election did not end S corporation status
An S corporation shareholder transferred stock to a grantor trust and later died. The trust remained an eligible shareholder for two years after the deemed owner's death, but it kept the stock beyond …
What these documents are
- Private letter rulings (PLRs): A taxpayer asked the IRS to rule on a planned transaction before doing it. The ruling shows exactly how the IRS applied the Code to those facts.
- Technical advice memoranda (TAMs): The IRS National Office answering a question raised during an audit or other proceeding.
- Chief Counsel advice (CCAs): IRS lawyers advising their own field staff on how to apply the law.
- Determination letters: Rulings on exempt-organization matters, such as whether an organization qualifies under § 501(c)(3) or a foundation's grant procedures pass § 4945.
- Not precedent, still useful: Under 26 U.S.C. § 6110(k)(3) none of these can be cited as precedent. They remain the best public window into how the IRS actually rules on facts like yours, and practitioners read them for exactly that.