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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Disproportionate distributions receive inadvertent termination relief
An S corporation made disproportionate distributions to its two shareholders even though every share had identical distribution and liquidation rights under its governing documents. The corporation wa…
S corporation receives late QSub election relief
An S corporation indirectly owned a subsidiary through another wholly owned subsidiary and intended to treat the lower-tier company as a qualified subchapter S subsidiary. It failed to file Form 8869 …
S corporation receives late QSub election relief
An S corporation intended to treat a wholly owned subsidiary as a qualified subchapter S subsidiary but failed to file Form 8869 on time. It represented that its returns had consistently treated the s…
S corporation receives late QSub election relief
An S corporation intended to treat a wholly owned subsidiary as a qualified subchapter S subsidiary but failed to file Form 8869 on time. It represented that its returns had consistently treated the s…
Corporation receives relief for an ineffective S election
A corporation's S election was ineffective because one shareholder did not properly consent. Its successor represented that the failure was inadvertent, was not driven by tax avoidance or retroactive …
Subsidiary receives relief after inadvertent QSub termination
An S corporation's wholly owned subsidiary had a QSub election in effect. During a reorganization, shares of the subsidiary were temporarily issued to another corporation and then distributed to an in…
Partnership ownership caused inadvertent S corporation termination
An S corporation's initial shareholders transferred their stock to a partnership they wholly owned, causing the S election to terminate because the partnership was not an eligible shareholder. After d…
S corporation termination treated as inadvertent
An individual transferred shares of an S corporation to two trusts, one of which was not an eligible S corporation shareholder. The corporation's S election therefore terminated when the ineligible tr…
Sale to foreign owner caused inadvertent S termination
Two shareholders sold an S corporation's stock to a foreign corporation, which was not an eligible S corporation shareholder. After learning that the sale had terminated the S election, the parties re…
Late S election and QSST relief approved
An S corporation parent distributed all stock of its qualified subchapter S subsidiary to three trusts, ending the subsidiary election. The company intended to become an S corporation immediately, but…
Invalid S election treated as inadvertent
A limited liability company elected corporate and S corporation treatment but failed to obtain all required shareholder consents. Its governing documents also could allow disproportionate distribution…
Late QSST elections preserve S and QSub status
A shareholder transferred S corporation stock to three trusts intended to qualify as qualified subchapter S trusts, but their income beneficiaries did not timely file QSST elections. The missing elect…
Late qualified subchapter S subsidiary election is approved
An S corporation wholly owned a domestic subsidiary and intended to treat it as a qualified subchapter S subsidiary from the subsidiary's incorporation date. The parent inadvertently failed to file Fo…
Inadvertent S corporation termination receives relief
An S corporation's stock was held by a revocable trust that became ineligible to remain an S corporation shareholder after the grantor's death. The trustee and estate executor had not timely elected u…
Late QSub election receives 120-day extension
An S corporation owned all the stock of a subsidiary and intended to elect qualified subchapter S subsidiary status effective when the subsidiary was formed. It failed to file Form 8869 because of ina…
S election preserved after trusts miss QSST elections
An S corporation shareholder transferred stock to two trusts that were intended to qualify as qualified subchapter S trusts. The trusts' income beneficiaries failed to file the required QSST elections…
New parent could make a QSub election before five-year waiting period ended
A subsidiary's qualified subchapter S subsidiary status ended when an ineligible shareholder acquired shares of its former S corporation parent. After later ownership changes, another corporation acqu…
Preferred-stock terms caused an inadvertent ineffective S election
A corporation's charter gave preferred stock priority over its common stock for distributions, creating a prohibited second class of stock when the corporation attempted to elect S status. After disco…
S corporation received inadvertent termination relief for trust shares
An S corporation shareholder died, and the shareholder's stock passed to a trust for a minor beneficiary. The trust was intended to be a qualified subchapter S trust, but its terms did not qualify and…
S corporation received relief for a nonqualifying trust shareholder
Two shareholders transferred S corporation stock to a trust intended to be a qualified subchapter S trust. The trust terms did not meet the statutory requirements, and its beneficiary did not timely f…
S corporation received relief for ten trust election failures
Five trusts owned stock when a corporation attempted to begin S corporation status, but their common trustee failed to file electing small business trust elections. Later, an individual contributed st…
Corporation received S election and subsidiary election relief
A corporation's S election was ineffective because spouses with community property interests did not consent and the ownership information on Form 2553 was inaccurate. The corporation also failed to t…
S corporation termination treated as inadvertent
An S corporation converted into a limited partnership and admitted a limited liability company as a shareholder. That shareholder was ineligible under the S corporation rules, and the conversion also …
Stock warrant caused at most an inadvertent S election termination
An S corporation issued a stock warrant that may have created a prohibited second class of stock and terminated its S election. After discovering the issue, the corporation immediately voided the warr…
Shareholder's move abroad causes inadvertent S corporation termination
An S corporation issued shares to a resident alien who later moved permanently to another country and stopped qualifying as a U.S. resident. The shareholder did not tell the corporation, so the compan…
S corporation receives relief for invalid trust and subsidiary elections
An S corporation's election was ineffective because multiple shareholder trusts lacked valid QSST or ESBT elections. That defect also invalidated elections to treat four subsidiaries as qualified subc…
S corporation preserves status after invalid trust elections
An S corporation's election was ineffective because shareholder trusts lacked valid QSST or ESBT elections. The same defect invalidated elections for two qualified subchapter S subsidiaries, and three…
S corporation receives coordinated relief for trust and QSub defects
An S corporation's election was ineffective because numerous shareholder trusts lacked valid QSST or ESBT elections. That defect also invalidated elections involving 18 qualified subchapter S subsidia…
S corporation receives relief for ineligible trust shareholders
An S corporation shareholder was a grantor trust that remained eligible for two years after its owner's death but did not transfer its shares or make an ESBT election before that period expired. The s…
Corporation receives relief for an invalid S election
A corporation's S election was invalid because it had an ineligible shareholder when the election took effect. The corporation transferred the shares to eligible shareholders and represented that the …
Corporation cannot reelect S status before five years
An individual sold all the stock of an S corporation to a C corporation, which terminated the target's S election. The same individual later repurchased the corporation and asked to make a new S elect…
Corporation receives late S election relief
A corporation intended to be treated as an S corporation from a specified effective date but did not timely file the required election. Section 1362(b)(5) permits the IRS to treat a late election as t…
Corporation receives relief for an invalid S election
A corporation intended to begin S corporation treatment after an ineligible shareholder transferred its interest to an eligible shareholder. The parties intended the transfer to occur before the elect…
Late QSST elections do not end S corporation status
Two shareholders transferred S corporation stock to six trusts that represented they qualified as qualified subchapter S trusts, but no beneficiary made a timely QSST election. The missing elections c…
Missing QSST election receives inadvertent termination relief
A trust held S corporation stock and was a grantor trust until its owner died. Within two years, the trust was reformed to have one current income beneficiary and became eligible to elect qualified su…
Late ESBT election does not end S corporation status
An irrevocable trust held S corporation shares and initially qualified as a grantor trust. When the grantor relinquished retained powers, the trust ceased being a grantor trust but otherwise represent…
S corporation gets inadvertent-termination relief for distribution agreements
An S corporation entered into shareholder agreements containing two distribution clauses that gave shareholders different distribution rights. Although those provisions created more than one class of …
S corporation restructuring preserves F reorganization treatment
Family trusts indirectly owned an S corporation with qualified subchapter S subsidiaries and a separate corporate group. They proposed forming a new S corporation, exchanging the old corporation's sha…
S corporation receives relief after QSST income was not distributed
Shareholders transferred S-corporation stock to seven trusts whose beneficiaries elected qualified subchapter S trust treatment. The trust instruments did not require current distribution of all incom…
S corporation receives relief after stock was issued to an ineligible shareholder
An S corporation issued shares to another corporation, an ineligible S-corporation shareholder, causing its election to terminate. After discovering the problem, an eligible individual acquired the sh…
LLC receives more time for corporate and S-corporation elections
A single-member LLC intended to be treated as a corporation and an S corporation from the same effective date, but the IRS had no record of timely receiving Forms 8832 and 2553. The IRS found that the…
S corporation receives relief for ineligible shareholders and a missed QSST election
An S corporation's shares were transferred first to an ineligible entity and later held by a trust that failed to make a timely qualified subchapter S trust election. The parties reported consistently…
Subsidiary receives more time for corporate and QSub elections
An S corporation formed a wholly owned single-member LLC that it intended to classify as a corporation and elect as a qualified subchapter S subsidiary. The parent did not timely file Forms 8832 and 8…
S corporation receives more time to file a QSub election
An S corporation intended to treat its wholly owned subsidiary as a qualified subchapter S subsidiary but did not timely file Form 8869. The parent and subsidiary filed their returns consistently with…
S corporation receives relief for missing consents and an ineligible shareholder
A corporation's S election was initially ineffective because four shareholders did not properly consent. The corporation later contracted to sell shares to an ineligible entity, though the agreement w…
S corporation receives relief for a missing consent and ineligible shareholder
A corporation's S election was initially ineffective because one shareholder did not properly consent. The corporation later contracted to sell shares to an ineligible entity, though the agreement was…
S corporation receives relief after a trust missed its ESBT election
A revocable trust became the sole shareholder of an S corporation and later became ineligible after the grantor's death because no electing small business trust election was filed. The corporation and…
S corporation receives relief for multiple missed ESBT elections
S-corporation stock was transferred among a series of trusts, including newly created and divided trusts, without properly filing electing small business trust elections. The corporation and trusts fi…
Unequal distributions did not end S corporation status
An S corporation made disproportionate shareholder distributions because it used incorrect ownership percentages, then made corrective distributions after an audit found the error. It also treated sta…
Ineligible shareholder caused an inadvertent S termination
Shares of an S corporation were sold to an entity that was not an eligible S corporation shareholder, even though that entity's members were eligible individuals. The entity and its members later ente…
S corporation receives more time for QSub election
An S corporation acquired all stock of another S corporation and intended to treat the acquired company as a qualified subchapter S subsidiary from the acquisition date. The subsidiary inadvertently f…
Late ESBT elections preserve S corporation status
Shares of an S corporation passed from two deceased shareholders' estates to two trusts. Each trustee failed to timely elect to treat the trust as an electing small business trust, which caused one te…
Late ESBT election receives inadvertent termination relief
An S corporation shareholder trust remained eligible for two years after its grantor's death but then lacked a timely electing small business trust election. That failure terminated the corporation's …
Missing trust elections receive inadvertent S corporation termination relief
An S corporation's election terminated when a former revocable trust remained a shareholder after its two-year eligibility period ended without making an electing small business trust election. Additi…
Corporation keeps S status after passive-income termination
An S corporation had accumulated earnings and profits and received more than 25 percent of its gross receipts from passive investment income for three consecutive years. That combination terminated it…
Corporation keeps S status after missed ESBT election
A shareholder placed S corporation stock in a revocable grantor trust and later died. The trust remained an eligible S corporation shareholder for two years after the death, but its trustee failed to …
Partnership-style provisions did not defeat S status after correction
A limited liability company elected S corporation status while its operating agreement still contained partnership provisions that created different distribution or liquidation rights and therefore mo…
Corporation received relief for two inadvertent S election terminations
An S corporation's election terminated when a trust shareholder transferred shares to a partnership, which was not an eligible S corporation shareholder. A second trust also would have caused another …
S corporation received inadvertent-termination relief
An S corporation issued shares first to an LLC taxed as a corporation and later to two LLCs taxed as partnerships. Those entities were ineligible S corporation shareholders, so the stock issuances ter…
IRS grants inadvertent-relief for an invalid S corporation election
An entity's S corporation election may have been ineffective because it had an ineligible shareholder and a possible second class of stock. The entity transferred the shares to an eligible shareholder…
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.