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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Missed ESBT elections treated as inadvertent S corporation termination
An S corporation's shares were held by a grantor trust whose deemed owner died. The trust remained an eligible S shareholder for two years after the owner's death, but no ESBT election was made when t…
S corporation received more time to make a QSub election
An S corporation acquired all the stock of a subsidiary and intended to treat it as a qualified subchapter S subsidiary (QSub) from the acquisition date. The corporation failed to file Form 8869 on ti…
Defective governing terms and missing consent did not prevent S status
A company's S corporation election was ineffective because its operating agreement created more than one class of stock and one shareholder did not sign Form 2553. A later amendment left the same uneq…
S corporation receives inadvertent-termination relief
An eligible S corporation shareholder transferred all of its shares in another S corporation to a wholly owned S corporation. Because an S corporation cannot be a shareholder of another S corporation,…
Ineffective QSub election receives inadvertent relief
An S corporation acquired all the stock of another S corporation as part of a purported reorganization, after which the subsidiary converted to a limited liability company. The parent intended to elec…
IRS grants S corporation relief for partnership terms and IRA ownership
A limited liability company intended to be taxed as an S corporation, but its operating agreement contained partnership-style allocation and liquidation provisions that created a second class of stock…
Late ESBT election receives inadvertent S corporation termination relief
A trust owning stock in an S corporation ceased to be a grantor trust and qualified to become an electing small business trust, but its trustee did not timely file the ESBT election. That omission cau…
New owner may restore S election before five-year waiting period ends
A corporation's sole shareholder had revoked its S election. A new shareholder later bought stock, and the corporation redeemed all of the former owner's remaining shares, leaving the buyer as sole ow…
Four missed ESBT elections receive conditional S corporation relief
Four shareholders transferred S corporation stock to four trusts intended to be electing small business trusts, but the trustees did not timely file the ESBT elections. The missed elections caused the…
Inadvertent S corporation termination relief granted for late QSST elections
Five trusts held stock in an S corporation but their beneficiaries did not timely file qualified subchapter S trust elections when grantor-trust treatment ended. Those failures terminated, or would ha…
Inadvertent S corporation termination relief granted for eight late QSST elections
Eight trusts received stock in an S corporation, but their beneficiaries did not timely make qualified subchapter S trust elections. The resulting ineligible shareholders terminated the corporation's …
Inadvertent S corporation termination relief granted for late QSST and ESBT elections
Stock in an S corporation passed to a testamentary trust after a shareholder's death. The beneficiary did not timely elect qualified subchapter S trust treatment, and after that beneficiary died, the …
Inadvertent S corporation termination relief granted for two trusts' late elections
Stock in an S corporation passed to two testamentary trusts after a shareholder's death. The beneficiary did not timely elect qualified subchapter S trust treatment for either trust, and after that be…
Invalid S election ruled inadvertent after missed QSST elections and a bad consent
A company elected S corporation status, and its stock was held by two separate subtrusts that were intended to qualify as qualified subchapter S trusts (QSSTs) for two individual beneficiaries. Two pr…
Missed ESBT election ruled inadvertent, so a company keeps its S corporation status
A company had elected S corporation status, and one of its shareholders was a grantor trust, which is a permitted shareholder. When the grantor and the trustees waived certain trust rights, the trust …
Late QSST election excused, so a company keeps its S corporation status
A small business had elected to be taxed as an S corporation, and one of its shareholders was a trust set up by a married couple who were its grantors, beneficiaries, and trustees. When the first spou…
Late S corporation election treated as timely
A corporation intended to be an S corporation from its formation date and filed returns consistently with that treatment. It did not timely file Form 2553. The IRS found reasonable cause for the misse…
Late QSST election does not end corporation's S status
Shares of an S corporation were transferred to a trust eligible to be a qualified subchapter S trust, but the beneficiary inadvertently failed to make the required QSST election on time. That failure …
Passive-income termination of S status was inadvertent
An S corporation had accumulated C corporation earnings and profits and, for three consecutive years, received passive investment income exceeding 25 percent of gross receipts. Those facts automatical…
Missing ESBT election does not invalidate corporation's S status
A trust held stock when a corporation's S election was supposed to take effect, but the trustee had not elected electing small business trust treatment. The trust therefore was not an eligible S corpo…
S corporation received relief for omitted QSST elections
An S corporation’s stock passed through several trusts after a shareholder died. Eight trusts were intended to qualify as qualified subchapter S trusts, but the required QSST elections were not timely…
S corporation received relief for omitted QSST elections
An S corporation’s stock passed through several trusts after a shareholder died. Eight trusts were intended to qualify as qualified subchapter S trusts, but the required QSST elections were not timely…
S corporation received relief for two omitted QSST elections
An S corporation shareholder’s stock passed through an administrative trust and then to two successor trusts after the shareholder died. The successor trusts were intended to qualify as qualified subc…
Corporation received 120 days to file late S election
A corporation intended to be treated as an S corporation from a specified date but did not timely file the election. It established reasonable cause for the late filing under section 1362(b)(5). The I…
S corporation receives relief after shareholder eligibility failures
An S corporation was owned in part through a disregarded limited liability company whose interests were held by individuals and grantor trusts. When one owner died, two trusts ceased being grantor tru…
Corporation receives inadvertent invalid S election relief
A corporation's operating agreement created a second class of stock, making its S corporation election invalid. After discovering the problem, the corporation adopted a new operating agreement that re…
Corporation receives relief for missing consent and ineligible shareholder
A corporation's S election was invalid because the spouse of a shareholder, who held a community-property interest, did not consent on Form 2553. The corporation's stock ledger later also showed share…
S corporation receives 120-day extension for QSub election
An S corporation purchased all of the stock of another S corporation and intended to treat the acquired company as a qualified subchapter S subsidiary. It failed to timely file Form 8869 for the QSub …
S corporation preserved after five missed ESBT elections
After a grantor died, a grantor trust transferred S corporation shares to five successor trusts whose trustees failed to make timely electing small business trust elections. That failure technically t…
S corporation preserved after five missed ESBT elections
After a grantor died, a grantor trust transferred S corporation shares to five successor trusts whose trustees failed to make timely electing small business trust elections. That failure technically t…
S status restored after operating agreement created second stock class
An LLC had elected S corporation status, but its operating agreement retained partnership provisions and authorized profits interests with different liquidation rights. Issuing those interests caused …
S status restored after preferred stock created second class
An S corporation amended its articles and issued preferred stock to an eligible trust shareholder. Because the preferred shares had different dividend and liquidation rights, their issuance created a …
Late trust elections treated as an inadvertent S corporation termination
An S corporation transferred shares to three trusts that were eligible to elect treatment as electing small business trusts, but the trustees did not file timely elections. The missed filings made the…
Late ESBT elections receive inadvertent-termination relief
An S corporation's stock was held by two grantor trusts. When each trust later stopped being a grantor trust, its trustee failed to make a timely electing small business trust election, causing the co…
Late QSub election allowed
An S corporation acquired all the stock of a subsidiary and intended to elect qualified subchapter S subsidiary treatment from the acquisition date. It inadvertently failed to file Form 8869, although…
Second-class-of-stock defect receives S election relief
A corporation made an S election while its stock was subject to an agreement that created a second class of stock, making the election invalid. After discovering the problem, the corporation canceled …
S corporation split-off qualifies as a tax-free reorganization and distribution
An S corporation proposed transferring a business and other assets to a qualified subchapter S subsidiary, then distributing all of that subsidiary's stock to one shareholder group in exchange for its…
Corporation received relief for a late S corporation election
A corporation intended to be an S corporation from its formation date and filed returns consistently with that treatment. Its Form 2553 election, however, was not filed on time. The IRS concluded that…
Late S corporation election allowed with a 120-day filing condition
A corporation intended to be treated as an S corporation beginning on a redacted effective date, but it did not timely file the required election. The IRS found reasonable cause for the late filing un…
S corporation termination from missed ESBT election treated as inadvertent
A trust acquired shares of an S corporation but its trustees did not timely elect for the trust to be treated as an electing small business trust. That failure made the trust an ineligible shareholder…
Missed ESBT and eight QSub elections received corrective relief
A trust held shares when a corporation intended to begin S corporation treatment, but the trustee did not timely elect electing small business trust status. That omission made the corporation's S elec…
Late S corporation election allowed with a 120-day filing condition
A corporation intended to be treated as an S corporation from a redacted effective date but did not timely file the election. The IRS found reasonable cause for the late filing under section 1362(b)(5…
S corporation received inadvertent-termination relief after trust merger
An eligible electing small business trust that owned S corporation shares merged into a second trust. The surviving trust filed an ESBT election using a later effective date than the actual share tran…
S corporation received inadvertent-termination relief after trust merger
An eligible electing small business trust that owned S corporation shares merged into a second trust. The surviving trust filed an ESBT election using a later effective date than the actual share tran…
S corporation received inadvertent-termination relief after trust merger
An eligible electing small business trust that owned S corporation shares merged into a second trust. The surviving trust filed an ESBT election using a later effective date than the actual share tran…
S corporation received inadvertent-termination relief after trust merger
An eligible electing small business trust that owned S corporation shares merged into a second trust. The surviving trust filed an ESBT election using a later effective date than the actual share tran…
S corporation received inadvertent-termination relief after trust merger
An eligible electing small business trust that owned S corporation shares merged into a second trust. The surviving trust filed an ESBT election using a later effective date than the actual share tran…
Late QSub and corporate classification elections received 120-day extensions
An S corporation acquired all the stock of another S corporation and intended to elect qualified subchapter S subsidiary status for the acquired company. It later converted both entities to limited li…
Corporation received inadvertent invalid S election relief
A corporation’s S election was ineffective because its governing documents created a second class of stock. The corporation and its shareholders later amended the documents to remove the offending pro…
Late ESBT elections received inadvertent S termination relief
Two trusts acquired shares of an S corporation but their trustees did not timely elect electing small business trust status. The first omission terminated the corporation’s S election, and the second …
Late QSST elections received inadvertent S termination relief
A shareholder transferred S corporation stock to two trusts that otherwise met the qualified subchapter S trust requirements, but the beneficiaries did not timely file QSST elections. The corporation’…
S corporation and QSub received inadvertent-termination relief
A trust became an ineligible S corporation shareholder after its temporary eligibility expired because its trustees failed to make a timely electing small business trust election. That failure termina…
Corporation received relief for an ineffective S election
A corporation's S election was ineffective from its intended start date because a shareholder trust failed to make an electing small business trust election. The corporation represented that the omiss…
S election relief covered an ineligible owner and second stock class
An entity intended to be an S corporation, but a partnership shareholder was ineligible and did not consent to the election. Its governing agreements also used partnership-style capital accounts and a…
Unequal liquidation rights received inadvertent S election relief
A corporation had voting and nonvoting shares that originally carried identical economic rights. Before its S election, an articles amendment changed the liquidation rights so the nonvoting shares rec…
S corporation received passive-income termination relief
An S corporation had accumulated earnings and profits from C corporation years and received more than 25 percent of its gross receipts from passive investment income for three consecutive years. Those…
Modified ruling preserves S status after a missed ESBT election
Shareholders transferred S corporation stock to an irrevocable trust that was eligible to be an electing small business trust, but the trustee did not timely make the ESBT election. The missed electio…
Conditional relief granted for invalid S election and trust shareholder
An S corporation’s original election omitted the signature of a shareholder’s community-property spouse. Later, a trust intended to be a qualified subchapter S trust held shares but its governing agre…
Late ESBT elections received inadvertent-termination relief
Six trusts acquired stock in an S corporation but their trustees did not timely elect electing small business trust status. The first failures terminated the corporation’s S election, and later failur…
Ineligible shareholder received inadvertent S termination relief
An S corporation transferred shares to a person that was not an eligible S corporation shareholder, terminating its S election. The corporation represented that the termination was inadvertent and was…
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.