CORPORATION'S S STATUS RECOGNIZED.

Index Number: 1362.01-03

[1] This letter responds to your representative's letter dated November 14, 2000, and subsequent correspondence, submitted on behalf of X, requesting a ruling under section 1362(b)(5) of the Internal Revenue Code.

[2] The represented facts are as follows: X was incorporated on D1. A and B, the shareholders of X on D1, intended X to be an S corporation effective for the Year 1 taxable year, but Form 2553, Election by a Small Business Corporation, was not filed timely. This intent is evidenced by a resolution of the officers of X, dated D2, which states that X will elect to be taxed under subchapter S. Accordingly, X requests a ruling that it will be treated as an S corporation effective D1.

[3] Section 1362(b)(5) of the Code provides that if -- (A) an election under section 1362(a) is made for any taxable year after the date prescribed by section 1362(b) for making such election for such taxable year or no such election is made for any taxable year, and (B) the Secretary determines that there was reasonable cause for the failure to timely make such election, the Secretary may treat such an election as timely made for such taxable year.

[4] Based solely on the facts and the representations submitted, we conclude that X has established reasonable cause for failing to make a timely election to be an S corporation for X's Year 1 taxable year. Accordingly, provided that X makes an election to be an S corporation by filing a completed Form 2553 with the appropriate service center effective for its Year 1 taxable year, within 60 days following the date of this letter, then such election will be treated as timely made for X's Year 1 taxable year. A copy of this letter should be attached to the Form 2553.

[5] Except as specifically set forth above, no opinion is expressed concerning the federal tax consequences of the facts described above under any other provision of the Code, including whether X was or is a small business corporation under section 1361(b) of the Code.

[6] This ruling is directed only to the taxpayer who requested it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.

[7] Pursuant to a power of attorney on file with this office, a copy of this letter is being forwarded to X's authorized representative.

                                   Sincerely yours,