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Extension Granted to Elect Disregarded Entity Status

OCT. 7, 2014

LTR 201507010

DATED OCT. 7, 2014
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Code Sections
  • Subject Area/Tax Topics
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2015-3704
  • Tax Analysts Electronic Citation
    2015 TNT 31-65
Citations: LTR 201507010

Person To Contact: * * *, ID No. * * *

 

Telephone Number: * * *

 

 

Index Numbers: 7701.00-00, 9100.31-00

 

Release Date: 2/13/2015

 

Date: October 7, 2014

 

 

Refer Reply To: CC:PSI:B03 - PLR-124057-14

 

 

LEGEND:

 

 

X = * * *

 

Y = * * *

 

Z = * * *

 

Country 1 = * * *

 

Country 2 = * * *

 

Sub1 = * * *

 

Sub2 = * * *

 

State = * * *

 

Parent = * * *

 

Entity = * * *

 

Limited = * * *

 

D1 = * * *

 

D2 = * * *

 

D3 = * * *

 

D4 = * * *

 

D5 = * * *

 

 

Dear * * *:

This letter responds to a letter dated June 16, 2014, submitted on behalf of X requesting an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to file an election under § 301.7701-3 to be classified as a disregarded entity for federal tax purposes.

 

FACTS

 

 

The information submitted discloses that Sub1 formed X on D1, under the laws of Country 1. Sub1 is owned by Sub2, a State corporation, whose ultimate owner is Parent, also a State corporation and the parent of an affiliated group that files a U.S. consolidated return.

On D2, X formed Y under the laws of Country 2 to use for the acquisition of Entity. After the acquisition, Y and Entity merged on D3, and the surviving Entity was converted to a Limited and renamed Z. X, Y, and Z each intended to be classified as a disregarded entity for federal tax purposes effective D4, D5, and D3, respectively. However, X, Y, and Z each failed to file timely a Form 8832, Entity Classification Election, to be classified as a disregarded entity for federal tax purposes. X, Y, and Z represent that all U.S. tax and information returns have been filed consistent with X, Y, and Z being treated as disregarded entities effective D4, D5, and D3, respectively.

 

LAW AND ANALYSIS

 

 

Section 301.7701-3(a) provides, in part, that a business entity that is not classified as a corporation under § 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) (an eligible entity) can elect its classification for federal tax purposes as provided in § 301.7701-3. An eligible entity with at least two members can elect to be classified as either an association (and thus a corporation under § 301.7701-2(b)(2)) or a partnership, and an eligible entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner.

Section 301.7701-3(b)(2)(i) provides that, except as provided in § 301.7701-3(b)(3), unless the entity elects otherwise, a foreign eligible entity is: (A) a partnership if it has two or more members and at least one member does not have limited liability; (B) an association if all members have limited liability; or (C) disregarded as an entity separate from its owner if it has a single owner that does not have limited liability. Section 301.7701-3(b)(2)(ii) provides, in part, that for purposes of § 301.7701-3(b)(2)(i), a member of a foreign eligible entity has limited liability if the member has no personal liability for the debts of or claims against the entity by reason of being a member.

Section 301.7701-3(c)(1)(i) provides, in part, that, except as provided in § 301.7701-3(c)(1)(iv) and (v), an eligible entity may elect to be classified other than as provided under § 301.7701-3(b), or to change its classification, by filing Form 8832 with the service center designated on Form 8832.

Section 301.7701-3(c)(1)(iii) provides, in part, that an election made under § 301.7701-3(c)(1)(i) will be effective on the date specified by the entity on Form 8832 or on the date filed if no such date is specified on the election form. The effective date specified on Form 8832 can not be more than 75 days prior to the date on which the election is filed and can not be more than 12 months after the date on which the election is filed.

Under § 301.9100-1(c), the Commissioner may grant a reasonable extension of time to make a regulatory election, or a statutory election (but no more than six months except in the case of a taxpayer who is abroad), under all subtitles of the Internal Revenue Code (Code) except subtitles E, G, H, and I. Section 301.9100-1(b) provides that the term "regulatory election" includes an election whose due date is prescribed by a regulation published in the Federal Register.

Sections 301.9100-1 through 301.9100-3 provide the standards the Commissioner will use to determine whether to grant an extension of time to make an election. Section 301.9100-2 provides automatic extensions of time for making certain elections. Section 301.9100-3 provides extensions of time for regulatory elections that do not meet the requirements of § 301.9100-2.

Section 301.9100-3(a) provides that requests for relief under § 301.9100-3 will be granted when the taxpayer provides the evidence (including affidavits described in § 301.9100-3(e)) to establish to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice the interests of the Government.

 

CONCLUSION

 

 

Based solely on the facts and representations submitted, X has established that the requirements of §§ 301.9100-1 and 301.9100-3 are satisfied. Consequently, X is granted an extension of time of one hundred twenty (120) days from the date of this letter to elect under § 301.7701-3 to be treated as a disregarded entity effective D4. X must file Form 8832 within the extension period with the appropriate service center, with a copy of this letter attached.

Except for the specific ruling above, we express or imply no opinion concerning the federal tax consequences of the facts of this case under any other provision of the Code. In addition, § 301.9100-1(a) provides that the granting of an extension of time for making an election is not a determination that the taxpayer is otherwise eligible to make the election.

This ruling is directed only to the taxpayer requesting it. According to § 6110(k)(3) of the Code, this ruling may not be used or cited as precedent.

Under a power of attorney on file with this office, we are sending a copy of this letter to X's authorized representative.

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 on examination.

Sincerely,

 

 

Associate Chief Counsel

 

(Passthroughs & Special Industries)

 

 

By: Mary Beth Carchia

 

Senior Technician Reviewer,

 

Branch 3

 

Office of the Associate Chief

 

Counsel

 

(Passthroughs & Special Industries)

 

Enclosures:

 

 

Copy of this letter

 

Copy for § 6110 purposes
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Code Sections
  • Subject Area/Tax Topics
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2015-3704
  • Tax Analysts Electronic Citation
    2015 TNT 31-65
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