Section 754; Manner of Electing Optional Adjustment to Basis of Partnership Property

Internal Revenue Service
Number: 201632007
Release Date: 8/5/2016
Index Numbers: 754.00-00, 754.02-00,
9100.00-00, 9100.15-00
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Department of the Treasury
Washington, DC 20224
Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
---, ID No. ---
Telephone Number:
--- ---
Refer Reply To:
CC:PSI:B03
PLR-131839-15
Date:
February 29, 2016
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X =
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A =
B = ---
State = ---
Date 1 = ---
Date 2 = ---
Year = --- n = ---
Dear --- ---:
This letter responds to a letter received by our office on September 29, 2015, and subsequent correspondence, submitted on behalf of X by its authorized representatives, requesting a ruling that X be granted an extension of time under § 301.9100-3 of the Procedure and Administration Regulations to make an election under § 754 of the Internal Revenue Code (Code) for Year.
PLR-131839-15 2

# FACTS

X is a limited liability partnership organized under the laws of State on Date 1.
On Date 2, A, a member of X, died. X intended to make an election under § 754 for
Year, the year in which A died. After A’s death, A’s n% interest in X was transferred to
B. X relied on its advisor to file an election under § 754, however; the advisor failed to make an election under § 754 for Year.

# LAW

Section 754 provides that a partnership may elect to adjust the basis of partnership property when there is a distribution of property or transfer of a partnership interest. An election under § 754 applies with respect to all distributions of property by the partnership and to all transfers of property in the partnership during the taxable year to which the election was filed and all subsequent taxable years.
Section 1.754-1(b) of the Income Tax Regulations provides that an election under § 754 to adjust the basis of partnership property under §§ 734(b) and 743(b), with respect to a distribution of property to a partner or a transfer of an interest in a partnership, shall be made in a written statement filed with the partnership return for the taxable year during which the distribution or transfer occurs. For the election to be valid, the return must be filed not later than the time prescribed by § 1.6031-1(e) (including extensions thereof) for filing the return for that taxable year.
Section 301.9100-1(c) provides that the Commissioner may grant a reasonable extension of time to make a regulatory 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 Code except subtitles E, G, H, and I. Section 301.9100-1(b) provides that a 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 a regulatory election. Section 301.9100-2 provides the rules governing automatic extensions of time for making certain elections. Section 301.9100-3 provides extensions of time for making regulatory elections that do not meet the requirements of § 301.9100-2.
Requests for relief subject to § 301.9100-3 will be granted when the taxpayer provides the evidence (including affidavits described in § 301.9100-3(e)) to establish to PLR-131839-15 3 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 on the facts submitted and representations made, we conclude that the requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. Accordingly, X is granted an extension of time of 120 days from the date of this letter to make an election under § 754 effective for its Year taxable year. The election should be made in a written statement filed with the appropriate service center for association with X’s Year tax return. A copy of this letter should be attached to the statement filed.
Except as specifically set forth above, we express or imply no opinion concerning the federal tax consequences of the facts described above under any other provision of the Code.
This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.
Pursuant to a power of attorney on file with this office, we are sending a copy of this letter to your authorized representatives.
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 and Special Industries)
By:____
James A. Quinn
Senior Counsel, Branch 3
Office of the Associate Chief Counsel
(Passthroughs & Special Industries)
Enclosures (2)
Copy of this letter
Copy for § 6110 purposes cc: