Section 1502; Election to File Consolidated Return

Internal Revenue Service Department of the Treasury
Washington, DC 20224
Number: 201648014
Release Date: 11/25/2016
Index Number: 9100.20-00, 1502.75-00
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In Re:
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Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
---, ID No. ---
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Telephone Number:
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Refer Reply To:
CC:CORP:B01
PLR-116127-16
Date:
August 24, 2016
New Parent = ---
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Acquiring = ---
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Old Parent = ---
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Date 1 = ---
Date 2 = ---
Company Official = ---
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Tax Professional 1 = ---
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Tax Professional 2 = ---
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PLR-116127-16 2
Dear ---
This letter responds to a letter dated May 16, 2016, submitted on behalf of New
Parent, requesting an extension of time under § 301.9100-3 of the Procedure and
Administration Regulations to file an election. The extension is being requested for New
Parent, Acquiring, and the members of Old Parent’s former consolidated group to elect to file a consolidated Federal income tax return, with New Parent as the common parent, under § 1.1502-75(a)(1) of the Income Tax Regulations (hereinafter referred to as “the Election”), for the taxable year ending Date 2. The material information submitted for consideration is summarized below.
Through Date 1, Old Parent was the common parent of a consolidated group.
On Date 1, Acquiring, a wholly-owned subsidiary of New Parent, acquired all of the stock of Old Parent, terminating the Old Parent consolidated group.
An election for New Parent, Acquiring, and the members of Old Parent’s former consolidated group to file a consolidated income tax return, with New Parent as the common parent, for the taxable year ending Date 2 was required to be filed no later than the last day prescribed by law (including extensions of time) for filing of New Parent’s return, but for various reasons New Parent did not timely file the Election.
Subsequently, this request was submitted, under § 301.9100-3, for an extension of time to file the Election. The period of limitations on assessment under § 6501(a) has not expired for the New Parent affiliated group's taxable year for which it wants to make the Election.
New Parent represents that it does not seek to alter a return position for which an accuracy-related penalty has been or could have been imposed under § 6662 at the time it requested relief, and the new position requires or permits the election for which relief is requested.
Section 1.1502-75(a)(1) provides that a group which did not file a consolidated return for the immediately preceding taxable year may file a consolidated return in lieu of separate returns for the taxable year, provided that each corporation which has been a member of the group during any part of the taxable year for which the consolidated return is to be filed consents (in the manner provided in § 1.1502-75(b)) to the regulations under § 1502. If a group wishes to exercise its privilege of filing a consolidated return, such consolidated return must be filed no later than the last day prescribed by law (including extensions of time) for filing the common parent's return.
Under § 301.9100-1(c), the Commissioner has discretion to grant a reasonable extension of time to make a regulatory election or a statutory election (but no more than PLR-116127-16 3 six months except in the case of a taxpayer who is abroad), under all subtitles of the Internal Revenue Code except subtitles E, G, H, and I.
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 301.9100-1(a). Section 301.9100-2 provides automatic extensions of time for making certain elections. Requests for relief under § 301.9100-3 will be granted when the taxpayer provides evidence to establish to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the government. Section 301.9100-3(a).
In this case, the time for filing the Election is fixed by the regulations (i.e.,
§ 1.1502-75(a)(1)). Therefore, the Commissioner has discretionary authority under
§ 301.9100-3 to grant an extension of time for the New Parent affiliated group to file the
Election, provided New Parent shows it acted reasonably and in good faith, the requirements of §§ 301.9100-1 and 301.9100-3 are satisfied, and granting relief will not prejudice the interests of the government.
Information, affidavits, and representations submitted by New Parent, Company
Official, Tax Professional 1, and Tax Professional 2 explain the circumstances that resulted in the failure to timely file a valid Election.
Based on the facts and information submitted, including the affidavits submitted and the representations made, we conclude that New Parent has shown it acted reasonably and in good faith, the requirements of §§ 301.9100-1 and 301.9100-3 are satisfied, and granting relief will not prejudice the interests of the government.
Accordingly, an extension of time is granted under § 301.9100-3, until 60 days from the date on this letter, for New Parent to file the Election, by filing a consolidated return, with New Parent as the common parent, and attaching a Form 1122 for each subsidiary, including the members of Old Parent’s former consolidated group, for the taxable year ending Date 2. New Parent must attach a copy of this letter to the return. Alternatively, if such return is filed electronically, the requirement of attaching a copy of this letter to the return may be satisfied by attaching a statement to the return that provides the date and control number (PLR-116127-16) of this letter ruling.
The above extension of time is conditioned on the New Parent affiliated group's tax liability, if any, not being lower in the aggregate for all years to which the Election applies than it would have been if the Election had been timely made (taking into account the time value of money). We express no opinion as to the New Parent affiliated group's tax liability for the years involved. A determination thereof will be made by the Director's office upon audit of the income tax returns involved.
Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any item discussed or referenced in this letter. In PLR-116127-16 4 particular, we express no opinion with respect to whether New Parent and its subsidiaries qualify substantively to make the Election. In addition, we express no opinion as to the tax effects or consequences of filing the return or the Election late under the provisions of any other section of the Internal Revenue Code or regulations, or as to the tax treatment of any conditions existing at the time of, or resulting from, filing the return or the Election late that are not specifically set forth in this letter.
For purposes of granting relief under § 301.9100-3, we relied on certain statements and representations made under penalty of perjury by New Parent, Company Official, Tax Professional 1, and Tax Professional 2. The Director, however, should verify all essential facts. In addition, notwithstanding that an extension is granted under § 301.9100-3 to file the Election, any penalties and interest that would otherwise be applicable continue to apply.
This letter ruling is directed only to the taxpayer who requested it. Section
6110(k)(3) provides that it may not be used or cited as precedent.
In accordance with a power of attorney on file with this letter, copies of this letter are being sent to your authorized representatives.
Sincerely,
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Ken Cohen
Chief, Branch 3
Office of Associate Chief Counsel
(Corporate) cc: