Reg. 301.7701-3 Classification of Certain Business Entities

Internal Revenue Service Department of the Treasury
Washington, DC 20224
Number: 202144013
Release Date: 11/5/2021
Index Number: 9100.31-00, 7701.00-00
---
---
---
---
Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
---, ID No. ---
Telephone Number:
---
Refer Reply To:
CC:PSI:B03
PLR-103146-21
Date:
August 11, 2021
Legend
X = ---
---
Y = ---
---
---
---
Date 1 = ---
Date 2 = ---
Country = ---
Dear ---:
This letter responds to a letter dated February 3, 2021 submitted on behalf of X by X's authorized representative, 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 treated as an association for federal income tax purposes.

# FACTS

According to the information submitted, X was formed on Date 1 under the laws of Country. On Date 2, Y, a U.S. corporation, acquired all of the interests in X, and X became relevant, within the meaning of § 310.7701-3(d), for U.S. federal tax purposes as of Date 2. X states that under § 301.7701-3(b)(2), it is a foreign eligible entity owned by a single member with unlimited liability and its default classification is an entity disregarded from its owner for federal tax purposes. X intended to be classified as an association for federal tax purposes effective Date 2. However, X did not timely file PLR-103146-21 2 Form 8832, Entity Classification Election, to elect to be classified as an association effective Date 2.
X represents that it acted reasonably and in good faith. Further, X represents that the interests of the Government will not be prejudiced for the taxable years affected by the election by granting the relief sought.

# 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) provides guidance on the classification of a foreign eligible entity for federal tax purposes. Generally, a foreign eligible entity is treated as disregarded as an entity separate from its owner if it has a single owner that does not have limited liability. If all members of the foreign eligible entity have limited liability it may elect to be treated as an association pursuant to the rules in § 301.7701-3(c).
Section 301.7701-3(c)(1)(i) provides that 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 appropriate service center. Under § 301.7701-3(c)(1)(iii), this election will be effective on the date specified by the entity on Form 8832 or on the date filed if no such date is specified. The date specified on Form 8832 cannot be more than 75 days prior to the date on which the election is filed and cannot be more than 12 months after the date on which the election is filed.
Section 301.9100-1(c) provides that the Commissioner may grant a reasonable extension of time to make a regulatory election, or a statutory election (but no more than 6 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 the standards the Commissioner will use to determine whether to grant an automatic extension of time for making certain elections.
Section 301.9100-3 provides the standards the Commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the PLR-103146-21 3 requirements of § 301.9100-2. Under § 301.9100-3, a request for relief will be granted when the taxpayer provides 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 information submitted and the representations made, we conclude that X has satisfied the requirements of §§ 301.9100-1 and 301.9100-3. As a result, X is granted an extension of time of 120 days from the date of this letter to file a Form 8832 with the appropriate service center to elect to be classified as an association for U.S. federal tax purposes, effective Date 2. A copy of this letter should be attached to the Form 8832.
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 and the regulations thereunder. 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.
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.
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.
In accordance with the power of attorney on file with this office, we are sending a copy of this letter to X's authorized representatives.
Sincerely,
Associate Chief Counsel
(Passthroughs & Special Industries)
/s/ Adrienne M. Mikolashek
By:
Adrienne M. Mikolashek
Branch Chief, Branch 3
(Office of the Associate Chief Counsel
Enclosure (2)
Copy of this Letter
Copy for 6110 purposes cc: