Reg. 301.7701-3 Classification of Certain Business Entities

Internal Revenue Service Department of the Treasury
Washington, DC 20224
Number: 202249008
Release Date: 12/9/2022
Index Number: 9100.31-00, 7701.00-00
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Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:PSI:B01
PLR-106122-22
Date:
September 15, 2022
LEGEND
X = ---
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Y = ---
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Z = ---
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Country = ---
Date = ---
Dear ---:
This responds to a letter dated March 21, 2022, submitted on behalf of X, requesting an extension of time under § 301.9100-3 of the Procedure and Administration Regulations, to make an entity classification election to be treated as an association taxable as a corporation under § 301.7701-3.

# Facts

According to the information submitted and representations made, X is an entity organized under the laws of Country. X is a foreign entity eligible to elect to be classified as an association taxable as a corporation for federal tax purposes.
X is wholly but indirectly owned by Y, a domestic corporation. Y is wholly owned by Z. Z is the common parent of a group of domestic corporations that file a U.S. consolidated PLR-106122-22 2 federal income tax return. X was formed on Date 1 as the result of an amalgamation under the laws of Country. X intended that it be classified as foreign association taxable as a corporation for federal tax purposes. However, due to inadvertence, X failed to file Form 8832, Entity Classification Election, to be classified as a corporation effective Date
1. X is requesting an extension of time to make an election to be classified as an association taxable as a corporation effective Date 1.
X represents that all relevant parties have treated X as a foreign corporation for federal tax purposes effective Date 1 and thereafter. In particular, Z filed Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, with respect to X for each relevant taxable year.

# Law and Analysis

Section 301.7701-3(a) provides that a business entity that is not classified as a corporation under section 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) (an eligible entity), can elect its classification for federal tax purposes.. 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) provides a default classification for an eligible entity that does not make an election. Section 301.7701-3(b)(2)(i) provides that, unless the entity elects otherwise, a foreign eligible entity is (A) a partnership if it has two 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(c)(1)(i) provides, in part, that an eligible entity may elect to be classified other than as provided under section 301.7701-3(b), or to change its classification, by filing Form 8832, Entity Classification Election, with the applicable service center.
Section 301.7701-3(c)(1)(iii) provides 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 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.
If an election specifies an effective date more than 75 days prior to the date on which the election is filed, it will be effective 75 days prior to the date it was filed.
Section 301.9100-1(c) of the Procedure and Administration Regulations 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 Code except subtitles E, G, H, and I.
PLR-106122-22 3
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 rules governing automatic extensions 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 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 (1) the taxpayer acted reasonably and in good faith, and (2) the grant of relief will not prejudice the interests of the Government.

# Conclusion

Based solely on the facts submitted and 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 Form 8832 to elect to treat X as an association taxable as a corporation, effective Date 1. The election should be filed with the appropriate service center. A copy of this letter should be attached to the election.
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 Internal Revenue 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.
This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code provides that it may be used or cited as precedent.
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 an of the material submitted in support of the ruling request, it is subject to verification on examination.
PLR-106122-22 4
In accordance with the power of attorney on file with this office, we are sending copies of this letter to X's authorized representatives.
Sincerely,
Holly Porter
Associate Chief Counsel
(Passthroughs & Special Industries )
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Jennifer N. Keeney
Senior Counsel, Branch 1
Office of the Associate Chief Counsel
(Passthroughs & Special Industries)
Enclosure
Copy for § 6110 purposes cc: