Section 338(g); Election Under Section 1.338-1T(c)(1)

Department of the Treasury
Internal Revenue Service
Number: 202309010
Release Date: 3/3/2023
Washington, DC 20224
Third Party Communication: None
Date of Communication: Not Applicable
Index Number: 338.00-00, 338.01-00,
Person To Contact:
338.01-02, 9100.00-00,
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9100.06-00
ID No. ---
Telephone Number:
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Refer Reply To:
CC:CORP:2
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Legend
Parent =
ParentDE =
Seller =
SellerDE =
Target1 =
Target2 =
Target2Subs =
Date 1 =
Company Official =
Tax Professional =
PLR-115569-22
Date:
December 06, 2022
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PLR-115569-22 2
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Dear ---:
This letter responds to a letter submitted August 15, 2022, on behalf of Parent, the common parent of a consolidated group, requesting an extension of time under §301.9100-3 of the Procedure and Administration Regulations to file elections. Parent is requesting an extension of time to file "section 338 elections" under section 338(g) with respect to the acquisition of Targets (as defined below) on Date 1 (the "Elections").
The material information submitted is summarized below.
Immediately prior to Date 1, Seller owned through SellerDE (a disregarded entity for federal tax purposes) all the stock of Target1 and Target2, and Target2 owned all the stock of Target2Subs (collectively, the "Targets"), each of which was a controlled foreign corporation ("CFC") within the meaning of section 957(a). On Date 1, Parent acquired, through ParentDE (a disregarded entity for federal tax purposes), the ownership interests of SellerDE from Seller, and through SellerDE, the stock of Targets.
Parent has represented that the acquisition of Targets was a "qualified stock purchase" within the meaning of section 338(d)(3).
Parent intended to make Elections for each of Targets but, for various reasons, valid
Elections were not made. Subsequently, this request was submitted, under §301.9100-
3, for an extension of time to file the Elections. Parent has represented that it is not seeking to alter a return position for which an accuracy-related penalty has been or could be imposed under section 6662 at the time of the request for relief.
Section 338(a) permits certain stock purchases to be treated as asset acquisitions if: (1) the purchasing corporation makes or is treated as having made a "section 338 election" or a "section 338(h)(10) election"; and (2) the acquisition is a "qualified stock purchase."
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 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, the requirements of §§301.9100-1 and 301.9100-3 are satisfied, and granting relief will not prejudice the interests of the government.
PLR-115569-22 3
Information, affidavits, and representations submitted by Parent, Company Official, and
Tax Professional explain the circumstances that resulted in the failure to timely file the
Elections. The information establishes that Parent reasonably relied on a qualified tax professional who failed to make, or advise Parent to make, the Elections, and that the request for relief was filed before the failure to make the Elections was discovered by the Internal Revenue Service. See §301.9100-3(b)(1)(i) and (v).
Based on the facts and information submitted, including the representations made, we conclude that 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 75 days from the date on this letter, for Parent to file the Elections with respect to the acquisition of Targets, as described above.
WITHIN 75 DAYS OF THE DATE ON THIS LETTER, Parent must file the Elections on
Form 8023, in accordance with §§1.338-2(d) and (e)(3) and the instructions to the form.
A copy of this letter must be attached to Form 8023.
WITHIN 150 DAYS OF THE DATE ON THIS LETTER, all relevant parties must file or amend, as applicable, all returns and amended returns (if any) necessary to report the transactions as section 338 transactions for the taxable year in which the transactions were consummated (and for any other affected taxable year). A copy of this letter and a copy of Form 8883 must be attached to any tax return to which it is relevant.
Alternatively, taxpayers filing their returns electronically may satisfy the requirements of attaching a copy of this letter by attaching a statement to their return that provides the date on, and control number (PLR-115569-22) of, the letter ruling.
Parent must also deliver written notice of the Elections (and a copy of Forms 8023 and
8883, their attachments and instructions) to any U.S. persons selling or holding stock in
Targets in accordance with §1.338-2(e)(4).
The above extension of time is conditioned on the relevant taxpayers' tax liability (if any) being not lower, in the aggregate, for all years to which the Elections apply, than it would have been if the Elections had been timely made (taking into account the time value of money). No opinion is expressed as to the taxpayers' tax liability for the years involved. A determination thereof will be made by the applicable Director's office upon audit of the federal income tax returns involved.
We express no opinion as to: (1) whether any acquisition qualified as a "qualified stock purchase" under section 338(d)(3); or (2) any other tax consequences arising from the Elections.
In addition, we express no opinion as to the tax consequences of filing the Elections late under the provisions of any other section of the Code and regulations, or as to the tax treatment of any conditions existing at the time of, or resulting from, filing the Elections PLR-115569-22 4 late that are not specifically set forth in the above ruling. For purposes of granting relief under §301.9100-3, we relied on certain statements and representations made by Parent, Company Official, and Tax Professional. However, the Director should verify all essential facts. In addition, notwithstanding than an extension is granted under §301.9100-3 to file the Elections, penalties and interest that would otherwise be applicable, if any, continue to apply.
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, a copy of this letter is being sent to your authorized representative.
Sincerely,
Thomas I. Russell
Thomas I. Russell
Chief, Branch 1
Office of Associate Chief Counsel (Corporate) cc: ---
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