Extension of Time for Making Certain Elections

Internal Revenue Service
Number: 202521021
Release Date: 5/23/2025
Index Numbers: 1361.00-00, 1361.05-00,
9100.00-00
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LEGEND---
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X = ---
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Y = ---
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State = ---
Date 1 = ---
Date 2 = ---
Date 3 = ---
Dear ---:
Department of the Treasury
Washington, DC 20224
Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
---, ID No. ---
Telephone Number:
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Refer Reply To:
CC:PT&E:B03
PLR-122427-24
Date:
February 24, 2025
This letter responds to a letter dated August 5, 2024, submitted on behalf of X by its authorized representatives, requesting relief under §301.9100-3 of the Procedure and Administration Regulations to make a late election for Y under § 1361(b)(3) of the Internal Revenue Code (Code).
PLR-122427-24 2

# FACTS

According to the information submitted, X is a corporation organized under the laws of State and made an election to be an S Corporation effective Date 2.
Y is a corporation organized under the laws of State on Date 1. X acquired a 100 percent interest in Y on Date 3. X represents that it intended for Y to be treated as a qualified subchapter S Subsidiary (QSub) effective Date 3. However, due to inadvertence, X failed to timely file a QSub election on behalf of Y.
X represents that its failure to file QSub elections for Y was inadvertent and not the result of tax avoidance or retroactive tax planning. X further represents both it and Y filed tax returns and reported all tax items consistent with the tax treatment of Y as a QSub for all relevant years. X and Y have agreed to make any adjustments required by the Service consistent with the treatment of Y as a QSub.

# LAW AND ANALYSIS

Section 1361(b)(3)(A) provides that, except as provided in regulations prescribed by the Secretary, for purposes of the Code (i) a corporation which is a QSub shall not be treated as a separate corporation, and (ii) all assets, liabilities, and items of income, deduction and credit of a QSub shall be treated as assets, liabilities, and such items (as the case may be) of the S corporation.
Section 1361(b)(3)(B) provides that the term “QSub” means any domestic corporation which is not an ineligible corporation (as defined in § 1361(b)(2)), if (i) 100 percent of stock of such corporation is held by the S corporation, and (ii) the S corporation elects to treat such corporation as a QSub.
Section 1.1361-3(a)(1) of the Income Tax Regulations provides that the corporation for which a QSub election is made must meet all the requirements of § 1361(b)(3)(B) at the time the election is made and for all periods for which the election is to be effective.
Section 1.1361-3(a)(6) provides that an extension of time to make a QSub election may be available under procedures applicable under §§ 301.9100-1 and 301.9100-3.
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 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) defines a “regulatory election” as an election whose due date is prescribed by a regulation published in PLR-122427-24 3 the Federal Register, or a revenue ruling, revenue procedure, notice, or announcement published in the Internal Revenue Bulletin.
Section 301.9100-2 provides the rules governing automatic extensions of time for making certain elections.
Section 301.9100-3 sets forth 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 upon the facts submitted and representations made, we conclude that the requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. As a result, X is granted an extension of time of 120 days from the date of this letter to file Form 8869, Qualified Subchapter S Subsidiary Election, with the appropriate service center on behalf of Y effective Date 3. A copy of this letter should be attached to the Form 8869.
Except as expressly provided herein, we express or imply no opinion concerning the federal income tax consequences of the facts under any other provision of the Code and the regulations thereunder. Section 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. Specifically, we express or imply no opinion on whether X meets the definition of an S Corporation under § 1361(b)(1) or whether Y meets the definition of a QSub under § 1361(b)(3).
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 requested ruling, it is subject to verification on examination.
This ruling is directed only to the taxpayer that requested it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.
PLR-122427-24 4
Pursuant to a power of attorney on file with this office, we are sending a copy of this letter to your authorized representatives.
Sincerely,
Jeffrey Erickson
Associate Chief Counsel
(Passthroughs, Trusts, and Estates)
By: ____
Christiaan T. Cleary
Senior Technician Reviewer, Branch 1
Office of Associate Chief Counsel
(Passthroughs, Trusts, and Estates)
Enclosure:
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