Disregarded entity election

Private Letter Ruling 201016017, 4/23/2010, IRC Sec(s). 7701

--------------------------------------------------------------------------------

UIL No. 7701.00-00, 9100.31-00


Headnote:
Foreign entity was granted 60-day extension from date this letter was issued to file Form 8832 and elect to be treated as disregarded entity, effective stated date, where taxpayer acted reasonably and in good faith.

Reference(s): Code Sec. 7701;

Full Text:
Number: 201016017

Third Party Communication: None

Release Date: 4/23/2010

Date of Communication: Not Applicable

Person To Contact:

Index Number: 7701.00-00, 9100.31-00 , ID No.

Telephone Number:

Refer Reply To: CC:PSI:B01 PLR-130787-09 Date:

December 23, 2009

Legend: X

Y
D1 D2 D3 Country

Dear

This responds to a letter dated June 23, 2009 and subsequent correspondence, submitted on behalf of _X, requesting an extension of time under § 301.9100-3 of the Procedure and Administration

Regulations to file an election under § 301.7701-3(c) to be treated as a disregarded entity for federal tax purposes.

FACTS
According to the information submitted, X was formed on _D1 under the laws of Country. On _D2, Y_ purchased 100 percent of stock of X_. X_ intended to be treated as a disregarded entity for federal tax purposes effective D3. However, X inadvertently failed to timely file Form 8832, Entity Classification Election, to be treated as a disregarded entity for federal tax purposes.

LAW AND 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. An eligible entity with at least two members can elect to be classified as either an association 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 an association if all members have limited liability, unless the entity makes an election to be treated otherwise. A foreign eligible entity with a single member having limited liability may elect to be treated as a disregarded entity pursuant to the rules of § 301.7701-3(c). Section 301.7701-3(c) provides that an entity classification election must be filed on

Form 8832 and can be effective up to 75 days prior to the date the form is filed or up to 12 months after the date the form is filed.

Under § 301.9100-1(c), 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 Internal Revenue Code, except subtitles E, G, H, and

I. Section 301.9100-1 (b) defines the term "regulatory election" as including 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 that the Commissioner will use to determine whether to grant an extension of time to make an election. Section 301.9100-1(a).

Section 301.9100-2 provides automatic extensions of time for making certain elections. Section 301.9100-3 provides rules for requesting extensions of time for regulatory elections that do not meet the requirements of § 301.9100-2.

Requests for relief under § 301.9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the government.

CONCLUSION
Based solely on the facts submitted and the representations made, we conclude that the requirements of § 301.9100-3 have been satisfied. As a result, X is granted an extension of time of 60 days from the date of this letter to make an election to be treated as a disregarded entity for federal tax purposes effective D3. _X should make the election by filing a properly executed Form 8832 with the appropriate service center. A copy of this letter should be attached to the form.

Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) 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

Xs authorized representative.

Sincerely,

Curt G. Wilson Curt G. Wilson Associate Chief Counsel (Passthroughs and Special Industries)

Enclosures (2)

Copy of this letter

Copy for § 6110 purposes cc: