IRS written determination 201442014

Private letter rulings and published taxpayer determination letters. Native document type is retained separately; a determination letter is not labeled a private letter ruling. These taxpayer-specific releases cannot be used or cited as precedent under 26 USC 6110(k)(3); applicability and current legal force are not independently certified. Keep repeated UILC subjects attached to one actual numbered document.

Internal Revenue Service
Department of the Treasury
Washington, DC 20224
Number: 201442014
Release Date: 10/17/2014
Index Number: 1362.04-00
----------------------------------------
-----------------------------
-------------------------------
----------------------------
Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
-------------------, ID No. ----------------
Telephone Number:
--------------------
Refer Reply To:
CC:PSI:B03
PLR-109648-14
Date:
June 9, 2014
X = -----------------------------
-------------------------------------------------
State=-----------
D1=----------------------
D2=------
D3=---------------------
Trust=----------------------------------------
-------------------------------------------------------------------
Beneficiary=--------------------------
--------------------------------------------------
Dear ----- -------:
This responds to a letter dated February 4, 2014, submitted on behalfof X by its
authorized representative, requesting a ruling under § 1362(f) of the Internal Revenue
Code.
The information submitted states that X was incorporated in Stateon D1. As of
D2, X’s shareholders included Trust. X intended to be treated as an S corporation
effective D3. To this end, X timely elected subchapter S status, effective D3, by filing
Form 2553, Election by a Small Business Corporation, with the Service. However, this
election did not include Trust’s Qualified Subchapter S Trust (“QSST”) election which
must be signed by Beneficiary, the Trust’s beneficiary. Additionally, Beneficiarydid not
properly consent, on behalf of Trust, to X’s election to be an S corporation. Beneficiary
and Trustrepresent that they have filed income tax returns consistent with the treatment
of X as an S corporation and Trust as a QSST.
X represents that the invalid election was not motivated by tax avoidance or
retroactive tax planning. X and its shareholders have agreed to make any adjustments
that the Commissioner may require, consistent with the treatment of X as an S
corporation.

PLR-109648-14
2
Section 1362(f) provides that if (1) an election under § 1362(a) by any
corporation (A) was not effective for the taxable year for which made (determined
without regard to § 1362(b)(2)) by reason of a failure to meet the requirements of
§ 1361(b) or to obtain shareholder consents or (B) was terminated under § 1362(d)(2)
or (3), (2) the Secretary determines that the circumstances resulting in the
ineffectiveness or termination were inadvertent, (3) no later than a reasonable period of
time after discovery of the event resulting in the ineffectiveness or termination, steps
were taken (A) so that the corporation is a small business corporation, or (B) to acquire
the required shareholder consents, and (4) the corporation, and each person who was a
shareholder of the corporation at any time during the period specified pursuant to §
1362(f), agrees to make such adjustments (consistent with the treatment of the
corporation as an S corporation) as may be required by the Secretary with respect to
such period, then, notwithstanding the circumstances resulting in such ineffectiveness,
the corporation shall be treated as an S corporation during the period specified by the
Secretary.
Based solely on the facts submitted and the representations made, we conclude
that X’s S corporation election was ineffective on D3. We conclude, however, such
ineffectiveness was inadvertent within the meaning of § 1362(f). We further hold that,
pursuant to the provisions of § 1362(f), X will be treated as an S corporation from D3
and thereafter, provided that X’s election was not otherwise terminated under § 1361(d).
If X or its shareholders fail to treat themselves as described above, this letter
ruling shall be null and void. This ruling is conditioned on Trustfiling a new QSST
election effective D3 with the appropriate service center within 120 days of this letter. A
copy of this letter should be attached to the QSST election.
Except as specifically ruled above, we express no opinion concerning the federal
tax consequences of the transactions described above under any other provisions of the
Code.
This ruling is directed only to the taxpayer who requested it. Section 6110(k)(3) of
the Codeprovides that it may not be used or cited as precedent.

PLR-109648-14
3
Pursuant to a power of attorney on file with this office, a copy of this letter is
being forwarded to X’s authorized representative.
Sincerely,
Bradford R. Poston
Senior Counsel, Branch 3
Office of the Associate Chief Counsel
(Passthroughs & Special Industries)
Enclosures:2
Copy of this letter
Copy for § 6110 purposes
cc: