IRS written determination 201429011

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: 201429011
Release Date: 7/18/2014
Index Number: 1295.02-02
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Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
------------------------, ID No. ------------------
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Telephone Number:
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Refer Reply To:
CC:INTL:B02
PLR-144068-13
Date:
April 14, 2014
TY: ------
LEGEND
Taxpayer = -----------------------
TIN = ----------------
FC = ------------------------------
Country = ----------
Accountant = -----------------
Year 1 = ------
Year 2 = ------
Year 3 = ------
Date 1 = --------------------------
Dear ------------------:
This is in response to a letter dated October 14, 2013, and additional representations
submitted by your authorized representative that requested the consent of the
Commissioner of the Internal Revenue Service (“Commissioner”) for Taxpayer to make
a retroactive qualified electing fund ("QEF") election under section 1295(b) of the
Internal Revenue Code and Treas. Reg. §1.1295-3(f) with respect to Taxpayer’s
investment in FC.
The ruling contained in this letter is based upon information and representations
submitted on behalf of Taxpayer by his authorized representative, 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 this request for ruling, such

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material is subject to verification on examination. The information submitted in the
request is substantially as set forth below.
FACTS
Taxpayer is a United States citizen. In Year 1, Taxpayer purchased shares of FC, an
entity organized under the laws of Country that is treated as a corporation for Federal
tax purposes. Taxpayer acquired additional shares of FC in Year 2. The shares were
purchased through an investment firm, and subsequently transferred to a separate
investment firm. The investment advisors at the investment firms did not provide any
tax advice to Taxpayer. Taxpayer’s shares in FC were sold in Year 3.
During the years in which Taxpayer owned shares of FC, Taxpayer relied on
Accountant, a competent U.S. accountant, to prepare his U.S. tax returns and provide
advice on his U.S. tax matters. Taxpayer provided Accountant all relevant tax
information and documentation to prepare Taxpayer’s returns for the years during which
Taxpayer owned shares of FC. Taxpayer believed Accountant had access to all relevant
facts and circumstances. Accountant did not advise Taxpayer that FC was a PFIC
within the meaning of section 1297(a). Accountant failed to advise Taxpayer of the
possibility of making a QEF election under section 1295(b) with respect to FC and of the
consequences of making, or failing to make, such an election.
As part of a transaction entered into during Year 3, FC issued an Information Circular,
dated Date 1, to all shareholders. The Information Circular stated that FC believes it has
been a PFIC for each year of its existence. The Information Circular also included
information regarding the consequences of owning and disposing of PFIC shares and
the ability to make a retroactive QEF election. Once Taxpayer became aware of FC’s
PFIC status, Taxpayer took immediate action to engage a law firm to assist with
requesting relief to make a retroactive QEF election.
Taxpayer has submitted affidavits, under penalties of perjury, that describe the events
that led to his failure to make a QEF election with respect to FC by the election due
date, including the role of Accountant.
Taxpayer represents that, as of the date of his request for ruling, the PFIC status of FC
had not been raised by the IRS on audit for any of the taxable years at issue.
LAW
Section 1295(a) provides that a PFIC will be treated as a QEF with respect to a
shareholder if (1) an election by the shareholder under section 1295(b) applies to the
PFIC for the taxable year; and (2) the PFIC complies with the requirements prescribed
by the Secretary for purposes of determining the ordinary earnings and net capital gains
of the company.

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Under section 1295(b)(2), a QEF election may be madefor a taxable year at any time
on or before the due date (determined with regard to extensions) for filing the return for
the taxable year. To the extent provided in regulations, the election may be made after
the due date if the shareholder failed to make an election by the due date because the
shareholder reasonably believed the company was not a PFIC.
Under Treas. Reg. §1.1295-3(f), a shareholder may request the consent of the
Commissioner to make a retroactive QEF election for a taxable year if:
1. the shareholder reasonably relied on a qualified tax professional, within the
meaning of Treas. Reg. §1.1295-3(f)(2);
2. granting consent will not prejudice the interests of the United States
government, as provided in Treas. Reg. §1.1295-3(f)(3);
3. the request is made before a representative of the Internal Revenue Service
raises upon audit the PFIC status of the company for any taxable year of the
shareholder; and
4. the shareholder satisfies the procedural requirements of Treas. Reg. §1.1295-
3(f)(4).
The procedural requirements include filing a request for consent to make a retroactive
election with, and submitting a user fee to, the Office of the Associate Chief Counsel
(International). Treas. Reg. §1.1295-3(f)(4)(i). Additionally, affidavits signed under
penalties of perjury must be submitted that describe:
1. the events that led to the failure to make a QEF election by the election due
date;
2. the discovery of the failure;
3. the engagement and responsibilities of the qualified tax professional; and
4. the extent to which the shareholder relied on the professional.
Treas. Reg. §§1.1295-3(f)(4)(ii) and (iii).
CONCLUSION
Based on the information submitted and representations made with respect to
Taxpayer’sruling request, we conclude that Taxpayer has satisfied Treas. Reg.
§1.1295-3(f). Accordingly, consent is granted to Taxpayer to make a retroactive QEF
election with respect to FC for Year 1, provided that Taxpayer complies with the rules
under Treas. Reg. §1.1295-3(g) regarding the time and manner for making the
retroactive QEF election.

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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 private letter 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
ruling is being sent to your authorized representative.
A copy of this letter ruling must be attached to any federal income tax return to which it
is relevant. Alternatively, taxpayers filing their returns electronically may satisfy this
requirement by attaching a statement to their return that provides the date and control
number of the letter ruling.
Sincerely,
Barbara E. Rasch
Senior Technical Reviewer, Branch 2
Office of Associate Chief Counsel (International)