us-irs-private-letter-rulings-201442014•IRS written determination 201442014
IRS written determination 201442014
us-irs-private-letter-rulings-201442014IRS written determination 201442014Guidance
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:
Wondering how this text applies to your situation?
Free consultation, no commitment
Describe your situation. Our team will contact you by email about your consultation.
Continue your research in ChatGPT or Claude
Connect Omnilex to search the legal corpus from your AI assistant.