IRS written determination 201550016

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: 201550016
Release Date: 12/11/2015
Index Number: 9100.02-03
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In Re: Request for extension of time under
§§ 301.9100-1 and 301.9100-3 of the
Procedure and Administration Regulations to
file an election pursuant to § 59(e) of the
Internal Revenue Code
LEGEND:
P =---------------------------------
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S1 =---------------------------------
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S2 =------------------
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S3 =---------------------------
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Date =---------------------------
Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
--------------------------, ID No. -----------
Telephone Number:
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Refer Reply To:
CC:PSI:B06
PLR-109030-15
Date: September 11, 2015
Dear------------------:
This letter responds to a letter dated February 26, 2015, and supplemental
correspondence, submitted by P on behalf of S1, S2, and S3 (hereinafter P, S1, S2,
and S3 will be collectively referred to as Taxpayer), requesting an extension of time
pursuant to§§ 301.9100-1 and 301.9100-3 of the Procedure and Administration
Regulations to make an election under §59(e) of the Internal Revenue Code and

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§ 1.59-1(b)(1) of the Income Tax Regulations to deduct ratably over a 10-year period
certain research and experimental (R&E) expenditures incurred in Taxpayer’s taxable
year ended Date.
FACTS
Taxpayer represents that the facts are as follows:
Taxpayer is an affiliated group of corporations of which P is the common parent.
Taxpayer uses the overall accrual method of accounting and files a consolidated federal
income tax return on the basis of a fiscal year. Taxpayer is primarily in the businesses
of (1) building efficiency, (2) automotive experience, and (3) power solutions.
Taxpayer timely filed its consolidated federal income tax return for its taxable
year ended Date and intended to make an election under §59(e) and §1.59-1(b)(1) to
deduct ratably over a 10-year period its R&E expenditures described in § 174(a).
Taxpayer has made representations explaining why the election under §59(e) was not
timely filed.
Taxpayerrepresents that granting the relief requested will not result in Taxpayer
having a lower tax liability in the aggregate for the tax years affected by the election
than Taxpayerwould have had if the electionhad been timely made(taking into account
the time value of money). Taxpayeralso represents that it acted reasonably and in
good faith and that granting relief will not prejudice the interests of the Government.
LAW AND ANALYSIS
Section 59(e)(1) allows a taxpayer to deduct ratably over a specified period any
qualified expenditure to which an election under §59(e)(1) applies.
Section 59(e)(2)(B) includes in the definition of “qualified expenditure” any
amount which, but for an election under §59(e), would have been allowable as a
deduction for the taxable year in which paid or incurred under §174(a) (relating to R&E
expenditures).
Section 59(e)(1) allows a taxpayer to deduct R&E expenditures ratably over the
10-year period beginning with the taxable year in which the expenditures were made.
Section 59(e)(3) specifically prohibits the deduction of the qualified expenditures
under any other section of the Code if this option is elected. Section 59(e)(4)(A) allows
a taxpayer tomake an election under §59(e)(1) for any portion of any qualified
expenditure.

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Section 1.59-1(b)(1) prescribes the time and manner of making the election
under §59(e). According to §1.59-1(b)(1), an election under §59(e) shall only be
made by attaching a statement to the taxpayer’s income tax return (or amended return)
for the taxable year in which the amortization of the qualified expenditures subject to the
§ 59(e) election begins. The taxpayer must file the statement no later than the date
prescribed by law for filing the taxpayer’s original income tax return (including any
extensions of time) for the taxable year in which the amortization of the qualified
expenditures subject to the §59(e) election begins.
Under §301.9100-1(c), the Commissioner in exercising the Commissioner’s
discretion may grant a reasonable extension of time under the rules set forth in
§§ 301.9100-1 through 301.9100-3 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.
Sections 301.9100-1, 301.9100-2, and 301.9100-3 provide the standards the
Commissioner will use to determine whether to grantan extension of time to make a
regulatory election. Section 301.9100-1(a).
Section 301.9100-2 allows automatic extensions of time for making certain
elections. Section 301.9100-3 allows extensions of time for making elections that do
not meet the requirements of §301.9100-2.
The Commissioner will grant requests for relief under §301.9100-3 when the
taxpayer provides the evidence (including affidavits described in §301.9100-3(e)) to
establish to the satisfaction of the Commissioner that the taxpayer acted reasonably
and in good faith, and the grant of relief will not prejudice the interests of the
Government. Section 301.9100-3(a).
Section 301.9100-3(b)(1) provides, in part, that a taxpayer is deemed to have
acted reasonably and in good faith if thetaxpayer requests relief under § 301.9100-3
before the failure to make the regulatory election is discovered by the Internal Revenue
Service; the taxpayer failed to make the election because of intervening events beyond
the taxpayer's control; the taxpayer failed to make the election because, after exercising
reasonable diligence (taking into account the taxpayer’s experience and the complexity
of the return or issue), the taxpayer was unaware of the necessity for the election; the
taxpayer reasonably relied on the written advice of the Service; or the taxpayer
reasonably relied on a qualified tax professional, including a tax professional employed
by the taxpayer, and the tax professional failed to make, or advise the taxpayer to
make, the election.
Section 301.9100-3(b)(3) provides, in part, that a taxpayer is deemed to have not
acted reasonably or in good faith if the taxpayer seeks to alter a return position for
which an accuracy-related penalty has been or could be imposed under §6662 at the

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time the taxpayer requests relief (taking into account any qualified amended return filed
within the meaning of §1.6664-2(c)(3) of this chapter) and the new position requires or
permits a regulatory election for which relief is requested; the taxpayer was informed in
all material respects of the required election and related tax consequences, but chose
not to file the election; or the taxpayer uses hindsight in requesting relief.
Section 301.9100-3(c)(1)(i) provides, in part, that the Government’s interests are
considered prejudiced if granting relief would result in a taxpayer having a lower tax
liability in the aggregate for all taxable years affected by the election than the taxpayer
would have had if the election had been timely made (taking into account the time value
of money). Additionally, §301.9100-3(c)(1)(ii) provides, in part, that the Government’s
interests ordinarily are prejudiced if the taxable year in which the regulatory election
should have been made or any taxable years that would have been affected by the
election had it been timely made are closed by the period of limitations on assessment
under §6501(a) before the taxpayer’s receipt of a ruling granting relief under
§ 301.9100-3.
CONCLUSION
Based solely on the facts and representations submitted, we conclude that the
requirements of §§301.9100-1 and 301.9100-3 have been satisfied. Accordingly, the
Commissioner grants Taxpayer an extension of time of 60 calendar days from the date
of this letter to make the election under §59(e) and §1.59-1(b)(1) to deduct ratably over
a 10-year period its R&E expenditures described in §174(a) for its taxable year ended
Date. The §59(e) election must comply with the manner-of-election requirements of
§ 1.59-1(b)(1).
Taxpayer must attach a copy of this letter ruling to its amended consolidated
federal income tax return. We have enclosed a copy for that purpose. Alternatively, if
Taxpayer files its amended consolidated federal income tax return electronically, it may
satisfy this requirement by attaching a statement to its amended return that provides the
date and control number of the letter ruling.
The rulings contained in this letter are based upon information and
representations submitted by Taxpayer and Taxpayer’s representative and
accompanied bya penalties of perjury statement executed by an appropriate party.
While this office has not verified any of the material submitted in support of the request
for a ruling, it is subject to verification on examination.
Except as specifically set forth above, we express or imply no opinion concerning
the federal tax consequences of the facts described above under any other provisions
of the Code and the regulations thereunder. Specifically, we express or imply no
opinion on whether Taxpayer satisfies the requirements of §174(a) or §59(e).

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This 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, we are sending a
copy of this letter ruling to Taxpayer’s authorized representatives. We also are sending
a copy of this letter to the appropriate Industry Director, LB&I.
Sincerely,
Associate Chief Counsel
(Passthroughs & Special Industries)
By:_______________________________
Jaime C. Park
Chief, Branch 6
Office of Associate Chief Counsel
(Passthroughs & Special Industries)

cc: