IRS written determination 202607010

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: 202607010
Release Date: 2/13/2026
Index Number: 1362.00-00, 1362.02-00,
1362.04-00, 7701.00-00,
9100.00-00, 9100.31-00

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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:B01
PLR-111456-25
Date:
November 18, 2025

LEGEND

X = ------------------------------------
-----------------------
State = -----------
Date 1 = -----------------
Date 2 = --------------------
Date 3 = ---------------------------

Dear ----------------:

This letter responds to a letter dated May 23, 2025, and subsequent correspondence,
submitted on behalf of X by X’s authorized representative, requesting that the Service
grant X an extension of time under § 301.9100-3 of the Procedure and Administration
regulations to elect to be treated as an association taxable as a corporation for federal
tax purposes, relief to file a late S corporation election under § 1362(b)(5), and relief
under § 1362(f) of the Internal Revenue Code.

FACTS

According to the information submitted, X was formed as a limited liability company
under the laws of State on Date 1. X intended to elect treatment as an S corporation

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effective Date 1; however, due to inadvertence X failed to timely file Form 2553,
Election by a Small Business Corporation. Since Date 1, X and its shareholders have
treated X as an S Corporation.

On Date 2, X discovered that X’s operating agreement, which had been in effect since
Date 1, contained governing provisions that could give rise to disproportionate
distributions since Date 1. Consequently, X’s election was ineffective on Date 1. Upon
learning that it had more than one class of stock, X amended the operating agreement
as of Date 3.

X represents that there is no retroactive tax planning in making this election. X
represents that X and its shareholders have filed consistent with X having a valid S
corporation election in effect as of Date 1. Further, X and its shareholders have agreed
to make adjustments consistent with the treatment of X as an S corporation as may be
required by the Secretary.

LAW AND ANALYSIS

Section 1361(a) provides that the term “S corporation” means, with respect to any
taxable year, a small business corporation for which an election under § 1362(a) is in
effect for such year.

Section 1362(b)(1) provides that an election under § 1362(a) may be made by a small
business corporation for any taxable year (A) at any time during the preceding taxable
year, or (B) at any time during the taxable year and on or before the 15th day of the
third month of that taxable year.

Section 1.1361-1(l)(1) provides, in part, that a corporation is generally treated as having
only one class of stock if all outstanding shares of stock of the corporation confer
identical rights to distribution and liquidation proceeds.

Section 1.1361-1(l)(2)(i) provides that the determination of whether all outstanding
shares of stock confer identical rights to distribution and liquidation proceeds is made
based on the corporate charter, articles of incorporation, bylaws, applicable state law,
and binding agreements relating to distribution and liquidation proceeds (collectively,
the governing provisions).

Section 1362(b)(3) provides that if (A) a small business corporation makes an election
under § 1362(a) for any taxable year and (B) the election is made after the 15th day of
the third month of the taxable year and on or before the 15th day of the third month of
the following taxable year, then such election shall be treated as made for the following
taxable year.

Section 1362(b)(5) provides that if an election under § 1362(a) is made for any taxable
year (determined without regard to § 1362(b)(3)) after the date prescribed by § 1362(b)

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3
for making the election for the taxable year or no election is made for any taxable year,
and the Secretary determines that there was reasonable cause for the failure to timely
make the election, the Secretary may treat the election as timely made for the taxable
year (and § 1362(b)(3) shall not apply).

Section 1362(d)(2)(A) provides that an election under § 1362(a) shall be terminated
whenever (at any time on or after the first day of the first taxable year for which the
corporation is an S corporation) such corporation ceases to be a small business
corporation. Section 1362(d)(2)(B) further provides that the termination shall be
effective on and after the date of cessation.

Section 1362(f) provides, in relevant part, 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 circumstances resulting in such ineffectiveness or
termination, steps were taken (A) so that the corporation for which the election was
made or the termination occurred is a small business corporation or (B) to acquire the
shareholder consents; and (4) the corporation for which the election was made or the
termination occurred, 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 the ineffectiveness or termination, the corporation will be
treated as an S corporation during the period specified by the Secretary.

Section 301.7701-3(a) provides 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.

Section 301.7701-3(b)(1) provides that unless an entity elects otherwise, a domestic
eligible entity is (i) a partnership if it has two or more members, or (ii) disregarded as an
entity separate from its owner if it has a single owner.

Section 301.7701-3(c)(1)(i) provides that an eligible entity may elect to be classified
other than as provided under § 301.7701-3(b) by filing Form 8832 with the appropriate
Service Center. Section 301.7701-3(c)(1)(iii) provides that this election shall be
effective on the date specified by the entity on Form 8832 or on the date filed if no such
date is specified. The date specified on Form 8832 cannot be more than 75 days prior
to the date on which the election is filed.

Section 301.9100-1(c) provides that the Commissioner may grant a reasonable
extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a

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4
regulatory 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) provides that the term regulatory election includes an election
whose due date is prescribed by a regulation published in the Federal Register, or a
revenue ruling, revenue procedure, notice, or announcement published in the Internal
Revenue Bulletin.

Section 301.9100-2 provides the rules governing automatic extensions of time for
making certain elections.

Section 301.9100-3 provides the standards the Commissioner will use to determine
whether to grant an extension of time for regulatory extensions that do not meet the
requirements of § 301.9100-2. Under § 301.9100-3, a request for relief will be granted
when the taxpayer provides evidence (including affidavits described in § 301.9100-3(e))
to establish to the satisfaction of the Commissioner that (1) the taxpayer acted
reasonably and in good faith, and that (2) the grant of relief will not prejudice the
interests of the government.

CONCLUSION

Based solely on the facts submitted and representations made, we conclude that X has
satisfied the requirements of §§ 301.9100-1 and 301.9100-3. As a result, X is granted
an extension of time of 120 days from the date of this letter to file a Form 8832 with the
appropriate Service Center to elect to be classified as an association taxable as a
corporation for federal tax purposes, effective Date 1. A copy of this letter should be
attached to the Form 8832.

In addition, based solely on the facts submitted and representations made, we conclude
that X has established reasonable cause for failing to make a timely S Corporation
election, and X is eligible for relief under § 1362(b)(5).

Accordingly, X’s S corporation election will be treated as timely made for its taxable year
that began on Date 1 provided that X files a Form 2553, Election by a Small Business
Corporation, with an effective date of Date 1, with the appropriate Service Center within
120 days from the date of this ruling. A copy of this letter should be attached to the
Form 2553 filed with the Service Center.

We further conclude that X’s S corporation election on Date 1 was ineffective as a result
of the provisions in X’s operating agreement. We conclude that the circumstances
resulting in the termination on Date 1 were inadvertent within the meaning of § 1362(f).
Thus, X will be treated as continuing to be an S corporation from Date 1 and thereafter,
provided X’s S corporation election is otherwise valid and has not otherwise terminated
under § 1362(d).

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Except as specifically provided above, we express or imply no opinion concerning the
federal tax consequences of the facts described above under any other provision of the
Code. Specifically, we express or imply no opinion concerning whether X otherwise
qualifies as an S corporation for federal tax purposes.

The ruling contained in this letter is based upon information and representations
submitted by the taxpayer 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 the ruling request, it is subject to verification on examination.

This ruling is directed only to the taxpayer who requested it. Section 6110(k)(3) of the
Code 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 ruling to X’s authorized representative.

Sincerely,

Jeffrey Van Hove
Acting Associate Chief Counsel
(Passthroughs, Trusts, and Estates)

_______/s/___________
Laura C. Fields
Branch Chief, Branch 1
Associate Chief Counsel
(Passthroughs, Trusts, and Estates)

Enclosure:
Copy for § 6110 purposes

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