IRS written determination 201433012

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: 201433012
Release Date: 8/15/2014
Index Number: 831.02-00, 9100.00-00
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Legend
Company = ------------------------------
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Country X =-----------------------------
Individual = -------------------------
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Accountant = -------------------------------
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Partnership = --------------------------------
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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:FIP:B04
PLR-149183-13
Date:
May 19, 2014
Year 1 = ------
Year 2 = ------
Date A = ----------------

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Date B = ------------------
Date C = --------------------------
Date D = ------------
Date E = ---------
Date F = -------------
Date G = -----------------
Date H = ------------------
Dear -------------
This is in response to a request submitted on behalf of Company for a ruling granting an
extension of time for making an election under section 831(b)(2)(A)(ii) of the Internal
Revenue Code pursuant to section 301.9100-3 of the Procedure and Administration
Regulations to be effective for Tax Year 1.
The ruling contained in this letter is based upon information and representations
submitted by Company as required by section 301.9100-3(e). While this office has not
verified any of the material submitted in support of the ruling request, it is subject to
verification on examination.
FACTS
Company was formed under the laws of Country X on Date A of Year 1. Upon receipt
of its insurance license from the Country X insurance regulator, on Date B of Year 1,
Company assumed insurance risks under directly written insurance contracts and it also
assumed additional risks under reinsurance agreements. Company states that it
qualifiesas a property and casualty insurance company under Part II of Subchapter L of
the Code. All of the stock of Company is owned by Individual who is Company’s
President.
Company made a timely election to be treated as a domestic corporation under section
953(d)(1)(D) on Date C of Year 2, which was approved by the Internal Revenue Service
in a Notice of Date E of Year 2. Company also filed a timely request for extension of
time to file its Year 1 Form 1120-PC, U.S. Property and Casualty Company Tax Return
to extend the due date for filing the return until Date H of Year 2.

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On Date D of Year 2, Company sent its financial information to Partnership,
1
for the
purpose, in part, of coordinating with Accountant on the preparation of Company’s Year
1 Form 1120-PC. On Date F of Year 2, Partnership forwarded to Accountant the
information necessary to complete Company’s return. On Date G of Year 2, Accountant
sent Company’s proposed Year 1 Form 1120-PC to Individual, Company’s President.
However, Individual did not file the Form 1120-PC, including the election under
section831(b)(2)(A)(ii), until four days after the due date. Individual represents that
prior to the due date of the Form 1120-PC, he was unaware of the necessity to make
the section 831(b)(2)(A)(ii) election for the Year 1 by that due date. After the due date
(but before he actually filed the Form 1120-PC), Accountant informed Individual that for
the election under section 831(b)(2)(A)(ii) to be effective for Year 1 it needed to have
been made by the due date. Hence Individual then filed the Form 1120-PC, with the
election, as soon as practicable and Company then submitted this request.
LAW AND ANALYSIS
Insurance companies other than life insurance companies are taxable under section
831. However,certain insurance companies can elect to pay an alternative tax
provided in section 831(b) on only their taxable investment income. Section
831(b)(2)(A)(ii) requires that a company elect the application of the alternative tax
imposed by section 831(b). Pursuant to section 301.9110-8(a)(2)(i), this election must
be made by the due date (taking into account any extensions of time to file obtained by
the taxpayer) for the first taxable year for which the election is effective.
Under section 301.9100-1(c),the Commissioner may grant reasonable extension of
time pursuant to sections 301.9100-2 and 301.9100-3 to make a regulatory election (but
no more than 6 months except in the case when the taxpayer is abroad), under all
subtitles of the Code except subtitles E, G, H, and I. Section 831(b) is part of subtitle A.
Section 301.9100-3 provides that requests or extensions of time for regulatory elections
that do not meet the requirements of section 301.9100-2 (automatic extension) must be
made pursuant to section 301.9100-3. Under section 301.9100-3(a), relief will be
granted only when the taxpayer provides the evidence 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.
Under section 301.9100-3(b)(1), a taxpayer is deemed to have acted reasonably and in
good faith if the taxpayer: (i) requests relief under this section before the failure to make
the regulatory election is discovered by the Internal Revenue Service; (ii) failed to make
the election because of intervening events beyond the taxpayer’s control; (iii) 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

1
Partnership provides multifaceted insurance related support to Company.

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unaware of the necessity for the election; (iv) reasonably relied on the written advice of
the Internal Revenue Service; or (v) reasonably relied on a qualified tax professional,
includinga tax professional employed by the taxpayer and the tax professional failed to
make, or advise the taxpayer to make the election.
Under section 301.9100-3(b)(2), a taxpayer will not be considered to have reasonably
relied on a qualified tax professionalif the taxpayer knew or should have known that the
professional was not competent to render advice on the regulatory election or was not
aware of all relevant facts.
Under section 301.9100-3(c)(1), the Commissioner will grant a reasonable extension of
time to make a regulatory election only when the interests of the Government will not be
prejudiced by the granting of relief. The interests of the Government are prejudiced if
the 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).
Based solely on the facts submitted and the representations made, we conclude that
the requirements of section 301.9100-1 and 301.9100-3 have been satisfied. Company
requested relief under these provisions before the failure to make the regulatory election
was discovered by the Service. Company, through Individual, is deemed to have acted
in good faith; Company meets four of the five alternative grounds to be deemed to have
acted in good faith (Company did not reasonably rely on the written advice of the
Service). The interests of the Government are not prejudiced because the election
affects the tax liability of only Company and Company will not have a lower tax liability
in the aggregate for all taxable years affected by the election than Company would have
had if the election had been timely made (taking into account the time value of money).
RULING
Company is granted an extension of time until 60 days following the date of this letter to
make the election to be subject to the alternative tax provided in section 831(b)(2)(A) of
Year 1.
CAVEATS
Notwithstanding that an extension of time is granted under section 301.9100-3 to make
an election under section 831(b)(2)(A), additions, penalties and interest that would
otherwise be applicable, if any, continue to apply with respect to the tax return for Year
1.
No ruling has been requested, and no opinion is expressed (or implied) whether
Company is engaged in the issuing of insurance or annuity contracts or the reinsuring of
risks underwritten by insurance companies; or whether Company qualifies as an

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insurance company under section 831(c) for Year 1. (See section 301.9100-1(a) which
provides that the granting of an extension of time is not a determination that the
Company is otherwise eligible to make the extension.)
A copy of this ruling letter should be attached to a copy of the Year 1 Form 1120-PC
and sent to the Service Center to which the original Form 1120-PC was sent.
This ruling is directed only to the taxpayer who requested it. Section 6110(k)(3)
provides that it may not be used or cited as precedent.
Pursuant to a powerof attorney on file in this office, copies of this ruling are being
furnished to your authorized representatives.
Sincerely,
JOHN E. GLOVER
Senior Counsel, Branch 4
Office of the Associate Chief Counsel
(Financial Institutions and Products)