IRS written determination 201546010

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: 201546010
Release Date: 11/13/2015
Index Number: 1295.02-02
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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:INTL:B02
PLR-116725-15
Date:
July 31, 2015
TY: -------
Legend
Shareholder=----------------------------------------
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FC=-----------------------------------
Accounting
Firm
=----------------------------------------
-
Country 1=------------
Country 2=-------------
State=--------------
Year 1=-------
Year 2=-------
Year 6=-------
Year 8=-------
Dear --------------:
This is in response to a letter dated May 6, 2015, submitted by Shareholder’s authorized
representative that requested the consent of the Commissioner of the Internal Revenue
Service (“Commissioner”) for Shareholder 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 Shareholder's investment in FC.
The ruling contained in this letter is based upon information and representations
submitted on behalf of Shareholder by its 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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2
material is subject to verification on examination. The information submitted in the
request is substantially as set forth below.
FACTS
Shareholder is limited liability partnership organized in State. FC is an entity organized
under the laws of Country 1 that is treated as a corporation for U.S. federal income tax
purposes. FC qualified as a passive foreign investment company (“PFIC”) as defined in
section 1297(a) in Year 1.
During Year 1 and Year 2, Shareholder acquired shares of FC indirectly through its
interests in two partnerships formed under the laws of Country 2.
Shareholder retained Accounting Firm to prepare its Year 1 through Year 6 tax returns.
Accounting Firm employs experienced tax professionals and advised Shareholder with
respect to the U.S. federal income tax matters regarding Shareholder's operations and
investments, including Shareholder's investment in FC. Accounting Firm is competent
to render tax advice to U.S. shareholders of foreign corporations. Shareholder provided
Accounting Firm all relevant facts and circumstances to prepare its U.S. federal income
tax returns. Shareholder relied on Accounting Firmto provide advice with respect to
filing and reporting requirements in general, as well as any elections or statements that
would be necessary to elect a specific tax treatment.
Shareholder did not know or have reason to know that FC was a PFIC or that it, as an
indirect owner of shares of FC, was eligible to make an election to treat FC as a QEF.
Accounting Firm did not advise Shareholder that FC was a PFIC or of the availability of
electing to treat FC as a PFIC.
In Year 8, Shareholder learned that there would be an initial public offering of FC.
Shareholder analyzed FC for U.S. federal income tax purposes as part of the tax due
diligence for the sale of a foreign security. As part of that review, Shareholder
determined that FC was a PFIC. Based on thatdetermination, Shareholder requested
Accounting Firm to prepare a request to make a retroactive QEF election.
Shareholder has submitted an affidavit, signed under penalties of perjury, that describes
the events that led to its failure to make a QEF election with respect to FC by the
election due date, including the role of Accounting Firm. Shareholder also submitted an
affidavit from Accounting Firm, signed under penalties of perjury, setting forth
Accounting Firm’s engagement and responsibilities as well as the advice concerning the
tax treatment of FC that Accounting Firm provided to Shareholder.
Shareholder represents that, as of the date of this request for ruling, the PFIC status of
FC has not been raised by the Internal Revenue Service (“IRS”) on audit for any of the
taxable years at issue.

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3
RULING REQUESTED
Shareholder requests the consent of the Commissioner to make a retroactive QEF
election with respect to FC for Year 1 under Treas. Reg. §1.1295-3(f).
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.
Under section 1295(b)(2), a QEF election may be made for 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 IRS 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).

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CONCLUSION
Based on the information submitted and representations made with Shareholder's ruling
request, we conclude that Shareholder has satisfied Treas. Reg. §1.1295-3(f).
Accordingly, consent is granted to Shareholder to make a retroactive QEF election with
respect to FC for Year 1, provided that Shareholder complies with the rules under
Treas. Reg. §1.1295-3(g) regarding the time and manner for making the retroactive
QEF election.
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 Attorneyon file with this office, a copy of this letter
ruling is being sent to your authorized representatives.
A copy of this letter ruling must be attached to any federal income tax return to which it
is relevant. Alternatively, taxpayers filing their returnselectronically 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
(International)
cc: