IRS written determination 201426018

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: 201426018
Release Date: 6/27/2014
Index Number: 1362.02-02
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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:PSI:B3
PLR-146768-13
Date:
February 25, 2014
LEGEND
X=------------------------------------------------------------------------------------------------
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A=-----------------
Trust------------------------------------------------------------------------------------------------
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State=-----------------
Date 1=----------------------
Date 2=---------------------
Date 3=-------------------------
Date 4 =---------------------
Date 5=---------------------
Dear -------------:

PLR-146768-13
2
This letter responds to a letter dated February 20, 2013, and subsequent
correspondence, submitted on behalf of X by X’s authorized representatives, requesting
inadvertent termination relief pursuant to § 1362(f) of the Internal Revenue Code.
FACTS
The information submitted states that X was incorporated under the laws of State
on Date 1and elected to be an S corporation effective on Date 2.
A, one of X’s shareholders, died on Date 3. On Date 4, following the
administration of A’s estate, A’s estate distributed its shares in X to Trust. During the
two years between Date 4and Date 5, Trustwas an eligible shareholder by reason of
§ 1361(c)(2)(A)(iii).
X represents that Trustwas a qualified subchapter S trust (“QSST”) eligible to
make an election under § 1361(d)(2), effective Date 5. However, no such election was
filed on behalf of Trust. Therefore, Trustwas not a permissible shareholder, and X’s S
corporation election terminated on Date 5.
X represents that the termination was not motivated by tax avoidance or
retroactive tax planning. X further represents that from Date 5, X and its shareholders,
including Trust, have filed all returns consistent with X’s status as an S corporation. 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.
LAW AND ANALYSIS
Section 1362(f) provides, in 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, (2) the Secretary determines that the
circumstances resulting in such termination were inadvertent, (3) no later than a
reasonable period of time after discovery of the circumstances resulting in such
termination, steps were taken (A) so that the corporation for which the termination
occurred is a small business corporation, and (4) the corporation for which the
termination occurred, and each person who was a shareholder in such corporation at
any time during the period specifiedpursuant to § 1362(f), agrees to make such
adjustments (consistent with the treatment of such corporation as an S corporation, as
the case may be) as may be required by the Secretary with respect to such period,
then, notwithstanding the circumstances resulting in such termination, such corporation
shall be treated as an S corporation during the period specified by the Secretary.
CONCLUSION

PLR-146768-13
3
Based solely on the facts submitted and representations made, we conclude that
the termination of X’s S corporation election on Date 5was inadvertent within the
meaning of § 1362(f). We further conclude that, pursuant to the provisions of § 1362(f),
X will be treated as an S corporation from Date 5and thereafter, provided that, within
120 days of thedate of this letter, Trustfiles a QSST election effective Date 5, pursuant
to the provisions set forth in § 1.1361-1(j)(6) of the Income Tax Regulations with the
appropriate service center. A copy of this letter should be attached to the QSST
election.
Except as expressly provided herein, we express or imply no opinion concerning
the tax consequences of any aspect of any transaction or item discussed or referenced
in this letter. Specifically, we express or imply no opinion regarding whether X is
otherwise eligible to be treated as an S corporation or whether Trustis eligible to be
treated as a QSST.
This 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 a power of attorney on file with this office, we are sending a
copy of this letter to your authorized representatives.
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.
Sincerely,
James A. Quinn
Senior Counsel, Branch 3
Office of the Associate Chief Counsel
(Passthroughs & Special Industries)
Enclosures (2):
Copy of this letter
Copy for § 6110 purposes
cc: