IRS written determination 201438008

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: 201438008
Release Date: 9/19/2014
Index Number: 9100.00-00, 754.00-00,
9100.15-00
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Third Party Communication: None
Date of Communication: Not Applicable
Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:PSI:03
PLR-127106-13
Date:
April 30, 2014
LEGEND
X=------------------------------------------------------------------------------------------
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Y =------------------------------------------------------------------------------------------
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Z=------------------------------------------------------------------------------------------
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State=------------
Year 1=------
Year 2=------
Year 3=------
Year 4=------
Date 1=--------------------------
Date 2=----------------------
Dear ---- --------:

PLR-127106-132
This letter responds to a letter dated June 17, 2013, and subsequent
correspondence, submitted on behalf of X by X’s authorized representative, requesting
an extension of time under §301.9100-3 of the Procedure and Administration
Regulations to file an election under §754 of the Internal Revenue Code.
FACTS
X was formed as a limited liability company under Statelaw in Year 1. X is
treated as a partnership for federal tax purposes and has two partners, Y and Z. X sold
nondepreciable property in Year 2, Year 3, and Year 4. Also in Year 2, Year 3, and
Year 4, X made distributions to Y in excess of the adjusted basis of Y’s interest in X. X
relied on its tax advisors when preparing returns for those years, and the advisors did
not inform X as to the availability of an election under § 754. Therefore, X did not make
an election for the taxable year ending on Date 1.
In Date 2, X became aware of its failure to make an election under § 754. X now
requests an extension of time under §§ 301.9100-1 and 301.9100-3 to make a § 754
election to adjust the basis of its property.
LAW AND ANALYSIS
Section 754 provides that if a partnership files an election, in accordance with the
regulations prescribed by the Secretary, the basis of partnership property is adjusted, in
the case of a distribution of property, in the manner provided in § 734 and, in the case of
a transfer of a partnership interest, in the manner provided in § 743. Such an election
shallapply with respect to all distributions of property by the partnership and to all
transfers of interests in the partnership during the taxable year with respect to which the
election was filed and all subsequent taxable years.
Section 1.754-1(b) of the Income Tax Regulations provides that an election
under § 754 to adjust the basis of partnership property under §§ 734(b) and 743(b), with
respect to a distribution of property to a partner or a transfer of an interest in a
partnership, is made in a written statement filed with the partnership return for the
taxable year during which the distribution or transfer occurs. For the election to be valid,
the return must be filed not later than the time prescribed by § 1.6031-1(e) (including
extensions thereof) forfiling the return for that taxable year.
Under § 301.9100-1(c), the Commissioner may grant a reasonable extension of
time 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.

PLR-127106-13
3
Section 301.9100-1(b) defines the term “regulatory election” as including an
election whose deadline is prescribed by a regulation published in the Federal Register.
Sections 301.9100-1 through 301.9100-3 provide the standards the
Commissioner will use to determine whether to grant an extension of time to make an
election.
Section 301.9100-2 provides automatic extensions of time for making certain
elections.
Section 301.9100-3 provides extensions of time for making elections that do not
meet the requirements of § 301.9100-2. Requests for relief under § 301.9100-3 will be
granted when the taxpayer provides evidence that the taxpayer acted reasonably and in
good faith, and that granting relief will not prejudice the interests of the government.
CONCLUSION
Based on the facts submitted and the representations made, we conclude that
the requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. As a result, X
is granted an extension of time of 120 days from the date of this letter to make an
election under §754, effective for the taxable year ending on Date 1and thereafter.
The election should be made in a written statement filed with the appropriate service
center for association with X’s return for its taxable year ending on Date 1. A copy of
this letter should be attached to the §754 election.
X must calculate the adjustments under § 734(b) and (c), and § 1.755-1(c), as if
X had timely made the § 754 election and allocatedthe increase in basis among the
properties held by X at that time. If the statutory period of limitation on assessment or
filing a claim for refund has expired for any year subject to this grant of late relief, then
and as a condition of this late relief,Y and Z must reduce their respective bases of their
interests in X to reflect any basis adjustments under §734 that would have been
allocated under §755 to any properties sold in such years as if the §754 election had
been timely made, in the same proportion in which Y and Z would have shared gain
from the sale of those properties.
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. Specifically, we express or imply no opinion as to whether X is
a partnership for federal tax purposes.
Pursuant to a power of attorney on file with this office, we are sending a copy of
this letter to X’s authorized representative.

PLR-127106-13
4
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.
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,
Associate Chief Counsel
(Passthroughs & Special Industries)
By:___________________________________
Holly Porter
Branch Chief, Branch 3
Office of the Associate Chief Counsel
(Passthroughs & Special Industries)
cc: