IRS written determination 202634006

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: 202634006
Release Date: 8/21/2026
Index Number: 1362.04-00

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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:B03
PLR-117169-25

Date:
May 22, 2026

LEGEND

X = ------------------------
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State = --------

Date 1 = -------------------------

Date 2 = ---------------------

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

This responds to a letter dated June 24, 2025 and subsequent correspondence,
submitted on behalf of X by its authorized representative, requesting relief under
§ 1362(f) of the Internal Revenue Code (Code).

FACTS

The information submitted states that X was formed as a State limited liability
company on Date 1. X made an election to be treated as an S corporation effective Date
2. However, X’s Form 2553 Election by a Small Business Corporation was not complete,
which resulted in an ineffective election.

X represents that the ineffective S corporation election was inadvertent and not
motivated by tax avoidance or retroactive tax planning. Further, X represents that X and
its owners filed federal income tax returns consistent with X having a valid S corporation
election effective Date 2.

PLR-117169-25

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X and its owners agree to make any adjustments required by the Secretary as a
condition of obtaining relief under § 1362(f).

LAW AND ANALYSIS

Section 1361(a)(1) 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 1361(b)(1) defines a “small business corporation” as a domestic
corporation which is not an ineligible corporation and which does not (A) have more
than 100 shareholders, (B) have as a shareholder a person (other than an estate, a
trust described in § 1361(c)(2), or an organization described in § 1361(c)(6)) who is not
an individual, (C) have a nonresident alien as a shareholder, and (D) have more than 1
class of stock.

Section 1362(a)(1) provides that, except as provided in § 1362(g), a small
business corporation may elect, in accordance with the provisions of § 1362, to be an S
corporation.

Section 1362(a)(2) provides that an election to be an S corporation will be valid
only if all persons who are shareholders in such corporation on the day on which such
election is made consent to such election.

Section 1.1362-6(a)(2)(i) provides that the election to be an S corporation is not
valid unless all shareholders of the corporation at the time of the election consent to the
election in the manner provided in § 1.1362-6(b).

Section 1.1362-6(b)(2)(i) provides that when stock of the corporation is owned by
spouses as community property (or the income from the stock is community property),
each person having a community interest in the stock or income therefrom must
consent to the election.

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 a corporation is an S corporation) such corporation ceases to be a small business
corporation. Section 1362(d)(2)(B) 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 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 was terminated under § 1362(d)(2) or (3); (2) the Secretary determines that
the circumstances resulting in such ineffectiveness or termination were inadvertent; (3)
no later than a reasonable period of time after discovery of the circumstances resulting

PLR-117169-25

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in such ineffectiveness or termination, steps were taken so that the corporation for
which the election was made or termination occurred is a small business corporation or
to acquire the required shareholder consents; and (4) the corporation for which the
election was made or termination occurred, and each person who was a shareholder in
such corporation at any time during the period specified pursuant to § 1362(f), agrees to
make the adjustments (consistent with the treatment of such corporation as an S
corporation) as may be required by the Secretary with respect to such period, then,
notwithstanding the circumstances resulting in such ineffectiveness or termination, such
corporation will be treated as an S corporation during the period specified by the
Secretary.

CONCLUSION

Based solely on the facts submitted and representations made, we conclude that
X’s S corporation election was ineffective. However, the ineffectiveness of X’s S
corporation election was inadvertent within the meaning of § 1362(f). Accordingly, X will
be treated as an S corporation effective Date 2 and thereafter, provided its S
corporation election is not otherwise terminated under § 1362(d).

Accordingly, X is granted an extension of time of 120 days from the date of this
letter to file Form 2553 with the appropriate service center to elect to be an S
corporation, effective Date 2. A copy of this letter must accompany Form 2553.

Except as specifically ruled above, we express or imply no opinion concerning
the federal tax consequences of the facts described above under any other provision of
the Code and the regulations thereunder, including whether X was otherwise a valid S
corporation.

The ruling contained in this letter is based on information and representations
submitted by X 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 requesting 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 letter to X’s authorized representative.

PLR-117169-25

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Sincerely,

_______________________________
Elizabeth V. Zanet
Senior Technician Reviewer, Branch 3
Office of the Associate Chief Counsel
(Passthroughs, Trusts, and Estates)

Enclosure
Copy for § 6110 purposes

cc: -------------------
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