Private Letter Ruling   
Number: 202319002   
Internal Revenue Service   
February 15, 2023   
     
     
     
Internal Revenue Service   
Department of the Treasury   
Washington, DC 20224   
     
Number: 202319002   
Release Date: 5/12/2023   
Index Number: 9100.02-03     
Third Party Communication: None   
Date of Communication: Not Applicable   
Person To Contact:   
ID No.   
Telephone Number:   
Refer Reply To:   
CC:PSI:B06   
PLR-112916-22   
Date:  February 15, 2023   
     
Re: Request for extension of time under §§ 301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations to file an election pursuant to § 59(e) of the Internal Revenue Code   
     
Dear ******:     
     
This letter responds to a letter dated June 29, 2022, and subsequent correspondence submitted by P on behalf of S, requesting an extension of time under §§ 301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations to make an election under § 59(e) of the Internal Revenue Code (Code) and § 1.59-1(b)(1) of the Income Tax Regulations to deduct ratably over a 10-year period research and experimental (R&E) expenditures incurred in Tax Year under § 174(a).   
     
This letter is being issued electronically in accordance with Rev. Proc. 2020-29, 2020-21 I.R.B. 859. A paper copy will not be mailed to P.   
     
FACTS   
     
P represents that the facts are as follows:   
     
P is the common parent of an affiliated group of corporations that includes S (hereinafter P and S will be collectively referred to as Taxpayer), and that files a consolidated federal income tax return on a calendar year basis using the accrual method of accounting.   
     
Taxpayer intended to make an election under § 59(e) and § 1.59-1(b)(1) to deduct ratably over a 10-year period a portion of its R&E expenditures. On its consolidated federal income tax return for Tax Year, Taxpayer capitalized and amortized its R&E expenditures in the amount of $a incurred during that year under § 59(e). An election statement, as required by § 59(e) and § 1.59-1(b)(1), was attached to Taxpayer's return for Tax Year when filed. However, the election statement did not identify that P was making the election on behalf of S.   
     
Taxpayer had prepared a Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns, to request an automatic 6-month extension to file its consolidated federal income tax return for Tax Year. The Form 7004 was saved in Taxpayer's system, and Taxpayer believed the Form 7004 had been timely filed. Based on this belief, Taxpayer filed its return by the extended due date for Tax Year.   
     
Taxpayer later discovered that it had not filed the Form 7004 to extend the consolidated federal return for Tax Year. Taxpayer realized that the return for Tax Year had not been timely filed, and that, therefore, the election under § 59(e) was also not timely filed.   
     
Taxpayer has made representations explaining why the Form 7004, and consequently, the consolidated return for Tax Year and the election statement under § 59(e) and § 1.59-1(b)(1) were not timely filed. Taxpayer further represents that, in requesting an extension of time to make a §  59(e)  election for Tax Year, it has acted reasonably and in good faith and, further, there is no prejudice to the interests of the government.      
     
RULING REQUESTED   
     
Taxpayer requests an extension of time under §§ 301.9100-1 and 301.9100-3 to make an election under § 59(e) to capitalize and deduct ratably over a 10-year period certain R&E expenditures incurred during Tax Year.   
     
LAW AND ANALYSIS   
     
Section 59(e)(1) allows a taxpayer, in general, to deduct ratably over the 10-year period any qualified expenditure to which an election under § 59(e) applies, beginning with the taxable year in which such expenditure was made.   
     
Section 59(e)(2)(B) includes in the definition of "qualified expenditure" any amount which, but for an election under § 59(e), would have been allowable as a deduction (determined without regard to § 291) for the taxable year in which paid or incurred under § 174(a) (relating to R&E expenditures).   
     
Section 59(e)(3) specifically prohibits the deduction of the qualified expenditures under any other section of the Code if the option under § 59(e) is elected.   
     
Section 59(e)(4)(A) provides that an election may be made under § 59(e)(1) with respect to any portion of any qualified expenditure.   
     
Section 59(e)(4)(B) provides that any election under § 59(e) may be revoked only with the consent of the Secretary.   
     
Section 1.59-1(b)(1) provides that an election under § 59(e) shall only be made by attaching a statement to the taxpayer's income tax return (or amended return) for the taxable year in which the amortization of the qualified expenditures subject to the § 59(e) election begins. The statement must be filed no later than the date prescribed by law for filing the taxpayer's original income tax return (including any extensions of time) for the taxable year in which the amortization of the qualified expenditures subject to the § 59(e) election begins. Additionally, the statement must include the taxpayer's name, address, and taxpayer identification number, and the type and amount of qualified expenditures identified in § 59(e)(2) that the taxpayer elects to deduct ratably over the applicable period described in § 59(e)(1).   
     
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.   
     
Section 301.9100-1(b) provides the term "regulatory election" includes an election the due date of which is prescribed by a regulation published in the Federal Register.   
     
Sections 301.9100-1 through 301.9100-3 provide the standards used to determine whether to grant an extension of time to make a regulatory election. Section 301.9100-1(a).   
     
Section 301.9100-2 allows automatic extensions of time for making certain elections. Section 301.9100-3 provides rules for requesting extensions of time for regulatory elections that do not meet the requirements of § 301.9100-2.   
     
The Commissioner will grant requests for relief under § 301.9100-3 when the taxpayer provides the evidence (including affidavits described in § 301.9100-3(e)) 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. Section 301.9100-3(a).   
     
CONCLUSION   
     
Based solely on the information submitted and the representations made, we conclude that the requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied. Accordingly, the Commissioner grants Taxpayer an extension of time of 120 days from the date of this letter to make an election under § 59(e) and § 1.59-1(b)(1) to deduct ratably over a 10-year period its R&E expenditures incurred for Tax Year. The § 59(e) election must comply with the manner-of-election requirements of § 1.59-1(b)(1).   
     
In making the election for Tax Year, Taxpayer must attach a copy of this letter ruling to its amended consolidated federal income tax return. Alternatively, if Taxpayer files its amended consolidated federal income tax return electronically, it may satisfy this requirement by attaching a statement to its amended return that provides the date and control number of the letter ruling.   
     
The ruling contained in this letter is based upon information and representations submitted by 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 request for a ruling, it is subject to verification on examination. Except as specifically set forth above, we express no opinion concerning the federal tax consequences of the facts described above under any other provision of the Code and the regulations thereunder. Specifically, we express or imply no opinion concerning whether Taxpayer satisfies the requirements of §§ 59(e) or 174(a).   
     
This ruling is directed only to the taxpayer who requested 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 your authorized representative.   
     
Sincerely,   
     
Associate Chief Counsel   
(Passthroughs and Special Industries)   
     
 Jennifer Records      
By: _______________________________   
Jennifer A. Records   
Senior Technician Reviewer, Branch 6   
Office of the Associate Chief Counsel   
(Passthroughs and Special Industries)   
     
Enclosure   
Copy for § 6110 purposes   
     
cc: