IRS Private Letter Ruling Allows Foreign Corporation’s Untimely Form 5471 Election

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Jason B. Freeman

Jason B. Freeman

Managing Member


Mr. Freeman is the founding member of Freeman Law, PLLC. He is a dual-credentialed attorney-CPA, author, law professor, and trial attorney.

Mr. Freeman has been named by Chambers & Partners as among the leading tax and litigation attorneys in the United States and to U.S. News and World Report’s Best Lawyers in America list. He is a former recipient of the American Bar Association’s “On the Rise – Top 40 Young Lawyers” in America award. Mr. Freeman was named the “Leading Tax Controversy Litigation Attorney of the Year” for the State of Texas for 2019 and 2020 by AI.

Mr. Freeman has been recognized multiple times by D Magazine, a D Magazine Partner service, as one of the Best Lawyers in Dallas, and as a Super Lawyer by Super Lawyers, a Thomson Reuters service. He has previously been recognized by Super Lawyers as a Top 100 Up-And-Coming Attorney in Texas.

Mr. Freeman currently serves as the chairman of the Texas Society of CPAs (TXCPA). He is a former chairman of the Dallas Society of CPAs (TXCPA-Dallas). Mr. Freeman also served multiple terms as the President of the North Texas chapter of the American Academy of Attorney-CPAs. He has been previously recognized as the Young CPA of the Year in the State of Texas (an award given to only one CPA in the state of Texas under 40).

Specified foreign corporations (“SPCs”) defined in 26 U.S.C. § 898(b) generally take on the same taxable year as the majority U.S. shareholder.[1] However, such corporations can elect to have a taxable year beginning one month earlier than the majority U.S. shareholder year.[2] This election is made on Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations), which must be filed with the income tax returns of the SPC’s U.S. shareholders.[3] If the SPC is unable to meet this deadline even though it acted reasonably and in good faith, it can receive an extension as long as doing so will not prejudice the interests of the government.[4]

In a series of Private Letter Rulings,[5] the IRS granted an extension when the taxpaying shareholder in question had a qualified tax professional prepare its filings who then neglected to timely file Form 5471. Thus, the late filing was “not due to any lack of due diligence or prompt action on the part of the taxpayer.” In light of the facts submitted by the taxpayer, the IRS concluded that the taxpayer acted reasonably and in good faith, and that granting the extension would not prejudice the interests of the government.


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[1] 26 USC § 898(c)(1).

[2] Id. at § 898(c)(2).

[3] I.R.S. Priv. Ltr. Rul. 202012009 (Mar. 20, 2020), 1-2.

[4] 26 C.F.R. § 301.9100-3.

[5] I.R.S. Priv. Ltr. Rul. 202012009 (Mar. 20, 2020), I.R.S. Priv. Ltr. Rul. 202012010 (Mar. 20, 2020), I.R.S. Priv. Ltr. Rul. 202012011 (Mar. 20, 2020).