IRS PLR: S Corporation Election Ineffectiveness Inadvertent (IRC §1362)

The IRS has published a private letter ruling on Section 1362(f), finding that the taxpayer’s S corporation election was ineffective on the original election date because the partnership was an ineligible shareholder and none of the taxpayer’s shareholders consented, but the ineffectiveness was inadvertent. The IRS held that the taxpayer will be treated as an S corporation from the original election date, provided the election was otherwise valid, and the taxpayer and shareholders must file all required federal income tax returns (including amended returns) for open years consistent with the ruling within 120 days. [PLR 202538001]
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