IRS PLR: S Corporation Termination Inadvertently Caused by Lack of QSST Election for Trust (IRC §1362)

The circumstances resulting in the failure to file a qualified subchapter S trust (QSST) election were inadvertent within the meaning of I.R.C. §1362(f) and not motivated by tax avoidance or retroactive tax planning, the IRS ruled, finding that X will be treated as continuing to be an S corporation. According to the representation, the sole income beneficiary of the trust failed to make a timely QSST election within the meaning of §1361(d)(2), thereby causing X’s S corporation election to terminate on that date. X further represented that it has filed its income tax returns consistent with having a valid S ...