(a) In general. Requests for extensions of time for regulatory elections that do not meet the requirements of Sec. 301.9100-2 must be made under the rules of this section. Requests for relief subject to this section will be granted when the taxpayer provides the evidence (including affidavits described in paragraph (e) of this section) 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.
(b) Reasonable action and good faith--(1) In general. Except as provided in paragraphs (b)(3)(i) through (iii) of this section, a taxpayer is deemed to have acted reasonably and in good faith if the taxpayer--
(1) In general. Except as provided in paragraphs (b)(3)(i) through (iii) of this section, a taxpayer is deemed to have acted reasonably and in good faith if the taxpayer--
(i) Requests relief under this section before the failure to make the regulatory election is discovered by the Internal Revenue Service (IRS);
(ii) Failed to make the election because of intervening events beyond the taxpayer's control;
(iii) Failed to make the election because, after exercising reasonable diligence (taking into account the taxpayer's experience and the complexity of the return or issue), the taxpayer was unaware of the necessity for the election;
(iv) Reasonably relied on the written advice of the Internal Revenue Service (IRS); or
(v) Reasonably relied on a qualified tax professional, including a tax professional employed by the taxpayer, and the tax professional failed to make, or advise the taxpayer to make, the election.
(2) Reasonable reliance on a qualified tax professional. For purposes of this paragraph (b), a taxpayer will not be considered to have reasonably relied on a qualified tax professional if the taxpayer knew or should have known that the professional was not--
(i) Competent to render advice on the regulatory election; or
(ii) Aware of all relevant facts.
(3) Taxpayer deemed to have not acted reasonably or in good faith. For purposes of this paragraph (b), a taxpayer is deemed to have not acted reasonably and in good faith if the taxpayer--
(i) Seeks to alter a return position for which an accuracy-related penalty has been or could be imposed under section 6662 at the time the taxpayer requests relief (taking into account any qualified amended return filed within the meaning of Sec. 1.6664-2(c)(3) of this chapter) and the new position requires or permits a regulatory election for which relief is requested;
(ii) Was informed in all material respects of the required election and related tax consequences, but chose not to file the election; or
(iii) Uses hindsight in requesting relief. If specific facts have changed since the due date for making the election that make the election advantageous to a taxpayer, the IRS will not ordinarily grant relief. In such a case, the IRS will grant relief only when the taxpayer provides strong proof that the taxpayer's decision to seek relief did not involve hindsight.
(c) Prejudice to the interests of the Government--(1) In general. The Commissioner will grant a reasonable extension of time to make a regulatory election only when the interests of the Government will not be prejudiced by the granting of relief. This paragraph (c) provides the standards the Commissioner will use to determine when the interests of the Government are prejudiced.
(1) In general. The Commissioner will grant a reasonable extension of time to make a regulatory election only when the interests of the Government will not be prejudiced by the granting of relief. This paragraph (c) provides the standards the Commissioner will use to determine when the interests of the Government are prejudiced.
(i) Lower tax liability. The interests of the Government are prejudiced if granting relief would result in a taxpayer having a lower tax liability in the aggregate for all taxable years affected by the election than the taxpayer would have had if the election had been timely made (taking into account the time value of money). Similarly, if the tax consequences of more than one taxpayer are affected by the election, the Government's interests are prejudiced if extending the time for making the election may result in the affected taxpayers, in the aggregate, having a lower tax liability than if the election had been timely made.
(ii) Closed years. The interests of the Government are ordinarily prejudiced if the taxable year in which the regulatory election should have been made or any taxable years that would have been affected by the election had it been timely made are closed by the period of limitations on assessment under section 6501(a) before the taxpayer's receipt of a ruling granting relief under this section. The IRS may condition a grant of relief on the taxpayer providing the IRS with a statement from an independent auditor (other than an auditor providing an affidavit pursuant to paragraph (e)(3) of this section) certifying that the interests of the Government are not prejudiced under the standards set forth in paragraph (c)(1)(i) of this section.
(2) Special rules for accounting method regulatory elections. The interests of the Government are deemed to be prejudiced except in unusual and compelling circumstances if the accounting method regulatory election for which relief is requested--
(i) Is subject to the procedure described in Sec. 1.446-1(e)(3)(i) of this chapter (requiring the advance written consent of the Commissioner);
(ii) Requires an adjustment under section 481(a) (or would require an adjustment under section 481(a) if the taxpayer changed to the method of accounting for which relief is requested in a taxable year subsequent to the taxable year the election should have been made);
(iii) Would permit a change from an impermissible method of accounting that is an issue under consideration by examination, an appeals office, or a federal court and the change would provide a more favorable method or more favorable terms and conditions than if the change were made as part of an examination; or
(iv) Provides a more favorable method of accounting or more favorable terms and conditions if the election is made by a certain date or taxable year.
(3) Special rules for accounting period regulatory elections. The interests of the Government are deemed to be prejudiced except in unusual and compelling circumstances if an election is an accounting period regulatory election (other than the election to use other than the required taxable year under section 444) and the request for relief is filed more than 90 days after the due date for filing the Form 1128, Application to Adopt, Change, or Retain a Tax Year (or other required statement).
(d) Effect of amended returns--(1) Second examination under section 7605(b). Taxpayers requesting and receiving an extension of time under this section waive any objections to a second examination under section 7605(b) for the issue(s) that is the subject of the relief request and any correlative adjustments.
(1) Second examination under section 7605(b). Taxpayers requesting and receiving an extension of time under this section waive any objections to a second examination under section 7605(b) for the issue(s) that is the subject of the relief request and any correlative adjustments.
(2) Suspension of the period of limitations under section 6501(a). A request for relief under this section does not suspend the period of limitations on assessment under section 6501(a). Thus, for relief to be granted, the IRS may require the taxpayer to consent under section 6501(c)(4) to an extension of the period of limitations on assessment for the taxable year in which the regulatory election should have been made and any taxable years that would have been affected by the election had it been timely made.
(e) Procedural requirements--(1) In general. Requests for relief under this section must provide evidence that satisfies the requirements in paragraphs (b) and (c) of this section, and must provide additional information as required by this paragraph (e).
(1) In general. Requests for relief under this section must provide evidence that satisfies the requirements in paragraphs (b) and (c) of this section, and must provide additional information as required by this paragraph (e).
(2) Affidavit and declaration from taxpayer. The taxpayer, or the individual who acts on behalf of the taxpayer with respect to tax matters, must submit a detailed affidavit describing the events that led to the failure to make a valid regulatory election and to the discovery of the failure. When the taxpayer relied on a qualified tax professional for advice, the taxpayer's affidavit must describe the engagement and responsibilities of the professional as well as the extent to which the taxpayer relied on the professional. The affidavit must be accompanied by a dated declaration, signed by the taxpayer, which states: ``Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete.'' The individual who signs for an entity must have personal knowledge of the facts and circumstances at issue.
(3) Affidavits and declarations from other parties. The taxpayer must submit detailed affidavits from the individuals having knowledge or information about the events that led to the failure to make a valid regulatory election and to the discovery of the failure. These individuals must include the taxpayer's return preparer, any individual (including an employee of the taxpayer) who made a substantial contribution to the preparation of the return, and any accountant or attorney, knowledgeable in tax matters, who advised the taxpayer with regard to the election. An affidavit must describe the engagement and responsibilities of the individual as well as the advice that the individual provided to the taxpayer. Each affidavit must include the name, current address, and taxpayer identification number of the individual, and be accompanied by a dated declaration, signed by the individual, which states: ``Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete.''
(4) Other information. The request for relief filed under this section must also contain the following information--
(i) The taxpayer must state whether the taxpayer's return(s) for the taxable year in which the regulatory election should have been made or any taxable years that would have been affected by the election had it been timely made is being examined by a district director, or is being considered by an appeals office or a federal court. The taxpayer must notify the IRS office considering the request for relief if the IRS starts an examination of any such return while the taxpayer's request for relief is pending;
(ii) The taxpayer must state when the applicable return, form, or statement used to make the election was required to be filed and when it was actually filed;
(iii) The taxpayer must submit a copy of any documents that refer to the election;
(iv) When requested, the taxpayer must submit a copy of the taxpayer's return for any taxable year for which the taxpayer requests an extension of time to make the election and any return affected by the election; and
(v) When applicable, the taxpayer must submit a copy of the returns of other taxpayers affected by the election.
(5) Filing instructions. A request for relief under this section is a request for a letter ruling. Requests for relief should be submitted in accordance with the applicable procedures for requests for a letter ruling and must be accompanied by the applicable user fee.
(f) Examples. The following examples illustrate the provisions of this section:
Example 1. Taxpayer discovers own error. Taxpayer A prepares A's 1997 income tax return. A is unaware that a particular regulatory election is available to report a transaction in a particular manner. A files the 1997 return without making the election and reporting the transaction in a different manner. In 1999, A hires a qualified tax professional to prepare A's 1999 return. The professional discovers that A did not make the election. A promptly files for relief in accordance with this section. Assume paragraphs (b)(3) (i) through (iii) of this section do not apply. Under paragraph (b)(1)(i) of this section, A is deemed to have acted reasonably and in good faith because A requested relief before the failure to make the regulatory election was discovered by the IRS.
Example 2. Reliance on qualified tax professional. Taxpayer B hires a qualified tax professional to advise B on preparing B's 1997 income tax return. The professional was competent to render advice on the election and B provided the professional with all the relevant facts. The professional fails to advise B that a regulatory election is necessary in order for B to report income on B's 1997 return in a particular manner. Nevertheless, B reports this income in a manner that is consistent with having made the election. In 2000, during the examination of the 1997 return by the IRS, the examining agent discovers that the election has not been filed. B promptly files for relief in accordance with this section, including attaching an affidavit from B's professional stating that the professional failed to advise B that the election was necessary. Assume paragraphs (b)(3) (i) through (iii) of this section do not apply. Under paragraph (b)(1)(v) of this section, B is deemed to have acted reasonably and in good faith because B reasonably relied on a qualified tax professional and the tax professional failed to advise B to make the election.
Example 3. Accuracy-related penalty. Taxpayer C reports income on its 1997 income tax return in a manner that is contrary to a regulatory provision. In 2000, during the examination of the 1997 return, the IRS raises an issue regarding the reporting of this income on C's return and asserts the accuracy-related penalty under section 6662. C requests relief under this section to elect an alternative method of reporting the income. Under paragraph (b)(3)(i) of this section, C is deemed to have not acted reasonably and in good faith because C seeks to alter a return position for which an accuracy-related penalty could be imposed under section 6662.
Example 4. Election not requiring adjustment under section 481(a). Taxpayer D prepares D's 1997 income tax return. D is unaware that a particular accounting method regulatory election is available. D files D's 1997 return without making the election and uses another permissible method of accounting. The applicable regulation provides that the election is made on a cut-off basis (without an adjustment under section 481(a)). In 1998, D requests relief under this section to make the election under the regulation. If D were granted an extension of time to make the election, D would pay no less tax than if the election had been timely made. Assume that paragraphs (c)(2) (i), (iii), and (iv) of this section do not apply. Under paragraph (c)(2)(ii) of this section, the interests of the Government are not deemed to be prejudiced because the election does not require an adjustment under section 481(a).
Example 5. Election requiring adjustment under section 481(a). The facts are the same as in Example 4 of this paragraph (f) except that the applicable regulation provides that the election requires an adjustment under section 481(a). Under paragraph (c)(2)(ii) of this section, the interests of the Government are deemed to be prejudiced except in unusual or compelling circumstances.
Example 6. Under examination by the IRS. A regulation permits an automatic change in method of accounting for an item on a cut-off basis. Taxpayer E reports income on E's 1997 income tax return using an impermissible method of accounting for the item. In 2000, during the examination of the 1997 return by the IRS, the examining agent notifies E in writing that its method of accounting for the item is an issue under consideration. Any change from the impermissible method made as part of an examination is made with an adjustment under section 481(a). E requests relief under this section to make the change pursuant to the regulation for 1997. The change on a cut-off basis under the regulation would be more favorable than if the change were made with an adjustment under section 481(a) as part of an examination. Under paragraph (c)(2)(iii) of this section, the interests of the Government are deemed to be prejudiced except in unusual and compelling circumstances because E seeks to change from an impermissible method of accounting that is an issue under consideration in the examination on a basis that is more favorable than if the change were made as part of an examination. [T.D. 8742, 62 FR 68171, Dec. 31, 1997] Sec. 301.9100-4T Time and manner of making certain elections under the Economic Recovery Tax Act of 1981.
(a) Miscellaneous elections--(1) Elections to which this paragraph applies. This paragraph applies to the following elections provided under the Economic Recovery Tax Act of 1981: ----------------------------------------------------------------------------------------------------------------
Description ofSection of Act Section of code election Availability of election----------------------------------------------------------------------------------------------------------------201(a)........ 168(b)(3)..................... Different recovery Property placed in service after 1980.
period.201(a)........ 168(d)(2)(A).................. Inclusion in income Property placed in service after 1980.
of entire proceeds
of disposition.201(a)........ 168(e)(2)..................... Exclusion of property Property placed in service after 1980.
from recovery system.201(a)........ 168(f)(2)(C).................. Different recovery Property placed in service after 1980.
period for property
used outside U.S..202(a)........ 179........................... Expensing certain Taxable years beginning after 1981.
depreciable property.237........... 474........................... For small business to Taxable years beginning after 1981.
use one inventory
pool when LIFO is
elected.266(a)........ .............................. Deferral of Taxable years ending after June 30, 1980.
commencement of
amortization period
for motor carrier
operating authority.508(c)........ .............................. Application of title Property held on June 23, 1981.
V of the Act to all
regulated futures
contracts or
positions held on
June 23, 1981.509........... .............................. Application of Code Property held during taxable year that
sec. 1256 and includes June 23, 1981.
extension of time
for payment of tax
for all regulated
futures contracts
held at any time
during taxable year
that includes June
23, 1981.----------------------------------------------------------------------------------------------------------------
(2) Time for making elections--(i) In general. Except as otherwise provided in this paragraph (a)(2), the elections specified in paragraph (a)(1) of this section shall be made by the later of--
(i) In general. Except as otherwise provided in this paragraph (a)(2), the elections specified in paragraph (a)(1) of this section shall be made by the later of--
(A) The due date (taking extensions into account) of the income tax return for the taxable year for which the election is to be effective, or
(B) April 15, 1982.
(ii) No extension of time for payment. Payments of tax due shall be made in accordance with chapter 62 of the Code.
(iii) Elections under section 508(c) or 509 of the Act. Elections under section 508(c) or 509 of the Act shall be made by the due date (taking extensions into account) of the income tax return for the taxable year for which the election is to be effective.
(3) Manner of making elections. The elections specified in paragraph (a)(1) of this section shall be made by attaching a statement to the income tax return (or amended return) for the taxable year for which the election is made. Except as otherwise provided in the return or in the instructions accompanying the return for the taxable year, the statement shall--
(i) Contain the name, address, and taxpayer identification number of the electing taxpayer,
(ii) Identify the election,
(iii) Indicate the section of the Code (or, if the provision is not codified, the section of the Act) under which the election is being made,
(iv) Specify the period for which the election is being made and the property to which the election is to apply, and
(v) Provide any information required by the relevant statutory provisions and any information necessary to show that the taxpayer is entitled to make the election.
(b) Designation of principal campaign committee. This paragraph applies to the designation of a principal campaign committee under section 527(h) of the Code, as added by section 128 of the Act. References in this section to ``elections'' include designations under section 527(h). Under that provision a candidate for Congress may designate one committee as the candidate's principal campaign committee. The political organization taxable income of that committee shall be taxed at the appropriate rates under section 11(b); that income is ordinarily taxed at the highest rate specified in section 11(b). The candidate shall designate the principal campaign committee by filing a statement of designation with the income tax return of the committee for the first taxable year of the committee ending after 1981 for which the designation is to be effective. The return and the statement shall be filed by the due date (taking extensions into account) of the return. The rules of section 21 (relating to effects of changes in rates during a taxable year) shall apply in the case of any taxable year beginning before 1982 for which a designation is made. The statement of designation shall be signed by the candidate and shall--
(1) Contain the name, address, and taxpayer identification number of the candidate and of the committee,
(2) Identify the statement as a designation under section 527(h) of the Code, and
(3) Designate the committee as the principal campaign committee of the candidate. The candidate shall attach to the statement a copy of the statement of designation filed with the Federal Election Commission.
(c) Election to be treated as a qualified fund for purposes of the research credit. This paragraph applies to the election provided under section 44F(e)(4) of the Code, as added by section 221(a) of the Act. The election to be treated as a qualified fund for purposes of the research credit may be made effective as of any date after June 30, 1981, and before January 1, 1986. An organization shall make this election by filing with the service center with which it files its annual return a statement signed by a person authorized to act on behalf of the organization. That statement shall--
(1) Contain the name, address, and taxpayer identification number of the electing organization and of the organization that established and maintains the electing organization,
(2) Identify the election as an election under section 44F(e)(4) of the Code,
(3) Specify the date on which the election is to become effective (in the case of elections filed before February 1, 1982, not earlier than the date that is 7 months before the date on which the election is filed; in the case of elections filed after January 31, 1982, not earlier than the date on which the election is filed), and
(4) Provide all information necessary to show that the organization is entitled to make the election.
(d) Election to treat qualified subchapter S trust as grantor trust. This paragraph applies to the election provided under section 1371(g)(2) of the Code, as added by section 234(b) of the Act. The election to treat a qualified subchapter S trust as a grantor trust described in section 1371(e)(1)(A) of the Code is available for taxable years beginning after 1981. The beneficiary of the trust (or the legal representative of the beneficiary) shall make this election by signing and filing with the service center with which the subchapter S corporation files its income tax return a statement that--
(1) Contains the name, address, and taxpayer identification number of the beneficiary, the trust, and the subchapter S corporation,
(2) Identifies the election as an election under section 1371(g)(2) of the Code,
(3) Specifies the date on which the election is to become effective (not earlier than 60 days before the date on which the election is filed), and
(4) Provides all information necessary to show that the beneficiary is entitled to make the election. Note that this election does not itself constitute an election as to the status of the corporation; the corporation must make the election provided in section 1372(a) to be treated as an electing small business corporation.
(e) Election to have Code section 422A apply to options granted before 1981. This paragraph applies to the election provided under section 251(c)(1)(B) of the Act to have Code section 422A apply to certain options granted before 1981. A corporation may make only one election under this provision. Thus, a corporation that makes an election under this provision with respect to certain options granted before 1981 may not make any subsequent election under this provision with respect to other options granted before 1981. An election under this provision shall be made no later than the due date (taking extensions into account) of the income tax return of the corporation for its first taxable year during which either an option subject to the election or an option subject to the rules of section 422A of the Code is exercised. In any event, no election under this provision will be permitted after the due date (taking extensions into account) of the income tax return for the taxable year including December 31, 1982. A corporation shall make this election by attaching to its income tax return (or amended return) a statement that--
(1) Contains the name, address, and taxpayer identification number of the corporation,
(2) Identifies the election as an election under section 251(c)(1)(B) of the Economic Recovery Tax Act of 1981,
(3) Specifies the options to which the election applies, and
(4) Provides all information necessary to show that the corporation is entitled to make the election.
(f) Election to increase basis of property on which additional estate tax is imposed. This paragraph applies to the election provided under section 1016(c) of the Code, as amended by section 421(g) of the Act. The election to increase the basis of property on which additional estate tax is imposed is available with respect to the estates of decedents dying after 1981. The qualified heir shall make this election by filing with the Form 706-A (Additional Estate Tax Return) a statement that--
(1) Contains the name, address, and taxpayer identification number of the qualified heir and of the estate,
(2) Identifies the election as an election under section 1016(c) of the Code,
(3) Specifies the property with respect to which the election is made, and
(4) Provides any additional information required by the instructions accompanying Form 706-A. A qualified heir making an election under this paragraph must pay interest on the additional estate tax from the date that is 9 months after the date of the decedent's death to the date of the payment of the additional estate tax.
(g) Revocation of elections. Elections under paragraph (f) of this section are irrevocable. Other elections made under this section may be revoked only with the consent of the Commissioner. An application for consent to revoke an election shall be signed by the applicant and filed with the service center with which the election was filed and shall--
(1) Contain the name, address, and taxpayer identification number of all parties identified in connection with the election,
(2) Identify the election being revoked by reference to the section of the Code or Act under which the election was made,
(3) Specify the scope of the election, and
(4) Explain why the applicant seeks to revoke the election.
(h) Additional information required. If later regulations issued under the section of the Code or Act under which the election was made require the furnishing of information in addition to that which was furnished with the statement of election and an office of the Internal Revenue Service requests the taxpayer to provide the additional information, the taxpayer shall furnish the additional information in a statement filed with that office of the Internal Revenue Service within 60 days after the request is made. This statement shall also--
(1) Contain the name, address, and taxpayer identification numbers of all parties identified in connection with the election,
(2) Identify the election by reference to the section of the Code or Act under which the election was made, and
(3) Specify the scope of the election. If the additional information is not provided within 60 days after the request is made, the election may, at the discretion of the Commissioner, be held invalid.
(i) Effective date. This section applies to elections made after August 12, 1981. [T.D. 7793, 46 FR 54538, Nov. 3, 1981. Redesignated by T.D. 8435, 57 FR 43895, Sept. 23, 1992. Amended by T.D. 9481, 75 FR 17857, Apr. 8, 2010] Sec. 301.9100-5T Time and manner of making certain elections underthe Tax Equity and Fiscal Responsibility Act of 1982.
(a) Miscellaneous elections--(1) Elections to which this paragraph applies. This paragraph applies to the following elections provided under the Tax Equity and Fiscal Responsibility Act of 1982. ----------------------------------------------------------------------------------------------------------------
Availability of
Section of act Section of code Description of election election----------------------------------------------------------------------------------------------------------------201(c)............................... 58(i)(1)............... Optional 10-year write Taxable years beginning
off of certain tax after Dec. 31, 1982.
preferences.201(c)(1)............................ 58(i)(4)............... Intangible drilling and Taxable years beginning
development costs. after Dec. 31, 1982.
205(a)............................... 48(q).................. Reduced investment Generally to period
credit in lieu of beginning after Dec.
basis adjustment. 31, 1982.256(f)............................... 820.................... Insurance company Contracts which took
revocation of election effect in 1980 or
under section 820. 1981.----------------------------------------------------------------------------------------------------------------
(2) Time for making elections--(i) In general. Except as otherwise provided in paragraph (a)(2) of this section, the elections specified in paragraph (a)(1) of this section shall be made by the later of--
(i) In general. Except as otherwise provided in paragraph (a)(2) of this section, the elections specified in paragraph (a)(1) of this section shall be made by the later of--
(A) The due date (taking extensions into account) of the income tax return for the taxable year for which the election is to be effective, or
(B) April 15, 1983.
(ii) No extensions of time for payment. Payments of tax due shall be made in accordance with chapter 62 of the Code.
(iii) Election by insurance companies relating to repeal of section 820. Elections under section 256(f) of the Act, relating to special rule allowing reinsured insurance company to revoke an election under section 820, must be made before March 5, 1983.
(3) Manner of making elections. The elections specified in paragraph (a)(1) of this section shall be made by attaching a statement to the income tax return (or amended return) for the taxable year for which the election is made. Except as otherwise provided in the return or in the instructions accompanying the return for the taxable year, the statement shall--
(i) Contain the name, address, and taxpayer identification number of the electing taxpayer,
(ii) Identify the election,
(iii) Indicate the section of the Code (or, if the provision is not codified, the section of the Act) under which the election is being made,
(iv) Specify the period for which the election is being made and the property to which the election is to apply, and
(v) Provide any information required by the relevant statutory provisions and any information necessary to show that the taxpayer is entitled to make the election.
(b) Special rules for reduced investment credit in lieu of basis adjustment--(1) Appropriate return. For purposes of section 48(q) of the Code and paragraph (a) (2)(i)(A) and (3) of this section the term ``income tax return for the taxable year for which the election is effective'' with respect to any property is the tax return for the taxable year in which such property is placed in service, or in the case of property to which an election under section 46(d) (relating to qualified progress expenditures) applies, the appropriate return is the return for the first taxable year for which qualified progress expenditures were taken into account with respect to such property.
(1) Appropriate return. For purposes of section 48(q) of the Code and paragraph (a) (2)(i)(A) and (3) of this section the term ``income tax return for the taxable year for which the election is effective'' with respect to any property is the tax return for the taxable year in which such property is placed in service, or in the case of property to which an election under section 46(d) (relating to qualified progress expenditures) applies, the appropriate return is the return for the first taxable year for which qualified progress expenditures were taken into account with respect to such property.
(2) Applicability of election. In general, the election under section 48(q) is applicable to periods beginning after December 31, 1982 under rules similar to the rules of section 48(m) of the Code. However, the election does not apply to property excepted by section 205(c)(1)(B) of the Act.
(c) Election by a reinsurer to make installment payments of taxes owed resulting from the repeal of section 820. This paragraph applies to the election by an insurance company provided under section 256(e) of the Act. A reinsurer that is a calendar year tax-payer shall be considered to have made an election under section 256(e) of the Act if by March 15, 1983 it files its income tax return (or an application on Form 7004 for an automatic extension of time to file its income tax return), with the statement required to be filed under this paragraph attached and, unless the reinsurer is making a further election under section 256(e)(2)(B) of the Act, pays one-third of the amount described in section 256(e)(1) of the Act by March 15, 1983. A reinsurer making an election under section 256(e)(2)(B) of the Act must pay one-sixth of the amount described in section 256(e)(1) of the Act by March 15, 1983 and one-sixth of such amount by June 15, 1983. The statement required to be filed under this paragraph shall--
(1) Contain the name, address, and tax-payer identification number of the corporation,
(2) Identify the election as an election under section 256(e) of the Act, and section 256(e)(2)(B) if applicable, and
(3) Provide all information necessary to show the taxpayer is entitled to make the election. For provisions relating to the use of authorized financial institutions in depositing the taxes, see Sec. 1.6302-1.
(d) [Reserved]
(e) Additional information required. If later regulations issued under the section of the Code or Act under which the election was made require the furnishing of information in addition to that which was furnished with the statement of election and an office of the Internal Revenue Service requests the taxpayer to provide the additional information, the taxpayer shall furnish the additional information in a statement filed with that office of the Internal Revenue Service within 60 days after the request is made. This statement shall also--
(1) Contain the name, address, and taxpayer identification numbers of all parties identified in connection with the election,
(2) Identify the election by reference to the section of the Code or Act under which the election was made, and
(3) Specify the scope of the election. If the additional information is not provided within 60 days after the request is made, the election may, at the discretion of the Commissioner, be held invalid.
(f) Effective date. This section applies to elections made after September 3, 1982. [T.D. 7870, 48 FR 1486, Jan. 13, 1983. Redesignated by T.D. 8435, 57 FR 43895, Sept. 23, 1992, as amended by T.D. 8952, 66 FR 33832, June 26, 2001] Sec. 301.9100-6T Time and manner of making certain elections underthe Deficit Reduction Act of 1984.
(a) Miscellaneous elections--(1) Elections to which this paragraph applies. This paragraph applies to the following elections provided under the Deficit Reduction Act of 1984 (the Act): ------------------------------------------------------------------------
Section of Section of Description of Availability of
act code election election------------------------------------------------------------------------31(a) and 168(j)(4)(E)( Election by certain Generally for
31(g)(16). ii). 501(c)(12) property placed in
organizations to be service after May
treated as taxable 23, 1983, or leased
organizations and after such date.
to have certain
arbitrage profits
taxed.31(f)........ 46(e)(4)(C).. Election by section Generally for
593 organizations property placed in
not to apply service after Nov.
section 46(e)(4)(A). 5, 1983, or leased
after such date.41(a)........ 1282(b)(2)... Election to have Taxable years ending
section 1281 apply after July 18,
to all short-term 1984, with respect
obligations to obligations
acquired on or acquired after such
after the first day date.
of the first
taxable year to
which the election
relates (but not to
obligations
acquired before
July 19, 1984).41(a)........ 1283(c)(2)... Election to have Do.
section 1283(c)(1)
not apply to all
obligations
acquired on or
after the first day
of the first
taxable year to
which the election
relates (but not to
obligations
acquired before
July 19, 1984).113.......... 48(r)........ Election by all Property placed in
persons having an service after Mar.
ownership interest 15, 1984.
in a sound
recording to treat
such recording as 3-
yr. recovery
property.211.......... 806(d)(4).... Election with Taxable years
respect to loss beginning after
from operations of Dec. 31, 1983.
member of group.211.......... 807(d)(4)(C). Election to use Taxable years
preceding year's beginning after
interest rate for Dec. 31, 1983.
nonannuity reserves.211.......... 810(b)(3).... Election to forgo Losses from
carryback period by operations for
life insurance taxable years
companies. beginning after
Dec. 31, 1983.216(c)(1).... ............. Election not to have First taxable year
reserves recomputed. beginning after
Dec. 31, 1983.216(c)(2).... ............. Election to use Generally for
adjusted statutory contracts issued
reserves for after 1983 and
certain contracts. before 1989 by
certain companies
that make an
election under sec.
216(c)(1) of the
act.217(i)....... ............. Election to treat First taxable year
individual beginning after
noncancellable Dec. 31, 1983.
accident and health
contracts as
cancellable.217(l)(2)(B). ............. Treatment of losses Taxable years
from certain beginning after
guaranteed interest Dec. 31, 1983, and
contracts. before Jan. 1,
1988.
431(e)(2).... 46(c) (8) and Election to apply Generally to
(9), the investment tax property placed in
48(d)(6), credit at risk service between
47(d) (1) rules as modified Feb. 18, 1981, and
and (2). by the Tax Reform July 19, 1984.
Act of 1984 to all
transactions
covered by sec.
211(f) of the
Economic Recovery
Tax Act of 1981.712(l)(7)(B). 304.......... Election to apply Stock acquired after
certain technical Aug. 31, 1982, and
corrections of sec. before June 19,
304 to all 1984.
transfers covered
by the changes made
to sec. 304 by the
Tax Equity and
Fiscal
Responsibility Act
of 1982.712(l)(7)(C)( 304.......... Election with Generally to
ii). respect to bank transfers to bank
holding companies holding companies
to apply certain formed pursuant to
technical application filed
corrections of sec. with Federal
304 to stock Reserve Board
acquired after June before June 18,
18, 1984. 1984.1066......... 163(d)....... Elections to treat With respect to S
certain income from corporation taxable
S corporations, for years beginning in
purposes of sec. 1983 or 1984.
163(d), as such
income would have
been treated prior
to the Subchapter S
Revision Act of
1982.1078......... ............. Election to exclude Payments in taxable
from gross income years beginning
payments from U.S. after Dec. 31,
Forest Service as 1979.
result of
restricting
motorized traffic
in the boundary
waters canoe area.------------------------------------------------------------------------
(2) Time for making elections--(i) In general. Except as otherwise provided in this paragraph (a)(2), the elections specified in paragraph (a)(1) of this section shall be made by the later of--
(i) In general. Except as otherwise provided in this paragraph (a)(2), the elections specified in paragraph (a)(1) of this section shall be made by the later of--
(A) The due date (taking extensions into account) of the tax return for the first taxable year for which the election is to be effective, or
(B) April 15, 1985 (in which case the election generally must be made by amended return).
(ii) No extension of time for payment. Payments of tax due shall be made in accordance with chapter 62 of the Code.
(iii) Time for making certain life insurance company elections--(A) Election to use preceding year's interest rate for non-annuity reserves. The election under section 807(d)(4)(C) to use the preceding year's interest rate for non-annuity reserves applies on a contract-by-contract basis. For contracts issued before the first day of the first taxable year beginning after December 31, 1983, the election shall be made by the due date (including extensions) of the income tax return for the first taxable year beginning after December 31, 1983. For contracts issued on or after the first day of the first taxable year beginning after December 31, 1983, the election shall be made by the due date (including extensions) of the income tax return for the taxable year in which the contract is issued.
(A) Election to use preceding year's interest rate for non-annuity reserves. The election under section 807(d)(4)(C) to use the preceding year's interest rate for non-annuity reserves applies on a contract-by-contract basis. For contracts issued before the first day of the first taxable year beginning after December 31, 1983, the election shall be made by the due date (including extensions) of the income tax return for the first taxable year beginning after December 31, 1983. For contracts issued on or after the first day of the first taxable year beginning after December 31, 1983, the election shall be made by the due date (including extensions) of the income tax return for the taxable year in which the contract is issued.
(B) Election not to have reserves recomputed. The election under section 216(c)(1) of the Act not to have reserves recomputed shall be made by the due date (including extensions) of the income tax return for the first taxable year beginning after December 31, 1983.
(C) Election to use adjusted statutory reserves for certain contracts. The election under section 216(c)(2) of the Act to use adjusted statutory reserves for certain contracts may be made only by life insurance companies that make an election under section 216(c)(1) of the Act and that meet the other requirements of section 216(c)(2). The election, if made, applies to all contracts issued on or after the first day of the first taxable year beginning after December 31, 1983, and before January 1, 1989. The election shall be made by the due date (including extensions) of the income tax return for the first taxable year beginning after December 31, 1983.
(D) Election to treat individual non-cancellable accident and health contracts as cancellable. The election under section 217(i) of the Act to treat individual non-cancellable accident and health contracts as cancellable shall be made by the due date (including extensions) of the income tax return for the first taxable year beginning after December 31, 1983.
(E) Treatment of losses from certain guaranteed interest contracts. The election under section 217(l)(2)(B) of the Act with respect to the treatment of losses from certain guaranteed interest contracts shall be made by the due date (including extensions) of the income tax return for the first taxable year beginning after December 31, 1983.
(iv) Time for making the election to exclude from gross income payments received from the U.S. Forest Service as a result of the restriction of motorized traffic in the Boundary Waters Canoe Area. Elections under section 1078 of the Act shall be made by the later of the expiration of the period for making a claim for credit or refund of the tax imposed by chapter 1 of the Code for the taxable year in which the reinvestment of the payment occurred, or July 18, 1985. Amended returns for years after the year for which the election is made must be filed if making this election affects the tax liability for such years.
(3) Manner of making elections--(i) In general. The elections specified in paragraph (a)(1) of this section shall be made by attaching a statement to the tax return for the taxable year in which the election is made. If because of paragraph (a)(2)(i)(B) the election may be filed after the due date of the tax return for the first taxable year for which the election is to be effective, such election must be attached to a tax return or amended return for the taxable year to which the election relates. Except as otherwise provided in the return or in the instructions accompanying the return for the taxable year, the statement shall--
(i) In general. The elections specified in paragraph (a)(1) of this section shall be made by attaching a statement to the tax return for the taxable year in which the election is made. If because of paragraph (a)(2)(i)(B) the election may be filed after the due date of the tax return for the first taxable year for which the election is to be effective, such election must be attached to a tax return or amended return for the taxable year to which the election relates. Except as otherwise provided in the return or in the instructions accompanying the return for the taxable year, the statement shall--
(A) Contain the name, address, and taxpayer identification number of the electing taxpayer,
(B) Identify the election,
(C) Indicate the section of the Code (or, if the provision is not codified, the section of the Act) under which the election is made,
(D) Specify, as applicable, the period for which the election is being made and/or the property or other items to which the election is to apply, and
(E) Provide any information required by the relevant statutory provisions and any information necessary to show that the taxpayer is entitled to make the election.
(ii) Special rules for making the election with respect to sound recordings. The election under section 48(r), as amended by section 113 of the Act, shall be made separately for each sound recording and must be made by all persons having an ownership interest in the sound recording. In the case of an ownership interest held by a partnership or an S corporation, the partnership or S corporation shall make the election. Each person making the election shall do so in accordance with paragraph (a) (2) and (3) of this section, and shall identify in the statement described in paragraph (a)(3) of this section the persons with ownership interests in the sound recording, and shall state that each such person is making the election with respect to that sound recording.
(iii) Special rules for making the election with respect to redemption through use of related corporations. For either election available under section 712(l)(7) of the Act (relating to redemptions through related corporations) to be effective, such election must be made jointly by both the issuing and acquiring corporations. The election is made jointly when both the issuing and acquiring corporations make the election in accordance with paragraph (a) (2) and (3) of this section.
(iv) Special rules for making the election for investment tax credit at risk rules. The election under section 431(e)(2) of the Act is made by filing an amended return for the first taxable year ending after February 18, 1981, during which taxable year property, to which the amendments made by section 211(f) of the Economic Recovery Tax Act of 1981 apply, was placed in service. If that taxable year is a closed year, the election is made by filing an amended return for the first succeeding open taxable year, but in such event this election can be made only if the aggregate amount of the investment tax credit that would have been allowable in the closed years had the election been effective for those years is greater than or equal to the amount of the investment tax credits actually claimed in the closed years. In the case of partnerships and S corporations, the election under section 431(e) is made, respectively, at the partner or the shareholder level. Any election made under section 431(e) shall apply to all property of the taxpayer to which the amendments made by section 211(f) of the Economic Recovery Tax Act of 1981 apply. Amended returns must be filed for any year the tax liability for which is affected by making this election.
(v) Special rules for certain elections by life insurance companies--(A) Election with respect to loss from operations of member of group. Any life insurance company that makes an election under section 806(d)(4) must include on the statement described in paragraph (a)(3) of this section the name, address and taxpayer identification number of the members of the controlled group that did not file a consolidated return with the life insurance company for the taxable year to which the election applies, the amount of loss subject to the limitation provided by section 806(d)(4)(B), and a computation showing how such amount was derived.
(A) Election with respect to loss from operations of member of group. Any life insurance company that makes an election under section 806(d)(4) must include on the statement described in paragraph (a)(3) of this section the name, address and taxpayer identification number of the members of the controlled group that did not file a consolidated return with the life insurance company for the taxable year to which the election applies, the amount of loss subject to the limitation provided by section 806(d)(4)(B), and a computation showing how such amount was derived.
(B) Election to use preceding year's interest rate for non-annuity reserves. If the election under section 807(d)(4)(C) is not made for all non-annuity contracts issued by the life insurance company before the end of the taxable year in which the election is made, the company must reasonably identify, in the statement described in paragraph (a)(3) of this section, the contracts or groups of contracts for which the election is made. The statement, however, need not specify each individual contract for which the election is made.
(4) Revocation. The elections under Act sections 31(a), 31(g)(16), 31(f), 113, 211 (Code section 810(b)(3)), 216(c) (1) and (2), 217(l), 431(e)(2), and 712(l)(7) (B) and (C)(ii) are irrevocable. Elections under Act sections 41(a) (Code sections 1282(b)(2) and 1283(c)(2)), 211 (Code sections 806(d)(4), and 807(d)(4)(C)), 217(i), 1066, and 1078 are revocable only with the consent of the Commissioner. A revocation under Act section 211 (Code section 807(d)(4)(C)) shall be treated as a change in basis of computing reserves that is subject to the adjustment provided in section 807(f) of the Code.
(b) Church or qualified church-controlled organization's election of exemption from social security taxes under chapter 21--(1) In general. This paragraph applies to the election under section 3121(w) of the Code, as added by section 2603(b) of the Act, by a church or qualified church-controlled organization (as defined in section 3121(w)(3)) that service performed in the employ of such church or organization shall be excluded from employment for purposes of title II of the Social Security Act and chapter 21 of the Internal Revenue Code. Any election made under section 3121(w) shall apply to all services performed on or after January 1, 1984, by employees of such church or organization (whether or not they were employees on that date or on the date the election is made). Employees of the electing church or organization are subject to the provisions of chapter 2 of the Code (relating to the tax on self-employment income) as amended by section 2603 (c)(2) and (d)(2) of the Act for service performed for such church or organization on or after January 1, 1984.
(1) In general. This paragraph applies to the election under section 3121(w) of the Code, as added by section 2603(b) of the Act, by a church or qualified church-controlled organization (as defined in section 3121(w)(3)) that service performed in the employ of such church or organization shall be excluded from employment for purposes of title II of the Social Security Act and chapter 21 of the Internal Revenue Code. Any election made under section 3121(w) shall apply to all services performed on or after January 1, 1984, by employees of such church or organization (whether or not they were employees on that date or on the date the election is made). Employees of the electing church or organization are subject to the provisions of chapter 2 of the Code (relating to the tax on self-employment income) as amended by section 2603 (c)(2) and (d)(2) of the Act for service performed for such church or organization on or after January 1, 1984.
(2) Time for making the election. Any election under section 3121(w) by a church or qualified church-controlled organization for which a quarterly employment tax return for the tax imposed under section 3111 is due (or would be due but for the election) on October 31, 1984, must be made on or before October 30, 1984. Any election under section 3121(w) by a church or organization for which the first quarterly employment tax return for the tax imposed under section 3111 is due (or would be due but for this election) after October 31, 1984, must be made on or before the day before the first date that such tax return would be due from the church or organization (disregarding any extension of such due date). A purported election filed after the date prescribed in this paragraph (b)(2) shall be void.
(3) Manner of making the election. To make an election under section 3121(w), a church or qualified church-controlled organization must certify that it is opposed for religious reasons to the payment of the tax imposed by section 3111 (relating to the employer tax) of the Code. The election and certification are made by executing and filing Form 8274 in accordance with the form and its instructions. The form shall be signed by an official authorized to sign tax returns for the church or organization. Where tax imposed by section 3111 is reported (or would be reported but for this election) with respect to more than one church or organization on a single quarterly employment tax return, and the election under section 3121(w) is made, then all of the churches and organizations covered by the last such return filed before such election was made for which the time for making the election has not expired shall be covered by the election unless specifically excluded by stating such exclusion in the election.
(4) Refunds of FICA taxes paid. Where a church or qualified church-controlled organization makes a timely election under section 3121(w), a refund, without interest, shall be made to such church or organization of any taxes paid under sections 3101 and 3111 with respect to service performed after December 31, 1983, covered by the election. However, the refund will be made only if the church or organization agrees on its claim for the refund to pay to each employee covered by the election the portion of the refund attributable to the tax imposed on the wages of the employee by section 3101. The employee may not receive any other refund of such taxes. The claim for refund shall be made by the church or organization by filing Form 843 with the service center where the Form 941 on which the taxes subject to refund was filed. Form 843 shall be executed in accordance with the form and its instructions, and also in accordance with the instructions to Form 8274 that relate to Form 843.
(5) Irrevocability of election except by Commissioner. An election under section 3121 shall be irrevocable by the electing church or organization. The Commissioner, however, shall permanently revoke the election if the church or organization fails to furnish the information required under section 6051 to the Internal Revenue Service for a period of 2 years or more and also fails to furnish such information within 60 days after a written request therefor is made by the Internal Revenue Service.
(c) Election to issue taxable student loan bonds. This paragraph applies to the election by an issuer to issue taxable student loan bonds under section 625(c) of the Act. The election is available for obligations issued after December 31, 1983, and is made by filing a statement and necessary attachments with the Internal Revenue Service Center, Philadelphia, PA 19255, prior to the issuance of such taxable bonds. The statement shall identify the election as made under section 625(c) of the Tax Reform Act of 1984 and shall contain the name, address and taxpayer identification number of the issuer, and the total purchase price, face amount and interest rate of the issue, bond issuance costs, amounts allocated to reasonably required reserve or replacement funds, and the date of issue. The issuer shall attach to the statement of election a copy of previous Internal Revenue Service correspondence relating to the tax exempt status of the issuing authority and a statement containing the total purchase price, face amount, interest rate, bond issuance costs, amounts allocated to reasonably required reserve or replacement funds, and the date of issuance of outstanding tax exempt issues of student loan bonds of the issuer. With respect to outstanding tax exempt issues of student loan bonds of the issuer issued after December 31, 1982, the issuer may alternatively attach copies of the Form 8038 filed with respect to such issues. Each taxable student loan bond must state on its face that the interest paid on such bond is subject to federal income taxation. An election with respect to an issue is irrevocable once made.
(d) [Reserved]
(e) Election not to claim the credit for alcohol used as fuel. The election under section 40(f) (as added by section 474(k) of the Act) not to claim the alcohol fuels credit is available for taxable years beginning after December 31, 1983, and shall be made for the taxable year in which such credit is determined by not claiming such credit on an original return or amended return at any time before the expiration of the 3-year period beginning on the last date prescribed by law for filing the return for the taxable year (determined without regard for extensions). The election may be revoked within the 3-year period by filing an amended return and claiming the credit on the return.
(f) Protective election to adopt LIFO method--(1) Time for making the election. A protective election in connection with the enactment of section 95 of the Act to adopt the LIFO method of accounting for inventory under section 472 of the Code can only be made for the taxpayer's first taxable year beginning after July 18, 1984, and must be made on or before the due date (including extensions) of the tax return for such taxable year. Once made, the election is irrevocable unless the Commissioner authorizes the use of another inventory method (see Sec. 1.472-5).
(1) Time for making the election. A protective election in connection with the enactment of section 95 of the Act to adopt the LIFO method of accounting for inventory under section 472 of the Code can only be made for the taxpayer's first taxable year beginning after July 18, 1984, and must be made on or before the due date (including extensions) of the tax return for such taxable year. Once made, the election is irrevocable unless the Commissioner authorizes the use of another inventory method (see Sec. 1.472-5).
(2) Manner for making a protective election. The protective election is made by completing all line items on a current Form 970 and indicating that the election is a protective election filed in connection with the enactment of section 95 of the Tax Reform Act of 1984. The Form 970 must be attached to the taxpayer's income tax return for the taxable year for which the protective election is made. The LIFO method adopted under the protective election must be consistent in all respects with the taxpayer's LIFO method used in the taxpayer's most recently completed taxable year for which the LIFO method was used. In completing the current Form 970, the taxpayer shall specify the method of inventory valuation that the taxpayer would have used, the opening LIFO inventory for the taxable year for which the protective election is made, and the section 481 adjustment that would be required, as if the taxpayer were not on the LIFO method for the taxable year immediately preceding the taxable year for which the protective election is made.
(g) Election by an estate or trust to recognize gain or loss on the distribution of property (other than cash) to a beneficiary. This paragraph applies to the election made by a trust or estate to recognize gain or loss on the distribution of property (other than cash) to a beneficiary under section 643(d) of the Code as amended by section 81 of the Act. The election is available for distributions made after June 1, 1984, in taxable years ending after such date. The election must be made by the fiduciary who is required to make the return of the estate or trust under section 641 and Sec. 1.641(b)-2. The election shall be made by such fiduciary on the tax return of the estate or trust for the taxable year with respect to which the distribution of property was made and must be filed by the due date (including extensions) of such return. Until the Form 1041, U.S. Fiduciary Income Tax Return is revised, the election should be made by including the gain or loss on the Schedule D (or other appropriate schedule, if applicable) of the Form 1041 and attaching the statement described in paragraph (a)(3) of this section to the tax return on which the election is made and including on that statement the name and taxpayer identification number of the distributee. For distributions made after June 1, 1984, and before July 18, 1984, the election must be filed by the later of the due date (including extentions) of the tax return of the estate or trust for the taxable year with respect to which the distribution was made or January 1, 1985. For those distributions, the fiduciary may make the election in the manner described above on a tax return, or amended return, for the year with respect to which the distribution was made. An election under section 643(d) may be revoked only with the consent of the Commissioner. The request for revocation of an election should be made by the fiduciary in the form of a ruling request and must contain the information required by regulations and revenue procedures pertaining thereto.
(h) Election to treat a stapled foreign entity as a subsidiary. This paragraph applies to the election, provided under section 136(c)(6) of the Act, to treat a foreign corporation which was a stapled entity with a domestic corporation as of June 30, 1983, as being owned (to the extent of its stapled interests) by the domestic corporation with which it is stapled. This treatment, if so elected, is in lieu of the treatment prescribed in section 269B(a)(1) of the Code, as added by the Act. This election may be made by the domestic corporation with which the foreign entity is stapled. The election may not be made by the foreign entity or by shareholders of the domestic corporation. This election must be made no later than January 14, 1985, and may be revoked only with the consent of the Commissioner. This election shall be effective after December 31, 1986. The domestic corporation shall make this election by filing with the service center with which the domestic corporation files its income tax return a statement that--
(1) Contains the name, address, and taxpayer identification number of the domestic corporation,
(2) Identifies the election as made under section 136(c)(6) of the Tax Reform Act of 1984, and,
(3) Identifies the foreign entity and the interests in the foreign entity which constitute stapled interests with respect to the stock of the domestic corporation, and specifies the date on which those interests became stapled interests. If this election is not made, the foreign corporation (interests in which were stapled interests as of June 30, 1983) will be treated as a domestic corporation, effective January 1, 1987, under section 269B(a)(1) of the Code.
(i) Election to treat certain section 1248 amounts as included in gross income under section 951(a)(1)(A). This paragraph applies to the elections, provided under section 133(d)(3) of the Act, to treat amounts included in the gross income of any person as a dividend by reason of section 1248 (a) or (f) after October 9, 1975, and before July 19, 1985, as an amount included in the gross income of such person under section 951(a)(1)(A). The election with respect to transactions to which section 1248(a) applies may be made by the foreign corporation described in section 1248(a) (or its successor in interest). The election with respect to transactions to which section 1248(f) applies may be made by the domestic corporation described in section 1248(f)(1) (or its successor in interest). Neither election may be made by an affected shareholder of any such corporation (unless the shareholder is the successor in interest). This election must be made no later than January 14, 1985, and shall apply with respect to all transactions to which section 1248 (a) or (f) applies that occurred after October 9, 1975, and before July 19, 1984. Once made, the election may be revoked only with the consent of the Commissioner. A foreign corporation shall make this election by filing the statement described in this paragraph with the Internal Revenue Service Center, Philadelphia, PA 19255. A domestic corporation shall make this election by filing the statement described in this paragraph with the service center with which the domestic corporation files its income tax return. In either case, the statement shall--
(1) Contain the name, address, and taxpayer identification number (if any) of the corporation making the election,
(2) Identify the election as made under section 133(d)(3) of the Tax Reform Act of 1984, and
(3) Identify all of the transactions (including the date of each transaction), shareholders involved in those transactions, and amounts to which the election applies.
(j) Special election for computing investment company taxable income. This paragraph applies to the election by a regulated investment company provided under section 1071(b) of the Act, which added section 852(b)(2)(F) to the Code. Under section 852(b)(2)(F), the taxable income of a regulated investment company shall be computed without regard to section 454(b) (relating to short-term obligations issued on a discount basis) if the company so elects. The election may be made only for taxable years beginning after December 31, 1978. A regulated investment company shall make the election by computing taxable income without regard to section 454(b) on its return for the first taxable year for which it desires the election to apply and shall attach the statement described in paragraph (a)(3) of this section to the return on which the election is made. A regulated investment company shall make the election by the time set forth in paragraph (a)(2) of this section. Once made, the election applies to the first taxable year for which it is made and to all subsequent taxable years and cannot be revoked without the consent of the Commissioner.
(k) Election of extension of time for payment of estate tax for interests in certain holding companies. An election under section 6166(b)(8), as added by section 1021(a) of the Act, or under section 1021(d)(2) of the Act, shall be made by including on the notice of election under section 6166 required by Sec. 20.6166-1(b) a statement that an election is being made under section 6166(b)(8) or section 1021(d)(2) of the Act (whichever is applicable) and the facts which formed the basis for the executor's conclusion that the estate qualified for such election. If a taxpayer makes an election described in this paragraph (k), then the special 4-percent interest rate of section 6601(j) and the 5-year deferral of principal payments of section 6166(a)(3) are not available. Thus, the first installment of tax is due on the date prescribed by section 6151(a) and subsequent installments bear interest at the rate determined under section 6621. If the executor makes an election described in this paragraph (k) and the notice of election under section 6166 fails to state the amount of tax to be paid in installments or the number of installments, then the election is presumed to be for the maximum amount so payable and for payment thereof in 10 equal annual installments, beginning on the date prescribed in section 6151(a). The elections described under this paragraph (k) are available for estates of decedents dying after July 18, 1984.
(l) Subchapter S election by commodities dealers and options dealers. This paragraph applies to a commodities dealer or options dealer referred to in section 102(d)(3) of the Act (relating to the election by such a dealer to be an S corporation) whose taxable year is the calendar year and that was a small business corporation (as defined in section 1361(b) of the Code) as of January 1, 1984. The election by such a dealer under section 102(d)(3) of the Act shall be made in the manner prescribed by section 1362 and the regulations thereunder, except that the election under section 102(d)(3) must be made before October 2, 1984. In addition to making the election in the manner prescribed under such section 1362 and the regulations thereunder, the commodities dealer or options dealer must indicate on Form 2553 that the election is made under section 102(d)(3) of the Act. Although section 102(d)(3) of the Act applies to dealers not covered by this paragraph, and such dealers may make an election under such section 102(d)(3), guidelines for making such an election are not provided in this paragraph and are forthcoming.
(m) Election with respect to treatment of S termination year. For the election provided under section 1362(e)(3), as amended by section 721(h) of the Act, see Sec. 18.1362-4 of this chapter.
(n) Election to be an S corporation; certain short taxable years. For the election provided under section 1362(b), as amended by section 721(l) of the Act, see Sec. 18.1362-1(b) of this chapter.
(o) Election with respect to subchapter S passive investment income rules. For the election provided under section 721(i) of the Act which amends section 6(b) of the Subchapter S Revision Act of 1982, see Sec. 18.1362-5 of this chapter.
(p) Election with respect to subchapter S distributions during certain post-termination transition periods. For the election provided under section 1371(e), as amended by section 721(o) of the Act, see Sec. 18.1371-1 of this chapter.
(q) No elections for closed year. Any election under this section which is allowed to be made by filing an amended return may only be made if the period for making a claim for refund or credit with respect to the taxable year for which such election is to be effective has not expired. This paragraph shall not apply to the election under paragraph (a)(2)(iv) of this section with respect to the election under section 1078 of the Act.
(r) Additional information required. Later regulations or revenue procedures issued under provisions of the Code or Act covered by this section may require the furnishing of information in addition to that which was furnished with the statement of election described herein. In such event the later regulations or revenue procedures will provide guidance with respect to the furnishing of such additional information. [T.D. 7976, 49 FR 35487, Sept. 10, 1984; T.D. 7976, 49 FR 43640, Oct. 31, 1984; 49 FR 43951, Nov. 1, 1984, as amended by T.D. 8062, 50 FR 46004, Nov. 6, 1985. Redesignated by T.D. 8435, 57 FR 43895, Sept. 23, 1992; T.D. 9172, 70 FR 296, Jan. 4, 2005] Sec. 301.9100-7T Time and manner of making certain elections underthe Tax Reform Act of 1986.
(a) Miscellaneous elections--(1) Elections to which this paragraph applies. This paragraph applies to the elections set forth below provided under the Tax Reform Act of 1986 (the Act). General rules regarding the time for making the elections are provided in paragraph (a)(2) of this section. General rules regarding the manner for making the elections are provided in paragraph (a)(3) of this section. Special rules regarding the time and manner for making certain elections are contained in paragraphs (a) through (i) of this section. If a special rule applies to one of the elections listed below, a cross-reference to the special rule is shown in brackets at the end of the description of the ``Availability of Election.'' Paragraph (j) of this section provides that additional information with respect to elections may be required by future regulations or revenue procedures. ----------------------------------------------------------------------------------------------------------------
Section of Act Section of Code Description of Election Availability of Election----------------------------------------------------------------------------------------------------------------201(a)................. 168(b)(5)................ Election to depreciate Property placed in service
property using the straight after 12-31-86. Election
line method of recovery with must be made for taxable
respect to one or more year in which property is
classes of property for any placed in service. Election
taxable year shall apply to all property
in the class placed in
service during the taxable
year for which the election
is made.201(a)................. 168(f)(1)................ Election to exclude certain Property placed in service
property from the after 12-31-86. Election
accelerated cost recovery must be made for taxable
system year in which property is
placed in service.201(a)................. 168(g)(7)................ Election to use alternative Property placed in service
depreciation system with after 12-31-86. Election
respect to one or more must be made for taxable
classes of property for any year in which property is
taxable year (except for placed in service. Except
residential rental or non- for residential rental or
residential real property non-residential real
where the election may be property, election shall
made separately with respect apply to all property in the
to each property) class placed in service
during the taxable year for
which the election is made.201(a), 1802(a)........ 168(h)(6)(F)(ii), 168(j) Election by a tax-exempt Property placed in service
(as in effect before controlled entity to treat after 9-27-85, but can apply
October 22, 1986). any gain recognized by the to property placed in
tax-exempt parent on any service before such date if
disposition of an interest the tax-exempt controlled
in the tax-exempt controlled entity so elects. [See
entity (and to treat any paragraph (a)(3)(ii) of this
dividends or interest section.]
received or accrued from the
tax-exempt controlled
entity) as unrelated
business taxable income
under Code section 511 in
order for the tax-exempt
controlled entity to not be
treated as a tax-exempt
entity (or as a successor to
a tax-exempt entity)203(a)(1)(B)........... ......................... Election to apply Act section Property placed in service
201 (including all elections after 7-31-86 and before 1-1-
within section 201) 87.204(e)................. ......................... Election to have Act section (i) Property placed in
201 either (i) not apply to service during 1987 or 1988;
any property placed in or (ii) property placed in
service during 1987 or 1988 service during 1985 or 1986.
which is replacement
property for property lost,
damaged or destroyed in a
flood which occurred 11-3-85
through 11-7-85 and which
was declared a natural
disaster area by the
President of the United
States, or (ii) apply to all
such replacement property
placed in service during
1985 or 1986243(a)................. ......................... Election to begin the 60 Bus operating authorities
month amortization period held on 11/19/82, or
with the first month of the acquired after that date
taxpayer's first taxable under a written contract
year beginning after 11-19- that was binding on that
82 in lieu of the 11-19-82 date.
date or the bus operating
authority acquisition date243(b)................. ......................... Election to begin the 60 Freight forwarder operating
month amortization period on authorities held at the
the first month of the beginning of the 60 month
taxpayer's first taxable period applicable to the
year beginning after the taxpayer (i.e., the
deregulation month in lieu deregulation date or the
of the deregulation month first month of the first
taxable year beginning after
the deregulation date).243 (a), (b)........... ......................... Election by a qualified For bus operating
corporate taxpayer to authorities: authorities
allocate a portion of the held on 11/19/82, or
cost basis of a qualified acquired after that date
acquiring corporation in the under a written contract
stock of an acquired that was binding on that
corporation to the basis of date. For freight
the authority forwarders: authorities held
at the beginning of the 60-
month period applicable to
the taxpayer.
252(a)................. 42(f)(1)................. Election concerning beginning Buildings placed in service
of credit period for low- after 12-31-86 and before 1-
income housing credit 1-90 (before 1-1-91 for
buildings described in Code
section 42(n)(2)(B)). [See
paragraph (b) of this
section.]252(a)................. 42(g)(1)................. Election concerning qualified Buildings placed in service
low-income housing project after 12-31-86 and before 1-
to either satisfy the 20-50 1-90 (before 1-1-91 for
or the 40-60 occupancy test buildings described in Code
section 42(n)(2)(B)). [See
paragraph (b) of this
section.]252(a)................. 42(i)(2)................. Election to reduce eligible Buildings placed in service
basis by outstanding balance after 12-31-86 and before 1-
of Federal loan subsidy 1-90 (before 1-1-91 for
buildings described in Code
section 42(n)(2)(B)). [See
paragraph (b) of this
section.]252(a)................. 42(j)(5)................. Election to have certain Buildings placed in service
partnerships treated as the after 12-31-86 and before 1-
taxpayer eligible for low- 1-90 (before 1-1-91 for
income housing credit buildings described in Code
section 42(n)(2)(B) [See
paragraph (b) of this
section.]311(d)(2).............. ......................... Revocation of prior election Election for taxable years
under Code section 631(a). beginning before 1-1-87 may
be revoked for taxable years
ending after 12-31-86.411(b)(1).............. 263(i)................... For intangible drilling and Costs paid or incurred after
development costs paid or 12-31-86 in taxable years
incurred with respect to an ending after such date. [See
oil, gas, or geothermal well paragraph (a)(2)(iii) of
located outside the United this section.]
States, election to include
such costs in adjusted basis
for purposes of computing
the amount of any deduction
under Code section 611
(without regard to section
613).411(b)(2).............. 616(d)................... For expenditures paid or Costs paid or incurred after
incurred with respect to the 12-31-86 in taxable years
development of a mine or ending after such date. [See
other natural deposit (other paragraph (a)(2)(iv) of this
than an oil, gas, or section.]
geothermal well) located
outside the United States,
election to include such
expenditures paid or
incurred during the taxable
year for which made in
adjusted basis for purposes
of computing the amount of
any deduction under Code
section 611 (without regard
to section 613)411(b)(2).............. 617(h)................... For expenditures paid or Costs paid or incurred after
incurred before the 12-31-86 in taxable years
development stage for the ending after such date. [See
purpose of ascertaining the paragraph (a)(2)(v) of this
existence, location, extent section.]
or quality of any deposit of
ore or other mineral deposit
(other than an oil, gas or
geothermal well) located
outside the United States,
election to include all such
expenditures, paid or
incurred during the taxable
year with respect to any
such deposit, in adjusted
basis for purposes of
computing the amount of any
deduction under Code section
611 (without regard to
section 613)501(a)................. 469(j)(9)................ Election to increase basis of Taxable years beginning after
property by amount of 12-31-86. [See paragraph
disallowed credit for (a)(3)(iii) of this
purposes of determining gain section.]
or loss from a disposition
of property used in a
passive activity614(b)................. 1059(c)(4)............... Election to determine whether Dividends declared after July
a dividend is extraordinary 18, 1986 in taxable years
by reference to the fair ending after such date.
market value of the share of
stock with respect to which
the dividend was received644(d)................. 216(b)(3)................ Election by a cooperative Taxable years beginning after
housing corporation to 12-31-86. [See paragraph
allocate real estate taxes (a)(3)(iv) of this section.]
or interest or both to each
tenant-stockholder's
dwelling unit in a manner
which reasonably reflects
the cost to the corporation
of the tenant-stockholder's
dwelling unit
646.................... ......................... Election by an entity to be The election is effective
treated as a trust under the beginning on the first day
Internal Revenue Code if of the first taxable year
such entity was created in beginning after October 22,
1906 as a common law trust 1986 and following the year
and governed by the trust in which the election is
laws of the State of made. Such election must be
Minnesota, receives made by the board of
royalties from iron ore trustees of such entity and
leases, and income interests must be accompanied by a
in the entity are publicly written agreement signed by
traded on a national stock the board of trustees of the
exchange entity.651.................... 4982(e)(4)............... Election by a regulated Calendar years beginning
investment company to use after 12-31-86. [See
taxable years ending on 11- paragraph (a)(2)(vi) of this
30 or 12-31 for purposes of section.]
computing capital gain net
income under Code section
4982701(a)................. 56(f)(3)(B).............. Election to have amount of Taxable years beginning after
net book income be equal to 12-31-86.
amount of earnings and
profits801(a)................. 448(d)(4)................ Election of common parent of Taxable years beginning after
an affiliated group that all 12-31-86.
members of such group be
treated as one taxpayer if
substantially all the
activities of all members of
the affiliated group involve
performance of services in
the same field801(d)(2).............. ......................... Election to continue using Loans, leases and related
the cash method of party transactions entered
accounting for loans, leases into before 9-26-85.
and related party
transactions802.................... 474...................... Election by certain small Taxable years beginning after
businesses to use the 12-31-86. [See paragraph
simplified dollar-value LIFO (a)(3)(v) of this section.]
method803(a)................. 263A(d)(3)............... Election to have rules of Unless consent is obtained
Code section 263A (relating from the Commissioner, the
to capitalization and first taxable year beginning
inclusion in inventory costs after 12-31-86 during which
of certain expenses) not the taxpayer engages in a
apply to any plant or animal farming business. [See
produced in any farming paragraph (c) of this
business conducted by the section.]
electing taxpayer806(e)(2)(C)........... ......................... Election to have net income Partner and shareholder
for the short taxable year taxable years beginning
of a partnership or S after 12-31-86 with or
corporation which results within which the short
from the required change in taxable year created under
accounting period included section 806 of the Act ends.
entirely in income for such [See paragraph (d) of this
short taxable year section.]
Election to reduce Short taxable years of
partnership or S corporation partnerships or S
income for the short taxable corporations beginning after
year resulting from a 12-31-86. [See paragraph (e)
required change in of this section.]
accounting period under
section 806 of the Act by an
unamortized adjustment
amount existing as of
October 22, 1986, where such
adjustment was required to
effectuate a previous
accounting period change
under Rev. Proc. 72-51, 1972-
2 C.B. 832 or Rev. Proc. 83-
25, 1983-1 C.B. 689811(a)................. 453C(b)(2)(B)............ Election to compute adjusted Taxable years ending after 12-
bases using depreciation 31-86 with respect to
deduction used under Code dispositions made after 2-28-
section 312(k) 86.811(a)................. 453C(e)(4)............... Election to have Code section Taxable years ending after 12-
453C not apply to 31-86 with respect to
obligations arising from dispositions made after 2-28-
sales of timeshares and 86. [See paragraph
unimproved residential lots (a)(3)(vi) of this section.]
to invidividuals905(a)................. 165(l)(1)................ Election to treat amount of Taxable years beginning after
reasonably estimated loss on 12-31-81. [See the cross--
a deposit in insolvent or reference in paragraph (f)
bankrupt qualified financial of this section.]
institution as a loss
described in Code section
165(c)(3) and incurred in
the taxable year905(c)................. ......................... Election to apply Code Taxable years beginning after
section 451(f) (relating to 12-31-82 and before 1-1-87.
treatment of interest on
frozen deposits in certain
financial institutions)1301(b)................ 141(b)(9)................ Election by issuer of tax- Bonds issued after 8-15-86.
exempt bonds to treat a [See paragraph (g) of this
portion of an issue as a section.]
qualified 501(c)(3) bond if
such portion would have
qualified as a 501(c)(3)
bond had it been issued
separately1301(b)................ 142(d)(1)................ Election by issuer of tax- Bonds issued after 8-15-86.
exempt bonds for residential [See paragraph (g) of this
rental property to satisfy section.]
either the 20-50 or the 40-
60 occupancy test
1301(b)................ 142(d)(4)(B)............. Election by issuer of tax- Bonds issued after 8-15-86.
exempt bonds for residential [See paragraph (g) of this
rental property to treat the section.]
project as a deep rent
skewed project1301(b)................ 143(k)(9)(D)(iii)........ Election to treat limited Bonds issued after 8-15-86
equity cooperative housing and before 1-1-89. [See
as residential rental paragraph (g) of this
property and not as owner- section.]
occupied housing1301(b)................ 145(d)................... Election by issuer of tax- Bonds issued after 8-15-86.
exempt bonds to have Code [See paragraph (g) of this
section 145 not apply to the section.]
issue if the issue is an
issue of exempt facility
bonds or qualified
redevelopment bonds, to
which the volume cap applies1301(b)................ 147(b)(4)(A)............. Election by issuer of Bonds issued after 8-15-86.
qualified 501(c)(3) bonds to [See paragraph (g) of this
have such bonds treated as section.]
meeting the limitation on
maturity requirements of
Code section 147(b)(1) if
the requirements of section
147(b)(4)(B) are met1704(b)................ ......................... Election to revoke prior Remuneration received in
election under Code section taxable years ending on or
1402(e) (relating to after October 22, 1986. [See
exemption from social paragraph (h) of this
security taxes for certain section.]
clergy)1801(a)................ 168(i) (as in effect Election to make finance Personal property leased
before October 22, 1986). leasing rules inapplicable under certain lease
to property which would agreements effective on or
otherwise be subject to them after 1-1-84. [See paragraph
under the transitional rules (a)(3)(vii) of this
of section 12(c)(1) of the section.]
Tax Reform Act of 19841804(e)(4)............. ......................... Election by a common parent Groups which include a
of an affiliated group to corporation which on 6-22-84
apply amendments made by the is a member of the group
Tax Reform Act of 1984 for which files a consolidated
taxable years beginning return for such
after 12-31-83 corporation's taxable year
which includes 6-22-84.1807(a)(7)............. 468B..................... Election to treat a qualified Generally, liabilities
payment made to a court- arising out of personal
ordered fund as a payment injury, death or property
made to a designated damage that are incurred
settlement fund after 7-18-84 under law in
effect before the enactment
of Code section 461(h).
Election is made for the
taxable year in which
qualified payments are made
to a designated settlement
fund.1809(e)(2)............. 48(b)(2)................. Election by lessee and lessor Property originally placed in
not to apply the rule of service after 4-11-84 (as
Code section 48(b)(2) determined under Code
concerning the date leased section 48(b) prior to its
property is treated as amendment by section
originally placed in service 114(a)of the Tax Reform Act
of 1984). [See paragraph
(a)(3)(viii) of this
(3)(viii) of this
(viii) of this
section.]1810(1)(4)............. 7701(b).................. Election to be treated as a Taxable years beginning after
resident alien December 31, 1984. [See
paragraph (a)(3)(ix) of this
section.]1879(p)(1)............. 83(c)(3)................. Election to treat certain Transfers of stock described
stock acquired upon the in section 1879(p)(1) of the
exercise of nonqualified Act. [See paragraph
stock options as subject to (a)(2)(vii) and(a)(3)(x) of
a substantial risk of this section.]
forfeiture by reason of Code
section 83(c)(3) even though
the transfer of stock
pursuant to such exercise
occurred before 1-1-82, the
effective date of section
83(c)(3)1882(c)................ 3121(w)(2)............... Election to revoke prior Remuneration paid after 12-31-
election under Code section 86 unless such electing
3121(w) (relating to church or church-controlled
exemption from social organization had withheld
security taxes for certain and paid over all employment
churches and qualified taxes due, as if such
church-controlled election had never been in
organizations) effect during the period
from the stated effective
date of the election being
revoked through 12-31-86.
[See paragraph (i) of this
section.]----------------------------------------------------------------------------------------------------------------
(2) Time for making elections--(i) In general. Except as otherwise provided in this section, the elections specified in paragraph (a)(1) of this section shall be made by the later of--
(i) In general. Except as otherwise provided in this section, the elections specified in paragraph (a)(1) of this section shall be made by the later of--
(A) The due date (taking extensions into account) of the tax return for the first taxable year for which the election is to be effective, or
(B) April 15, 1987 (in which case the election generally must be made by amended return).
(ii) No extension of time for payment. Payments of tax due shall be made in accordance with chapter 62 of the Code.
(iii) Time for making the election with respect to foreign intangible drilling costs. With respect to the election under Act section 411(b)(1) (Code section 263(i)(2)(A)), the election shall be made on a property-by-property basis for each oil, gas, or geothermal property (as defined in Code section 614). The election shall be made by the due date (taking extensions into account) of the income tax return for the first taxable year in which the taxpayer pays or incurs any cost with respect to the development of such property for which the election is available.
(iv) Time for making the election with respect to foreign development expenditures. With respect to the election under Act section 411(b)(2) (Code section 616(d)(2)(A)), the election shall be made for each mine or other natural deposit not later than the time prescribed by law for filing the income tax return (taking extensions into account) for the taxable year to which such election is applicable.
(v) Time for making the election with respect to foreign exploration expenditures. With respect to the election under Act section 411(b)(2) (Code section 617(h)(2)(A)), the election may be made at any time before the expiration of the period prescribed for filing a claim for credit or refund of the tax imposed by chapter 1 of the Code for the first taxable year for which the taxpayer desires the election to be applicable.
(vi) Time for making certain elections by regulated investment companies. The election under Act section 651 (Code section 4982(e)(4)) shall be made on a statement attached to the form prescribed by the Internal Revenue Service which is used to report and pay the excise tax liability under section 4982. The election shall be filed on or before the later of--
(A) March 15 of the first calendar year beginning after the end of the first excise tax period for which the election is to be effective, or
(B) If the regulated investment company has been granted an extension of time to file a return for the excise tax under Code section 4982 for such excise tax period, the due date (including extensions thereof) for such return. The statement of election under section 4982(e)(4) shall be attached to the prescribed form regardless of whether the regulated investment company is liable for the excise tax imposed by section 4982 for the excise tax period in question.
(vii) Time for making the election with respect to certain nonqualified stock options. The election under section 1879(p)(1) of the Act (Code section 83(c)(3)) shall be made--
(A) By April 21, 1987, in any case in which the operation of any law or rule of law on or before such date would prevent the credit or refund of any overpayment of tax resulting from such election, and
(B) By no later than any date after April 21, 1987 on which the operation of any law or rule of law would prevent the credit or refund of any overpayment of tax resulting from such election.
(3) Manner of making elections--(i) In general. Except as otherwise provided in this section, the elections specified in paragraph (a)(1) of this section shall be made by attaching a statement to the tax return for the taxable year for which the election is to be effective. If because of paragraph (a)(2)(i)(B) of this section the election may be filed after the due date of the tax return for the first taxable year for which the election is to be effective, such statement must be attached to a tax return or amended return for the taxable year to which the election relates. Except as otherwise provided in the return or in the instructions accompanying the return for the taxable year, the statement shall--
(i) In general. Except as otherwise provided in this section, the elections specified in paragraph (a)(1) of this section shall be made by attaching a statement to the tax return for the taxable year for which the election is to be effective. If because of paragraph (a)(2)(i)(B) of this section the election may be filed after the due date of the tax return for the first taxable year for which the election is to be effective, such statement must be attached to a tax return or amended return for the taxable year to which the election relates. Except as otherwise provided in the return or in the instructions accompanying the return for the taxable year, the statement shall--
(A) Contain the name, address and taxpayer identification number of the electing taxpayer,
(B) Identify the election,
(C) Indicate the section of the Code (or, if the provision is not codified, the section of the Act) under which the election is made,
(D) Specify, as applicable, the period for which the election is being made and/or the property or other items to which the election is to apply, and
(E) Provide any information required by the relevant statutory provisions and any information necessary to show that the taxpayer is entitled to make the election.
(ii) Special rules for making the transitional rule elections with respect to certain tax-exempt controlled entities. The irrevocable election under Act sections 201(a) and 1802(a) (Code sections 168(h)(6)(F)(ii) and 168(j), as in effect before October 22, 1986), shall be made by the tax-exempt controlled entity at the time and in the manner described in paragraphs (a)(2) and (a)(3)(i) of this section. A copy of the election statement filed by the tax-exempt controlled entity shall also be attached to the Federal tax returns (e.g., Form 990 or 5500) of each of the tax-exempt shareholders or beneficiaries of the controlled entity.
(iii) Special rule for making the election with respect to gain or loss from a disposition of property used in a passive activity. The election under Act section 501(a) (Code section 469(j)(9)) shall be made on the form prescribed by the Internal Revenue Service for computing the taxpayer's passive activity loss and credit for the taxable year in which the property is disposed.
(iv) Special rules for making the election with respect to cooperative housing corporations. The election under Act section 644(d) (Code section 216(b)(3)(B)(ii)) may be made by a cooperative housing corporation with respect to its real estate taxes or interest or both. The election is available for any taxable year beginning after December 31, 1986, if the cooperative housing corporation has, by January 31 of the year following the first calendar year that includes any period to which the election applies, furnished to each tenant-stockholder during that period a written statement showing the amount of the allocation (or allocations) under section 216(b)(3)(B)(i) attributable to such tenant-stockholder's dwelling unit (or units) for that period. Any cooperative housing corporation making the election shall do so in accordance with paragraphs (a) (2) and (3) of this section and shall identify in the statement described in paragraph (a)(3) of this section whether the election is for real estate taxes or interest or both.
(v) Special rules for making the election with respect to the simplified dollar-value LIFO method. The election under Act section 802 (Code section 474) may be made only if the taxpayer files with the taxpayer's income tax return for the taxable year as of the close of which the method is first to be used a statement of the taxpayer's election to use the simplified dollar-value LIFO inventory method. The statement shall be on Form 970 pursuant to the instructions to the form and to the requirements of the regulations under section 474, or in such other manner as may be acceptable to the Commissioner.
(vi) Special rules for making the election to have section 453C not apply to obligations arising from sales of timeshares and unimproved residential lots to individuals. The election under Act section 811(a) (Code section 453C(e)(4)) to have section 453C not apply to obligations arising from sales of timeshares and unimproved residential lots to individuals may be made with respect to any obligation, or with respect to a class of such obligations. In the case of an election made with respect to a class of obligations, such election shall describe the class of obligations with such specificity as to make the class readily identifiable.
(vii) Special rules for making certain finance leasing transitional rule elections. The election relating to finance leases under Act section 1801(a)(1) (Code section 168(i) as in effect before October 22, 1986) shall be made by the lessor under a lease agreement subject to the finance lease rules of section 168(i) of the Code, as in effect before October 22, 1986, by noting this election in the books and records relating to the lease agreement within 12 months after February 5, 1987.
(viii) Special rules for making the election relating to the date leased property is treated as originally placed in service. The election under Act section 1809(e)(2) (Code section 48(b)(2)) must be made jointly by the lessee and the lessor. The election is made jointly when both the lessee and the lessor make the election in accordance with paragraphs (a)(2) and (a)(3)(i) of this section. In addition to the other information required to be provided under paragraph (a)(3)(i) of this section, the statement described therein shall include a copy of the lease agreement and shall be signed by both the lessee and the lessor.
(ix) Special rules for making the election to be treated as a resident alien. The election under Act section 1810(l)(4) (Code section 7701(b)) to be treated as a resident under Code section 7701(b) shall be made by an alien individual by attaching a statement to the individual's income tax return (Form 1040), for the taxable year for which the election is to be in effect (the election year). The alien individual may not make this election until such time as he has satisfied the substantial presence test of Code section 7701(b)(1)(A)(ii) for the year following the election year. If an alien individual has not satisfied the substantial presence test for the year following the election year as of the due date (without regard to extensions) of the tax return for the election year, the alien individual may request an extension of time for filing the return until after he has satisfied such test, provided that he pays with his extension application the amount of tax he expects to owe for the election year, computed as if he were a non-resident alien throughout the election year. The statement shall include the name and address of the alien individual and contain a signed declaration that the election is being made. It must specify--
(A) That the alien individual was not a resident in the year immediately preceding the election year;
(B) That the alien individual is a resident in the year immediately following the election year under the substantial presence test and the individual's number of days of presence in the United States during such year;
(C) The date or dates of the alien individual's 31 consecutive day period of presence and continuous presence in the United States during the election year; and
(D) The date or dates of absence from the United States during the election year that are deemed to be days of presence.
(x) Special rules for making the election with respect to the treatment of the exercise of certain nonqualified stock options. The election under Act section 1879(p)(1) (Code section 83(c)(3)) is made by filing on Form 1040X a claim for credit or refund of the overpayment of tax resulting from the election. In order to satisfy the requirements of Sec. 301.6402-2(b)(1) (relating to grounds set forth in claim), the claim for credit or refund must set forth)--
(A) The date on which the option was granted,
(B) The name of the corporation which granted the option,
(C) The date on which the stock was transferred pursuant to the exercise of the option,
(D) The fair market value of such stock on December 4, 1973,
(E) The fair market value on July 1, 1974 of the stock received upon the reorganization of the corporation which granted the option, and
(F) The date on which the taxpayer sold substantially all of the stock received in such reorganization. The taxpayer shall file a single claim for credit or refund of the entire overpayment of tax resulting from the election under Act section 1879(p)(1).
(4) Revocation--(i) Irrevocable elections. The elections described in this section under: ------------------------------------------------------------------------
Act Sections Code Sections------------------------------------------------------------------------201(a) 168(b)(5), 168(f)(1), 168(g)(7),
168(h)(6)(F)(ii)203(a)(1)(B), 252(a) 42(f)(1), 42(g)(1), 42(i)(2),
42(j)(5)411(b)(1) 263(i)411(b)(2)(A) 616(d)(2)(A)501(a) 469(j)(9)801(d)(2), 905(c), 1301(b) 141(b)(9), 142(d)(1),
142(d)(4)(B) 143(k)(9)(D)(iii),
145(d), 147(b)(4)(A)1704(b), 1802(a) 168(j) as in effect before
October 22, 19861804(e)(4), 1879(p)(1) 83(c)(3)1882(c) 3121(w)(2)------------------------------------------------------------------------ are irrevocable.
(ii) Elections revocable with the consent of the Commissioner. The elections described in this section under: ------------------------------------------------------------------------
Act Sections Code Sections------------------------------------------------------------------------204(e), 243(a), 243(b), 243(a)(b), 617(h)(2)(A)
411(b)(2)(B)614(b) 1059(c)(4)644(d) 216(b)(3)646, 651 4982(e)(4)(B)701(a) 56(f)(3)(B)801(a) 448(d)(4)802 474803(a) 263A(d)(3)806(e)(2)(C) and the election described in 453C(b)(2)(B)(i), 453C(e)(4)
H.R. Rep. No. 99-841 at II-320, 811(a)905(a) 165(l)(1)1801(a) 168(i) as in effect before
October 22, 19861807(a)(7) 468B)1809(e)(2) 48(b)(2)1810(l)(4) 7701(b)------------------------------------------------------------------------ are revocable only with the consent of the Commissioner.
(iii) Freely revocable election. The election described in this section under Act section 311(d)(2) is freely revocable.
(b) Elections with respect to the low-income housing credit. The elections under Act section 252(a) (Code sections 42(f)(1), 42(g)(1), 42(i)(2), and 42(j)(5)) must be made for the taxable year in which the project is placed in service and shall be made in the certification required to be filed pursuant to section 42(l)(1).
(c) Election to have the rules of section 263A (relating to capitalization and inclusion in inventory costs of certain expenses) not apply to any plant or animal produced in any farming business conducted by the electing taxpayer--(1) In general. This paragraph applies to the election under Act section 803(a) (Code section 263A(d)(3)) to have the rules of section 263A (relating to capitalization and inclusion in inventory costs of certain expenses) not apply to any plant or animal produced in any farming business conducted by the electing taxpayer. The election is available to taxpayers engaged in the business of farming, including producers of agricultural crops, livestock, nursery stock, sod, trees bearing fruit, nuts or other crops, and ornamental trees (for purposes of section 263A, an evergreen tree that is more than 6 years old at the time it is severed from the roots shall not be treated as an ornamental tree). The election is not available to a corporation, partnership, or tax shelter that is required to use the accrual method of accounting under section 447 or section 448(a)(3), or farming syndicates (as defined in section 464(c)), or with respect to the planting, cultivation, maintenance or development of pistachio trees. In addition, the election does not apply with respect to costs incurred for the planting, cultivation, maintenance or development of any citrus or almond grove incurred during the 4-taxable-year period beginning with the taxable year in which such grove was planted. If a citrus or almond grove is planted in more than one taxable year, the portion of the grove planted in one taxable year is treated as a separate grove for this purpose.
(1) In general. This paragraph applies to the election under Act section 803(a) (Code section 263A(d)(3)) to have the rules of section 263A (relating to capitalization and inclusion in inventory costs of certain expenses) not apply to any plant or animal produced in any farming business conducted by the electing taxpayer. The election is available to taxpayers engaged in the business of farming, including producers of agricultural crops, livestock, nursery stock, sod, trees bearing fruit, nuts or other crops, and ornamental trees (for purposes of section 263A, an evergreen tree that is more than 6 years old at the time it is severed from the roots shall not be treated as an ornamental tree). The election is not available to a corporation, partnership, or tax shelter that is required to use the accrual method of accounting under section 447 or section 448(a)(3), or farming syndicates (as defined in section 464(c)), or with respect to the planting, cultivation, maintenance or development of pistachio trees. In addition, the election does not apply with respect to costs incurred for the planting, cultivation, maintenance or development of any citrus or almond grove incurred during the 4-taxable-year period beginning with the taxable year in which such grove was planted. If a citrus or almond grove is planted in more than one taxable year, the portion of the grove planted in one taxable year is treated as a separate grove for this purpose.
(2) Time and manner of making the election. Unless consent is obtained from the Commissioner, the election may only be made for the taxpayer's first taxable year that begins after December 31, 1986, and during which the taxpayer engages in a farming business. The election shall be made on the Schedule E, F or other schedule required to be attached to the income tax return for the first taxable year for which the election is effective. In the case of a partnership or S corporation, the election must be made at the partner or shareholder level.
(3) Election treated as if made if certain requirements satisfied. A taxpayer eligible to make the election under section 263A(d)(3) shall be treated as having made the election if such taxpayer reports income and expense, in accordance with the rules under the election on a timely filed income tax return.
(4) Revocation. Once the election is made, it is revocable only with the consent of the Commissioner.
(5) Special rules for treatment of expenses. If the election is made, the plant or animal produced is treated as section 1245 property and gain is recaptured (treated as ordinary income) in the amount of deductions which, but for the election, would have been required to be capitalized with respect to the plant or animal. If the taxpayer or a related person makes the election, a non-accelerated method of depreciation (as defined in section 168(g)(2)) shall be applied to all property used predominantly in any farming business of the taxpayer or related person and placed in service in any taxable year during which the election is in effect. For purposes of this election, related party means: (i) The members of the taxpayer's family (defined for this purpose to include the spouse of the taxpayer and any of his or her children who have not reached the age of 18 as of the last day of the taxable year); (ii) any corporation (including an S corporation) 50 percent or more of the value of which is owned directly or indirectly (through the application of section 318) by the taxpayer or members of the taxpayer's family; (iii) any corporation that is a member of the same controlled group (within the meaning of section 1563) as the taxpayer; and (iv) any partnership if 50 percent or more of the value of the interests in such partnership is owned directly or indirectly (through the application of section 318) by the taxpayer or members of the taxpayer's family.
(d) Election with respect to the treatment of net income for the short taxable year resulting from a required change in accounting period. This paragraph applies to the election under section 806(e)(2)(C) of the Act. Net income for the short taxable year resulting from a required change in accounting period under the provisions of section 806 of the Act which is to be included ratably in the partners' and S corporation shareholders' income for the first four taxable years (including the short taxable year) beginning after December 31, 1986, or included entirely in income for the short taxable year at the election of the partner or shareholder, shall be taken into account in accordance with section 702 (with respect to partners) and section 1366 (with respect to S corporation shareholders).
(e) Election with respect to reducing partnership or S corporation income for the short taxable year resulting from a required change in accounting period under section 806 of the Act by an unamortized adjustment amount existing as of October 22, 1986--(1) In general. This paragraph applies to the election described in H.R. Rep. No. 99-841 at II-320.
(1) In general. This paragraph applies to the election described in H.R. Rep. No. 99-841 at II-320.
(2) Partnerships or S corporations that make the election to reduce income for the short taxable year by an unamortized adjustment amount existing as of October 22, 1986. Where a partnership or S corporation elects to reduce its income for the short taxable year required under the provisions of section 806 of the Act by the unamortized adjustment amount existing as of October 22, 1986, in accordance with paragraph (a) of this section, the income for the short taxable year (reduced by the unamortized adjustment amount) may then be subject to the election, under section 806(e)(2)(C) of the Act, by partners and S corporation shareholders to include all the net income for the short taxable year entirely in income for the partners' or shareholders' taxable year with or within which the short taxable year ends.
(3) Partnerships or S corporations that do not make the election to reduce income for the short taxable year by an unamortized adjustment amount existing as of October 22, 1986. Where a partnership or S corporation does not elect to reduce its income for the short taxable year created by the provisions of section 806 of the Act by the unamortized adjustment amount existing as of October 22, 1986, as provided in paragraph (a) of this section, the short taxable year required under the provisions of section 806 of the Act shall be considered one taxable year for purposes of amortizing the adjustment amount under the requirements of Rev. Proc. 72-51, 1972-2 C.B. 832, or Rev. Proc. 83-25, 1983-1 C.B. 689. The net income of the partnership or S corporation after reduction by the adjustment amount for the short taxable year may then be subject to the election under section 806(e)(2)(C) of the Act by partners or S corporation shareholders to include all the net income for the short taxable year entirely in income for the partners' or shareholders' taxable year with or within which the short taxable year of the partnership or S corporation ends.
(f) Cross-reference. See Sec. 301.9100-8(d) for rules on both the election under section 905(a) of the Act, relating to section 165(l)(1), and the related election under section 165(l)(5), added by section 1009(d) of the Technical and Miscellaneous Revenue Act of 1988, 102 Stat. 3342. An election under section 165(l) is available only to qualified individuals and, in general, applies to reasonably estimated losses on deposits in an insolvent or bankrupt financial institution.
(g) Elections with respect to certain bonds. The elections under Act section 1301(b) (Code sections 141(b)(9), 142(d)(1), 142(d)(4)(B), 143(k)(9)(D)(iii), 145(d), and 147(b)(4)(A)) must be made in the bond indenture or a related document (as defined in Sec. 1.103-13(b)(8)) on or before the date of issue. With respect to obligations issued on or before March 9, 1987 these elections must be made on or before March 9, 1987 and need not be made in the bond indenture or a related document, but must be made in writing and retained as part of the issuer's books and records.
(h) Revocation of the election for exemption from social security taxes by certain clergy--(1) In general. This paragraph applies to the election under Act section 1704(b) to revoke an election under section 1402(e)(1) of the Code by a duly ordained, commissioned, or licensed minister of a church, a member of a religious order (other than a member of a religious order who has taken a vow of poverty as a member of such order), or a Christian Science practitioner. Only elections which are effective for the taxable year containing October 22, 1986 may be revoked under this paragraph.
(1) In general. This paragraph applies to the election under Act section 1704(b) to revoke an election under section 1402(e)(1) of the Code by a duly ordained, commissioned, or licensed minister of a church, a member of a religious order (other than a member of a religious order who has taken a vow of poverty as a member of such order), or a Christian Science practitioner. Only elections which are effective for the taxable year containing October 22, 1986 may be revoked under this paragraph.
(2) Time for revoking the election. The election shall be revoked by filing Form 2031 before the date on which the individual becomes entitled to benefits under sections 202(a) or 223 of the Social Security Act (without regard to sections 202(j)(1) or 223(b) of such Act), and not later than the due date of the Federal income tax return (including any extension thereof) for the individual's first taxable year beginning after October 22, 1986.
(3) Manner of revoking the election. To revoke an election under section 1402(e)(1), the individual shall file Form 2031 in accordance with the instructions accompanying that form. The revocation shall be made effective, as designated by the individual on the form, either with respect to the individual's first taxable year ending on or after October 22, 1986, or with respect to the individual's first taxable year beginning after October 22, 1986.
(4) Special rules for payment of self-employment taxes with respect to certain taxable years ending on or after October 22, 1986--(i) Elections filed after the due date of the Federal income tax return. If Form 2031 is filed on or after the due date of the Federal income tax return (including any extension thereof) for the individual's first taxable year ending on or after October 22, 1986, and the election made therein is effective with respect to that taxable year, Form 2031 shall be accompanied by an amended Federal income tax return for such taxable year together with payment in full of an amount equal to the total of the taxes that would have been imposed by section 1401 of the Code with respect to all of the individual's income derived in that taxable year which would have constituted net earnings from self-employment for purposes of chapter 2 of subtitle A of the Code (notwithstanding paragraph (4) or (5) of section 1402(c)) but for the exemption under section 1402(e)(1).
(i) Elections filed after the due date of the Federal income tax return. If Form 2031 is filed on or after the due date of the Federal income tax return (including any extension thereof) for the individual's first taxable year ending on or after October 22, 1986, and the election made therein is effective with respect to that taxable year, Form 2031 shall be accompanied by an amended Federal income tax return for such taxable year together with payment in full of an amount equal to the total of the taxes that would have been imposed by section 1401 of the Code with respect to all of the individual's income derived in that taxable year which would have constituted net earnings from self-employment for purposes of chapter 2 of subtitle A of the Code (notwithstanding paragraph (4) or (5) of section 1402(c)) but for the exemption under section 1402(e)(1).
(ii) Elections filed before the due date of the Federal income tax return. If Form 2031 is filed before the due date of the Federal income tax return (including any extension thereof) for the individual's first taxable year ending on or after October 22, 1986, and the election is effective with respect to that taxable year, payment in full of an amount equal to the total of the taxes that would have been imposed by section 1401 of the Code with respect to all of the individual's income derived in that taxable year which would have constituted net earnings from self-employment for purposes of chapter 2 of subtitle A of the Code (notwithstanding paragraph (4) or (5) of section 1402(c)) but for the exemption under section 1402(e)(1) shall be made:
(A) In the case of Forms 2031 that are filed on or before the date on which the individual's Federal income tax return for such first taxable year is filed, with the individual's Federal income tax return for such taxable year; and
(B) In the case of Forms 2031 that are filed after the date on which the individual's Federal income tax return for such first taxable year is filed, with an amended Federal income tax return for that taxable year filed on or before the due date for the individual's Federal income tax return (including any extension thereof) for such taxable year.
(iii) Interest on amounts paid after the due date of the Federal income tax return. If any amount of tax imposed by section 1401 for an individual's taxable year with respect to which an election under this paragraph (h) is effective is paid after the due date of the individual's Federal income tax return (without regard to extensions) for such taxable year, interest will be assessed on such tax from the due date of such return (without regard to extensions) to the date on which such tax is paid.
(5) Revocability of the revocation of the election. Once having filed Form 2031, the individual may not thereafter file an application for an exemption under section 1402(e)(1).
(6) Effective date of this provision. This provision shall apply with respect to remuneration received in the taxable years for which the individual designates the revocation to be effective, as described in paragraph (h)(3) of this section, and with respect to monthly insurance benefits payable under title II of the Social Security Act on the basis of the wages and self-employment income of any individual for months in or after the calendar year in which such individual's application for revocation is effective (and lump-sum death payments payable under such title on the basis of such wages and self-employment income in the case of deaths occurring in or after such calendar year).
(i) Revocation of the election for exemption from social security taxes by certain churches on qualified church-controlled organizations--(1) In general. This paragraph applies to the election under Act section 1882 (Code section 3121 (w)(2)) to revoke an election under section 3121(w) by a church or qualified church-controlled organization (as defined in section 3121(w)(3)).
(1) In general. This paragraph applies to the election under Act section 1882 (Code section 3121 (w)(2)) to revoke an election under section 3121(w) by a church or qualified church-controlled organization (as defined in section 3121(w)(3)).
(2) Time and manner of revoking the election. The revocation described in this paragraph (i) shall be made by filing a Form 941 on or before the due date for filing Form 941 (without regard to extensions) for the first quarter for which the revocation is to be effective, accompanied by payment in full of the taxes that would be due for that quarter had there been no election under section 3121(w). See paragraph (i)(4) of this section for the effective date of revocations made under this paragraph (i).
(3) Revocability of the revocation of the election. Once an election under section 3121(w) is revoked under this paragraph (i), a new election under section 3121(w) may not be made.
(4) Effective date of this paragraph. A revocation made under this paragraph (i) shall be effective for the quarter of the calendar year covered by the Form 941 on which the revocation is made in accordance with paragraph (i)(2) of this section and all subsequent quarters. However, no revocation shall be effective prior to January 1, 1987 unless such electing church or church-controlled organization had withheld and paid over all employment taxes due, as if such election had never been in effect, during the period from the effective date of the election being revoked through December 31, 1986.
(j) Additional information required. Later regulations or revenue procedures issued under provisions of the Code or Act covered by this section may require the furnishing of information in addition to that which was furnished with the statement of election described in this section. In such event, the later regulations or revenue procedures will provide guidance with respect to the furnishing of such additional information. [T.D. 8124, 52 FR 3624, Feb. 5, 1987; 52 FR 8405, Mar. 17, 1987; 52 FR 10085, Mar. 30, 1987, as amended by T.D. 8180, 53 FR 6147, Mar. 1, 1988; T.D. 8267, 54 FR 38980, Sept. 22, 1989. Redesignated and amended by T.D. 8435, 57 FR 43895, 43896, Sept. 23, 1992; T.D. 8513, 58 FR 68764, 68765, Dec. 29, 1993; T.D. 8530, 59 FR 12844, Mar. 18, 1994; T.D. 8644, 60 FR 66926, Dec. 27, 1995]