SECTION 2. BACKGROUND

.01 Section 469 of the Internal Revenue Code generally imposes restrictions on the allowance of passive activity losses and credits in the case of individuals and certain other taxpayers.

.02 Under § 469(c)(2), the term “passive activity” generally includes any rental activity. Section 469(c)(7) provides a limited exception to this rule for taxpayers in a real property business. Specifically, § 469(c)(7)(A) provides that if a taxpayer meets the requirements of § 469(c)(7)(B), the taxpayer’s rental real estate activity will no longer be presumptively passive. In general, § 469(c)(7)(A) provides that a taxpayer’s interests in rental real estate are treated as separate activities for determining whether the taxpayer materially participates in each rental real estate activity unless the taxpayer elects to treat all of the taxpayer’s interests in rental real estate as a single rental real estate activity.

.03 Section 1.469–9(g)(1) provides that a qualifying taxpayer may make an election to treat all of the taxpayer’s interests in rental real estate as a single rental real estate activity.

.04 Section 1.469–9(g)(3) provides that a qualifying taxpayer makes the election to treat all interests in rental real estate as a single rental real estate activity by filing a statement with the taxpayer’s original income tax return for the taxable year. Section 1.469–9(g)(3) describes the information that must be contained in the statement.

.05 Under § 301.9100–1(c), the Commissioner may grant a reasonable extension of time to make a regulatory election,

or a statutory election (but no more than six months except in the case of a taxpayer who is abroad), under all subtitles of the Code, except subtitles E, G, H, and I. Section 301.9100–1(b) defines the term “regulatory election” as including an election whose deadline is prescribed by a regulation published in the Internal Revenue Bulletin.

.06 Sections 301.9100–1 through 301.9100–3 provide the standards that the Commissioner will use to determine whether to grant an extension of time to make an election.

.07 Section 301.9100–2 provides automatic extensions of time for making certain elections. Section 301.9100–3 provides extensions of time for making elections that do not meet the requirements of § 301.9100–2.

.08 Section 301.9100–3(a) provides that requests for relief under § 301.9100–3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice the interests of the government.

.09 Section 301.9100–3(b)(1) provides that subject to paragraphs (b)(3)(i) through (iii) of § 301.9100–3, a taxpayer is deemed to have acted reasonably and in good faith if the taxpayer meets one of the requirements in § 301.9100–3(b)(1)(i)-(v), which include that the taxpayer 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.