SECTION 1. WHAT ARE THE

PURPOSES OF THIS REVENUE PROCEDURE?

This revenue procedure provides taxpayer assistance procedures, including under § 1362(f) of the Internal Revenue Code (Code), to allow S corporations and their shareholders to resolve frequently encountered issues with certainty and without requesting a private letter ruling (PLR) issued by the Internal Revenue Service (IRS). The issues addressed by the taxpayer assistance procedures set forth in sections 3.01 through 3.05 of this revenue procedure are issues that the IRS historically has identified as not affecting the validity or continuation of a corporation’s election under § 1362(a) of the Code to be treated as an S corporation (S election); or an S corporation’s election under § 1361(b)(3)(B)(ii) of the Code to treat its corporate subsidiary as a qualified subchapter S subsidiary (a QSub, and the election a QSub election). Section 3.06 of this revenue procedure provides retroactive corrective relief procedures under section 1362(f) in certain circumstances to allow taxpayers to retroactively preserve S elections that are invalid or terminated solely as the result of one or more non-identical governing provisions (as defined in section 2.03(6)(a) of this revenue procedure). The Department of the Treasury (Treasury Department) and the IRS have provided these taxpayer assistance procedures to (1) reduce burdens on taxpayers and the IRS, (2) facilitate increased taxpayer compliance with S election and QSub election rules, and (3) reduce costs and delays for completing transactions involving S corporations and QSubs. Appendix A (Sample Corporate Governing Provision Statement) and Appendix B (Sample Shareholder Statement) are provided to assist corporations and their shareholders in complying with the taxpayer assistance procedures in section 3 of this revenue procedure. In

connection with these taxpayer assistance procedures, section 4 of this revenue procedure provides areas in which the IRS will not rule, or will not ordinarily rule, regarding the validity or continuation of an S election or a QSub election.