IRS Issues PLR Permitting Continued S Corporation Status with Late QSST, ESBT Elections

The IRS has issued a private letter ruling on I.R.C. §§1361 and 1362 and Treas. Reg. §1.1361 addressing inadvertent S corporation election termination when trusts holding corporation stock failed to make required qualified subchapter S trust (QSST) and electing small business trust (ESBT) elections and confirming the corporation may continue S corporation status provided Trust 1’s beneficiary files a QSST election within 120 days effective the original termination date, Trust 2 and Trust 3 trustees file ESBT elections within 120 days effective their respective dates, and the corporation makes a required payment within 45 days. [PLR 202619002]

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