Form 8869 Form 8869 Qualified Subchapter S Subsidiary Election

8869

Qualified Subchapter S Subsidiary Election

Form
(Rev. December 2008)

Department of the Treasury
Internal Revenue Service

Part I

OMB No. 1545-1700

(Under section 1361(b)(3) of the Internal Revenue Code)

Parent S Corporation Making the Election

1a Name of parent

2 Employer identification number (EIN)

b Number, street, and room or suite no. If a P.O. box, see instructions.

3 Tax year ending (month and day)

c City or town, state, and ZIP code

4 Service center where last return was filed

5

Name and title of officer or legal representative whom the IRS may call for more information

Part II

6 Telephone number of officer or legal

representative (
)
Subsidiary Corporation for Which Election is Made (For additional subsidiaries, see instructions.)

7a Name of subsidiary

8 EIN (if any)

b Number, street, and room or suite no. If a P.O. box, see instructions.

9 Date incorporated

c City or town, state, and ZIP code

10 State of incorporation

11 Date election is to take effect (month, day, year) (see instructions)

©

/

12 Did the subsidiary previously file a federal income tax return? If “Yes,” complete lines 13a, 13b, and 13c

©

Yes

13a Service center where last return was filed

13b Tax year ending date of last

13c Check type of return filed:

return (month, day, year) ©

/

/

/
No

Form 1120
Other ©

Form 1120S

14 Is this election being made in combination with a section 368(a)(1)(F) reorganization described in Rev. Rul. 2008-18, where the subsidiary
©
was an S corporation immediately before the election and a newly formed holding company will be the subsidiary’s parent?

Yes

No

©

Yes

No

15 Was the subsidiary’s last return filed as part of a consolidated return? If “Yes,” complete lines 16a, 16b, and 16c
16a Name of common parent

16b EIN of common parent

16c Service center where consolidated return was filed

Under penalties of perjury, I declare that I have examined this election, including accompanying schedules and statements, and to the best of my knowledge and belief,
it is true, correct, and complete.

Signature of officer
of parent corporation

©

General Instructions
Section references are to the Internal Revenue Code unless
otherwise noted.

Purpose of Form
A parent S corporation uses Form 8869 to elect to treat one or more
of its eligible subsidiaries as a qualified subchapter S subsidiary
(QSub).
The QSub election results in a deemed liquidation of the
subsidiary into the parent. Following the deemed liquidation, the
QSub is not treated as a separate corporation and all of the
subsidiary’s assets, liabilities, and items of income, deduction, and
credit are treated as those of the parent.
Because the liquidation is a deemed liquidation, do not
file Form 966, Corporate Dissolution or Liquidation.
However, a final return for the subsidiary may have to be
CAUTION filed if it was a separate corporation prior to the date of
the deemed liquidation. No final return is required if this election is
being made pursuant to a reorganization under section 368(a)(1)(F)
and Rev. Rul. 2008-18. See Rev. Rul. 2008-18, 2008-13 I.R.B. 674,
for details.

Eligible Subsidiary
An eligible subsidiary is a domestic corporation whose stock is
owned 100% by an S corporation and is not one of the following
ineligible corporations.
● A bank or thrift institution that uses the reserve method of
accounting for bad debts under section 585.
● An insurance company subject to tax under subchapter L of the
Code.
For Paperwork Reduction Act Notice, see page 2.

Title

©

Date

©

● A corporation that has elected to be treated as a possessions
corporation under section 936.
● A domestic international sales corporation (DISC) or former DISC.
See sections 1361(b)(3), 1362(f), and their related regulations for
additional information.

When To Make the Election
The parent S corporation can make the QSub election at any time during
the tax year. However, the requested effective date of the QSub election
generally cannot be more than:
1. Twelve months after the date the election is filed, or
2. Two months and 15 days before the date the election is filed.
An election filed more than 12 months before the requested
effective date will be made effective 12 months after the date it is
filed. An election filed more than two months and 15 days after the
requested effective date generally is late and will be made effective
two months and 15 days before the date it is filed. However, an
election filed more than two months and 15 days after the requested
effective date will be accepted as timely filed if the corporation can
show that the failure to file on time was due to reasonable cause.
To request relief for a late election, the corporation generally must
request a private letter ruling and pay a user fee in accordance with
Rev. Proc. 2009-1, 2009-1 I.R.B. 1 (or its successor). However, relief
from the ruling and user fee requirements is available. See Rev. Proc.
2003-43, 2003-23 I.R.B. 998, for details.

Where To File
File Form 8869 with the service center where the subsidiary filed its
most recent return. However, if the parent S corporation forms a
subsidiary, and makes a valid election effective upon formation,
submit Form 8869 to the service center where the parent S
corporation filed its most recent return.
Cat. No. 28755K

Form

8869

(Rev. 12-2008)

Form 8869 (Rev. 12-2008)

Acceptance of Election
The service center will notify the corporation if the QSub election is
(a) accepted, and when it will take effect, or (b) not accepted.
The corporation should generally receive a determination on its
election within 60 days after it has filed Form 8869. However, if the
corporation is not notified of acceptance or nonacceptance
of its election within 2 months of the date of filing (date mailed), take
follow-up action by calling 1-800-829-4933.
If the IRS questions whether Form 8869 was filed, an acceptable
proof of filing is (a) a certified or registered mail receipt (timely
postmarked) from the U.S. Postal Service, or its equivalent from a
designated private delivery service (see Notice 2004-83, 2004-52
I.R.B. 1030 (or its successor)); (b) a Form 8869 with an accepted
stamp; (c) a Form 8869 with a stamped IRS received date; or (d) an
IRS letter stating that Form 8869 has been accepted.

End of Election
Once the QSub election is made, it remains in effect until it is
terminated. If the election is terminated, IRS consent generally is
required for another QSub election with regard to the former QSub
(or its successor) for any tax year before the 5th tax year after the
first tax year in which the termination took effect. See Regulations
section 1.1361-5 for details.

Specific Instructions
Address
Include the suite, room, or other unit number after the street
address. If the Post Office does not deliver to the street address and
the corporation has a P.O. box, show the box number instead.
If the subsidiary has the same address as the parent
S corporation, enter “Same as parent” in Part II.

Additional Subsidiaries
If the QSub election is being made for more than one subsidiary,
attach a separate sheet for each subsidiary. Use the same size,
format, and line numbers as in Part II of the printed form. Put the
parent corporation’s name and employer identification number at the
top of each sheet.
If the QSub elections are being made effective on the same date
for a tiered group of subsidiaries, the parent S corporation may
specify the order of the deemed liquidations on an attachment. If no
order is specified, the deemed liquidations will be treated as
occurring first for the lowest tier subsidiary and proceeding
successively upward. See Regulations section 1.1361-4(b)(2).
Caution. A QSub election for a tiered group of subsidiaries may, in
certain circumstances, result in the recognition of income. A primary
example is excess loss accounts (see Regulations section 1.1502-19).

Reorganizations
Line 14. This box should be checked “Yes” if this election is being
made pursuant to a reorganization under section 368(a)(1)(F) and
Rev. Rul. 2008-18. This occurs when a newly formed parent holding
company holds the stock of the subsidiary that was an S corporation
immediately before the transaction and the transaction otherwise
qualifies as a reorganization under section 368(a)(1)(F). No Form
2553, Election by a Small Business Corporation, is required to be
filed by the parent. See Rev. Rul. 2008-18, 2008-13 I.R.B. 674, for
details.

Employer Identification Number (EIN)
A QSub may not be required to have an EIN for federal tax
purposes. If the QSub does not have an EIN, enter “N/A” on
line 8.

Page

2

However, if the QSub has previously filed a return, separately or as
part of a consolidated return, and used an EIN, enter that EIN on line
8 and (if applicable) the EIN of its common parent on line 16b. If this
election is being made pursuant to a reorganization under section
368(a)(1)(F) and Rev. Rul. 2008-18, the old S corporation for which
this QSub election is being made will retain its EIN. The newly
formed parent must get a new EIN. See Rev. Rul. 2008-18, 2008-13
I.R.B. 674, for details.
Note. Failure to enter the subsidiary’s EIN may result in the service
center sending a notice of delinquent filing to the QSub.
If the QSub wants its own EIN, but does not have one, see Form
SS-4, Application for Employer Identification Number, for details on
how to obtain an EIN.
If the QSub has not received its EIN by the time the election is
made, write “Applied for” on line 8. See the Instructions for Form
SS-4 for details.

Effective Date of Election

TIP

Form 8869 generally must be filed no earlier than 12
months before or no later than 2 months and 15 days
after the effective date requested on line 11. For details
and exceptions, see When To Make the Election on

page 1.
A parent S corporation that forms a new subsidiary and wants the
election effective upon formation should enter the formation date. A
parent corporation that wants to make the election for an existing
subsidiary should enter the requested effective date. For details about
the effect of a QSub election, see Regulations section 1.1361-4.

Signature
Form 8869 must be signed and dated by the president, vice
president, treasurer, assistant treasurer, chief accounting officer, or
any other corporate officer (such as tax officer) authorized to sign
the parent’s S corporation return.
Paperwork Reduction Act Notice. We ask for the information on
this form to carry out the Internal Revenue laws of the United States.
You are required to give us the information. We need it to ensure
that you are complying with these laws.
You are not required to provide the information requested on a
form that is subject to the Paperwork Reduction Act unless the form
displays a valid OMB control number. Books or records relating to a
form or its instructions must be retained as long as their contents
may become material in the administration of any Internal Revenue
law. Generally, tax returns and return information are confidential, as
required by section 6103.
The time needed to complete and file this form will vary depending
on individual circumstances. The estimated average time is:
Recordkeeping
Learning about the law or the form
Preparing, copying,
assembling, and sending the
form to the IRS

6 hr., 13 min.
53 min.

1 hr., 2 min.

If you have comments concerning the accuracy of these time
estimates or suggestions for making this form simpler, we would be
happy to hear from you. You can write to Internal Revenue Service,
Tax Products Coordinating Committee, SE:W:CAR:MP:T:T:SP, 1111
Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send
the form to this address. Instead, see Where To File on page 1.