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April 2, 2021

Associate Chief Counsel (International) provides advice on federal tax classification of certain foreign entities

In AM 2021-002, the Associate Chief Counsel (International) has concluded that a foreign eligible entity, "the classification of which has never been relevant," is classified by default under Treas. Reg. Section 301.7701-3(b)(2) during the period in which its classification is not relevant. Further, the prohibition in Treas. Reg. Section 301.7701-3(c)(1)(iv) against changing an entity's classification within the 60-month period following the effective date of its first election (the 60-month limitation rule) does not apply if the election to change classification is effective on the first date the classification is relevant.