The IRS released PLR 202619013 on May 8, 2026. A limited partnership taxed as a partnership had a partner die. The partnership inadvertently failed to make a Section 754 election for the relevant tax year. The partnership then requested late-election relief under Treas. Reg. § 301.9100-3. The IRS granted the partnership 120 days from the date of the letter to make the election effective for that year.
A Section 754 election allows partnership property basis adjustments under Section 734(b), for certain distributions, and Section 743(b), for certain transfers of partnership interests. The election is made by written statement filed with the partnership return for the year in which the distribution or transfer occurs, and the return must be timely filed, including extensions. Treas. Reg. § 1.754-1(b). The election applies to both Sections 734(b) and 743(b); it is not a selective election for only favorable adjustments. Treas. Reg. § 1.754-1(a).
The PLR matters because the IRS conditioned relief on the partnership reconstructing the tax consequences as if the election had been timely made. The partnership’s relevant filings must reflect any Section 734(b) or 743(b) adjustments that would have been made. They also must reflect additional deductions for recovery of basis that would have been allowable if the election had been timely made, even if limitations periods have expired for affected years.
That is the practical ramification. Late relief may restore the procedural election, but it does not let the partnership cherry-pick the good years. The partnership may have to compute basis adjustments, depreciation or amortization effects, and partner-basis consequences on a consistent “as-if-timely-filed” basis.
The ruling also flags the procedural problem for partnerships subject to amended-return or centralized partnership audit regime rules. If the partnership must file an administrative adjustment request to correct the return, the relief is conditioned on filing Form 1065-X or Form 8082 and taking the adjustments into account under Section 6227(b).
There is another important limitation. The IRS expressly states that the ruling does not decide whether the taxpayer is otherwise eligible to make the election. It also gives no opinion on other federal tax consequences. And, as with other private letter rulings, it is directed only to the requesting taxpayer and may not be cited as precedent.
For partnerships, a death, sale, redemption, or distribution should trigger an immediate Section 754 checklist. The partnership should confirm whether an election is already in effect, whether a new election is needed, whether the return deadline has been extended, and who is responsible for attaching the election statement to the Form 1065.
If the deadline has already been missed, the partnership should move quickly. IRS guidance recognizes automatic 12-month relief under Treas. Reg. § 301.9100-2 for late Section 754 elections; after that, relief requires Commissioner approval under Treas. Reg. § 301.9100-3. But the later the issue is caught, the more likely the problem becomes computational, procedural, and partner-level—not just a missed attachment.
PLR 202619013 is a narrow grant of late-election relief with conditions. The better reading is practical and conservative: the IRS may allow a missed Section 754 election to be fixed, but the partnership should expect to put everyone back in the tax position they would have occupied if the election had been made on time.