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Department of the Treasury
Internal Revenue Service
Instructions for Form 8869

(Rev. December 2020)
Qualified Subchapter S Subsidiary Election

Section references are to the Internal Revenue Code after the date it is filed. An election filed more than 2
unless otherwise noted. months and 15 days after the requested effective date
generally is late and will be made effective 2 months and
Future Developments 15 days before the date it is filed. However, an election
For the latest information about developments related to filed more than 2 months and 15 days after the requested
Form 8869 and its instructions, such as legislation effective date will be accepted as timely filed if the
enacted after they were published, go to IRS.gov/ corporation can show that the failure to file on time was
Form8869. due to reasonable cause.
To request relief for a late election, the corporation
General Instructions must generally request a private letter ruling and pay a
user fee in accordance with Rev. Proc. 2021-1, 2021-1
Purpose of Form I.R.B. 1 (or its successor). However, relief from the ruling
A parent S corporation uses Form 8869 to elect to treat and user fee requirements is available. See Rev. Proc.
one or more of its eligible subsidiaries as a qualified 2013-30, 2013-36 I.R.B. 173, for details.
subchapter S subsidiary (QSub).
Even if a QSub election is made 12 months before
The QSub election results in a deemed liquidation of ! or 2 months and 15 days after the effective date, a
the subsidiary into the parent. Following the deemed CAUTION QSub election will be ineffective if made for a
liquidation, for federal tax purposes, the QSub is not corporation that was formerly eligible, but is ineligible at
treated as a separate corporation and all of the the time the election is made. See Regulations section
subsidiary’s assets, liabilities, and items of income, 1.1361-3(a)(1).
deduction, and credit are treated as those of the parent.
Because the liquidation is a deemed liquidation, Where To File
! do not file Form 966, Corporate Dissolution or File Form 8869 with the service center where the
CAUTION Liquidation. However, a final return for the subsidiary filed its most recent return. However, if the
subsidiary may have to be filed if it was a separate parent S corporation forms a subsidiary, and makes a
corporation prior to the date of the deemed liquidation. No valid election effective upon formation, submit Form 8869
final return is required if this election is being made to the service center where the parent S corporation filed
pursuant to a reorganization under section 368(a)(1)(F) its most recent return.
and Rev. Rul. 2008-18. See Rev. Rul. 2008-18, 2008-13
I.R.B. 674, available at IRS.gov/irb/ Acceptance of Election
2008-13_IRB#RR-2008-18, for details. The service center will notify the corporation if the QSub
election is (a) accepted, and when it will take effect, or (b)
Eligible Subsidiary not accepted. The corporation may also receive an
An eligible subsidiary is a domestic corporation whose administrative letter confirming the receipt of Form 8869.
stock is owned 100% by an S corporation and is not one The corporation should generally receive a
of the following ineligible corporations. determination on its election within 60 days after it has
• A bank or thrift institution that uses the reserve method filed Form 8869. However, if the corporation is not notified
of accounting for bad debts under section 585. of acceptance or nonacceptance of its election within 2
• An insurance company subject to tax under subchapter months of the date of filing (date mailed), take follow-up
L of the Internal Revenue Code. action by calling 800-829-4933.
• A domestic international sales corporation (DISC) or
former DISC. If the IRS questions whether Form 8869 was filed, an
acceptable proof of filing is (a) a certified or registered
See sections 1361(b)(3), 1362(f), and their related
mail receipt (timely postmarked) from the U.S. Postal
regulations for additional information.
Service, or its equivalent from a designated private
When To Make the Election delivery service (go to IRS.gov/PDS for the current list of
designated services); (b) a Form 8869 with an accepted
The parent S corporation can make the QSub election for
stamp; (c) a Form 8869 with a stamped IRS received
an eligible corporation at any time during the tax year.
date; or (d) an IRS letter stating that Form 8869 has been
However, the requested effective date of the QSub
accepted.
election generally cannot be more than:
• 12 months after the date the election is filed, or End of Election
• 2 months and 15 days before the date the election is
Once the QSub election is made, it remains in effect until
filed.
it is terminated. If the election is terminated, IRS consent
An election filed more than 12 months before the generally is required for another QSub election with
requested effective date will be made effective 12 months regard to the former QSub (or its successor) for any tax

Dec 02, 2020 Cat. No. 74389E

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year before the fifth tax year after the first tax year in which Failure to enter the subsidiary’s EIN may result in
the termination took effect. See Regulations section ! the service center sending a notice of delinquent
1.1361-5 for details. CAUTION filing to the QSub.

If the QSub wants its own EIN, but does not have one,
Specific Instructions apply for an EIN in the following ways.
• Online—Go to IRS.gov/EIN. The EIN is issued
Address immediately once the application information is validated.
Include the suite, room, or other unit number after the • By faxing or mailing Form SS-4, Application for
street address. If the post office does not deliver to the Employer Identification Number.
street address and the corporation has a P.O. box, show
the box number instead. If the QSub has not received its EIN by the time the
election is made, write “Applied For” on line 8. See the
If the subsidiary has the same address as the parent S Instructions for Form SS-4 for details.
corporation, enter “Same as parent” in Part II.
Effective Date of Election
Additional Subsidiaries
If the QSub election is being made for more than one Form 8869 must generally be filed no earlier than
subsidiary, attach a separate sheet for each subsidiary. TIP 12 months before or no later than 2 months and
Use the same size, format, and line numbers as in Part II 15 days after the effective date requested on
of the printed form. Put the parent corporation’s name and line 11. For details and exceptions, see When To Make
employer identification number at the top of each sheet. the Election, earlier.
If the QSub elections are being made effective on the A parent S corporation that forms a new subsidiary and
same date for a tiered group of subsidiaries, the parent S wants the election effective upon formation should enter
corporation may specify the order of the deemed the formation date. A parent corporation that wants to
liquidations on an attachment. If no order is specified, the make the election for an existing subsidiary should enter
deemed liquidations will be treated as occurring first for the requested effective date. For details about the effect
the lowest tier subsidiary and proceeding successively of a QSub election, see Regulations section 1.1361-4.
upward. See Regulations section 1.1361-4(b)(2). Signature
A QSub election for a tiered group of subsidiaries Form 8869 must be signed and dated by the president,
! may, in certain circumstances, result in the vice president, treasurer, assistant treasurer, chief
CAUTION recognition of income. A primary example is accounting officer, or any other corporate officer (such as
excess loss accounts (see Regulations section tax officer) authorized to sign the parent’s S corporation
1.1502-19). return.

Reorganizations Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the Internal Revenue
Line 14. This box should be checked “Yes” if this election laws of the United States. You are required to give us the
is being made pursuant to a reorganization under section information. We need it to ensure that you are complying
368(a)(1)(F) and Rev. Rul. 2008-18. This occurs when a with these laws.
newly formed parent holding company holds the stock of
the subsidiary that was an S corporation immediately You are not required to provide the information
before the transaction and the transaction otherwise requested on a form that is subject to the Paperwork
qualifies as a reorganization under section 368(a)(1)(F). Reduction Act unless the form displays a valid OMB
No Form 2553, Election by a Small Business Corporation, control number. Books or records relating to a form or its
is required to be filed by the parent. See Rev. Rul. instructions must be retained as long as their contents
2008-18 for details. may become material in the administration of any Internal
Revenue law. Generally, tax returns and return
Employer Identification Number (EIN) information are confidential, as required by section 6103.
A QSub may not be required to have an EIN for federal tax The time needed to complete and file this form will vary
purposes. If the QSub does not have an EIN, enter “N/A” depending on individual circumstances. The estimated
on line 8. burden for business taxpayers filing this form is approved
However, if the QSub has previously filed a return, under OMB control number 1545-0123 and is included in
separately or as part of a consolidated return, and used the estimates shown in the instructions for their business
an EIN, enter that EIN on line 8 and (if applicable) the EIN income tax return.
of its common parent on line 16b. If this election is being If you have comments concerning the accuracy of
made pursuant to a reorganization under section 368(a) these time estimates or suggestions for making this form
(1)(F) and Rev. Rul. 2008-18, the old S corporation for simpler, we would be happy to hear from you. You can
which this QSub election is being made will retain its EIN. send us comments from IRS.gov/FormComments. Or you
The newly formed parent must get a new EIN. See Rev. can write to the Internal Revenue Service, Tax Forms and
Rul. 2008-18 for details. Publications Division, 1111 Constitution Ave. NW,
IR-6526, Washington, DC 20224. Don't send the form to
this office.

-2- Instructions for Form 8869 (December 2020)

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