Rev. Proc. 56-9

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to clarify the provision of section 761 of the Internal Revenue Code of 1954, pertaining to the election allowed members of an unincorporated organization to exclude such organization from the application of the partnership provisions of the Code.

SEC. 2. BACKGROUND.

.01 Under subchapter K, Partners and Partnerships, section 761 of the Code provides, in part, that the Secretary or his delegate may, at the election of all the members of an unincorporated organization, exclude such organization from the application of all or part of this subchapter, if such organization is availed of for the joint production, extraction, or use of property, but not for the purpose of selling services or property produced or extracted, and if the income of the members of the organization may be adequately determined without the computation of partnership taxable income.

.02 I.T. 3930, C.B. 1948-2, 126, gives the status for Federal income tax purposes of joint operating agreements commonly entered into between coowners of oil and gas properties or leaseholds, under the 1939 Code, and requires, under certain circumstances, the filing of qualified partnership returns.

.03 Section 6072(a) of the 1954 Code provides that in the case of partnership return, etc., those made on the basis of the calendar year shall be filed on or before the 15th day of April following the close of the calendar year and returns made on the basis of a fiscal year shall be filed on or before the 15th day of the fourth month following the close of the fiscal year, except as otherwise provided. In this connection, section 6081(a) of the 1954 Code provides that the Secretary or his delegate may grant a reasonable extension of time for filing any return, declaration, statement, or other document required. However, no such extension shall be for more than six months, except in the case of taxpayers who are abroad.

SEC. 3. EXTENSION OF TIME FOR ELECTION.

Because regulations under section 761 were not promulgated until May 23, 1956, any unincorporated organization entitled to make the election under section 761(a) of the Code for the filing of partnership returns, or other information in lieu thereof, required by the regulations under section 761, will be allowed an extension of six months from the due date prescribed for filing such returns. This is the maximum extension allowed by section 6081. Accordingly, returns for the calendar year 1955 required by the regulations under section 761 should be filed not later than October 15, 1956.