Discussion:Changing from C-Corp to S-Corp status
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Discussion Forum Index --> Tax Questions --> Changing from C-Corp to S-Corp status
| 29 November 2006 | |
| Would it be easier to wait until the end of a clients fiscal year or calendar year tax year to change from a regular C Corp to an S Corp. Also what form would you file with the IRS to convert the Corporation and would the form be accepted my March 15, 2007 to elect S-Corp status for 2006? Would you have to dissolve the C-Corp before electing S Corp status? | |
Mtmckeecpa (talk|edits) said: | 29 November 2006 |
| R,
You would file form 2553. It is too late to file an election for 2006, beginning January 1, 2006. For a new corp, yes, but not for an existing C corp. It you have C corp...and want to elect S status make sure you understand all aspects of the built in gains tax on the conversion. For example, does the C corp have inventory, accounts receivable, accounts payable, real estate, what is the basis of accounting, cash or accrual? What is the business of the C corp? | |
| 29 November 2006 | |
| There are provisions for late filing of 2553 for up to 2 years. You may want to check that out to see if your situation fits. | |
| 29 November 2006 | |
| There are specific "Revenue Rulings" that you're able to refer to in your application for a late filed Form 2553.
Here's an IRS special phone number for a department/unit that you can call for more specific guidance. Tel 801-620-3213 Fax 801-620-3108 Stacey Stegan has been very helpful, from what I've been told from other practitioners. | |
Mtmckeecpa (talk|edits) said: | 29 November 2006 |
| Yes, you both are right, I stand corrected. See Rev. Proc. 2003-43.
Still, before you file an S election for an existing C corp...make sure you understand the built in gains tax implications! | |
Corptaxhelp (talk|edits) said: | November 29, 2006 |
| R432, if I may ask, why is your client doing the conversion now? How long has the c-corp been around? | |
