Discussion:SITUATIONAL DECISION
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TTtzulungTT (talk|edits) said: | 10 May 2006 |
| HERE IS THE SITUATION: MY CLIENT FILED FOR INCORPORATION, C CORP AND REQUEST TO BE AN S-CORP AROUND APRIL 18, 2006. MY QUESTION IS: IS THE DATELINE FOR S-CORP STATUS FOR THE YEAR IS MARCH 15, 2006...SO THE CLIENT HAS TO DEAL WITH THE C-CORP SITUATION FOR 2006 THEN? MY CLIENT IS DEFINITELY NOT GOING TO FILE C CORP BECAUSE IT WILL MESS UP HIS SEP IRA. WHAT ARE SOME OF THE SITUATION THAT HE CAN GET AROUND IT? | |
| 10 May 2006 | |
| What date did he incorporate? It would be on the Articles of Incorporation sent back from the Secretary of State. The deadline for filing S-Corp election is not March 15th for new corp, it starts when the Corp was formed. Also there are provisions for filing a late S-Corp election if you are past the date but it doesn't sound like you are too late. | |
| 10 May 2006 | |
| There may be some wiggle room these days, so all is not lost. The problem is that it may be months before you could know for sure, kind of messing up how the client does business in 06. Read your S election rules carefully, complete with recent Rev Procs for fixing intended, but late or defective elections. | |
TTtzulungTT (talk|edits) said: | 11 May 2006 |
| THANKS. IT WAS INCORPORATED ABOUT A MONTH AGO AND I DID FILED FOR S-CORP ALSO AND IT IS IN PROCESS TO BE AN S CORP---JUST WAITING FOR IRS FINALIZATION....SO EVERYTHING IS OK. THANK GOODNESS.
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| May 12, 2006 | |
| TT - Just adding some additional information in the event you have another client that incorporates - an S election (Form 2553) should be filed within 75 days of incorporating. In your case, the company incorporated 4/18/06 so the s-election filing would be due 75 days from the April date, which would be sometime around the end of June.
Sometimes corporations start as C Corps. and then elect to be an S Corporation in later years. The corporation can convert to an S Corp with the effective date being January 1st. In these cases, the Form 2553 would be due March 15th which equates to 75 days. Lastly, in the event that a taxpayer was too late to file for the S-election, if the initial corporate tax return has not been filed yet, you would probably be successful in still getting the s-election approved by writing a letter to the IRS. (There are specific code sections to refer to in the letter, refer to the IRS Publication for Corporations in the section that discusses S-Elections. | |
