Discussion:Sole Proprietor to S corp election

Agree with Riley, just added what I hope is clarification.

(A) at any time during the preceding taxable year, or

(B) at any time during the taxable year and on or before the 15th day of the 3rd month of the taxable year.<--- March 15, for an 2008 election

Under section 1362(b)(3), if an S corporation election is made for a taxable year after the 15th day of the 3rd month (March 15, 2008) of that taxable year and on or before the 15th day of the 3rd month March 15, 2009) of the following taxable year, then the S corporation election is treated as made for the following taxable year." Year 2009 is that following year.

I would wait until 2008 and in the meantime start acting like an s corp..

When I set up the depreciation schedule in the tax program, what date will I use as the purchase date - actual date, or date of the election to be taxed as an S-corp which is Jan 1, 2008?

This research has led me to some interesting information that I didn't know about prior. It seemed so simple and it also had to be done because my client was on payroll as a SMLLC. Any guidance and advice of pitfalls to avoid will be appreciated. It would be wonderful if I can be prepared to do this return when the time comes by getting things in order now and doing whatever research needs to be done before the tax season starts.

http://www.jstor.org/pss/1071687

Sec. 167(c)(1)

The depreciation continues on as if there were no tranfer. See Sec. 168(i)(7).

   As for the EIN, does it belong to the individual - i.e., the one owner of the Schedule C LLC, that's really a disregarded entity, but which will become a non-disregarded entity [it's getting deep here] when there's a second owner - and therefore the "new" entity will need another EIN, not the same one?   
   Just musing, just musing...   Maybe IRS has a published ruling on how to move from a SMLLC to a Multi-owner LLC electing to be taxed as a corporation and as an S corporation and when a new EIN will be needed...  Just musing.

If you do want to be treated as an s corp, HB is correct, you need to first make the election to be treated as a corp on form 8832 and then the s election on form 2553. The instructions to form 8832 specifically say not to obtain a new EIN if you already have one, so it sounds like the original EIN can be used for either a partnership or an s corp.