Discussion:C Corporation Election
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| Whether it is a good idea to have a partnership taxed as a C corporation is another question entirely. But the answer to the queston Fairfax asked is, yes, the partnership must file an election to be taxed as a corporation on Form 8832.}} | Whether it is a good idea to have a partnership taxed as a C corporation is another question entirely. But the answer to the queston Fairfax asked is, yes, the partnership must file an election to be taxed as a corporation on Form 8832.}} | ||
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| + | {{ForumReplyPost|UserID=KatieJ|Date=22 October 2009|Text=P.S. Note that not every state will follow the fed by allowing an entity other than an LLC to "check the box" to be taxed as a corporation. Alabama is an example of a state that allows only LLCs to do so. Massachusetts was another until January 1, 2009. Alabama may be the only one that's left, but I'd check the state(s) involved to be sure the corporate election will be effective for state purposes.}} | ||
Revision as of 22:25, 22 October 2009
Discussion Forum Index --> Basic Tax Questions --> C Corporation Election
Discussion Forum Index --> Tax Questions --> C Corporation Election
FairfaxCPA (talk|edits) said: | 22 October 2009 |
| I have a client who formed partnership in August of 2009. However they want to file tax return as a C corporation. Do i need to make any election with IRS before i use form 1120? | |
Harry Boscoe (talk|edits) said: | 22 October 2009 |
| Partnerships file partnership returns. Corporations file corporation returns. You need to create a corporation that will be allowed/required to file as a corporation. The partnership "can't get there from here." Unless it's an LLC, which you didn't say.
You need to do something, and it's not with IRS... | |
FairfaxCPA (talk|edits) said: | 22 October 2009 |
| Thank u! for your reply. It is an llC so can i file 1120 | |
| 22 October 2009 | |
| Monica, you might want to look at Form 8832, now that you found out your 'partnership' is actually an LLC | |
| October 22, 2009 | |
| I suggest a thorough review of Reg. sec. 301.7701-2. Any partnership is an eligible entity. | |
| October 22, 2009 | |
| I also have to ask why do they want to be a C-corporation?
Search for "check the stupid box" for discussions on why having an LLC electing to be an S-corp may be a bad idea. (Or wait for JR1 to arrive). Since this entity just started a few months ago - perhaps a reconsideration of the whole entity choice should be revisited; with the attorney present. Here are a few, some a bit convuluted, but a lot of good info. | |
| October 22, 2009 | |
| At the risk of conducting a new seminar (please send money), I can't imagine too many scenarios where a C corp is the right choice. A. Huge medical expenses with no other employees B. Foreign owned C. Prior NOL's to use up (cannot apply to your situation) D. Jillions of shareholders E. There might be one or two more, tops. F. Well, ok, maybe someone who just likes paying more taxes, generally, and/or accounting fees to babysit the thing at year end to clear out profits. | |
| 22 October 2009 | |
| A partnership (or other unincorporated business entity) CAN elect under Treas. Reg. Sec. 301.7701-3 to be taxed as a corporation. To do so, you must file Form 8832 with the IRS. If you want it to be an S corporation for tax purposes, you can do both the corporate election and the S election together on Form 2553.
Whether it is a good idea to have a partnership taxed as a C corporation is another question entirely. But the answer to the queston Fairfax asked is, yes, the partnership must file an election to be taxed as a corporation on Form 8832. | |
| 22 October 2009 | |
| P.S. Note that not every state will follow the fed by allowing an entity other than an LLC to "check the box" to be taxed as a corporation. Alabama is an example of a state that allows only LLCs to do so. Massachusetts was another until January 1, 2009. Alabama may be the only one that's left, but I'd check the state(s) involved to be sure the corporate election will be effective for state purposes. | |
