Can an s- election that was sent in with form 2553 be nullified and changed to diregarded entity (single member llc) in the initial year? I have a client that elected to be treated as a s corp in 2015(initial year) and I need to know if it can be nullified. The tax return is on extension and as of yet has not been sent in. I would appreciate anybody's help.
August 19, 2016 at 11:02 AM
Raj said...
Thanks a lot,
November 30, 2016 at 2:07 PM
Anonymous said...
The section for shareholder consent should include a line for the shareholder's address and the date on which the shareholder's tax year ends. Both are required for shareholder consent per Subchapter S.
Is the revocation included as part of the return or should it be mailed separately to the IRS. I am referring to the cover letter as well as the shareholders' consent?
I filed the form 2553 but due to IRS delays I received the approval after my 1120 was filed, can i request the election date change to another year?? to avoid filing a new 1120-S and amend personal returns.
December 11, 2023 at 9:52 AM
While entities taxed as S-Corps are the default recommendation of most business and tax planners, there are a number of benefits derived from being taxed as a C-Corp that should be carefully considered. C-Corps can deduct expenses that other tax entities cannot, such as 100% of the health insurance paid for employees, including shareholders in the corporation, as well as the costs of any medical reimbursement plan. While C-Corps do leave its shareholders open to the notorious double tax, this may not be a problem if profits are low.
If after careful consideration with your CPA, you decide that you would like to revoke the S-Corp status of your closely-held business, the following is a form letter that can be used:
_______________ ____, 20____
Department of the Treasury
Internal Revenue Service
_______________, ____ __________
Re: Revocation of S Corporation Election of _______________, Inc., Taxpayer Identification Number: ____-______________
To Whom It May Concern:
Notice is hereby given, pursuant to Section 1362(a) of the Internal Revenue Code, that _______________, Inc., a corporation incorporated in the State of _______________, with address of _______________, _______________, ____ __________, revokes its S corporation election filed with you on IRS Form 2553 dated _______________ ____, 20____.
The number of shares of the corporation’s stock (including non-voting stock) issued and outstanding at the time of this revocation is __________. The first taxable year for which this revocation is intended to be effective is the corporation’s taxable year beginning _______________ ____, 20____. Required shareholder consents to this revocation of election are attached.
Sincerely,
______________________
President of _______________, Inc.
Shareholders' Consent to Voluntary Revocation of
Election of S Corporation Status
The undersigned, being shareholder(s) of _______________, Inc., a corporation incorporated in the State of _______________, hereby consent to the revocation of its election under Section 1362(a) of the Internal Revenue Code to which this consent is attached. The address of the corporation is _______________, _______________, ____ __________. The corporation’s Taxpayer Identification Number is ____-______________. Each of the undersigned shareholders taxable year ends on December 31.
The undersigned shareholders’ name, address, taxpayer identification number, number of shares owned, and date acquired are as follows:
Shareholder Name: Address: TIN: No. of Shares: Date Acquired:
"Sample Form for S-Election Revocation"
18 Comments -
Very good!.
These words I need now to close my little S.
Thank you very mach.
Lzrf
February 14, 2014 at 7:17 AM
Thank you so much. Very well written.
I could not find a current reference to the IRC 1372(a) & 1372(a)
September 15, 2014 at 8:48 PM
According to this https://www.irs.gov/pub/irs-prior/p589--1995.pdf, it's IRC 1362(a).
January 8, 2016 at 6:13 PM
Sorry about that, I've updated the post.
May 16, 2016 at 12:58 PM
Can an s- election that was sent in with form 2553 be nullified and changed to diregarded entity (single member llc) in the initial year? I have a client that elected to be treated as a s corp in 2015(initial year) and I need to know if it can be nullified. The tax return is on extension and as of yet has not been sent in.
I would appreciate anybody's help.
August 19, 2016 at 11:02 AM
Thanks a lot,
November 30, 2016 at 2:07 PM
The section for shareholder consent should include a line for the shareholder's address and the date on which the shareholder's tax year ends. Both are required for shareholder consent per Subchapter S.
December 17, 2016 at 11:10 PM
Good catch, I've updated the post again.
December 22, 2016 at 3:41 PM
Is the revocation included as part of the return or should it be mailed separately to the IRS. I am referring to the cover letter as well as the shareholders' consent?
Thanks
Mike
February 22, 2017 at 2:48 PM
A revocation is filed separate from any tax return at a different IRS address; see the instructions to Form 1120S.
February 23, 2017 at 1:04 PM
Can you tell me where i mail the chanhe request from s corp to c? I cannot find any info on this. Thanks
February 26, 2017 at 3:59 PM
Can you tell me where i mail the chanhe request from s corp to c? I cannot find any info on this. Thanks
February 26, 2017 at 3:59 PM
Very helpful, thank you for sharing!
May 30, 2017 at 5:51 PM
Can I file the termination letter for the prior year (current Tax year)?
February 28, 2018 at 6:17 PM
Where do you mail the document to?
April 19, 2018 at 1:55 PM
On the IRS page it says that it has to be signed under penalty of perjury. Do you add language for that?
March 7, 2019 at 11:59 AM
Thank you for posting this, it was of great help.
February 9, 2022 at 1:36 PM
I filed the form 2553 but due to IRS delays I received the approval after my 1120 was filed, can i request the election date change to another year?? to avoid filing a new 1120-S and amend personal returns.
December 11, 2023 at 9:52 AM