Running late with S corp election? 5 conditions for relief

If an S corporation conversion is in your future, you’ll need to prepare to make your IRS tax election properly and on time. Even if an election is late, though, a corporation can still get relief and avoid the negative consequences of being classified as a C corporation, if it meets these five conditions:

  1. Must have intended to be classified as an S corporation as of the requested effective date of the S election
  2. Must request relief within three years and 75 days after the intended effective date of the S election, with one exception
  3. Must have failed to qualify as an S corporation solely because the S election wasn’t filed by the due date of that S election
  4. Must have reasonable cause for its failure to make a timely S election and must have acted diligently to correct the mistake when it was discovered
  5. Must have all shareholders report their income during the period between the date the S election was to have become effective and the date Form 2553 is filed, on all affected returns consistent with the S election for the year of the election and all subsequent years; a statement to that effect must be attached to Form 2553

For more information about relief from late S corporation elections, please contact Bryan Keith at +1 202 861 4116.

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