LLC formed and elected to be taxed as a S Corp. They have filed 2 1120S since then. They have decided they do not want the aggravation of filing all the quarterly payroll reports that go along with the S Corp and want to switch back to being an LLC and filing as Sole Prop.

I know to do this I need to withdraw the election to be taxed as an S Corp, and file a new Form 8832. I also need to stop the payroll reports.

They want to do this effective December 31st, 2016. Their personal and S Corp for 2016 is on extension. They intend 2017 return to be filed as LLC being taxed as Sole Prop.

What are some of the things we need to look out for?

How do we handle the basis in property currently under depreciation?

Are there any tax consequences for the assets that were 179 expensed?

Thanks for any help and knowledge you can provide on this situation. Keep in mind we are keeping the LLC, but just wanting to change from being taxed as S Corp to Sole Prop.

Thanks