LLC taxed as S-Corp changing to Sch C...

[AZ-Tax]

An LLC that elected to be taxed as a S-Corp in 2006 & 2007, is now down to a 1 member LLC. The LLC had gross revs around $400,000. Can the LLC change its taxing status to a Sch C? If so what form is needed and how many days prior to 1-1-09 (beginning tax year for LLC) does the form need to be submitted to IRS?

[Lion]

Dissolving

Going up the entity ladder is less complex than coming back down. You'll dissolve the S-corp and distribute its assets at FMV to the shareholders. Your client will form a new LLC. See your state's Secretary of State web site for dissolution and formation requirements and forms. Also, read the current articles of incorporation and operating agreement to see what's required to end your particular S-corp.

[JON]

Lion

is right, but remember you have having a taxable event-why do it if it causes taxes???

[ChEAr$]

What?

Going up the entity ladder is less complex than coming back down. You'll dissolve the S-corp and distribute its assets at FMV to the shareholders. Your client will form a new LLC. See your state's Secretary of State web site for dissolution and formation requirements and forms. Also, read the current articles of incorporation and operating agreement to see what's required to end your particular S-corp.

What is that about dissolving the S corp? This was an LLC taxed AS an S corp, so
nothing to dissolve.

however some, if not most, states do require some paperwork when composition changes.

[BHoffman]

AZ requires amended articles of organization that reflect the change in composition. Go to:

http://www.cc.state.az.us/divisions/corporations/filings/forms/ll0022.pdf