sch C and scorp

[Unregistered]

Client converted from sole prop. to S on March 13, 2005.

Should I file Sch "C" for Jan & Feb and then file S crop return from March till Dec.

Or can I just file Jan to Dec S crop return/

Thanks.

[OldJack]

Check the form 2553 to elect S-corp and find out the effective date. If the corporation was in existance on January 1, 2005: Since he filed in March he probably elected to start the S-corp as of Jan 1. If so you do not file a Sch-C but would treat the whole year as S-corp transactions. Any business done before the "creation" of the corporation would have to be reported on 1040 Sch-C.

[Unregistered]

Check the form 2553 to elect S-corp and find out the effective date. If the corporation was in existance on January 1, 2005: Since he filed in March he probably elected to start the S-corp as of Jan 1. If so you do not file a Sch-C but would treat the whole year as S-corp transactions. Any business done before the "creation" of the corporation would have to be reported on 1040 Sch-C.

I looke at IRS acceptance letter. It says that "we have accepted your election as an S corp....beg March 11, 2005 He filed for s corp election in May of last year (2005).

This is a franchise - 7/11.
I can ask client to get P & L upto Feb (Or march 11) and another P & L from Mar (or Mar 11) to Dec. Should I prorate dep or just put all in sch c. I think two month won't make much diff.

Thanks

[OldJack]

You need to prorate anything that is not clear for the 1040 Sch-C as the corporation appears to have been created on March 11 so income and expenses before creation can't go into the corporation. Its probably not a big deal and nobody is probably going to care as long as you allocate something between the two.