Filing a 2553 S-Corp Election

[WhiteOleander]

I am confused. (what's new) My client and his wife have been filing 2 Sch C's (we're in a community property state) for their business for quite a few years. They have now incorporated. Wife is the sole shareholder. I have the letter issusing the EIN. I want to file the 2553 to make it an S-Corp. Can they file a short year S-Corp this year? If so, what do I put on line "E". "Election is to be effective for tax year beginning (month, day, year)".

I have confused myself because if i read the instructions correctly, they had to make the election by 3/15/2011 to be an S-Corp this year.

Thanks

[oceanlovin'ea]

I believe you can make the election with the filing of the first tax return for the s corp.

Linda, EA

[kpangelinan]

I am confused. (what's new) My client and his wife have been filing 2 Sch C's (we're in a community property state) for their business for quite a few years. They have now incorporated. Wife is the sole shareholder. I have the letter issusing the EIN. I want to file the 2553 to make it an S-Corp. Can they file a short year S-Corp this year? If so, what do I put on line "E". "Election is to be effective for tax year beginning (month, day, year)".

I have confused myself because if i read the instructions correctly, they had to make the election by 3/15/2011 to be an S-Corp this year.

Thanks

I've always put the date of the start of the corporation. For example, you start the corporation 11-1-2011, then the date I put on the "tax year beginning" line is 11-1-2011 and then file a short year return from 11-1-2001 through 12-31-2011 if the Corp is going to be a calendar year corp.

[WhiteOleander]

I've always put the date of the start of the corporation. For example, you start the corporation 11-1-2011, then the date I put on the "tax year beginning" line is 11-1-2011 and then file a short year return from 11-1-2001 through 12-31-2011 if the Corp is going to be a calendar year corp.

Thank you. That was what I was thinking. So, I can send the 2553 with the short year date and still file the return by 3/15/2012? I think what I'm confused about is it seems they would have had to make this election by Mar 15 of this year to be an s-corp this year. But, they weren't an s-corp earlier this year.

[kpangelinan]

Thank you. That was what I was thinking. So, I can send the 2553 with the short year date and still file the return by 3/15/2012? I think what I'm confused about is it seems they would have had to make this election by Mar 15 of this year to be an s-corp this year. But, they weren't an s-corp earlier this year.

Yup, just send it in now and within a month or so, you'll receive an approval letter for the election and then file your 2011 short year 1120S on 3-15-2012.

The rules are different if there was no prior year for the corporation. Normally, what you wrote about 3-12-15 election is for corporations who have had prior tax years.

For no prior tax year (or newly started corporations) the election has to be made no more than 2 months and 15 days after the beginning of that short year's start date.

[WhiteOleander]

Thanks very much.