Can anyone tell me if a letter from the IRS stating "you will be treated as an S corporation starting December 17, 2013," means they are considered an S Corp for 2013? Or does that begin for 2014? Thank you in advance.
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I take that to mean that the corp was formed on Dec 17, 2014 and immediately filed the 2553. If so, IRS will be looking for an 1120S for 2013. The return (or an extension request) must be filed by Mar 15 in order to avoid a penalty."The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith -
I guess... the IRS letter was dated March 10, 2014, but it stated that the company was an S Corp starting December 17, 2013. I just want to make sure that there isn't a short year as a S Corp - or is the company now an S Corp for all of 2013?
Thank you for helping me to understand this.
AnneComment
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On what date was the corporation formed?"The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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ah, it is a new client - all I have is the CP 261 letter from the IRS, dated March 10, 2014 accepting the S corp election. The LLC was formed in Dec 2013, the attorney who set him up filed the 2553 right away. From the letter it is an S corp beginning Dec 17, 2013. Does that mean it is an S corp for 2013 and therefore an 1120S has to be done by March 15 this year, 2014, for the entire tax year 2013?Comment
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Got my answer - the client just sent me the 2553 - S Corp for all of 2013. Thank you for your help.Comment
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It depends on whether the business operated prior to formation of the SCorp. If he was a sole proprietorship, for instance, and operated as such up until 12/17/13, then he would file a Schedule C for most of the year. The SCorp would file a short year for the balance if it received any income or paid any expenses since formation.Comment
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No its not an S Corp for all of 2013 if as you say the entity was formed in December of 2013.
You can't treat business transactions prior to the formation of an entity as business entity transactions. If the owner operated a business prior to the formation of the LLC taxed as an S corporation, you have to treat those transactions as a sole proprietorship. The 2553 or IRS letter acknowledging the 2553 cannot override the short tax year rules that apply to the first year of a corporation.Comment
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Thank you for the comments - the 2553 election was made for 01 01 2013 - but it also states "Caution. A corporation making the election for its first tax year in existence will usually enter the beginning date of a short year that begins on a date other than January 1"
So, even though the election is for Jan 1, 2013, he is a Schedule C until the incorporation date of 12-17-13? And then a short year S corp?
I hope so, that gets me out of my payroll panic....
AnneComment
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Thank you thank you thank you.
AnneComment
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