Taxpayer has filed an 1120S in past but came to me recently and his return did not get filed for 2025. I did file an extension for his personal return for 2025 and waiting on information to prepare both the business and the personal return. Is it possible to switch from the 1120S and put all the business income and expenses on Sch C instead of the 1120S. I know to go to 1120S you have to elect to file as an S Corp. If he would choose to no longer be an S Corp is it too late now to file that for the 2025 tax year, or is he now committed to filing the 1120S for 2025.
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He is committed to filing the 1120S for 2025 since the corporation was still in existence in 2025 as well as 2026 until the corporation notifies the state's tax department as well as the Secretary of State for dissolution. It's too late for 2026 to file for final year - that deadline passed on March 15th. The corporation is also obligated to notify each and every tax authority of S Corp's final filing and apply for new EI numbers for the Schedule C business.Uncle Sam, CPA, EA. ARA, NTPI Fellow -
I think you need to take a hard stop.
Going from a Sch C to an Scorp is not terrible, but several key changes (payroll, sept return, well kept financials, possibly entity changes)
Going from an Scorp to a Sch C can be a taxable event from the taxpayer especially if there are assets involved. Not someone I would want to handle if you asking these sorts of questions to begin with.
Chris
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One more thing - if the S Corp is dissolving I suggest you prepare the usual corporate dissolution papers for the IRS and respective state as well as prepare the IRS Form 966 -
Uncle Sam, CPA, EA. ARA, NTPI FellowComment
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Thank you all. It's kinda a mess and was just thinking this might help but probably not. I have the 1120S for 2024 and previous accountant did not do payroll so he did not pay himself a reasonable wage in 2024 or 2025 so that was not correct. I just need to get more information when I meet with him tomorrow when he brings info for 2025. So far all I have is the 2024 returns for both 1120S and 1040. My thought was since no wages paid to self just go back for filing a Sch C but if that's not gonna work I will have to see what we need to do. For most people I wouldn't even attempt this but he's kinda a friend who I'd like to help if I can figure out how to do soComment
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