LLC to S Corp

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  • Safire
    Senior Member
    • Jun 2005
    • 253

    #1

    LLC to S Corp

    New Client

    Single Member LLC, which was formed mid year 2005 and filed on a Schedule C last year, has this year paid wages to the Single Member. ( All year long )

    My advice to him was to File 2553 asap, and file as an S Corp for this and future years as the potential for huge profits are in this company with already gross sales for this year at over 3 million.

    Is is correct that I no longer have to file the 8832? And what is the Rev Proc that I need to type across the top of form 2553, because it is passed the deadline for filing?

    Any help is truly appreciated.
  • Bill Tubbs
    Senior Member
    • Jan 2006
    • 495

    #2
    Originally posted by Safire
    Is is correct that I no longer have to file the 8832?
    Check out the instructions for Form 2553, the very first paragraph.

    Originally posted by Safire
    And what is the Rev Proc that I need to type across the top of form 2553, because it is passed the deadline for filing?
    My recollection is "Filed Pursuant to Rev Proc 2003-43", but I would suggest double-checking that...


    Bill

    Comment

    • Safire
      Senior Member
      • Jun 2005
      • 253

      #3
      Thanks Bill, I did actually look at the instructions, but overlooked that entirely.

      Just looked in The Tax Book too, and Rev Prov 2003-43 looks right.

      Relief is up to 18 months, but it's not automatic.

      Comment

      • OldJack
        Banned
        • Dec 2005
        • 1689

        #4
        Originally posted by Safire
        My advice to him was to File 2553 asap, and file as an S Corp for this and future years as the potential for huge profits are in this company with already gross sales for this year at over 3 million.
        You should give serious consideration to advising the client to incorporate as a C-corp.

        Comment

        • Safire
          Senior Member
          • Jun 2005
          • 253

          #5
          Jack, I agree. But there was some problem with the suppliers. He has a floor plan of inventory, and the suppliers were not going to allow him to purchase the business unless there were personal guaranties on the inventory. They didn't even like the idea of the LLC.

          He purchased an ongoing business that had a floor plan of inventory valued at over 300k.

          I think the deal was worked out somehow with an additional guaranty by the previous owners for a period of time.

          They really screwed up the entire thing in my opinion.

          The S Corp that was already in place should have continued on with K-1s issued to show the proper amounts. But instead they liquidated it and set him up to finl on a schedule C.

          Be back after lunch.

          Comment

          • jimmcg
            Senior Member
            • Aug 2005
            • 633

            #6
            Late Elections

            Simply note "Filed under Rev Proc 2003-43" on the 2553 and attach a statement establishing reasonable cause.

            Comment

            • Safire not logged in

              #7
              thanks jim

              Comment

              • dsi
                Senior Member
                • Dec 2005
                • 705

                #8
                Would a disregarded entity pay wages to the only member?
                Dave, EA

                Comment

                • sea-tax
                  Senior Member
                  • Apr 2006
                  • 971

                  #9
                  Originally posted by dsi
                  Would a disregarded entity pay wages to the only member?

                  If by disregarded you mean an llc -sch c or 1065 no . Wages are not permitted in these situations.

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