1120s

[Bonnie]

I am working on an 1120S. This is actually my first so any advice or help anyone wants to give will be appreciated. In reading the instructions, I find that a 2553 should be filed first. This seems like a form that should have been filed when they elected to be an
S Corp. Is that correct? Also I am trying to decided where to enter wages paid to the employees. Business is a coffee shop and I can't decide if the wages should go in as part of the cost of goods sold, or on line 8? Any advice will be appreciated.

Thank You
Bonnie

[Bill Tubbs]

I am working on an 1120S. This is actually my first so any advice or help anyone wants to give will be appreciated. In reading the instructions, I find that a 2553 should be filed first. This seems like a form that should have been filed when they elected to be an
S Corp. Is that correct? Also I am trying to decided where to enter wages paid to the employees. Business is a coffee shop and I can't decide if the wages should go in as part of the cost of goods sold, or on line 8? Any advice will be appreciated.

Thank You
Bonnie

Correct -- the 2553 should have been filed at the time they elected to be an S Corp. Without more details (whether a LLC or Corp, how long it's existed), it is hard to address further.

Wages paid:
-- to people that are not officers (i.e. normal "employees") - line 8
-- to officers - line 7

Bill

[Bonnie]

[QUOTE=Bill Tubbs;33678]Correct -- the 2553 should have been filed at the time they elected to be an S Corp. Without more details (whether a LLC or Corp, how long it's existed), it is hard to address further.

It is an S Corp and was incorporated 3/31/2006

Thanks for your help
Bonnie

[Bees Knees]

TTB, page 19-4 gives you several ways to correct a late Form 2553. You may still be considered an S Corp from day one, if you follow one of those procedures.

As to the wage thing, you generally do not include wages in cost of goods sold unless it is a manufacturing business. A service type business, such as a coffee shop should not include wages in COGS.

[ChEAr$]

REmember

[QUOTE=Bonnie;33680]

Correct -- the 2553 should have been filed at the time they elected to be an S Corp. Without more details (whether a LLC or Corp, how long it's existed), it is hard to address further.

It is an S Corp and was incorporated 3/31/2006

Thanks for your help
Bonnie

Bonnie, that the corporation does not enjoy subchapter S classification until two things
have occurred: a 2553 has been properly filed with IRS AND a confirming letter from
IRS has been received granting the request.

Sounds like that hasn't occurred, right?

If it has not been done, there is a way to correct it. Just let me know
at lunstax@bellsouth.net

[Bonnie]

[QUOTE=ChEAr$;33717]

Bonnie, that the corporation does not enjoy subchapter S classification until two things
have occurred: a 2553 has been properly filed with IRS AND a confirming letter from
IRS has been received granting the request.

Sounds like that hasn't occurred, right?

If it has not been done, there is a way to correct it. Just let me know
at lunstax@bellsouth.net

Thanks for the help. Now I find out the 2553 actually was filed. But the form was not with other paperwork and so it seemed as if maybe they didn't file. I was quite concerned for awhile until they finally found they had filed it. I did file an extension of time for the 1120S as I only received the information yesterday to do the return.

Thanks
Bonnie

[rosieea]

Also I am trying to decided where to enter wages paid to the employees. Business is a coffee shop and I can't decide if the wages should go in as part of the cost of goods sold, or on line 8? Any advice will be appreciated.

Thank You
Bonnie

Put the wages on Line 8.

[OldJack]

Line 7 & 8 are for wages where a W2 was issued. Money taken out of the business other than W2 wages are called property distributions and go on page 3, line 16d.

[ChEAr$]

So the form 2553 was filed:

[QUOTE=Bonnie;33719]

Thanks for the help. Now I find out the 2553 actually was filed. But the form was not with other paperwork and so it seemed as if maybe they didn't file. I was quite concerned for awhile until they finally found they had filed it. I did file an extension of time for the 1120S as I only received the information yesterday to do the return.

Thanks
Bonnie

Now what's the "rest of the story?"

Did IRS approve the request? Does client have the appropriate letter from IRS
saying they approve?
Got to have that.