CA professional service corporations

[DTS]

If an occupation (attorney) is included in the definition of a PSC, is it mandatory they file as one or can they elect to be classified as a regular corp? It appears from what I read on the CA SOS website and others that this is an optional election.

Am I reading this correctly?

Thank you,

Dennis

[dsi]

Dennis, my understanding is if your client is a C-corp, then your only choice is to file as a PSC. If they are an s-corp, then you wouldn't have to be concerned about it.

[DTS]

Psc

David,

From the info I read, that is what I understood, as well. This client is wanting to become an S-corp and I wanted to make sure she could. So that is good news.

Thank you,

Dennis

[Roland Slugg]

Dear Dennis

In California there is no distinction between PSCs and other corps. That is a federal distinction. California has a flat tax rate that applies to all corporations (except banks), so the distinction is unnecessary.

What you saw on the California SOS's web site probably referred to "professional corporations" versus "general corporations," a distinction that can affect who may own stock in the corp and, perhaps, the types of businesses it can conduct. The information has no bearing on the taxation of California corporations, a function that is administered by the FTB, not the SOS.

[DTS]

Roland

Thank you for the clarification. I may have confused the issue by starting my post "CA". My intent there was to get a CA preparer to jump in.

In doing some research on this, it was suggested we go to the State first, which is what I did. On the SOS site, when I read the regulation, which was specific to a PSC, to paraphrase, the wording said an attorney or a law firm could be included in this group and I wanted to confirm this and just make sure it was not mandatory.

Is this the same with the Fed? My client's firm would like to become an S-corp.

Thank you,

Dennis