Late filing of Sub S election

[cred65]

Is this late election still available for 2008 for an LLC that has been filing as 1065?

If so what would be a reasonable cause explanation on Form 2553?

[jainen]

>>what would be a reasonable cause explanation on Form 2553? <<

I'm always uncomfortable with this question because it suggests to me some excuse rather than actual circumstances. One thing that is extremely important is to show that the decision was based SOLELY on factors that were in place prior to the original due date of the election (3/15/08), so you are not using hindsight to take advantage of, for example, real estate losses or a sales slump that occurred later in the year. It's okay to color the explanation with language that truthfully emphasizes certain aspects of the timing, such as being beyond the taxpayer's control in spite of a rigorous attempt to comply.

My understanding is that the IRS is fairly tolerant of late elections. However, you are way past the six month limit so you probably won't succeed without a Private Letter Ruling. You need a strong argument backed with excellent documentation.

[ed_accountant]

I would suggest you tell the client that it is too late for year 2008 and file on time for year 2009.

I believe you will also need form 8832, Entity Classification Election, filed with your form 2553. You file these forms together. For year 2009, you have until March 15 to make the election. See the instructions on both forms.