S CORP TO C CORP

[WITAXLADY]

LLC formed and elected S corp status for 2012, hasn't filed yet.

Now wants to be C corp due to many factors - main one making $600,000 in 2013

2012 year - 0 - for bottom line

file as S corp for 2012? or just dissolve and file as C corp to start so the equipment etc

does not have to transfer over..

I have done C's to S's but not the other way around.

Please help so we can put it on the proper form and mail in.

Thank you

D

[Guest Taxed]

I used to work at a place where my boss (a CPA) was doing a lot of S and C returns. If I remember correctly the S corp owners will need a board resolution with all owners agreeing to convert their business from an S to a C corp at a certain effective date (I think it is the next financial year). You file your last 1120s with a copy of that resolution to indicate that it will be the last 1120s return and the next year you are filing 1220. I think assets are transferred at book value to the C corporation.

Obviously with a C corp now you have double taxation. One at the corporate level and another at the shareholder level.

If this were my client I would recommend strongly to get an experienced attorney involved to take care of the legal and filing requirements. Also my engagement letter would define my scope very tightly.

I am sure there are other CPAs on this board more experienced with this matter.

[Pacun]

Double taxation of 0 is not a lot.

Keep in mind that if you file 1120, all payroll taxes are late.

[ed_accountant]

See form 1120S page 1 Box H for check the box to terminate the Scorp election.

Then you will need to re-file form 8832, Entity Classification Election, for the C corp election. Read the instructions for timely election filing.

[jshtax]

See form 1120S page 1 Box H for check the box to terminate the Scorp election.

Then you will need to re-file form 8832, Entity Classification Election, for the C corp election. Read the instructions for timely election filing.

Interesting. I was curious if you have to refile the 8832. I have an LLC that elected S status that on 12/31/13 will be terminated because they are admitting a non allowed s corp shareholder. So it defaults back to LLC as partnership then you have to make election to be taxed as corp?

[Mr. Pencil]

Interesting. I was curious if you have to refile the 8832. I have an LLC that elected S status that on 12/31/13 will be terminated because they are admitting a non allowed s corp shareholder. So it defaults back to LLC as partnership then you have to make election to be taxed as corp?

Terminating S-status does not revoke the election to be taxed as a corporation. (Reg. 301.7701-3( c)(1) might address that.) But be careful--if the new shareholder comes on 12/31, you must file two short years! Unless that's what you want, have the termination be effective on the FIRST day of the next tax year.

[jshtax]

Terminating S-status does not revoke the election to be taxed as a corporation. (Reg. 301.7701-3( c)(1) might address that.) But be careful--if the new shareholder comes on 12/31, you must file two short years! Unless that's what you want, have the termination be effective on the FIRST day of the next tax year.

So if you go back to being an LLC -partnership you then need to file the 8832.