Diane Posted October 24, 2007 Report Share Posted October 24, 2007 My client, a C corp since 1973, provided engineering services. Up until 5 years ago it was an active company with employees. No problem. The C corp had a fiscal year end of June. Has filed tax returns since 1973 as a June year end. The company is currently only active doing small jobs and collecting some receivables still owed to them. There are no employees. They are running with a big NOL carryover. No taxes due, no payroll, etc. The original owner has retired and turned the stock over to his son. The IRS sent a letter stating that the company now seemed to be a Personal Service Company. After reading up on PSC I filed the June 2007 (2006 Return) as a PSC (with the NOL, so no taxes due). Now IRS says that the corporation should have filed for a Change in Tax Year to a calendar year using Form 1128. On the Form 1128 there is a box to check to retain the current tax year. The company would like to retain its tax year. My question: Did I do right in filing as a PSC? and how should I fill out the Form 1128? I'm just no familiar with the form (or, for that matter, a PSC). Diane Quote Link to comment Share on other sites More sharing options...
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