An s corporation for united states federal income tax is a closely held corporation or in some cases a limited liability company llc or a partnership that makes a valid election to be taxed under subchapter s of chapter 1 of the internal revenue codein general s corporations do not pay any income taxesinstead the corporations income and losses are divided among and passed through. Your financial advisor may have told you of the potential benefits if you decide to have your llc file an election to be taxed as either a corporation or an s corporation.
Taxation Of An S Corporation The Why Benefits How Rules
election to be taxed as an s corporation
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An entity that makes the deemed election to be taxed as a corporation by filing the s election form 2553 will be classfied as a corporation on the date the s election is effective and will continue to be treated as a corporation until it makes an other entity classification regs.
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Election to be taxed as an s corporation. In order to become an s corporation the corporation must submit form 2553 election by a small business corporation pdf signed by all the shareholders. This form gives the irs detailed information about the corporation requesting s corp status and about the corporations eligibility for electing this status. Not be an ineligible corporation ie.
Certain financial institutions insurance companies and domestic international sales corporations. Form 2553 election by a small business corporation. This article discusses the benefits and process of filing such an election and how to use form 8832 for this filing.
The process for electing s corporation status begins with an irs application on irs form 2553. To show that the corporation agrees to adopt or change to a tax year ending december 31 if necessary for the irs to accept this election for s corporation status in the event 1 the corporations business purpose request is not.
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