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The tax implications of the switch would include paying tax on the built in gains (BIG) of the C Corp's assets
If there are NOLs, they would be lost as gains and losses go to the shareholder directly and not through the corp itself
If the corporation's inventories were being valued according to the LIFO method, tax must be paid on the benefits from using that method when switching to S corporation status.
Only on appreciated assets correct? I dont think we have any as we do not have real estate or investments. Our inventory is on the fifo method...
Okay then you should be fine. It's when there's a large amount of fixed assets when the BIG really takes off
Depreciated real estate or machinery - things like that
we do have machinery... so that would be our main concern... but only if we sold any of it within the next 10 years correct?
That is correct.
the C corp has a fiscal year end of 9/30... how do I handle that?
You would have a short year of 10/1 to 12/31 for the new company
Or the S corp
ok... so I should file my 9/30/13 return as C-corp.. convert as of 10/1/13 and file a 12/31/13 short year return?
Yes, that would be correct
and then just file the 2553
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Tax, finance, and social security