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Jax Tax
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1375
Experience:  JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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I started an LLC as a single-member disregarded entity in Jan

Customer Question

I started an LLC as a single-member disregarded entity in Jan 2011. I would like to change an S Corp. know that it is too late to change classification for the entire tax year. Can I file form 8832 effective 8/1/11? and if so, do I also need to file form 2553 to elect S Corp Status? And if the answer is yes to both of these, do I file Sch C for Jan-July and a short year 1120S ?
Submitted: 2 years ago.
Category: Tax
Expert:  Jax Tax replied 2 years ago.

Jax Tax : You only need to file the 2553. Anything you are looking at that says otherwise is outdated.
Jax Tax : You can wait and make the election retroactive with your return 1120s for the entire yearpr split it up by filing now. Part school c part 1120s.
Jax Tax : Keep in mind, as an 1120s filer, you mist pay yourself as a w2 employee of the business which will add many additional filing requirements for the IRS and the state if you do not currently have employees. You wage must be reasonable based on all facts and circumstances.
Customer:

I need to make the election now; I am employed by a university and they will contract me as a company only if I am taxed as a corp. So is the short year OK?

Customer:

And thanks, XXXXX XXXXX how to handle payroll taxes

Customer:

I am confused by the 2553 instructions that says the election must be made within 75 days of the start of the tax year.

Customer:

Complete and file Form 2553:





  • No more than two months and 15 days after the beginning of the tax year the election is to take effect, or




  • At any time during the tax year preceding the tax year it is to take effect.





 


 

Customer:

This seems inconsistent with your reply

Jax Tax : The tax year will star now. You are confusing January with the tax year. The tax year begins when the election is made. It is stating you can only retroactively begging your tax year 75 days back.
Jax Tax : PaPaI think the university has not communicated well enough. I think they just want you to have an EIN which can be done in 5 minutes at IRS.government
Jax Tax : I would do that and provide them the EIN. I really think that will do it. You are going to take on a whole lot of responsibility making the 2553 election.
Jax Tax : I really don't think they understand hat a disregarded entity is.
Jax Tax : They want to prevent paperwork by hiring a company not just a corporation. What they really want is the EIN. Take that to them with the LLC name on it and your in.
Customer:

Actually they already have my W-9 with EIN and certificate of commercial insurance, but Purchasing apparently has been given grief by the IRS over this issue.

Customer:

My sole concern at this point is the timely filing. F2553 question F (Tax Year) has the choice of calendar year, Fiscal year, 52-53 week year ending with reference to Dec, and 52-53 week for any other month. Choice of a fiscal year other than the calendar year requires a written justification of business purpose

Customer:

OK - having read E and F *very* carefully I see that you can enter an effective date for Item E and still choose a calendar year for a tax year. Thanks for your assistance

Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1375
Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
Jax Tax and 8 other Tax Specialists are ready to help you
Expert:  Jax Tax replied 2 years ago.
You will choose calendar year.

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