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CGCPA
CGCPA, CPA
Category: Tax
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Experience:  over 40 years experience in tax matters
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I just recently found my return that I thought I mailed out.

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I just recently found my return that I thought I mailed out. We are a llc and the first year we filled out 1120s and 2553 form to elect for S Corp. Now irs says because they never recieved our original first year return on time we must use form 1120. We had a business loss that year of over $25k that was put on a K-1. How long will it take to transfer the info on the 1120s to an 1120 form and will this 1120 form affect us in anyway different than the 1120s?
Submitted: 2 years ago.
Category: Tax
Expert:  CGCPA replied 2 years ago.

Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.

The information transfer is only about a 30 minute process but it is the impact of this change that will be most important. Using an 1120S provides, via schedule K-1 a tax share of the loss to be recognized by the individual shareholders. The 1120, on the other hand, does not provide this loss transfer to the individuals. Thus, all shareholders will need to be notified that their K-1 forms are invalid and they will need to file amended personal returns eliminating any tax benefit they received from the loss and possibly increasing their tax obligation. With an 1120 (C Corp) return the loss is retained by the corporation and used to offset future income. There is an available option, request relief for a late filed election. To do this see that heading in the instructions for form 2553 available at www.irs.gov If you are able to obtain relief it will save you time and the shareholders will save money.

Customer: replied 2 years ago.
So how does a $8000 loss from a supposedly s corp reported on my personal affect what I might owe once it's ammended and there is no loss to claim because its a c corp? Trying to get an idea of the percentage I may owe personally by not keep the $8k claim.
Expert:  CGCPA replied 2 years ago.
That is dependent on your other income in its entirety. However, you can safely figure a 15% effective tax cost ($1,200) plus interest. The amended personal return is done on form 1040X which is available at the IRS web site www.irs.gov The other shareholders should also use the 15% as an estimate of their tax cost. The actual amount may vary due to other income and deduction changes but it is a good ball park number to work with. The items which can be impacted include itemized deductions (medical and miscellaneous) and the taxable portion of Social Security benefits.
CGCPA, CPA
Category: Tax
Satisfied Customers: 3740
Experience: over 40 years experience in tax matters
CGCPA and 7 other Tax Specialists are ready to help you
Customer: replied 2 years ago.
Ok thank you very much for this understanding
Expert:  CGCPA replied 2 years ago.
You are welcome. Please feel free to return any time we can help.
Customer: replied 2 years ago.
So will I most likely be audited because we have to amend our personal returns for 2009? Or is it usually straight forward.
Expert:  CGCPA replied 2 years ago.
This is a relatively straight forward matter and is unlikely to be audited.
CGCPA, CPA
Category: Tax
Satisfied Customers: 3740
Experience: over 40 years experience in tax matters
CGCPA and 7 other Tax Specialists are ready to help you

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