This question is for Lane, JD. It is related to a question I asked a couple months ago. Some months ago I asked a question about a new forming corporation taking in earlier businesses from a couple and doing an S Corp election. I thought, after reading
your response, that this couple, who had started a couple of businesses, could elect s S-corp status as of the beginning of 2015 by doing a 2553 S corp election at end of year. However, the problem is /was they were simply two people with a couple businesses,
but these were small SE type businesses, and they had never incorporated or applied for LLC
status. Indeed they had just started business in 2015. They just incorporated in December, and I am sending off an S corp election that I wanted to elect as of beginning
of year. This was my intent when I asked you the original question. I am concerned I may have misunderstood your answer. I wanted to apply for S corp as of beginning of year. But at beginning of year they were two individuals
starting up small businesses.
My idea was to incorporate them, elect S back to start of year, and have them do the final payroll in Dec that paid them a reasonable salary for year, but gave the rest of their income
as s corp to them as dividend
. I suspect that this is impossible, and that
they were not eligible entity to do s-corp election until they incorporated, and that I thus cannot save them SE tax
by doing what I was planning
. if they incorporated Dec 1, and were simply a business prior to that, is there any way to legally pay them a
salary for the year and shield dividend income from SE tax???? This is a bit of a mess. And I looks like I ,misunderstood your answer. So I am trying to clarify it now.