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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28354
Experience:  Taxes, Immigration, Labor Relations
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I am thinking of converting my s corp to LLC. i have filed

Customer Question

I am thinking of converting my s corp to LLC. i have filed for the EIN, sales tax certificate and have done some business since ***** ***** under the S-corp. i was misguided and do not think the s is best so i don't have to deal with actual payroll. The company is part time, maybe will make 10K profit at the end of the year
JA: Thanks. Can you give me any more details about your issue?
Customer: my intention was to have a separate tax return for personal and the business. i was told an s would do that, however now i see it will not. I also didn't realize i would have to do reasonable wages, so that would mean payroll taxes, remittance of taxes ect....more work than it is worth for a part time seasonal job (actually my husband does the work, i do the books)
JA: OK got it. Last thing — Tax Professionals generally expect a deposit of about $32 to help with your type of question (you only pay if satisfied). Now I'm going to take you to a page to place a secure deposit with JustAnswer. Don't worry, this chat is saved. After that, we will finish helping you.
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

First of all - we need to know HOW you got S-corporation.
There are generally two ways - (1) you registered LLC and elect it to be taxed as S-corporation, or (2) you registered a corporation and elect S-corporation tax treatment;

In either way - you may revoke your election.

Expert:  Lev replied 1 year ago.

Assuming you used the first option - How the LLC will be taxed after revoking S-corporation election depends how many members that LLC has.
If that is a single member LLC - it will be disregarded entity - and all income and deductions woudl be reported on your individual tax return - schedule C.

But if you want to revoke original election - you will need to file the SAME form as you used when election was originally made.

Expert:  Lev replied 1 year ago.

https://www.irs.gov/pub/irs-wd/10-0249.pdf

An S corporation election may be revoked only if shareholders holding more than
one-half of the shares of stock of the corporation on the day on which the revocation is
made consent to the revocation. Section 1362(d)(1)(B). A revocation made during the
taxable year and on or before the 15th day of the third month shall effective on the first
day of such taxable year. Section 1362(d)(1)(C)(i). A revocation made during the
taxable year but after such 15th day shall be effective on the first day of the following tax
year. Section 1362(d)(1)(C)(ii). If the revocation specifies a date for revocation which is
on or after the day on which the revocation is made, the revocation shall be effective on
or after the date so specified. Section 1362(d)(1)(D).
To revoke an S corporation election, the corporation files a statement that it is
revoking the election under § 1362(a). This statement must be filed with the service
center where the S corporation election was properly filed. The revocation statement
must include the number of shares of stock (including non-voting stock) issued and
outstanding at the time the revocation is made. In addition, the revocation statement
must be accompanied by the consent of shareholders holding more than one-half of the

issued and outstanding shares of stock. A shareholder consent must be in the form of a
written statement that sets forth the name, address, and taxpayer identification number
of the shareholder, the number of shares of stock owned by the shareholder, the date
(or dates) on which the stock was acquired, the date on which the shareholder’s tax
year ends, the name of the S corporation, the corporation’s taxpayer identification
number, and that the shareholder consents to the revocation. This statement must be
signed by the shareholder under penalties of perjury. Section 1.1362-6 of the Income
Tax Regulations.

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