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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3375
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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I'm helping a partnership convert to an S-Corp. They net

Customer Question

I'm helping a partnership convert to an S-Corp. They net over $100,000 and pay $100,000 guaranteed payments to the 2 general partners. They also take huge distributions so there's never any cash and they complain about the amount of taxes they owe every
year. So, they'd like to convert to save on the SE taxes. Questions: How do we go about making this conversion? What time limits are there? Thank you
Submitted: 2 years ago.
Category: Tax
Customer: replied 2 years ago.
Is there something 'wrong' with my question? Been waiting almost 3 hours and 3 experts have worked on my question but have gotten no responses!?
Customer: replied 2 years ago.
I'm reading that I have to file #2553 and can be retroactive up to 75 days, so about 3/31/15, is that correct?
Expert:  Barbara replied 2 years ago.
Welcome to Just Answer. My name is ***** ***** I will be happy to assist you today.
I apologize for the delay you have experienced with receiving an answer, but in all honesty, the question value is on the "low" side for the level of knowledge and expertise required to provide an answer.
In any event, you would file Form 8832 to change the entity classification from partnership to corporation as well as Form 2553 to elect subchapter S status.
http://www.irs.gov/uac/Form-8832,-Entity-Classification-Election
While there are time constraints, the IRS is usually very flexible about granting "late election relief." For example, you can file Form 8832 and Form 2553 to take effect for tax year 2015. You will also then attach copies of both forms to Form 1120S which is filed for the S corporation for tax year 2015.
Please let me know if you require further information or clarification.
Thank you and best regards,
Barb
Expert:  Barbara replied 2 years ago.
Just following up with you to see if you have any other questions or concerns. If so, please come back to me here at your convenience, and I will be happy to assist you. If not, please take a moment to rate my answer since that is the only way I receive credit for answering you and alerts Just Answer to compensate me.
Best regards,
Barb