Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

Does the Secition 137(a)(2) election need to be signed by all…

Customer Question
Does the Secition 137(a)(2) election...
Does the Secition 137(a)(2) election need to be signed by all stockholders of an S corporation? Or does the election get attached to Form 1120S stating that each affected shareholder consents to the corporation making the election?
Submitted: 3 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 48 minutes by:
6/3/2015
Tax Professional: Stephen G., Sr Income Tax Expert replied 3 years ago
Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7,468
Experience: Extensive Experience with Tax, Financial & Estate Issues
Verified
Hello, my name is***** & I'll be helping you today. My goal is to give you a complete & accurate answer that you can understand.
Are you talking about IRC 1362(a)(2)?
I ask because you question asking about IRC 137(a)(2) refers to adoptions, which would not apply to S-Corps?
If you are talking about the S-Corp election under IRC 1362(a)(2), then the answer is YES. All shareholders must sign the election individually. A blanket statement that everyone consents to the election, would not be sufficient.
Hope this helps.
If you have any questions, please don't hesitate to ask.
.
Ask Your Own Tax Question
Customer reply replied 3 years ago
No, I'm referring to Section 1377(a)(2). Let me know your answer to my question for this Section. Thx.
Tax Professional: Stephen G., Sr Income Tax Expert replied 3 years ago
OK, you are talking about ending the tax year when there is a change of ownership, ie. splitting the year into 2 tax years.
All of the shareholders who owned shares at any time during the calendar year must sign the election. The S-Corp will file 2 tax returns for that split year.
Normally, the election is made by attaching a statement to the S-Corp tax returns, usually on the Company letterhead.
.
Ask Your Own Tax Question
Customer reply replied 3 years ago
Either I have not made my question clear or you don't understand my question. There is one S corporation. It had one stockholder for many years. On April 1st, 2015 the one stockholder sold all of her stock to another person who effective April 1st, 2015 owns 100% of the stock in the S corporation. Rather than pro-rating the income to each of the two stockholders during the year based on their ownership during part of the year, they or the S corporation can make an election under Section 1377(a)(2) to allocate the S corporation income for the first 3 months of the year to the original stockholder and then allocate the income for the last 9 months of the year to the second stockholder - correct?? In this case the S corporation only files one tax return for all of 2015, but allocates the income to the two stockholders based on what the net income was during the time of the year each person owned the stock. You mentioned above in your answer that the S-Corp will file 2 tax returns for that split year. I don't understand how the S-Corp can file two tax returns for the one calendar year. It seems to me that the S-Corp only files one tax year for the 12 month period but allocates the income for each K-1 by splitting the net income into the first 3 months and the last 9 months of the year. Am I correct or am I totally confused??Can you email me a copy of the election statement that gets attached to the S-Corp tax return? Also, please email me a copy of the IRS rules addressing this specific topic either written by the IRS or by some well know tax research company.Thanks.
Tax Professional: Stephen G., Sr Income Tax Expert replied 3 years ago
No. I mis-spoke; what I meant to say was that the S-Corp will file 1 tax return combining the 2 separate taxable years with each taxable year reporting it's own applicable K-1s, not the entire 1120-S. Basically what gets confusing is that the books must actually be closed twice (once for each short-period taxable year) within the same calendar year.
We aren't given access to your email, so what I can do is give you a sample statement right here that you may use to for the required statement for the election & shareholder consents:
I am sure that you will have to adjust the spacing below, as it seldom comes through as printed in this basic editor.
SAMPLE ELECTION AND CONSENT FORM
TO USE THE INTERIM CLOSING OF THE BOOKS METHOD
During this tax year ended [date] ______________, a shareholder’s entire interest in the corporation was terminated. [Name of S Corporation] elects under IRC § 1377(a)(2) and Reg. § 1.1377-1(b) to have the rules provided in IRC § 1377(a)(1) applied as if the tax year consisted of two separate tax years.
The corporation and each affected shareholder whose signature appears below consent to this election, which is made with respect to the termination of the entire interest of [Name of Shareholder] , as follows:
Manner of Shareholder’s Termination: Sale of Entire Interest
Date of Termination: ____________________
SHAREHOLDER CONSENTS:
The following identified shareholders of [Name of Corporation], TIN [number], hereby consent to the corporation’s election under IRC § 1377(a)(2) and Reg. § 1.1377-1(b) to have the rules provided in IRC § 1377(a)(1) applied as if the tax year consisted of two separate tax years:
Date Shareholder Signature Taxpayer SS# Address
_________ __________________________ _________________ ____________________
....................................................... ____________________
_________ __________________________ _________________ ____________________
....................................................... ____________________
Now as far as "IRS Rules", here's a link from Cornell Law School which explains the relevant sections of the Internal Revenue Code.
https://www.law.Cornell.edu/cfr/text/26/1.1377-1
If you need something else, please let me know.
Please remember to rate my response as that is the only way we receive credit for our work.
.
Ask Your Own Tax Question
Tax Professional: Stephen G., Sr Income Tax Expert replied 3 years ago
Do you have any additional questions or may I clarify anything for you?
.
Ask Your Own Tax Question
Tax Professional: Stephen G., Sr Income Tax Expert replied 3 years ago
I would appreciate it if you would take the time to rate my response as that is the only way I receive credit for my work. Despite the fact that you have paid the site for this question, I will not receive credit for responding unless and until you provide a rating.
Thanks very much & thanks for using JustAnswer.com.
****Again, if there's anything else I can do for you, please just ask.****
.
Ask Your Own Tax Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Stephen G. Your Own Question
Stephen G.
Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7,468
7,468 Satisfied Customers
Experience: Extensive Experience with Tax, Financial & Estate Issues

Stephen G. is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,512 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
I need help for a copy of my income tax return for the year
i need help for a copy of my income tax return for the year 2015 if there is chance pls. … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
How do I download 2018 income tax return form. 2017/2018
how do I download 2018 income tax return form JA: Which tax year are you filing for? Customer: 2017/2018 JA: Anything else you want the Accountant to know before I connect you? Customer: no… read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,270 satisfied customers
In preparation for MN income tax return, we noticed a
In preparation for MN income tax return, we noticed a discrepancy and would like to receive a transcript for the 2016 income tax return for MN. We have a POA on both spouses, thanks, … read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,270 satisfied customers
It's not really a tax question. We've got tax return and
Hi Pearl, it's not really a tax question. We've got tax return and deposited it to the bank. Check was 11K+. this transaction didn't come to my account to help bank to trace it, I'd need to have payme… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
I'm working on form 990 tax return and I have a few
Hello - I'm working on form 990 tax return and I have a few questions. The nonprofit organization that I'm working on has approximately 9 employees all of whom average anywhere between $2k and $57k an… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
How do I correct my social security on tax return form that
How do I correct my social security on tax return form that was entered wrong … read more
Bryan M.
Bryan M.
Owner
Masters of Accountancy
148 satisfied customers
I just filed a client's tax return for 2014. Tax return
I just filed a client's tax return for 2014. Tax return filing was due 4/15/2015...filed 4/17/2018. - just met the 3 year filing window. If I need to amend, is there a new window of time to do this?… read more
abci168
abci168
Principal
27 satisfied customers
When a married couple files a joint income tax return, is
When a married couple files a joint income tax return, is there a way to determine how much tax to pay for the separate property income minus expenses, and how much for the community property income m… read more
abci168
abci168
Principal
27 satisfied customers
Can interest & charity donations be used on 2018 tax return?
Can interest & charity donations be used on 2018 tax return? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
VA income tax return form 760, Line 16, “ Taxable Income -
VA income tax return form 760, Line 16 , “Virginia Taxable Income - Subtract Line 15 from Line 9” what are the two bubbles “DTD” and “LTD” ? Should I fill in one ?… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
Will my tax returns be flagged/audited if I don't report tax
Will my tax returns be flagged/audited if I don't report tax credit of $1500 that I got in my 1095-A?… read more
abci168
abci168
Principal
27 satisfied customers
My mom is a dependent on my tax return with no work income.
Hello, my mom is a dependent on my tax return with no work income. She does receive few thousands of social security income. She received form 1095-A and says she is required to file a tax return. Whe… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Finally filing 2016 income tax returns. Filing as "married
Finally filing 2016 income tax returns. Filing as "married filing separate return". Did not live with spouse at all in 2016. What is she on my return: an exemption? a dependent? an alimony expense onl… read more
abci168
abci168
Principal
27 satisfied customers
Under reported $150,000 in 2016 tax return due to missing
under reported $150,000 in 2016 tax return due to missing the 1099 int. Forms form the bank which I made a redemption of a series 30 year EE bonds. IRS may add 20% Accuracy-related penalty. What shoul… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
On MD state form, you said Md net income was $12k+; last
on MD state form, you said Md net income was $12k+; last yr's form (2106) sd $27k+.. saw nowhere to compare or correct. Husband died 9/15/16. My first time filing single in over 30 yrs. Question was a… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
My mother in law passed away in 2016 and a final tax return
My mother in law passed away in 2016 and a final tax return was filed for that year. She received a 1099-int form issued with her ss# in 2017 for prepaid funeral expenses that the funeral director did… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
On Form 1065, which places do you report interest income.
For Partnership on Form 1065, which places do you report interest income. Such interest earned on a bank account balance by the Partnership.It seems like it needs be put on "Line 7. Other Income (Loss… read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,270 satisfied customers
I want to ask a question about Income tax return form 1040..
Hello I want to ask a question about Income tax return form 1040.. I want to fill form but My wife doesnt have any ssn number. She is housewife and she has no income. Which option should I choose from… read more
James Daloisio
James Daloisio
Attorney
Doctoral Degree
358 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x