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My corporation was C corp but I changed it to S corp. I want…

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My corporation was C...

My corporation was C corp but I changed it to S corp. I want to change it back to C corp. How can I do it?

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My corp. was C corp.but changed it to S corp. I want to change it back to C corp. Could you help me?

Submitted: 11 months ago.Category: Tax
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9/8/2017
Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 11 months ago
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,236
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 11 months ago

It is fairly easy to revoke the S-Corp status. I've done it a few times. But make sure that you really want to do it, as once revoked, you cannot elect S-Corp status again for five years.

The S-Corp revocation has to be approved by more than 50% of the current shareholders. If you are the sole shareholder, you won't have a problem.

Then, the S-corp must submit a letter to the IRS stating its intent to terminate its S-corp election. The letter must include a "statement of consent" from each shareholder that agreed to terminate the S-corp status. These statements should list each shareholder's name, address, tax identification number, and how much of the outstanding stock each shareholder owns as of the revocation vote. All the shareholders who voted to terminate the election must sign the letter. The form must be mailed to the IRS at the appropriate address. Look in the instructions for the Form 2553, under the “Where to File” for the address for your state. I have on several occasions mailed and faxed the terminations. When you mail, make sure that you use Certified Mail, Return Receipt Requested. On one occasion I had the IRS tell me that they did not receive the termination. Luckily I had the Certified Mail receipt, as well as a FAX confirmation that it was received.

The revocation letter can define when the business loses its tax status, which can be no earlier than when the letter is submitted. If no date is specified in the letter, and the IRS receives the document on or prior to the 15th day of the 3rd month of the corporation’s tax year, the revocation is effective at the beginning of the corporation’s current tax year. If the letter is received after the 15th day of the 3rd month of the tax year, the revocation is effective at the beginning of the corporation’s next tax year.

If the corporation terminates its tax status in the middle of its tax year, it might have to file two returns. It will have to file a return covering the months during which the corporation was still an S-corp. All income and losses from those months are reported on Form 1120S and the shareholders must include that financial data on their personal returns. Whether the business must file a second tax return depends on what type of business entity it is.

I hope this answers your question. If you have any more, please feel free to ask and I will be happy to answer.

Thanks! Have a great weekend!

Roger

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Customer reply replied 11 months ago
My question was "my Corp was C Corp but I changed it to S corp.But I want to go back to Chicago corp.Do I have to wait 5 years ?
Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 11 months ago

No, I stated above the procedure to change from a S-Corp back to a C-Corp. My statement about waiting for the five years was that if you revoke the S-Corp status and become a C-Corp again, you cannot change BACK to a S-Corp for 5 years. That is the only waiting period. Once the S-Corp status is revoked, you cannot get it back again for 5 years.

I hope this clears things up.

Rger

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Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 11 months ago

I have not heard back from you. Do you have any further questions?

If not, please don't forget to rate me. It is how the questions are closed.

Thanks!

Roger

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