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Company is set up C-corporation. Trying to send form 2553 to…

Company is set up C-corporation...
Company is set up C-corporation. Trying to send form 2553 to elect S-Corporation, however it will be effective 2018 unless it has reasonable cause for late election for 2017. The owner didn't know she is resident that is why she didn't elect S-corp. Now, if the company submits Form 2553, with explanation letter stating "S corporation status was not elected in a timely manner is due to my misunderstanding of S corporation
requirements. Since I met the IRS substantial presence test, I am a resident, and qualify as an owner of S
corporation. Please consider my request and make my small business an S corporation effective January
1 st of 2017."Will it help to be retroactively elect S-Corp? Please suggest to help IRS approve the late election.
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Answered in 1 hour by:
3/8/2018
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,026
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi. My name’s Lane …

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, to clients on three continents, since 1986.

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This has been greatly liberalized since 2013. Reasonable cause for THIS purpose is not NEARLY the high hurdle that we see for abatement of penalties for non-fioing of return's etc.

...

The reasonable cause you mention is already much stronger than necessary for this purpose.

...

Reasonable causes vary, and the IRS does not publish a list.

...

But, tax journals and tax court decisions show that certain reasonable causes are nearly always allowed.

...

Two acceptable reasonable causes are that the company’s president, chief executive officer or similar responsible person neglected to file the election, or the corporation’s tax professional or accountant neglected to do so.

...

Another acceptable cause is that the corporation or its shareholders either did not know of the need to file an election or didn't know they needed to file the election in advance.

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I've never had late election relief denied, when using the standard "chief executive officer or similar responsible person neglected to file the election."

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Se this from IRS: "Generally, the relief under the revenue procedure can be granted when the entity fails to qualify solely because it failed to file the appropriate election under Subchapter S timely with the applicable IRS Campus and all returns reported income consistently as if the election was in effect. Please note that for purposes of this guidance, the “effective date” is the date the election is intended to be effective."

...

Most common practice here is to file the 1120-S with the 2553 attached, with the late election relied section completed.

...

Please let me know if you have ANY questions at all, before rating me.

That’s the only way JustAnswer.com will credit me for the work.

But again, let me know if you need more here,

Lane

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,026
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
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Customer reply replied 1 month ago
Thanks so much. 5 star!

You're very welcome ... thanks much for the rating

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Lane
Lane
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