California Election of 'S' Corporation Status and Instructions - IRS 2553

• Category: Federal - IRS
• State: Multi-State
• Control #: US-IRS-2553
• Format: PDF

Description

A corporation or other entity eligible to elect to be treated as a corporation must use Form 2553 to make an election under section 1362(a) to be an S corporation. California Election of 'S' Corporation Status and Instructions — IRS 2553 The California Election of 'S' Corporation Status, also known as IRS Form 2553, is a crucial step for small businesses in California looking to qualify for Subchapter S tax treatment by the Internal Revenue Service (IRS). By electing 'S' Corporation status, eligible businesses can avoid double taxation, as the income or losses of the company are passed through to the shareholders to include in their individual tax returns. To successfully elect 'S' Corporation status in California, businesses must follow the instructions provided by the IRS on Form 2553. Here are the steps involved in completing the California Election of 'S' Corporation Status: 1. Verify eligibility: To qualify for 'S' Corporation status, the business must meet specific requirements, such as having no more than 100 shareholders, all of whom must be individuals or qualifying trusts. Additionally, the corporation must be a domestic entity, have only one class of stock, and not be a financial institution, insurance company, or a corporation affiliated with certain types of tax-exempt organizations. 2. Complete Form 2553: Obtain the IRS Form 2553, which is the election to be treated as an 'S' Corporation for federal and California tax purposes. Fill in the necessary fields, including the corporation's name, address, Employer Identification Number (EIN), and the effective date of the 'S' Corporation election. 3. Attach necessary documents: Along with Form 2553, you must attach various documents such as a copy of the corporation's Articles of Incorporation, any state correspondence regarding the 'S' Corporation status, and a shareholder consent form or meeting minutes approving the election. 4. Submit the form: Once completed, sign the Form 2553 and mail it to the appropriate address specified in the instructions. It is crucial to ensure that the form is postmarked on or before the due date, which is generally within 75 days of the desired effective date of the election. Different types of California Election of 'S' Corporation Status and Instructions — IRS 2553 include: 1. New 'S' Corporation Election: This type of election is for newly formed corporations that wish to immediately elect 'S' Corporation status for both federal and California tax purposes upon their formation. 2. Late 'S' Corporation Election: If a corporation fails to make the 'S' Corporation election within the required time frame, they can apply for relief under certain circumstances by filing a late election. However, the corporation must provide a reasonable explanation for the delay and meet the necessary criteria for the IRS to accept the late election. 3. Termination of 'S' Corporation Status: In certain situations, a corporation may want to terminate its 'S' Corporation status and revert to a traditional C Corporation. This can be done by filing the appropriate form with the IRS, usually Form 1120S. It is essential for businesses in California to understand the process and requirements associated with the California Election of 'S' Corporation Status and Instructions — IRS 2553. By carefully following the instructions and meeting the eligibility criteria, businesses can avail themselves of the tax benefits associated with 'S' Corporation status and ensure compliance with federal and state tax regulations.

California Election of 'S' Corporation Status and Instructions — IRS 2553 The California Election of 'S' Corporation Status, also known as IRS Form 2553, is a crucial step for small businesses in California looking to qualify for Subchapter S tax treatment by the Internal Revenue Service (IRS). By electing 'S' Corporation status, eligible businesses can avoid double taxation, as the income or losses of the company are passed through to the shareholders to include in their individual tax returns. To successfully elect 'S' Corporation status in California, businesses must follow the instructions provided by the IRS on Form 2553. Here are the steps involved in completing the California Election of 'S' Corporation Status: 1. Verify eligibility: To qualify for 'S' Corporation status, the business must meet specific requirements, such as having no more than 100 shareholders, all of whom must be individuals or qualifying trusts. Additionally, the corporation must be a domestic entity, have only one class of stock, and not be a financial institution, insurance company, or a corporation affiliated with certain types of tax-exempt organizations. 2. Complete Form 2553: Obtain the IRS Form 2553, which is the election to be treated as an 'S' Corporation for federal and California tax purposes. Fill in the necessary fields, including the corporation's name, address, Employer Identification Number (EIN), and the effective date of the 'S' Corporation election. 3. Attach necessary documents: Along with Form 2553, you must attach various documents such as a copy of the corporation's Articles of Incorporation, any state correspondence regarding the 'S' Corporation status, and a shareholder consent form or meeting minutes approving the election. 4. Submit the form: Once completed, sign the Form 2553 and mail it to the appropriate address specified in the instructions. It is crucial to ensure that the form is postmarked on or before the due date, which is generally within 75 days of the desired effective date of the election. Different types of California Election of 'S' Corporation Status and Instructions — IRS 2553 include: 1. New 'S' Corporation Election: This type of election is for newly formed corporations that wish to immediately elect 'S' Corporation status for both federal and California tax purposes upon their formation. 2. Late 'S' Corporation Election: If a corporation fails to make the 'S' Corporation election within the required time frame, they can apply for relief under certain circumstances by filing a late election. However, the corporation must provide a reasonable explanation for the delay and meet the necessary criteria for the IRS to accept the late election. 3. Termination of 'S' Corporation Status: In certain situations, a corporation may want to terminate its 'S' Corporation status and revert to a traditional C Corporation. This can be done by filing the appropriate form with the IRS, usually Form 1120S. It is essential for businesses in California to understand the process and requirements associated with the California Election of 'S' Corporation Status and Instructions — IRS 2553. By carefully following the instructions and meeting the eligibility criteria, businesses can avail themselves of the tax benefits associated with 'S' Corporation status and ensure compliance with federal and state tax regulations.