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.
Delaware Election of 'S' Corporation Status and Instructions — IRS 2553 The Delaware Election of 'S' Corporation Status, also known as Form IRS 2553, is a crucial document that allows a corporation incorporated in Delaware to elect to be treated as an S Corporation for federal income tax purposes. This election grants certain tax advantages and benefits to eligible corporations, such as the ability to pass corporate income, deductions, losses, and credits directly to shareholders for tax purposes, thereby avoiding double taxation. There are two specific types of Delaware Election of 'S' Corporation Status, namely: 1. Initial Election: An initial election occurs when a newly formed corporation decides to be treated as an S Corporation from its inception. To make an initial election, the corporation must meet specific eligibility requirements outlined by the IRS, such as having no more than 100 shareholders, all of whom must be individuals, estates, certain trusts, or tax-exempt organizations. Additionally, only U.S. citizens or residents can be shareholders, and the corporation must have only one class of stock. 2. Late Election: A late election occurs when an existing corporation meets the eligibility criteria for S Corporation status but failed to make a timely election in previous years. In such cases, the corporation can still file Form IRS 2553 to elect S Corporation status for the current year and subsequent years by meeting certain additional requirements. The Internal Revenue Service allows a reasonable cause explanation for the late filing, including administrative errors or ignorance of the election requirement. To complete the Delaware Election of 'S' Corporation Status — IRS 2553 form, the following instructions should be followed: 1. Eligibility Check: Ensure that the corporation meets all the eligibility requirements for electing S Corporation status, including shareholder composition, stock class, number of shareholders, and allowable entities. 2. Obtain the Form: Obtain the official Form IRS 2553, which is available on the Internal Revenue Service's website (www.irs.gov) or through authorized tax preparation software. 3. Completing the Form: Fill in all the required information on Form IRS 2553. This includes the corporation's legal and tax identification details, shareholder information, the effective date of the S Corporation election, and any other relevant details as stipulated on the form. 4. Gathering Supporting Documents: Attach any necessary supporting documents or schedules, as instructed on Form IRS 2553. 5. File the Form: Once completed, the form must be signed by an authorized officer or agent of the corporation and filed with the IRS within the stipulated time frames. Instructions on how to file the form and the appropriate mailing address are available on the official IRS website. It is important to note that while the Delaware Election of 'S' Corporation Status is specific to corporations incorporated in Delaware, the IRS 2553 form and instructions are applicable to eligible corporations across the United States. Nevertheless, it is always recommended consulting with a certified tax professional or legal advisor to ensure compliance with relevant laws and regulations specific to the state of incorporation.
Delaware Election of 'S' Corporation Status and Instructions — IRS 2553 The Delaware Election of 'S' Corporation Status, also known as Form IRS 2553, is a crucial document that allows a corporation incorporated in Delaware to elect to be treated as an S Corporation for federal income tax purposes. This election grants certain tax advantages and benefits to eligible corporations, such as the ability to pass corporate income, deductions, losses, and credits directly to shareholders for tax purposes, thereby avoiding double taxation. There are two specific types of Delaware Election of 'S' Corporation Status, namely: 1. Initial Election: An initial election occurs when a newly formed corporation decides to be treated as an S Corporation from its inception. To make an initial election, the corporation must meet specific eligibility requirements outlined by the IRS, such as having no more than 100 shareholders, all of whom must be individuals, estates, certain trusts, or tax-exempt organizations. Additionally, only U.S. citizens or residents can be shareholders, and the corporation must have only one class of stock. 2. Late Election: A late election occurs when an existing corporation meets the eligibility criteria for S Corporation status but failed to make a timely election in previous years. In such cases, the corporation can still file Form IRS 2553 to elect S Corporation status for the current year and subsequent years by meeting certain additional requirements. The Internal Revenue Service allows a reasonable cause explanation for the late filing, including administrative errors or ignorance of the election requirement. To complete the Delaware Election of 'S' Corporation Status — IRS 2553 form, the following instructions should be followed: 1. Eligibility Check: Ensure that the corporation meets all the eligibility requirements for electing S Corporation status, including shareholder composition, stock class, number of shareholders, and allowable entities. 2. Obtain the Form: Obtain the official Form IRS 2553, which is available on the Internal Revenue Service's website (www.irs.gov) or through authorized tax preparation software. 3. Completing the Form: Fill in all the required information on Form IRS 2553. This includes the corporation's legal and tax identification details, shareholder information, the effective date of the S Corporation election, and any other relevant details as stipulated on the form. 4. Gathering Supporting Documents: Attach any necessary supporting documents or schedules, as instructed on Form IRS 2553. 5. File the Form: Once completed, the form must be signed by an authorized officer or agent of the corporation and filed with the IRS within the stipulated time frames. Instructions on how to file the form and the appropriate mailing address are available on the official IRS website. It is important to note that while the Delaware Election of 'S' Corporation Status is specific to corporations incorporated in Delaware, the IRS 2553 form and instructions are applicable to eligible corporations across the United States. Nevertheless, it is always recommended consulting with a certified tax professional or legal advisor to ensure compliance with relevant laws and regulations specific to the state of incorporation.