The Minnesota Election of 'S' Corporation Status, also known as the IRS 2553 form, is a crucial legal process for businesses incorporated in Minnesota that wish to elect to be treated as an 'S' corporation for federal income tax purposes. By electing 'S' corporation status, eligible businesses can avoid the double taxation often associated with traditional C corporations, where both the business and its shareholders are taxed. The IRS 2553 form is used by businesses to formally request S corporation status with the Internal Revenue Service (IRS). It is important to note that while this form is required for federal tax purposes, it aligns with Minnesota state laws as well since the state conforms to federal guidelines for S corporation elections. Instructions for completing the IRS 2553 form can be found on the IRS website, and they are specific to the requirements set by both the IRS and Minnesota state. Some common instructions for completing the form include: 1. Eligibility: The business must meet specific criteria to qualify for 'S' corporation status. This includes being a domestic corporation, having only allowable shareholders (individuals, estates, or certain trusts), and not exceeding the maximum allowable number of shareholders (usually 100). 2. Timing: The election must be made no later than two months and 15 days after the beginning of the tax year the election is intended to take effect. However, special rules apply for newly formed corporations. 3. Filing: The completed IRS 2553 form must be signed by all shareholders and filed either by mail or electronically, depending on the preference of the corporation. Some variations or types of Minnesota Election of 'S' Corporation Status and Instructions — IRS 2553 may include: 1. Standard Election: This is the most common type of 'S' corporation election where the business meets all the eligibility criteria and files the IRS 2553 form to elect 'S' corporation status. 2. Late Election: In some cases, a business may miss the initial deadline to elect 'S' corporation status. However, the IRS allows for a late election to be made by filing under certain circumstances and following specific guidelines. 3. Retroactive Election: Under limited circumstances, the IRS permits retroactive 'S' corporation elections. These typically occur when a business intended to become an 'S' corporation from its date of incorporation but failed to file the IRS 2553 form on time. It is essential for businesses considering the Minnesota Election of 'S' Corporation Status to consult with a qualified tax professional or attorney to ensure compliance with both federal and state requirements and to properly complete the IRS 2553 form. Applying for 'S' corporation status can have significant tax implications, so seeking professional guidance is highly recommended.