Created an LLC August 2022 taxed as S-Corp mistake.

Forum|Forum|3 years ago
April 5, 2023
2 replies
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Hi, if someone could help me out here. I created my LLC last year towards the end and filed for s-corp tax status. I meant for the election to start this year 2023, and not when I formed the LLC since my accounting wasn’t setup for it, my mistake. How do I go about contacting the IRS to revoke S-Corp for last year, but keep it in effect for this tax year? Thank you!

Best answer by AliciaP1

Per the IRS:

Once the election is made, it stays in effect until it is terminated or revoked. IRS consent generally is required for another election by the corporation (or a successor corporation) on Form 2553 for any tax year before the 5th tax year after the first tax year in which the termination or revocation took effect. See Regulations section 1.1362-5 for details.

This means you cannot revoke the 2022 election and remain an S-Corp for 2023 even if you had been able to file timely. I also do not advise dissolving the existing company and creating a new one with a new election. You have to report your ownership status when you file the election and your SSN is tied to it. The IRS will see you are trying to skirt the rules.

You need to leave your business as it is and file a Form 1120S for 2022 for your business activities and then report the resulting Schedule K-1 on your personal returns for 2022.

@tim0teh1

ShirlynW

It depends, What form did you use last year to form your business structure?

@tim0teh1

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Mike9241

see this link but it would seem it's too late

https://www.irs.gov/forms-pubs/revoking-a-subchapter-s-election#:~:text=To%20revoke%20a%20Subchapter%20S,made%20under%20Section%201362(a)

also if you revoke it , you can't elect for the next 5 years.

https://wcginc.com/kb/5-year-rule/

consult with a tax pro

tim0teh1Author

Would this be a possible solution: it’s a single member llc, could I just dissolve the LLC, or revoke then dissolve and get taxed as a disregard entity? Then follow up on that by creating a new LLC electing for s-corp afterwards so that applies this year? @Mike9241

AliciaP1Answer

Per the IRS:

You need to leave your business as it is and file a Form 1120S for 2022 for your business activities and then report the resulting Schedule K-1 on your personal returns for 2022.

@tim0teh1

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