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Can you cancel an S-election if you haven't filed an 1120S for the entity yet? We filed a 1065 for the year ended 12/31/18 and completed Form 2553 March 19 to be taxed as an S-corp effective 1/1/19. Haven't ever filed the 2019 1120s yet and was wondering if there was any way I can cancel/under the election and file as a partnership again.
Thanks for your help.

Review Form 2553 for defects. In Texas both spouses usually must sign the form. We've had several elections thrown out due to this oversight. Right now we're asking for a revocation because the client was not aware of the election and the tax attorney who drew up the form forged their signatures (as a matter of expediency). The clients are immigrants and relied on the attorney who didn't do a good enough job explaining what he was doing.

In short, no. It's a revocation, by the way. When you revoke the S election, you become a C corp. When you filed the 2553, it's 2 elections in one. 1. To be taxed/treated as a corp. 2. To elect S corp status. So revoking only removes #2. You'd have to create a new LLC, sorry to say.

Thank you, that is what I had thought but wanted to make sure I wasn’t missing anything since there hasn’t been a return filed since the election.

what abotu this?

3.13.2.27.9 (01-01-2019)
Request to Withdraw Classification Election
Correspondence or a new Form 8832 may be received indicating the taxpayer wants to withdraw/rescind their entity classification election or to return to their default classification of partnership or disregarded entity.
For the taxpayer to withdraw/rescind the election, the request must be received by the due date of the initial tax return. A withdrawal/rescission is a request to treat the entity as if the classification election had never been input or applied.
If the due date for withdrawal/rescission has passed, the taxpayer may submit a request to return to their default classification. Requests to return to the default classification may be received as correspondence or by the submission of Form 8832 and must be received by the due date of the return for the effective date requested.

Something makes me remember that that doesn't apply to this case....oh, Professor...?

I read the section that states once an entity classification election has been made, you cannot make another one for a period of sixty months. Is that what you are referring to? I was wondering if the Internal Revenue Manual part was stating that as long as you send correspondence stating you would like to withdraw the classification election before the due date of the return for the year the new classification went into effect, the IRS would accept it and disregard the original 8832 and you could remain your default classification.

Issue another type of stock - that used to be an automatic termination.

Was the 2553 filed and accepted by the IRS? 3/19 would make the election late.

Sorry, the intital 2553 was faxes to the IRS 3/12/19, so it would have been timely filed to be effective 1/1/19....Jon, I believe if we just bust the S-election the entity would bust to a C-corp...they want to go back to their default classification of a partnership.

mljordan37 wrote:Sorry, the intital 2553 was faxed to the IRS 3/12/19...

Did you get confirmation of its receipt? I've been burned so many times by faxed 2553s, I don't do them anymore.

If you've not received confirmation, maybe it wasn't received and you get a 'get out of jail free' card on this one .

Been a long time since I looked hard at 9100, and doubt it covers you, but you csn confirm: https://www.law.cornell.edu/cfr/text/26/301.9100-3

I guess this proves I'm anal, but I have an email from August, 2008 through the old TaxAlmanac. My questions was if the 2553 election is not valid can the LLC revert to a partnership or does it have to file as a C corp. DZCPA responded the election was defective (lack of spouse's signatures on the form) and therefore the company can file as a partnership. JR1 chimed in that we should have just checked the box, but I didn't understand that comment, but he didnt' raise the issue he is raising now. Perhaps the rules have changed in 10 plus years, but this was my experience. The IRS accepted the 1065 with my explanation of the events attached to the return (yes, I actually keep all emails in DropBox ever sent or received).