Filed 2553, but not sure if we should act as S-Corp
Posted: 7-Jun-2021 8:08am
I have a client who decided in April 2021 that they wanted to bring in a new shareholder on July 1, 2021 and move from a partnership to an S-Corp. Their year end is 12/31. I filed the 2553 in April & requested consideration for the late filing (rev proc 2013-30). As you would imagine, we still haven't heard anything from the IRS here in June 2021. My client is very anxious about whether or not they'll be granted the S-election for 2021 as that will affect the deal with this new S/H.
If read numerous anecdotal stories about CPA's filing the 2553 timely and then immediately beginning that client on payroll & then filing the 1120-S despite not having heard anything from the IRS by the filing deadline for the 1120-S. With how backed up the IRS has been recently, I don't expect them to issue a determination on the 2553 any time soon.
Giving that we filed the 2553 late & are requesting late consideration, and given my client's circumstance of adding another S/H this year, would you tend to move forward with this client under the assumption they'll be an S-Corp (e.g. begin payroll; file an 1120-S for tax year 2021; etc), or would you urge them to wait to make any changes until we've received a ruling from the IRS?
If read numerous anecdotal stories about CPA's filing the 2553 timely and then immediately beginning that client on payroll & then filing the 1120-S despite not having heard anything from the IRS by the filing deadline for the 1120-S. With how backed up the IRS has been recently, I don't expect them to issue a determination on the 2553 any time soon.
Giving that we filed the 2553 late & are requesting late consideration, and given my client's circumstance of adding another S/H this year, would you tend to move forward with this client under the assumption they'll be an S-Corp (e.g. begin payroll; file an 1120-S for tax year 2021; etc), or would you urge them to wait to make any changes until we've received a ruling from the IRS?