LLC filed as partnership making a late S election
Posted: 29-Nov-2021 11:14pm
An LLC filed 2020 initial tax return as a partnership. The owners want to make a late S election now for 2021.
1. Does 2020 1065 need to be amended and marked "final" since 2021 will be filed on 1120S? There was a minimal activity in 2020 and the 1065 was already amended once by the previous accountant (don't know why).
2. The clients' attorney is advising to convert the LLC to a corporation with CA SOS, I assume in 2022.
If a late S election is granted by the IRS back to 1/1/2021, but the entity is converted with the state to an S corp in 2022:
a. Should they convert 1st and then file the S election or doesn't matter? For example form 2553 would list ownership interest for an LLC, but a number of shares for a corp.
b. Would the entity need a new EIN in 2022 when converted with the state?
c. What happens to the S election under the old EIN if a new EIN is required?
d. Would a short year return be required for before and after conversion periods?
e. I think CA state corp number wouldn't change in a conversion, but would it create a mess to file federal returns with different EINs with the same state corp number?
f. There's a large profit in 2021 and the owners would benefit from an S election in 2021 due to the QBI deduction, what's the best way to handle this situation without creating a massive headache? The attorney is open to keeping the entity as an LLC with the state if that makes things easier.
1. Does 2020 1065 need to be amended and marked "final" since 2021 will be filed on 1120S? There was a minimal activity in 2020 and the 1065 was already amended once by the previous accountant (don't know why).
2. The clients' attorney is advising to convert the LLC to a corporation with CA SOS, I assume in 2022.
If a late S election is granted by the IRS back to 1/1/2021, but the entity is converted with the state to an S corp in 2022:
a. Should they convert 1st and then file the S election or doesn't matter? For example form 2553 would list ownership interest for an LLC, but a number of shares for a corp.
b. Would the entity need a new EIN in 2022 when converted with the state?
c. What happens to the S election under the old EIN if a new EIN is required?
d. Would a short year return be required for before and after conversion periods?
e. I think CA state corp number wouldn't change in a conversion, but would it create a mess to file federal returns with different EINs with the same state corp number?
f. There's a large profit in 2021 and the owners would benefit from an S election in 2021 due to the QBI deduction, what's the best way to handle this situation without creating a massive headache? The attorney is open to keeping the entity as an LLC with the state if that makes things easier.