CaptCook wrote:You don't file Form 8832 to revoke an S-election. Such a revocation is carried out via a letter and signed consent from a majority of shareholder interest(s) must be attached.
Read Form 8832 carefully, you'll notice it doesn't say anything about an s-election. If you're already taxed as an s-corp, you've already made a corporate election. Revoking your s-election doesn't change that.
warnickcpa wrote:CaptCook wrote:You don't file Form 8832 to revoke an S-election. Such a revocation is carried out via a letter and signed consent from a majority of shareholder interest(s) must be attached.
Read Form 8832 carefully, you'll notice it doesn't say anything about an s-election. If you're already taxed as an s-corp, you've already made a corporate election. Revoking your s-election doesn't change that.
If you revoke your S Election by the letter the IRS will treat you as a C Corp for tax purposes if you don't file the 8832. There was a rev proc many years that changed the filing procedure from filing the 8832 first then the 2553 to get s status to just filing the 2553 but you have to file the 8832 after revocation to go back to a SMLLC/disregarded entity treatment
CaptCook wrote:warnickcpa wrote:CaptCook wrote:You don't file Form 8832 to revoke an S-election. Such a revocation is carried out via a letter and signed consent from a majority of shareholder interest(s) must be attached.
Read Form 8832 carefully, you'll notice it doesn't say anything about an s-election. If you're already taxed as an s-corp, you've already made a corporate election. Revoking your s-election doesn't change that.
If you revoke your S Election by the letter the IRS will treat you as a C Corp for tax purposes if you don't file the 8832. There was a rev proc many years that changed the filing procedure from filing the 8832 first then the 2553 to get s status to just filing the 2553 but you have to file the 8832 after revocation to go back to a SMLLC/disregarded entity treatment
Correct.
But you only noted in the OP that you wanted to revoke your s-election, not your corporate status. That is a meaningfully different transaction.
Is your client prepared to undergo a full corporate liquidation by no longer being a corporation? You didn't mention anything about that.
beardenjv wrote:If we have a client LLC that needs to go from S corporation to disregarded entity (or to partnership), we just do Form 8832, that's it. Right or wrong, that works for us; we haven't had any problems with the IRS on it.
But I that it's right, because the thing is, it's not the S status that's the problem, it's the corporate status. Talking about revoking the S election would make sense if you wanted the LLC to go from S-corp to C-corp. But Form 8832 is what gets rid of the corporate status and lets you be taxed as a disregarded entity or partnership.
ManVsTax wrote:beardenjv wrote:If we have a client LLC that needs to go from S corporation to disregarded entity (or to partnership), we just do Form 8832, that's it. Right or wrong, that works for us; we haven't had any problems with the IRS on it.
But I that it's right, because the thing is, it's not the S status that's the problem, it's the corporate status. Talking about revoking the S election would make sense if you wanted the LLC to go from S-corp to C-corp. But Form 8832 is what gets rid of the corporate status and lets you be taxed as a disregarded entity or partnership.
I've always heard that the statements of revocation and consent need to be concurrently filed with an 8832 if the LLC is going from S Corp to DRE or pship.
warnickcpa wrote:Sorry I must not be being clear enough. They are a SMLLC that elected S Status. Now they want to go back to a disregarded entity as business activities are wrapping up and they don't want to pay for a minimal s return going forward.
CaptCook wrote:
Correct. You weren't clear.
ManVsTax wrote:I've always heard that the statements of revocation and consent need to be concurrently filed with an 8832 if the LLC is going from S Corp to DRE or pship.
warnickcpa wrote:CaptCook wrote:
Correct. You weren't clear.
I'll blame my brain being fried from reading the new 1040 and 1120-S instructions regarding PPP loan reporting
warnickcpa wrote:Do you mean filing them together in one package or filing them at the same time but mailing them separately?
You definitely need a new EIN either way.
supdat wrote:You definitely need a new EIN either way.
Do they? The state law single member LLC in OP's case is converting, for tax purposes, from an S corporation to a disregarded entity. The IRS has a whole webpage devoted to different scenarios for when a new EIN is required and when it is not.
https://www.irs.gov/businesses/small-bu ... -a-new-ein
The OP's specific scenario is not on the page, but the following scenario is on the page:
You will not be required to obtain a new EIN if any of the following statements are true.
An LLC that already has an EIN chooses to be taxed as a corporation or as an S corporation
I think that if an LLC with an EIN chooses to be taxed as a corp does not need a new EIN, the reverse is probably also true.
supdat wrote:I think that if an LLC with an EIN chooses to be taxed as a corp does not need a new EIN, the reverse is probably also true.
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