BestQuestion wrote:MilesR wrote:One thing I seem to remember from CE somewhere is if it's a timely election then 2553 is okay to file by itself. If it's a late election, an LLC is supposed to also file 8823 along with 2553.
If this is a brand new LLC then it should be within the 2.5 month period for a timely election and only 2553 is required.
Can you clarify what a 'late election' is?
The LLC has been in existence for three years since 2019. The owner decides to make the election for the LLC to be taxed as a S-corp starting 10-1-2022. So he will file Form 2553 in September 2022.
So is this a 'late election' in his case?
I pulled out that old book [2013 PPC 1120S Deskbook (Thomson Reuters)] and reread some of it. I think I mixed up some of the rules. For a C corp, a late election is if the election is made more than 2 months and 15 days after the beginning of the tax year that is to have S status.
But rereading it, it says an eligible LLC can elect simultaneously to be treated as a corporation and elect S status for any time during the year and is not stuck with a calendar year. So in this case, the LLC is electing to become a corporation as of 10/01/2022 and additionally immediately elects S status on the same date. So this would not be late.
I think that part I read a while ago that stuck in my head was this paragraph:
"The entity normally files the election to be taxed as a corporation on form 8832 (entity classification election) in accordance with Reg. 301.7701-3(c). However, if an LLC that is eligible to elect S status timely files an S election (Form 2553), the entity is considered to have made the election to be taxed as a corporation [Reg. 301.7701-3(c)(1)(v)(C)].
This means that the Form 8832 does not have to be filed if the entity timely and properly elects S status. "
So now I guess what it meant was if he were, for instance, electing S status to be active for Jan 1, 2022, this would be late and would require 8832.