LLC Electing S or C tax treatment
Posted on: Fri, 04/11/2008 - 16:26
Hi I would like to confirm that changing my business LLC to elect S tax treatment would eliminate my Schedual C, and I would be filing two tax returns. One for the company and one for me. personally.
Thanks 
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I can’t believe you posted this topic. Megan sent me an email earlier today suggesting I start a thread with this very same idea.
I procrastinated…and Steven picked it up!
Anyway, yes, if you elect Sub S tax treatment with your LLC (by filing a Form 2553), you will be taxed just like a Sub S. That means a Form 1120S for the corporation. It creates a Form K-1 which lists the income and expenses you report on Schedule E of your Form 1040 (individual tax return).
Remember that the corporate returns are due a month earlier than the individual returns, but you still get a 6 month extension on those as well.
Thanks, Yes I am dealing with bad advise I received a few years back and now my business is a single member LLC. To bad I was not a member of first class lounge then but I have learned alot! I am planning on working with Megan on fixing the filing to a S-, since I am in California there is this gross receipt tax which stings me big time. I wish I would have been a Sub S. The main reason I was advised to do it this way was to avoid the step up basis on my cash convesion to accural which would have trigered a big tax. I still have to check on this it is kind of confusing.
At the beginning of this year I filed the form to change my LLC to an LLC with S corp status. Is there a way to check to make sure this happened?
Thanks
Hi Nellie,
It used to be that you got a letter from the IRS, but that is happening less frequently these days, at least that’s been my experience. How did you file your 2553? Typically they go by fax, or by mail. I usually file by fax and keep a copy of the fax transmission form as proof of receipt. Give that whole thing to your CPA or tax preparer to attach to your tax return and there should be no problem.
Generally speaking, as long as the IRS sees that you made an attempt to be reclassified as an S Corporation they’ll simply accept your tax return and a copy of the 2553 as proof of your reclassification.