Taxpayer has a single member LLC. Currently, income is reported
directly on taxpayer's Federal 1040 and California 540 personal income
tax returns.
For taxpayer to achieve the benefits provided by the new California
pass-thru entity new tax election, I believe the following is required:
1. File IRS Form 8832 to elect to have the SMLLC taxed as a corporation.
2. File IRS Form 2553 to elect to have the SMLLC treated as a Subchapter
S corporation.
3. File California and Federal Subchapter S tax returns.
4. Revoke the elections under items 1 and 2 above when appropriate or desirable, but no sooner than 5 years after making the elections.
Is this correct?
Question: Once filing Subchapter S tax returns in California, does the
LLC still have to file annual LLC tax returns and pay the LLC tax and
annual fee in addition to the Subchapter S taxes paid to California?
Thanks for any replies and any other thoughts.
Now that I look at this, I believe an LLC must be converted to a
corporation, and Sub S status elected. One cannot simply elect to
have the LLC taxed as a corporation. More complicated, and one
would likely want to convert the corporation back to an LLC when
this tax gimmick vanishes in a few years.
Now that I look at this, I believe an LLC must be converted to a
corporation, and Sub S status elected. One cannot simply elect to have
the LLC taxed as a corporation. More complicated, and one would likely
want to convert the corporation back to an LLC when this tax gimmick
vanishes in a few years.
Taxed and Spent <nospamplease@nonospam.com> wrote:
Now that I look at this, I believe an LLC must be converted to a
corporation, and Sub S status elected. One cannot simply elect to
have the LLC taxed as a corporation. More complicated, and one
would likely want to convert the corporation back to an LLC when
this tax gimmick vanishes in a few years.
That's how it was in the beginning - first file the 8832 and t hen the
2553. They even let you put them in the same envelope. But soon, I
suppose, the IRS decided that they didn't actually need all that
paperwork. So it was changed to only needing the 2553. I mean, if an
LLC files a 2553 there's nothing else it can mean. There is no
confusion to avoid. So that's all you need.
According to Taxed and Spent <nospamplease@nonospam.com>:
Now that I look at this, I believe an LLC must be converted to a
corporation, and Sub S status elected. One cannot simply elect to have
the LLC taxed as a corporation. More complicated, and one would likely
want to convert the corporation back to an LLC when this tax gimmick
vanishes in a few years.
Look at the instructions for form 8832. At the bottom of the first
column on page 5 it says
Do not file this form for an eligible entity that
is: ...
* Electing to be classified as an S corporation. An eligible entity
that timely files Form 2553 to elect classification as an S
corporation and meets all other requirements to qualify as an S
corporation is deemed to have made an election under Regulations
section 301.7701-3(c)(v) to be classified as an association taxable as
a corporation.
The instructions for Form 2553 say "A corporation or other entity
eligible to be treated as a corporation files this form to make an
election under section 1362(a) to be an S corporation."
An LLC is an "entity eligible to be treated as a corporation", right?
So I think you file form 2553, say you're the 100% owner, and I
expect the IRS will agree.
No idea about California law, I live in New York.
This question pertains to the NEW California law. "in the
beginning" is NOW.
John Levine wrote:
Taxed and Spent <nospamplease@nonospam.com>:
Now that I look at this, I believe an LLC must be converted to a
corporation, and Sub S status elected. One cannot simply elect
to have the LLC taxed as a corporation. More complicated, and
one would likely want to convert the corporation back to an LLC
when this tax gimmick vanishes in a few years.
Look at the instructions for form 8832. At the bottom of the
first column on page 5 it says
Do not file this form for an eligible entity that
is: ...
* Electing to be classified as an S corporation. An eligible
entity that timely files Form 2553 to elect classification as an
S corporation and meets all other requirements to qualify as an S
corporation is deemed to have made an election under Regulations
section 301.7701-3(c)(v) to be classified as an association
taxable as a corporation.
The instructions for Form 2553 say "A corporation or other entity
eligible to be treated as a corporation files this form to make
an election under section 1362(a) to be an S corporation."
An LLC is an "entity eligible to be treated as a corporation",
right?
So I think you file form 2553, say you're the 100% owner, and I
expect the IRS will agree.
This is more a question about the new California law than the old
Federal election situation.
Taxed and Spent <nospamplease@nonospam.com> wrote:
This question pertains to the NEW California law. "in the
beginning" is NOW.
I just took a look at the legislation. It just says that it has to be
an S-corporation or an entity taxed as one. How it gets there is
irrelevant. If you file the 2553 it will qualify as an S-corporation.
I have no idea why you think that California law would trump federal
law in determining if something is taxed as an S-corporation. It
doesn't. No 8832 is necessary.
| Sysop: | Keyop |
|---|---|
| Location: | Huddersfield, West Yorkshire, UK |
| Users: | 292 |
| Nodes: | 16 (2 / 14) |
| Uptime: | 194:28:06 |
| Calls: | 6,616 |
| Files: | 12,166 |
| Messages: | 5,315,461 |