Corporation S CorpNo election still has a tax

People talk about a C year as if it were a mistake. Sometimes it is simply the company you formed. A corporation is taxed as a C until the IRS accepts an S election. If you wanted that, the books should say so without apology. If you thought you had elected and the acceptance is missing, the C year is the fact until the paper exists.

The certificate from the state created the corporation. An LLC's formation fee is a different form, and the amount is whatever that state's instructions print. A corporation's state filing is its own instruction sheet. Neither sheet elects S. Form 2553 does that, and only after every shareholder signs and the IRS accepts.

We stop the habit of writing S on the footer of a C company's statements because the owner prefers the sound. Lenders read those footers. A false status is a worse problem than a C year you can explain.

Earnings sit in the company. A wage to an owner employee is still a wage, with payroll on the provider you run. A distribution is a different movement from a passthrough draw, and calling it a wage does not make it one. We keep those words apart so the payroll file and the equity file do not merge.

There is no K-1 in a pure C year. If someone is asking where the K-1 is, the first question is whether an election was accepted. The second question is whether the person is looking at an LLC that was never a corporation. Those are different repairs, and the menu will not tell them apart.

Picture a family corporation that has been a C for a decade. The last person who touched the file coded owner draws to a passthrough equity account because the prior software said S. The certificate says corporation. There is no acceptance. We reverse that coding before we prepare the return. The family company is a shape, not a client, and the story carries no dollar result.

Wanting S is allowed. It is a new action, not a correction of the certificate. Every shareholder signs Form 2553. The deadline is two months plus fifteen days after the year opens, and a signature during the year before that opening also counts. One class of stock and qualified shareholders are required. The cap is 100 shareholders.

If the window has closed, Revenue Procedure 2013-30 is the late relief text. We will read it against your facts. We will not tell you the relief is automatic. If it does not fit, the company remains a C and the books should be proud of that rather than muddy.

A lawyer should look at the governing documents before a second class of stock sneaks in through a side letter. We will point at the tax consequence. We will not draft the corporate documents.

Form 1120 is the federal return for a C year. From the form instructions, a calendar year corporation generally files on the 15th day of the fourth month. Estimated tax for the company, when it applies, has its own quarterly dates. A menu that says S does not move the company onto Form 1120-S.

Owners sometimes think a quiet personal return means the company year was a passthrough year. A missing K-1 does not turn a C year into an S year, and a hopeful menu does not either. Owners sometimes stack those ideas. We pull those stacked ideas apart before preparation starts.

Depreciation still lives in the books for a C year. The asset list and the federal return should describe the same equipment. A C company should see the filing date beside the estimate dates so neither arrives as a surprise while the months are still open.

Some folders keep an older shape on purpose. A corporation that never elected is that kind of folder. We leave the federal label alone until a real acceptance exists, and we do not dress a C year up because the menu sounds newer.