I have received a letter from the IRS stating that I have filed an 1120S form with out submitting and receiving an OK from the IRS on form 2553. If I do not respond they will submit my tax returns as an 1120. What is the difference, and how will it affect the taxes?

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Originally Posted by prancingfeet

I have received a letter from the IRS stating that I have filed an 1120S form with out submitting and receiving an ok from the IRS on form 2553. If I do not respond they will submit my tax returns as an 1120. What is the difference, and how will it affect the taxes?

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The IRS quote is:"An eligible domestic corporation can avoid double taxation (once to the shareholders and again to the corporation) by electing to be treated as an S corporation. Generally, an S corporation is exempt from federal income tax other than tax on certain capital gains and passive income. On their tax returns, the S corporation's shareholders include their share of the corporation's separately stated items of income, deduction, loss, and credit, and their share of nonseparately stated income or loss."

You need IRS permission to file as an S corporation because that designation reduces the tax you/the corporation pays.

Well, I filed originally as a sub chapter s and am surprised that they do not have me as such. I do not remember receiving a form 2553 to fill out for this. Can this be done in retrospect or does it only affect the years after the form is approved?

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Originally Posted by prancingfeet

well, I filed originally as a sub chapter s and am surprised that they do not have me as such. I do not remember receiving a form 2553 to fill out for this. Can this be done in retrospect or does it only affect the years after the form is approved?

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Looks to me like it's not retroactive beyond the year for which it's filed -

I would take this question over to the tax (or similar, I'm not familiar with the other boards) section - some CPA's and such hang out over there.

Thank you!

You should have filed form 2553 within 2 and half months after the coporation began to be elected as an S corporation to avoid the double taxation, if you failed to filed this form you can late file if you have reasonable cause and you must meet certain requirements which can be found at the IRS website under Form 2553 instructions. I hope this helps

Discuss the weaknesses found in companies act pertaining to director's roles,duties and liabilties.
Come with cases

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Originally Posted by ai mei lee

discuss the weaknesses found in companies act pertaining to director's roles,duties and liabilties.
come with cases

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"Come with cases"?

Might this be homework?

If so - we don't answer homework and you COULD have taken the time to post this as a question, not just printed out what you were handed. You probably also could have spent the time to figure out how the site works so you didn't attach your question to someone else's question.

I have a similar question.

We received the same notice as PracingFeet, but unfortunately the 30 day timeline is now passed, so I am assuming that they have converted our 1120S to 1120.

So how will this impact the Tax of the corporation and the Income tax of the members of the corporation?

THank you