Requirements for S Corp Election
- To elect S corporation status, a corporation must timely file Form 2553.
- All shareholders must consent.
- Only over 50% of stock is required to terminate S corporation status.
Base Year Information
The base year for the October 1, 2019 to September 30, 2020 election year is October 1, 2018 to September 30, 2019.
S Corporation Status Overview
- S corporation status means the entity is not taxed.
- Shareholders report income and deductions on personal returns.
- Ownership is limited to 100 shareholders who must be individuals, certain trusts or estates, or exempt organizations like 501(c)(3) nonprofits.
Revoking S Corp Status
- Over 50% of voting and nonvoting shareholders must consent to revoke S corporation status.
- The consent is recorded in a meeting.
- A letter is sent to the IRS with signatures, Social Security Numbers, ownership percentages, and the termination date.