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Discussion:First rejected late 2553 election

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Discussion Forum Index --> Basic Tax Questions --> First rejected late 2553 election


Discussion Forum Index --> Tax Questions --> First rejected late 2553 election

Cpaeth (talk|edits) said:

15 February 2014
Had my first rejection of a late S corp election 2553 last week. May have been too short and brief in reason for lateness.

Have read through 2013-30 and related flowcharts.

Will refile aiming for more adequate explanation of reasonable cause.

Anyone with more experience on late 2553's want to weigh in as to adequacy of this wording?

At top of form: Filed Pursuant to Rev Proc 2013-30.

Reasoning above signature line:

The requesting entity otherwise qualifies as an S corp.

The requesting entity had reasonable cause for failure to timely file in that time was needed to formally establish the business as a SMLLC and understand taxation options, their mechanics and costs. The election was filed promptly and as soon as possible thereafter.

The requesting entity’s first 1120S tax return (2013) has not yet been filed and the single shareholder’s 2013 1040 tax return has not yet been filed. And, there have been no tax treatments inconsistent with an S election.

The requesting entity requests relief under Rev Proc 2013-30 and is within the timeframe to do so.

Thanks.

JAD (talk|edits) said:

15 February 2014
I haven't read through 2013-30, but this is what I did in 2008:

I checked the box on page one of the return asking if the Corporation was electing to be an S corporation beginning with this tax year. I see that the same question remains on the 2013 forms. In my explanation, I fell on my sword somewhat.

The shareholder of the Corporation relied upon the advice of his tax and legal professionals in matters related to this Corporation. The tax professional believed that the legal professional handled the election in the course of establishing the Corporation. The attorney understood that the tax professional would handle the preparation of form 2553. The omission of the filing of the election was inadvertent.

The Corporation meets the requirements of Revenue Procedure 2007-62. Other than the failure to file the S election, the Corporation met the requirements to be an S Corporation on the day of its inception and has continued to qualify as an S corporation each day without exception.

The request for relief from the late election is filed within the prescribed time.

This return is the Corporation's first income tax return.

The Corporation has reasonable cause for its failure to make a timely election. See above.

This tax preparer personally prepares both the Corporation and the shareholders income tax returns, and income allocated by the S Corporation in this tax return is reported on the shareholders 2008 individual income tax return. The shareholders individual income tax return is consistent with this tax return.

The Corporation meets the requirements under IRC section 1362(f).

I hope that helps. Please excuse any typos. I'm dictating and not proofreading.

Captcook (talk|edits) said:

15 February 2014
I would concur with Jessica. In your wording, you mention the taxpayer has reasonable cause, but fail to describe that cause. I think this was likely the key failure.

Cpaeth (talk|edits) said:

15 February 2014
To be clear, Jessica's submittal was in 2008, which was prior to Rev Proc 2013-30.

Also, what I wrote above is the revised wording, not the original wording that was rejected.

And, I believe I do describe the cause. The question is the adequacy of it. I think it's adequate; perhaps more than adequate. But, I am not as experienced as many of you in working with Rev Proc 2013-30.

Thanks.

Martinea (talk|edits) said:

8 March 2014
Can I use Rev Proc 2013-30 the corp 2012 return has not been filed yet?

The accountant setting up the corporation died prior to filing the 2553. The Scorp owner was unaware it had not been filed. Corporation formed in Calif on 1/6/2012.

I do not know why the 2012 return is being filed late, Scorp owner did not make time to do it? The personal 1040 also was not filed.

Captcook (talk|edits) said:

10 March 2014
Since the return(s) have not yet been filed, the shareholders have not reported all income from the entity consistent with s-corp treatment, which is a requirement under RP 2013-30. Although, I see no requirement that the returns be on time to qualify. If it were an LLC, there does appear to be such a requirement, but not for a corp.

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