This session provides a detailed guide to navigating S corporation election imperfections, helping practitioners understand how to correct late, invalid or inadvertently terminated S elections to avoid adverse tax consequences such as double taxation.
DESIGNED FOR
Experienced tax accountants who work with S corporation clients or employers
BENEFITS
- Gain an understanding of various IRS relief mechanisms, from automatic procedures to Private Letter Rulings.
- Preserve valuable S corporation status for clients.
HIGHLIGHTS
Major topics to be covered include:
- Identifying common S election defects: Diagnose problems such as late Form 2553 filings, invalid S elections, more than one class of stock or missing shareholder consents, inadvertent terminations of valid S elections (e.g., ceasing to be a small business corporation, excessive passive investment income) and ancillary election failures (e.g., late QSST, ESBT, QSub elections).
- Automatic and simplified relief procedures (Rev. Proc. 2013-30): Learn the primary simplified method for obtaining relief for late S corporation elections and certain related elections (e.g., ESBT, QSST, QSub). This includes understanding eligibility requirements like the three-year and 75-day time limit, the "solely because of lateness" condition, the need for reasonable cause and diligence and consistent reporting by the entity and its shareholders.
- Addressing common issues via Rev. Proc. 2022-19: This procedure provides "taxpayer assistance procedures" to resolve certain frequently encountered S corporation issues without needing a private letter ruling (PLR). Topics include clarification on the one-class-of-stock rule regarding agreements and disproportionate distributions and the self-correction pathway for non-identical governing provisions. It also addresses non-critical errors on election forms and inconsistent tax return filings.