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cmam23
New Member

What date would I use as start date for S-corp if we have't conducted any business yet? We are an eCommerce website that has not bought or sold anything.

We just incorporated in 2017 and are in the process of building the website for future sales.  Our only expenses have been the cost of filing for incorporating and registering domains for website.

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MichaelDC
New Member

What date would I use as start date for S-corp if we have't conducted any business yet? We are an eCommerce website that has not bought or sold anything.

The IRS has a sort-of definitive answer about when a business begins, and it can vary.

Ordinarily, a corporation begins business when it starts the business operations for which it was organized;... on the date of its incorporation. Mere organizational activities, such as the obtaining of the corporate charter, are not alone sufficient to show the beginning of business.

However, the IRS also states that the process of beginning the business such as buying necessary operating assets, inventory, 'setting up shop' can also be a sign that a business has begun. To learn more on Starting a Business from the IRS please see Starting A Business.  So you can use the start date of the date you incorporate or when you began buying inventory.

The IRS will be looking for the S-corporation return to be filed for 2017. The IRS requires S-corporations to file a return using form 1120S each year regardless if the S-Corporation has any activity. The K-1 that is generated from the S-corporation will be reported on your personal return. The Form 1120S Income Tax Return is due March 15, 2018.

Under the tax code, every U.S. corporation that's in business to make a profit must file a tax return regardless of whether it made any money. This applies both to traditional corporations and Subchapter S corporations.

If you fail to file Form 1120S, the late-filing penalty is more expensive. For each month the return is late, the monthly penalty is $195 multiplied by the number of shareholders.

Per IRS 2015 Instructions for Form 1120S , Who Must File - A corporation or other entity must file Form 1120S if 

  • It elected to be an S corporation by filing Form 2553, 
  • The IRS accepted the election, and
  • The election remains in effect.
Please feel free to post any additional details or questions in the comment section.

To prepare a corporate return you would need TurboTax Business.  This is a separate program from Turbotax Home and Business.  TurboTax Business is a program only available for desktop use (there is no on-line version.)  See http://turbotax.intuit.com/small-business-taxes/

All expenses paid to set up a business will be "Start up Costs" when you open the business.

When that time comes:

Start-Up Expenses are reported in aggregate - one amount equal to the total of all expenses incurred. For active business activities, these costs are entered either under Assets/Depreciation or under Business Expenses depending...

Per IRS Pub 535 Business Start-Up and Organizational Costs: "Business start-up and organizational costs are generally capital expenditures. However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized."

As long as your start-up expenses are less than $5000, you can add them as Business Expenses. Continue past the expense categories (or choose Other Miscellaneous Expenses) to the page titled "Enter Business Expenses Not Yet Reported" and enter the description & amount (see screenshots below - click to enlarge).

If you have more than $5000 in start-up costs, the remainder is entered under Assets/Depreciation as a capital asset for amortization (TurboTax provides this category for you).






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3 Replies
MichaelDC
New Member

What date would I use as start date for S-corp if we have't conducted any business yet? We are an eCommerce website that has not bought or sold anything.

The IRS has a sort-of definitive answer about when a business begins, and it can vary.

Ordinarily, a corporation begins business when it starts the business operations for which it was organized;... on the date of its incorporation. Mere organizational activities, such as the obtaining of the corporate charter, are not alone sufficient to show the beginning of business.

However, the IRS also states that the process of beginning the business such as buying necessary operating assets, inventory, 'setting up shop' can also be a sign that a business has begun. To learn more on Starting a Business from the IRS please see Starting A Business.  So you can use the start date of the date you incorporate or when you began buying inventory.

The IRS will be looking for the S-corporation return to be filed for 2017. The IRS requires S-corporations to file a return using form 1120S each year regardless if the S-Corporation has any activity. The K-1 that is generated from the S-corporation will be reported on your personal return. The Form 1120S Income Tax Return is due March 15, 2018.

Under the tax code, every U.S. corporation that's in business to make a profit must file a tax return regardless of whether it made any money. This applies both to traditional corporations and Subchapter S corporations.

If you fail to file Form 1120S, the late-filing penalty is more expensive. For each month the return is late, the monthly penalty is $195 multiplied by the number of shareholders.

Per IRS 2015 Instructions for Form 1120S , Who Must File - A corporation or other entity must file Form 1120S if 

  • It elected to be an S corporation by filing Form 2553, 
  • The IRS accepted the election, and
  • The election remains in effect.
Please feel free to post any additional details or questions in the comment section.

To prepare a corporate return you would need TurboTax Business.  This is a separate program from Turbotax Home and Business.  TurboTax Business is a program only available for desktop use (there is no on-line version.)  See http://turbotax.intuit.com/small-business-taxes/

All expenses paid to set up a business will be "Start up Costs" when you open the business.

When that time comes:

Start-Up Expenses are reported in aggregate - one amount equal to the total of all expenses incurred. For active business activities, these costs are entered either under Assets/Depreciation or under Business Expenses depending...

Per IRS Pub 535 Business Start-Up and Organizational Costs: "Business start-up and organizational costs are generally capital expenditures. However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized."

As long as your start-up expenses are less than $5000, you can add them as Business Expenses. Continue past the expense categories (or choose Other Miscellaneous Expenses) to the page titled "Enter Business Expenses Not Yet Reported" and enter the description & amount (see screenshots below - click to enlarge).

If you have more than $5000 in start-up costs, the remainder is entered under Assets/Depreciation as a capital asset for amortization (TurboTax provides this category for you).






cmam23
New Member

What date would I use as start date for S-corp if we have't conducted any business yet? We are an eCommerce website that has not bought or sold anything.

We are a new brand of clothing that will be launching our website in the next few months, but we haven't bought or sold anything as of yet.  We incorporated in 2017 and  we have only spent money on incorporation filings, and website domain registrations, etc.  Should I still use the Effective date of the S-Corp filing?
MichaelDC
New Member

What date would I use as start date for S-corp if we have't conducted any business yet? We are an eCommerce website that has not bought or sold anything.

That's how I've done it in the past to be safe.
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