LLC to S-Corp to LLC Disregarded Entity

[RyMo]

We created our LLC in AZ when my husband and I were not married.  At the time, our accountants recommended electing S-Corp status.  Which we did.  But now we are looking to return back to LLC tax classification.  In the meantime, my husband and I are now married and since AZ is a Community Property state, can be considered a disregarded entity as an LLC.

How do I do this?

I was looking at Form 8832 and sending a statement to the IRS.  But when I am filling out Form 8832, I think it is looking for only 1 owner and not both of us.  Thank you!

[CesarJ]

Because you're now married and Arizona is a community property state, a husband and wife LLC may be elected to be treated as either:

• A partnership, or
• A qualified joint venture/disregerdaded entity (reported on Schedule C)

To return from S-corp status to LLC status, you must revoke the S-corp election, not file form 8832.

To revoke S-corp status:

1. Submit a signed statement to the IRS stating that you are revoking the S elction under IRC 1362
2. It must be signed by you and your spouse (shareholders)
3. Must include:

• Company name and EIN
• Statement that you are revoking the S election
• The effective date of revocation
• Shareholder consent signatures

[RyMo]

Will we return to LLC tax classification or a C-Corp?

I see that when someone revokes their S-Corp classification, they become a C-Corp and then must file a Form 8832 to reclassify.  Is that correct?  Thank you!

[CesarJ]

After the revocation, you must file form 8832 to reclassify as a Partnership or a Qualified Joint Venture LLC.  It's a two-step process. 

@RyMo