Importing quickbooks file that has changed Fed EIN

[121777]

For 2023 we were a single member sole proprietor llc. We always import our quickbooks info into turbotax for completing our income tax returns. For 2024 we have converted to a sole member S corp with a new FED ID #. 

When using turbotax to file our 2023 income tax return, we will be importing the same quickbooks file but the FED ID # will have changed as of Jan. 1, 2024. Will turbotax be able to import the quickbooks file to use for our 2023 income tax return as a sole proprietor even though the file will now show a different FED ID # for 2024 than it was for 2023.

[Carl]

Basically, your single member LLC closed one day before the S-Corp opened. Since you can't use any of the personal versions of TTX to file the 1120-S Corporate return, you'll be filing a "final" SCH C for the LLC, closing it one day before the S-Corp was formed. Then you have to use TurboTax Business (different from Home & Business, and Self-Employed) to complete and file the 1120-S corporate return. This can (and will) get tricky if you need to transfer assets and/or inventory from the LLC to the S-Corp. It's doable, but tricky if you don't understand what you're doing. For example, in TTX Business:

 - Date business opened will be the "ORIGINAL" start date of the LLC, even it it was years ago.

 - Date of incorporation will be one day after the LLC was closed. Incorporation date must also be a date that is after the original business was opened.

 - Assets placed in service date will be the "original" in service date, even if it was years ago. That date "must" be after the business opening date - which is why you have to use the date the LLC opened. You can't place an asset in service before the business opening date.

That's just a few examples. Also be aware that the 1120-S corporate return is due on March 15th, and not Apr 15th like it is for personal taxes. One day late, and the late filing penalty is $205 per owner/member, for each month it's late.

If your state also taxes personal income, then this adds a layer of complexity to this process.

[Rick19744 · Accepted solution]

A couple of corrections:

• The start date of the S corporation will be whatever you used on the election to be an S corporation.  This is what will be reflected on page 1 box A.
• This will be the same date as page 1 box E.
• Since your election is for 2024, the above are based on the 2023 return, which I expect to be the same as the 2024 version next year.
• Don't file your 1120-S until you receive an S corporation acceptance letter from the IRS; so make sure you follow up if you don't hear back from the IRS.
• Also, when completing the initial S corporation return, the beginning balance sheet (assuming you complete this), will reflect nothing.  You should only have an end of the year balance sheet.
• I might suggest you get some professional help in filing your initial S corporation return to get started down the right path.

[Carl]

@Rick19744 one question on the below.

The start date of the S corporation will be whatever you used on the election to be an S corporation. This is what will be reflected on page 1 box A.

Assuming the owner of the new S-Corp is the same as the owner of the original LLC, The problem with that is, if you're transferring assets from the LLC to the S-Corp, and don't show the original date the asset was placed in service, all prior depreciation will not be taken into account, unless you adjust the basis by first subtracting all prior depreciation already taken by the LLC and start depreciation over from day 1..... or is that what you're supposed to do?

[Rick19744]

This is technically a new entity, as the SMLLC  is deemed to contribute the assets to the S corporation in exchange for stock.

This is a carryover basis to the transferee S corporation; however, the basis cannot exceed FMV.

Depreciation does in fact start over with the new basis; transferor's basis.

There are also required statements for both the transferor and transferee under Section 351.

This is why I recommended professional help in the initial year.

[121777]

I think I did not communicate properly my question. Actually My concern is  using turbo tax for 2023 for the sole proprietorship. If I change my Fed EIN # in Quickbooks this month January 2024 for the conversion to a sole member  SCorp before I use TurboTax to figure my 2023 taxes as a sole proprietor - will that mess up TurboTax calculating my 2023 tax return as the sole proprietor when I import the Quickbooks file - since the FEIN will have changed but  the Quickbooks computer file name will not change- Or should I start a completely different business file on quickbooks for the S corp? I’m afraid to change the FEIN on Quickbooks until I know the answer to my concern. I’ve contacted Quickbooks but they referred me to TurboTax support for the answer. 

[Carl]

If I change my Fed EIN # in Quickbooks this month January 2024 for the conversion to a sole member SCorp before I use TurboTax to figure my 2023 taxes as a sole proprietor - will that mess up TurboTax calculating my 2023 tax return as the sole proprietor when I import the Quickbooks file - since the FEIN will have changed but the Quickbooks computer file name will not change-

First, understand there's no such thing as a "single member S_Corp". It's just a S-Corp, regardless of the number of owners/members.

Yes, it will mess things up. Do not change anything in QB until after you've imported into TTX 2023. for the change from single member LLC to S-Corp. Keep in mind that there's significantly more to change in QB than just the EIN. In fact, you "should" start the S-Corp as a completely new business in QB. That's because an S-Corp files it's own physically separate 1120-S corporate tax returns. You'll need to identify the new business as an S-Corp, and assign tax lines numbers that corespond to the line numbers of the 1120-S. Right now, your tax line assignments in QB correspond to those of a SCH C form.

If you just "change things" in the existing LLC business in QB, it can, and most likely will, mess the historical information up something fierce. So just  create a new business in QB and press on from there. If you need help with the QB side of things, it's best to seek that assistance in the QB support forums.