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Level 4
March 15, 2021
Question

S election effective date

  • March 15, 2021
  • 11 replies
  • 79 views

My Scorp was incorporated on 01/14/2020, and the S election effective date is 01/101/2019. these two dates are shown on my 2019 Scorp tax return form with the help of a CPA. 

Somehow, when I input these two dates in turbotax for 2020 tax return, the system can't let me go through.

How to fix it?

Thanks!

11 replies

M-MTax
Level 15
March 15, 2021

I don't think turbotax is going to let you enter an effective date that's before the incorporation date. You'll have to override or something.

Level 4
March 15, 2021

I think the two dates are somehow officially shown in 2019 tax return form. 

If I override it or fill in the other dates, the IRS could see it wrong.

Alumni - Intuit
March 15, 2021

Please double check your dates.

 

Generally, you would create the corporation (incorporate) first and then elect to be taxed as an s corporation after that.

 

Either the two dates would be the same or the s election should come after the incorporation date.

 

You can't elect to be an s corporation if you have not created the corporation first.

Level 4
March 15, 2021

yes, I double checked it on 2019 tax return form. 

It really shows what I mentioned above. 

What should I do next?

Level 15
March 15, 2021

@nongkangma wrote:

yes, I double checked it on 2019 tax return form. 

 


When was your corporation ACTUALLY formed?

Alumni - Intuit
March 15, 2021

I don't understand what date is entered as: 01/101/2019?  Is it the 10th, the 11th, or the 1st of January in 2019?

 

Then, if the legal documents show that the S election happened before the initial incorporation, then it could be that they filed Form 2553 to actually create the corporation and elect to be an S corporation at the same time.  

 

A corporation or other entity eligible to elect to be treated as a corporation must use Form 2553 to make an election under section 1362(a) to be an S corporation. An entity eligible to elect to be treated as a corporation that meets certain tests discussed below will be treated as a corporation as of the effective date of the S corporation election and doesn’t need to file Form 8832, Entity Classification Election.

 

If that is the actual situation, then you would use the date of the Form 2553 to be the date of incorporation and the date of the s election.

Level 4
March 15, 2021

very helpful, 01/01/2019, S election effective date. Sorry for the typo!

But the system won't let it go through.

Level 15
March 15, 2021

As I asked before, when was the legal entity of a corporation ACTUALLY formed with the State?