S-corp

[egansen]

so i thought i was going to be 100% self employed this year as a consultant. I applied to have my LLC turned into an S-corp.  BUT then the work dried up and I ended up getting a w-2 gig in June.  Can I change my s-corp back to a regular LLC?  

[emina]

Hello and thank you for joining us today!

 If the business was conducted in the name of the corporation, then the 1120S should be filed for this year. You may then revoke your election for next tax year, here is the IRS link with the instructions on how: LINK

• If revoking effective the first day of the tax year, the revocation is due by the 16th day of the third month of the tax year,
• If revoking effective any day other than the first day of the tax year, the revocation must be received by IRS by the requested effective date.
  • For example, the S corporation is on a December 31 tax year ending and requests a revocation effective January 1, the revocation is due March 15.
  • The S corporation is on a December 31 tax year ending and requests a revocation effective February 14, the revocation is due February 14. 

It is very important to follow the procedures and timely file your returns to avoid any IRS penalties.

Good luck!

[FranklinF]

I truly do NOT want to overcomplicate my response, and thus, for further details, you may check the links I will post below.   Nonetheless, I will provide clear-cut concise answers:

 1. If you want to revoke an S-Corporation, effective NEXT TAX YEAR (meaning starting on January 1st), the revocation form (IRS Form 2553) and all other necessary documents must be submitted before or on March 15th of the NEXT Tax Year.

2. For example, if you want to revoke your S-Corporation this year starting October 1st, the revocation form (IRS Form 2553) and all other necessary documents must be submitted before or on October1st of this Tax Year. of the NEXT Tax Year.

3. You are required, by law, to file an S-Corporation Tax Return for the time period that the S-Corporation was considered effective by the IRS EVEN IF THERE WERE NO ACTIVITY. 

A domestic corporation must file Form 1120, U.S. Corporation Income Tax Return, whether it has taxable income or not.


4. A Zero Activity S-Corporation is NOT required to pay Reasonable Compensation but the IRS can only know that if you actually file the Tax Return showing NO ACTIVITY.

Revoking a Subchapter S election 
Wage Compensation for S Corporation Officers