Q:

Hello,

I have found your information to be very helpful and was wondering if you can point me in the right direction. All along I thought our corporation was set up as an S corp., I have been filing 1120 returns since 1999 and the
income of the corp. has been low to min up until our 2004 tax year. If I send the form to elect an S status with the IRS, can I use this S status for our 2004 return? Any response would be helpful. I am sure you get many requests...Thanks again...

Thank You,

A:

First thing, you should be working with a tax pro.  If you have been trying to handle corporate taxes on your own, you have been asking for trouble.

If you have seen the S corp election form 2553 and its instructions, you should know that it's too late to file an election now and make it effective for 2004.  You need to file the 2553 by March 15, 2005 if you want to make it effective for 2005.

IRS does have provisions for late S elections for special circumstances.  However this is usually only allowed for new corporations where no tax returns have been filed.  I seriously doubt whether your case will qualify for the IRS's permission on this.   

If you do try for the special late election, you should be working with a tax pro and you need to get your story straight.  You claim to have been under the impression that you were already an S corp; yet you were filing 1120 forms, which are used for C corps.  That doesn't make sense to me and it won't for IRS.

Sorry to be so hard on you; but this is either a classic example of the dangers of not using a tax pro; or if you were using one, the repercussions of using an incompetent one.

Good luck.

Kerry Kerstetter

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 2/01/2005 12:27:00 PM Send this post: