Tax reform may have you thinking of changing your S corporation to a C corporation, partnership, or sole proprietorship.
With such a switch, you need to consider:
- How do I terminate the S corporation election correctly?
- What are the tax consequences to me?
If you want to turn your S corporation into a C corporation, you file an S corporation election revocation statement with the IRS. Your corporation is then a C corporation for federal tax purposes.
If you don’t want your business to be either an S or a C corporation, you liquidate the S corporation and contribute the assets to a new business entity.
If you chose S corporation taxation for your limited liability company (LLC), changing that election is a little more complicated.
First, you must file the S corporation election revocation statement with the IRS. The tax law then treats your LLC as a C corporation for federal tax purposes.
If that’s what you want, stop there.
If you want a disregarded entity (single-member LLC) or a partnership (multi-member LLC), you also need to file Form 8832, Entity Classification Election, to revoke the C corporation election.
As to the tax consequences, you should meet with me. The taxes can be nasty, and you surely don’t want to be surprised. For help on this or other matters, please contact me at 678-999-3800 or via email firstname.lastname@example.org . Thanks Lee Pennington CPA
Lee Pennington, CPA is the owner of R. Lee Pennington, CPA, LLC and the firm is dedicated to providing dentist with high quality personal and business advice. We focus on reducing business overhead cost and reducing taxes for our dental clients. We accomplish this by providing financial benchmarking and proactive tax planning advice. You can reach Lee at 678-999-3800 or by email at email@example.com