Fillable Form Ar1103 - Election By Small Business Corporation (Page 2 of 2) in pdf

STATE OF ARKANSAS

Election By Small Business Corporation

PURPOSE

The Purpose of this election is to permit the undistributed taxable income of a “Small Business Corporation” to be taxed to the shareholders rather than the

corporation. The term “undistributed taxable income” means taxable income (as computed under the Income Tax Act of 1929 as amended) minus the sum

of (1) the tax imposed on certain capital gains and (2) the amount of money distributed as dividends out of earnings and proﬁ ts of the taxable year.

INSTRUCTIONS

Subchapter S of the Federal Internal Revenue code of 1986, as amended,

The election must be ﬁ led during the ﬁ rst seventy-ﬁ ve (75) days of the taxable

and in effect as of January 1, 2011 has been adopted for Arkansas income

year. It shall be effective for the taxable year for which it is made and for all

tax purposes. A corporation may elect Subchapter S treatment for Arkansas

succeeding taxable years unless it is terminated under provision of the law.

income tax purposes only if it has elected Subchapter S treatment for fed-

This form must be signed either by the president, vice president, treasurer,

eral income tax purposes for the same tax year. A copy of the Corporation’s

assistant treasurer, chief accounting ofﬁ cer, or other corporate ofﬁ cer (such

“NOTICE OF ACCEPTANCE AS AN S-CORPORATION” received from the

as tax ofﬁ cer) who is authorized to sign.

Internal Revenue Service must be submitted to approve the Arkansas Elec-

tion, Form AR1103. The Arkansas election will be held in suspense until the

At the shareholder’s option on the date of the election, their signatures may

IRS Notice is received.

be entered on the consent shown in the lower portion of the election Form

AR1103 ﬁ led by the corporation in place of preparing and attaching the con-

Qualifying corporations may elect to be treated as a “Small Business (S) Cor-

sents described below.

poration” for Arkansas income tax purposes. The election may be made only

IN GENERAL: The consent to the election of the corporation by all share-

if the corporation meets all seven (7) of the following requirements:

holders at the date of election (which may be incorporated in one statement)

(1) It is treated as a Small Business Corporation with the Federal Govern-

shall be attached to this form unless otherwise shown on the face. In addi-

ment.

tion to an afﬁ rmative statement shall set forth the name and address of the

(2) It has no more than one hundred (100) shareholders. However, if stock

corporation and of the shareholder, the number of shares of stock owned

is held by a husband and wife as joint tenants by the entirety, or tenants

by the shareholder, and the date(s) on which such stock was acquired. The

in common or is community property for the income from which is com-

consent must be signed by both the husband and wife if they have a com-

munity income, it shall be treated as owned by one shareholder.

munity interest in the stock or the income therefrom, and by each tenant in

(3) It has only individuals or estates as shareholders.

common, each joint tenant, and each tenant by the entirety. The consent of

(4) It has no shareholder who is a nonresident alien stockholder.

a minor shall be made by the minor or by his legal guardian, or his natural

(5) It has only one class of stock.

guardian if no legal guardian has been appointed (even if the case of stock

(6) S Corporations are permitted to hold C & S Corporate Subsidiaries.

held by a custodian for a minor under a statute patterned after the Uniform

(7) It is a corporation organized under the laws of the United States or a

Gifts to Minors Act). The consent of an estate shall be made by the executor

state or territory or it is a similar association taxed as a corporation.

or administrator thereof. If the election is made before the ﬁ rst day of the

corporation’s taxable year, the consent of persons who became sharehold-

If the corporation is the parent of one or more Qualiﬁ ed Subchapter S Sub-

ers after the date of the election and on or before such ﬁ rst day shall be ﬁ led

sidiaries (QSSS), the election must be accompanied by Federal Form 8869

as soon as practicable after such ﬁ rst day but in no event later than the last

for each subsidiary that will be ﬁ ling with the corporation.

day prescribed for ﬁ ling the election and a copy shall also be ﬁ led with the

corporation income tax return.

TO BE RECOGNIZED AS AN ARKANSAS S-CORPORATION

The annual Income Tax Return of a small business corporation is to be

The following must be met:

submitted on Arkansas Form AR1100S, and ﬁ led with The Department of

Finance and Administration, Corporation Income Tax Section, P.O. Box 919,

The business must be registered with the Arkansas Secretary of State.

Little Rock AR 72203-0919.

(501) 682-1010

All non-resident shareholders of corporations receiving income in the form of

The business must ﬁ le with the Internal Revenue Service an Election

distributions pursuant to the provisions of Act 51 of 1983 must ﬁ le a properly

for Small Business Form (2553) and apply for a Federal Identiﬁ cation

executed Arkansas Income Tax return with the Director of the Department of

Number (SS-4). (1-800-829-3676)

Finance and Administration and remit the applicable Arkansas Income Tax

upon the amount distributed.

The business must ﬁ le with the State of Arkansas an Election by Small

Business Form (AR1103). (501) 682-4775.

Failure to so report and remit on the part of any shareholder is grounds upon

which the Director shall be authorized to revoke the Corporation’s Subchapter

For an election to be valid, all persons who are shareholders of the corpora-

S Election and collect the tax from the Corporation by any manner authorized

tion on the ﬁ rst day of the corporation’s taxable year or on the day of election,

by the Arkansas Income Tax Act of 1929 as amended.

whichever is later, must consent to such an election. The Arkansas election

form is AR1103, and is to be obtained from and submitted to Corporation

Income Tax Section, P.O. Box 919, Little Rock, AR 72203-0919.

IMPORTANT NOTES

Complete this form and send to the Department of Finance and Administration and upon approval you will receive by mail an approval letter for proof

of acceptance of your election. Please keep this letter with your corporate ﬁ les.

You may use AR1103, Supplemental Shareholder’s Consent Form if an additional list of shareholders is necessary. You will ﬁ nd the form on our

website,

AR1103 back (R 7/15/11)

Form Ar1103 - Election By Small Business Corporation Page 2

Related Articles

Related forms

Related Categories