Instructions For Form 2553 - Election By A Small Business Corporation printable pdf download

Instructions for Form 2553

Department of the Treasury

Internal Revenue Service

(Rev. December 2017)

Election by a Small Business Corporation

Section references are to the Internal Revenue Code unless

Regulations section 1.1361-1(m). For guidance on how to

otherwise noted.

convert a QSST to an ESBT, see Regulations section

1.1361-1(j)(12). If these elections weren’t timely made, see

Future Developments

Rev. Proc. 2013-30, 2013-36 I.R.B. 173, available at

IRS.gov/irb/2013-36_IRB#RP-2013-30.

For the latest information about developments related to

Form 2553 and its instructions, such as legislation enacted

4. It has no nonresident alien shareholders.

after they were published, go to IRS.gov/Form2553.

5. It has only one class of stock (disregarding differences

Reminder

in voting rights). Generally, a corporation is treated as having

only one class of stock if all outstanding shares of the

Simplified methods for a corporation (entity) to request relief

corporation's stock confer identical rights to distribution and

for a late S corporation election, ESBT election, QSST

liquidation proceeds. See Regulations section 1.1361-1(l) for

election, or corporate classification election are in effect. See

details.

Relief for Late

Elections.

6. It isn’t one of the following ineligible corporations.

a. A bank or thrift institution that uses the reserve method

General Instructions

of accounting for bad debts under section 585.

b. An insurance company subject to tax under

Purpose of Form

subchapter L of the Code.

c. A corporation that has elected to be treated as a

A corporation or other entity eligible to elect to be treated as

possessions corporation under section 936.

a corporation must use Form 2553 to make an election under

d. A domestic international sales corporation (DISC) or

section 1362(a) to be an S corporation. An entity eligible to

former DISC.

elect to be treated as a corporation that meets certain tests

discussed below will be treated as a corporation as of the

7. It has or will adopt or change to one of the following tax

effective date of the S corporation election and doesn’t need

years.

to file Form 8832, Entity Classification Election.

a. A tax year ending December 31.

The income of an S corporation generally is taxed to the

b. A natural business year.

shareholders of the corporation rather than to the corporation

c. An ownership tax year.

itself. However, an S corporation may still owe tax on certain

d. A tax year elected under section 444.

income. For details, see Tax and Payments in the

Instructions for Form 1120S, U.S. Income Tax Return for an

e. A 52-53-week tax year ending with reference to a year

S Corporation.

listed above.

Who May Elect

f. Any other tax year (including a 52-53-week tax year)

for which the corporation establishes a business purpose.

A corporation or other entity eligible to elect to be treated as

For details on making a section 444 election or requesting

a corporation may elect to be an S corporation only if it meets

a natural business, ownership, or other business purpose tax

all the following tests.

year, see the instructions for Part II.

1. It is (a) a domestic corporation, or (b) a domestic entity

8. Each shareholder consents as explained in the

eligible to elect to be treated as a corporation, that timely files

instructions for column K.

Form 2553 and meets all the other tests listed below. If Form

2553 isn’t timely filed, see

Relief for Late

Elections, later.

See sections 1361, 1362, and 1378, and their related

2. It has no more than 100 shareholders. You can treat

regulations for additional information on the above tests.

an individual and his or her spouse (and their estates) as one

A parent S corporation can elect to treat an eligible wholly

shareholder for this test. You can also treat all members of a

owned subsidiary as a qualified subchapter S subsidiary. If

family (as defined in section 1361(c)(1)(B)) and their estates

the election is made, the subsidiary's assets, liabilities, and

as one shareholder for this test. For additional situations in

items of income, deduction, and credit generally are treated

which certain entities will be treated as members of a family,

as those of the parent. For details, see Form 8869, Qualified

see Regulations section 1.1361-1(e)(3)(ii). All others are

Subchapter S Subsidiary Election.

treated as separate shareholders. For details, see section

When To Make the Election

1361(c)(1).

3. Its only shareholders are individuals, estates, exempt

Complete and file Form 2553:

organizations described in section 401(a) or 501(c)(3), or

No more than 2 months and 15 days after the beginning of

certain trusts described in section 1361(c)(2)(A).

the tax year the election is to take effect, or

For information about the section 1361(d)(2) election to be

At any time during the tax year preceding the tax year it is

a qualified subchapter S trust (QSST), see the instructions

to take effect.

for Part III. For information about the section 1361(e)(3)

For this purpose, the 2-month period begins on the day of

election to be an electing small business trust (ESBT), see

the month the tax year begins and ends with the close of the

Dec 02, 2017

Cat. No. 49978N

Instructions For Form 2553 - Election By A Small Business Corporation

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