Question

A corporation is formed and the shareholders want to elect S status. In the following situations what is the due date for the election to be effective for the first tax year?

Date of formation Election due date

February 3, 2018

December 17, 2017

Answer 1

For a S status corporation, IRS FORM 2553 is to be filed with IRS during the period that begins from the date of formation upto two and a half months from the date of formation and election can be held upto last date of filing IRS FORM 2553, in case of first tax year.

1. If the date of formation is February 3, 2018, then

Two months from date of formation = 2 April

15 days from 2 April = 17 April

So , if the date of formation is February 3, 2018 , election made before February 3rd, 2018 is not valid and last election due date is April 17, 2018.

2. If the date of formation is December 17, 2017, then Two months from date of formation = 16 February, 2018

15 days from 16 February = 3 March, 2018

So, if the date of formation is December 17, 2017, election made before December 17, 2017 is not valid and last election due date is March 3rd, 2018.