Do I need to file both Form 2553 and Form 8832 before my LLC can be treated by the IRS as an S corporation?

[jmt111]

What is the name of your state? NJ

I own a sole-member LLC registered in NJ. Rather than file its taxes under Schedule C of my Form 1040, I want to be able to file a separate return for the LLC. I understand that I need to file Form 1120-S Corp. (U.S. Income Tax Return for an S Corporation). However, I understand that before I can file Form 1120-S Corp., I need to file Form 2553 (Election by a Small Business Corporation). Do I also need to file Form 8832 (Entity Classification Election)?

 

[Just Blue]

@Taxing Matters

 

[LdiJ]

What is the name of your state? NJ

I own a sole-member LLC registered in NJ. Rather than file its taxes under Schedule C of my Form 1040, I want to be able to file a separate return for the LLC. I understand that I need to file Form 1120-S Corp. (U.S. Income Tax Return for an S Corporation). However, I understand that before I can file Form 1120-S Corp., I need to file Form 2553 (Election by a Small Business Corporation). Do I also need to file Form 8832 (Entity Classification Election)?

The 2553 is sufficient. However if you make an election now, it will be for tax year 2021. You will still need to file a Schedule C for 2020.

 

[davew9128]

The 2553 is sufficient. However if you make an election now, it will be for tax year 2021. You will still need to file a Schedule C for 2020.

There is absolutely no reason a late election wouldn't be accepted.

I'll also point out that the State of New Jersey requires a separate S election filed with the DOR.

 

[LdiJ]

There is absolutely no reason a late election wouldn't be accepted.

I'll also point out that the State of New Jersey requires a separate S election filed with the DOR.

Have the requirements for a late election changed recently? According to Rev Proc 2013-30 the business must have intended to be and operated as if it were an S-Corp from the beginning. It sounded to me like the OP just decided that he/she preferred to be an S-Corp. Now, if I am wrong and the OP only recently opened the business then that's another story.

 

[Taxing Matters]

However, I understand that before I can file Form 1120-S Corp., I need to file Form 2553 (Election by a Small Business Corporation). Do I also need to file Form 8832 (Entity Classification Election)?

If you want to have the LLC treated as a S-corporation starting January 1, 2021 then all you need to do is file the Form 2553 now and provide the effective date information on the form. You do not need the Form 8832 as the Form 2553 will act to both change the classification of the LLC to a corporation and to elect for the entity to be taxed under subchapter S of the Code. If you want the entity to be treated as a S corporation for 2020, your election is late and you need to complete the reasonable cause information on Line I of Form 2553. Note that you had to have intended by January 1, 2020 that your LLC be a S corporation. If you just decided now that you'd want it to be a LLC then you don't qualify for the late filing relief provided for in the form. Moreover, you need to have reasonable cause as to why, despite having intended at the start of the year to make the election, you are only now getting around to making that election. Again, simply deciding now that it would be better for you in 2020 to be a S corporation isn't enough to meet reasonable cause.