Form 2553 (S Corporation Election)

Detailed Explanation

Filing Form 2553 changes the entity's federal tax classification to that of an S corporation, allowing pass-through taxation while permitting owners who actively work in the business to take part of their compensation as distributions (not subject to self-employment tax). Late S-elections may be granted relief under Rev. Proc. 2013-30 for entities meeting reasonable cause and consistent reporting requirements. All shareholders must be eligible (US citizens or residents, certain trusts and estates) and consent to the election.