Form 2553 (S Corporation Election)
The IRS form used to elect S corporation tax status for an eligible domestic corporation or LLC, generally due within 75 days of the start of the tax year.
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.
Key Points
- Elects S corporation tax treatment for an eligible corporation or LLC.
- Generally due within 2 months and 15 days (about 75 days) of the start of the tax year the election takes effect.
- All shareholders must be eligible (US citizens or residents, certain trusts/estates) and must consent.
- Late elections can often be cured under Rev. Proc. 2013-30 with reasonable cause and consistent reporting.
- Eligibility limits: maximum 100 shareholders and only one class of stock.
Practical Example
An LLC formed on January 10 wants S-corp treatment for the full year. It files Form 2553, signed by all members, by roughly March 25 (within 75 days). Missing that window, it can still request late-election relief under Rev. Proc. 2013-30 by attaching a reasonable-cause statement, as long as it has consistently filed as an S-corp.
Related TS CPA Service
Start your business right, with the structure that saves the most on taxes.
Learn about Entity Formation & StructuringHave a Question About Form 2553 (S Corporation Election)?
Get a free, no-obligation answer from a licensed CPA. We respond the same day.
Free Consultation