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2553 late election relief reasonable cause examples Form: What You Should Know
Late Sub S Election. IRC §1362(b)(6)(B). An entity can submit an S-Corporation election to the election returns of the parent Sub S corporation at any election time unless the parent Sub S corporation was formed before the corporation's 2d quarter (December 1st through March 31st of the 2d quarter). IRC § 1362(b)(6)(C). An entity may also submit an additional S-Corporation election to the election returns of the subsidiaries thereof. IRC §1362(b)(7). In both instances, the following requirements must be met: a) a Sub S election was filed with the election returns of the parent Sub Corp at least 90 days before the due date for the corporation's first quarterly or other taxable year that begins after the taxpayer's 2d quarter of the taxable year in which an election was made; or b) the Sub S election was filed with the election returns of the subsidiary S corporations in a timely manner; and c) any failure in the timely filing will result in the subcorporations' failure to timely file an election under § 1362(b)(4). You may need to consult a skilled election advisor as to how to complete these forms. When evaluating whether reasonable cause exists, the IRS must consider: · whether the taxpayer was aware of the filing of the Subs S election with the election results and the return filed; · whether the election was submitted early; · the date the election was submitted; · whether the election was timely filed; & · whether the reason the election was submitted late was an honest mistake or willful neglect and not intentional. An S-Corp election is very different from a Sub-Corporation Election. An election under IRC §1362(b)(6)(B) is only good for the parent Sub Corp. an S-Corp election under IRC §1362(b)(6)(c) is not valid for other subsidiaries of the Sub Corp. Sub-Corporate Election: Reasonable Cause Example An S-Corporation owner who, on their 1st day of trading, wishes to transfer their shares to their spouse prior to the expiration of the shareholder approval period, will need to file a Sub-Corporate Elect. An owner may elect to use either: the old or the new transfer date & the old or new transfer form. IRC §1362(b)(6)(A)(i).
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