Chapter 10 Summary 175 Must be a domestic corp. Not a prohibited entity 100 shareholder's or less- All consent Qualifying Shareholders One Class of Stock Rev. Proc. 2013-30- late S Elections up to 3 Years, 75 days from effective date. Not a prohibited entity- DISCs, Insurance company, Electing to use a possessions tax credit, bank using the reserve method The problem I have with S Corporations is that for my wealthy clients the income is landing on a few returns.

Chapter 10 Summary 191 LLCS that want S status file only Form 2553. Items 3 and 4 on page 191 File Form 8832 Entity Classification From default to C Corp or C Corp back to default. Not a prohibited entity- DISCs, Insurance company, Electing to use a possessions tax credit, bank using the reserve method The problem I have with S Corporations is that for my wealthy clients the income is landing on a few returns.

196 Late Elections IRS has been very generous with PLRs for late S Corp and Entity Elections. Fee applies! At least $2,400 and up! There is a major difference between a corporation and LLC requesting a late S Election. The LLC didn’t need to file Form 8832 if it filed timely. It does need to file Form 8832 if it is late.

Late Elections 203 Let’s look at the differences in the relief Just the S Election – page 203 S and Entity Election- page 204 The LLC will have had to timely file its S Corp returns to get the relief.

Chapter 10 Summary 184 39.6% plus add on Medicare Taxes Should we consider gifting some stock to children. Would not do this in families that qualify for financial aide. Are we taking care of family members. Is there an estate issue? Not a prohibited entity- DISCs, Insurance company, Electing to use a possessions tax credit, bank using the reserve method The problem I have with S Corporations is that for my wealthy clients the income is landing on a few returns.

VI. Qualified Subchapter S Trusts (QSST) 184 VI. Qualified Subchapter S Trusts (QSST) Only one income beneficiary but can have multiple remainder beneficiaries. Separate QSST election for each S Corp it owns. If making the QSST at the same time as the S Election its done on Form 2553 Otherwise use format is on Page 186 Income is distributed currently

VI. Qualified Subchapter S Trusts (QSST) 185 VI. Qualified Subchapter S Trusts (QSST)

VI. Qualified Subchapter S Trusts (QSST) 185 VI. Qualified Subchapter S Trusts (QSST)

VII. Electing Small Business Trusts(ESBTS) 187 VII. Electing Small Business Trusts(ESBTS) Stock is transferred to testamentary trust with multiple income beneficiaries Can separate the transfer of income and corpus. This is a complex trust taxes at 39.6% and possible NIIT 3.8% All current income beneficiaries are included in 100 shareholder count. The Qsub election is made on FORM 8869- same timing as the Form 2553 2 months 15 days.

VII. Electing Small Business Trusts(ESBTS) 187 VII. Electing Small Business Trusts(ESBTS)