Can an LLC be an “S” Corporation?

Yes.  An LLC can make an election to be taxed as an “S” corporation.  The “S” election is made using IRS Form 2553.  All owners of the LLC must consent to the “S” election.  So long as the “S” election is in effect, the LLC will be treated as a corporation for all federal income tax purposes.  This can be important because some federal income tax provisions only apply to corporations.  For example, only corporations can participate in a tax-free corporate reorganization.  In the event the LLC’s status as an “S” corporation is terminated in the future for any reason, the LLC might find itself treated as a partnership or disregarded entity rather than a corporation for federal income tax purposes.   

Hope you found this material helpful.  If you like what you read, forward this to a friend and tell them to check it out by clicking on the SenneySays logo.  If something you read here raises a question, please call or email at Jsenney@pselaw.com or 937-223-1130. 

 

AND ONE MORE THING:   Over the last year or so, banks mortgage companies have been aggressive in collecting mortgage loans and foreclosing on residential properties.  When a property is foreclosed on, or a deed is given in lieu of foreclosure, the bank will foregive the unpaid balance of the loan.  The amount foregiven is reported to the IRS on IRS Form 1099-C and is generally treated as taxable income.  However, for debt foregiveness that occurs prior to January 1, 2013, foregiveness of qualified principal residence debt is not taxable.  Call me if you want to know more about this qualified principal residence debt exclusion or any other tax matter.  Jsenney@pselaw.com or 937-223-1130.