Sample Form for S-Election Revocation

While entities taxed as S-Corps are the default recommendation of most business and tax planners, there are a number of benefits derived from being taxed as a C-Corp that should be carefully considered. C-Corps can deduct expenses that other tax entities cannot, such as 100% of the health insurance paid for employees, including shareholders in the corporation, as well as the costs of any medical reimbursement plan. While C-Corps do leave its shareholders open to the notorious double tax, this may not be a problem if profits are low.

If after careful consideration with your CPA, you decide that you would like to revoke the S-Corp status of your closely-held business, the following is a form letter that can be used:


_______________ ____, 20____
Department of the Treasury
Internal Revenue Service
_______________, ____ __________

Re: Revocation of S Corporation Election of _______________, Inc., Taxpayer Identification Number: ____-______________

To Whom It May Concern:

Notice is hereby given, pursuant to Section 1362(a) of the Internal Revenue Code, that _______________, Inc., a corporation incorporated in the State of _______________, with address of _______________, _______________, ____ __________, revokes its S corporation election filed with you on IRS Form 2553 dated _______________ ____, 20____.

The number of shares of the corporation’s stock (including non-voting stock) issued and outstanding at the time of this revocation is __________. The first taxable year for which this revocation is intended to be effective is the corporation’s taxable year beginning _______________ ____, 20____. Required shareholder consents to this revocation of election are attached.

Sincerely,


______________________
President of _______________, Inc.


Shareholders' Consent to Voluntary Revocation of
Election of S Corporation Status

The undersigned, being shareholder(s) of _______________, Inc., a corporation incorporated in the State of _______________, hereby consent to the revocation of its election under Section 1362(a) of the Internal Revenue Code to which this consent is attached. The address of the corporation is _______________, _______________, ____ __________. The corporation’s Taxpayer Identification Number is ____-______________. Each of the undersigned shareholders taxable year ends on December 31.

The undersigned shareholders’ name, address, taxpayer identification number, number of shares owned, and date acquired are as follows:

Shareholder Name:                Address:                         TIN:                      No. of Shares:   Date Acquired:

______________________ ____________________ ______________ ____________ __________________

______________________ ____________________ ______________ ____________ __________________

______________________ ____________________ ______________ ____________ __________________

______________________ ____________________ ______________ ____________ __________________

Signed: ____________________ Title: ____________________ Date: __________________

Signed: ____________________ Title: ____________________ Date: __________________

Signed: ____________________ Title: ____________________ Date: __________________

Signed: ____________________ Title: ____________________ Date: __________________

14 comments:

Very good!.
These words I need now to close my little S.
Thank you very mach.
Lzrf

Thank you so much. Very well written.

I could not find a current reference to the IRC 1372(a) & 1372(a)

According to this https://www.irs.gov/pub/irs-prior/p589--1995.pdf, it's IRC 1362(a).

Sorry about that, I've updated the post.

Can an s- election that was sent in with form 2553 be nullified and changed to diregarded entity (single member llc) in the initial year? I have a client that elected to be treated as a s corp in 2015(initial year) and I need to know if it can be nullified. The tax return is on extension and as of yet has not been sent in.
I would appreciate anybody's help.

The section for shareholder consent should include a line for the shareholder's address and the date on which the shareholder's tax year ends. Both are required for shareholder consent per Subchapter S.

Good catch, I've updated the post again.

Is the revocation included as part of the return or should it be mailed separately to the IRS. I am referring to the cover letter as well as the shareholders' consent?

Thanks

Mike

A revocation is filed separate from any tax return at a different IRS address; see the instructions to Form 1120S.

Can you tell me where i mail the chanhe request from s corp to c? I cannot find any info on this. Thanks

Can you tell me where i mail the chanhe request from s corp to c? I cannot find any info on this. Thanks

Very helpful, thank you for sharing!

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