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How do I correct the S election effective date?

Roz1
Level 3
Any date I input, it gives me an error message.
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15 Replies 15
George4Tacks
Level 15

What does it say on the letter? https://www.irs.gov/pub/notices/cp261_english.pdf

OR Read the instructions if you are applying: https://www.irs.gov/instructions/i2553#idm139855003296080


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Roz1
Level 3

Not a letter.  On the return itself.

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George4Tacks
Level 15

@Roz1 What date is on the letter IRS sent to the S-Corp? I gave you a sample letter link, now look at the actual letter that your client has. 


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TaxGuyBill
Level 15

What does the error message say?

Is the S-election date on or after the incorporation date?

Is the S-election date the on the first day of the tax year for the corporation?

 

jgerow1995
Level 1

I am having the exact same issue with a short year tax return.  No matter what date I put in, I get the error.

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George4Tacks
Level 15

From https://www.irs.gov/instructions/i2553#idm139855003296080

Item E. Effective Date of Election

 

.Form 2553 generally must be filed no later than 2 months and 15 days after the date entered for item E. For details and exceptions, see When To Make the Election and Relief for Late Elections, earlier..

 

A corporation (or entity eligible to elect to be treated as a corporation) making the election effective for its first tax year in existence should enter the earliest of the following dates:

  • The date the corporation (entity) first had shareholders (owners),

  • The date the corporation (entity) first had assets, or

  • The date the corporation (entity) began doing business.

When the corporation (entity) is making the election for its first tax year in existence, it will usually enter the beginning date of a tax year that begins on a date other than January 1..

A corporation (entity) not making the election for its first tax year in existence that is keeping its current tax year should enter the beginning date of the first tax year for which it wants the election to be effective.

A corporation (entity) not making the election for its first tax year in existence that is changing its tax year and wants to be an S corporation for the short tax year needed to switch tax years should enter the beginning date of the short tax year. If the corporation (entity) doesn’t want to be an S corporation for this short tax year, it should enter the beginning date of the tax year following this short tax year and file Form 1128, Application To Adopt, Change, or Retain a Tax Year. If this change qualifies as an automatic approval request (Form 1128, Part II), file Form 1128 as an attachment to Form 2553. If this change qualifies as a ruling request (Form 1128, Part III), file Form 1128 separately. If filing Form 1128, enter "Form 1128" on the dotted line to the left of the entry space for item E.


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jgerow1995
Level 1

The election is being made with the first tax year.  The issue is the error message in ProSeries no matter what date I enter....

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George4Tacks
Level 15

did you try 1/1/2020?


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jgerow1995
Level 1

Yep, tried every kind of date to no avail...

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dkh
Level 12

@jgerow1995     Have you finished entering all the required data?  I've found that sometimes ProSeries likes to give an error message for data entered when some related information has not yet been entered.

jgerow1995
Level 1

Yep, everything has been entered.  The workaround is to generate the form for signature and mailing.  Then scan it in as an attachment to the return.  At least that's how I'm going to handle it.

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glmadden
Level 1

 you ever get a resolution? I am having same issue.

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Roz1
Level 3

Have not figured it out.

Does not matter what the IRS letter says re the S Acceptance date.

I add a note to the line and then I efile w/"errors".

I really think it's a glitch in the system, but not to everyone.  The following year of the filing it works.

 

 

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TaxGuyBill
Level 15

I think it is rather odd that you guys are having a problem, but won't give details.

  • What does the error message say?
  • What is the incorporation date?
  • What is the S-election date?
  • What type of tax 'year' is it (calendar, fiscal, etc.)?
  • Is this a 'short year' return?

 

It is rather unrealistic for anybody to try to help you if you don't provide AS MUCH DETAIL AS POSSIBLE about the problem.

PATAX
Level 11

Just completed two S Corp elections and had no problems whatsoever with anything including effective dates...

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