S Corporation

[jamessite]

I had a client create an S Corp without asking any questions. They used the SAME name and EIN as their one-person LLC. If I file the S Corp return with the numbers, the client owes a lot of money to NY City The client does not even remember how they created the S Corp. Is the S Corp even valid if the EIN is the same as the LLC EIN? I would love to file the S Corp return showing no income or expenses and file the income and expenses only on the LLC on Schedule C. Any thoughts?

[Jim-from-Ohio]

Did they file a 2553 under the original SMLLC EIN?

[IRonMaN]

Just curious once again, but what happened when you e-filed the S-corp extension back in March?

[George4Tacks]

Why would you ever think that they would ask questions? Especially ever ask you before they do things!

https://www.thetaxadviser.com/issues/2013/dec/casestudy-dec2013.html

[qbteachmt]

"Did they file a 2553 under the original SMLLC EIN?"

And if so, get evidence that it was accepted or rejected. You might be worried for no reason.

[jamessite]

It was accepted

[jamessite]

I think they just created it on their own and so did not file a 2553

[IRonMaN]

If the extension was accepted they filed the election properly.

[PATAX]

@IRonMaN 👍excellent observation Ironman.

[qbteachmt]

I guess the next issue is timeliness. Is this the first tax year for the entity's operations? Was there payroll (that FEIN was filing payroll forms and paying payroll taxes) under the S Corp? Or, as the LLC in prior years?

[Accountant-Man]

In the past, I've had S corp extensions rejected if the IRS did not have the S election, 2553, on file.

[sjrcpa]

NYC does not recognize S Corps. So wouldn't they owe the same amount to NYC either way?

NY requires an S election. Did your savvy client also make a NY S election?