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New EIN needed

Forum|Forum|4 years ago
January 24, 2022
3 replies
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Previous company: LLC filing 1065

Conversion to new company: Effective 1/1/2022, exchange of shares.

The new company will be a corporation.

The owners wish to be taxed as an S Corporation.

I think a new EIN is required per the instructions.

Any input is appreciated.

Corporations

You will be required to obtain a new EIN if any of the following statements are true.

A corporation receives a new charter from the secretary of state.
You are a subsidiary of a corporation using the parent's EIN or you become a subsidiary of a corporation.
You change to a partnership or a sole proprietorship.
A new corporation is created after a statutory merger

Lacerte Tax

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Best answer by sjrcpa

Agreed. I'm not an attorney either.

sjrcpa

Level 15

If they did a conversion under state law I don't think so.

That's one of the reasons companies do this - to keep the same EIN for government contracts, Medicaid reimbursement, etc.

The more I know the more I don’t know.

S

strongsilenceAuthor

Level 10

Sjrcpa

Thank you. Not being an attorney I might be out of my element, and perhaps an attorney should make the decision.

But I see these provisions in the documents.

- The members of the Company desire to convert the Company [LLC] to a general law corporation

- The company shall file Form CONV LLC-GS, “Articles of Incorporation with Statement of Conversion” (the “Conversion Certificate”) with the California Secretary of State as required under the Code; executing all documents necessary to dissolve the Company (including all required filings and notices with state and local authorities) and transfer the legal rights of the Company [LLC] to the Converted Entity

And I so I think this language falls under that provision I cited about a new charter.

I don't want to tell the client that I don't know the answer, but I think that is the best action to take. So the business attorney probably should be consulted.

sjrcpaAnswer

Level 15

Agreed. I'm not an attorney either.

The more I know the more I don’t know.

BobKamman

Level 15

Looks like a no-brainer to me, so probably a trick question. Old LLC, gone. Corporation, New. I mean, it's not like a transgender sole proprietor, is it?

sjrcpa

Level 15

My understanding is that with a conversion, legally it is still the same entity

The more I know the more I don’t know.

joshuabarksatlcs

Level 9

My suggestion: Call Mr. Trump at (202) 622-3080 (not a toll-free call).

I don't have a short answer. I don't do short answers.

Here's the short version of my "long answer": See Rev. Rul. 2004-59.

It would be nice if the Rev. Rul. had a short answer like: Oh, By the way, dudes and dudettes, you do (or do not) need a new FEIN.

Perhaps you could talk Mr. Trump into updating it.

I believe the LLC (as discussed in this thread) fell under the same rule that's applicable to a partnership (as discussed in the Rev. Rul.) I also believe that when the partnership (LLC) liquidates, the entities ends, and the partnership hands the stock of the corporation - a new entity - to the partners (LLC members). I would interpret the Rev. Rul. as saying that a new FEIN is needed.

But then, I'm not an attorney, would need further research if I were to advise my client, and is typing under the influence (of -what else - bourbon.)

Rev. Rul. 2004-59

State law conversion from partnership to corporation.

HOLDING

If an unincorporated state law entity that is classified as a partnership for federal tax purposes converts into a state law corporation under a state law formless conversion statute, the following is deemed to occur: the partnership contributes all its assets and liabilities to the corporation in exchange for stock in such corporation, and immediately thereafter, the partnership liquidates distributing the stock of the corporation to its partners.

DRAFTING INFORMATION

The principal author of this revenue ruling is Christopher L. Trump of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue ruling, contact Christopher L. Trump at (202) 622-3080 (not a toll-free call).

I come here for kudos and IRonMaN's jokes.

S

strongsilenceAuthor

Level 10

Thanks for your responses. The client asked his attorney who did not know. He decided to get a new EIN because getting to keep the old one might "get us in trouble because maybe if someone were to dig deep enough, we would find that it's disallowed." I don't know what he means.

I'm glad I didn't make the decision.

Corporations

DRAFTING INFORMATION

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