1065 extension - file 1120S

[ranthony]

I have a client (partnership/LLC) that filed a 1065 last year and I forgot that they went down to one member last year so I extended the 1065 before they got me their stuff.  Can I file an 1120S this year for them - as they'd rather be treated this way than report on Schedule C?  Will they get a late penalty?  If I explain on the 2553 that the extension was filed for the 1065 properly, will I have to protest a fine?

[IRonMaN]

Did they act like an 1120S - like pay wages to  themselves?  

[ranthony]

No not yet, but they only made $9k, too.  I expect it to be a lot more this year.

[Rick19744]

You have a number of issues here that need to be addressed:

• First, the partnership terminated when it became a SMLLC and the final tax return was due on the 15th day of the third month after that terminating event.
• Based on the above, you most likely have a late filed form 1065 if you did not extend in the time frame of bullet number 1.
• Then once you are a SMLLC you need to make the election to be treated as an association on form 8832 along with the S election.
• There are missed S election rulings, but not sure about the form 8832 not being filed along with the form 2553.
• Unless you can find a ruling that fits your facts, a private letter ruling is expensive