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See what's trending for the November 15th deadline (Form 990) and resources for the upcoming tax season. View ProSeries Hot Topics.
See what's trending for the November 15th deadline (Form 990) and resources for the upcoming tax season. View ProSeries Hot Topics.
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- Timing to convert from self employment to S Corp
Timing to convert from self employment to S Corp
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kirkavery
Level 3
06-11-2023
10:45 AM
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The guidance I have read is not clear to me when converting a business from reporting as self employment to an S Corp what date(s) are available to make it effective.
If the client sets up an LLC, effective July 1, 2023 and immediately files Form 2553 to elect treatment as an S Corp, can the 2023 tax year be split Jan to Jun as SE income and Jul to Dec as Sub S income or does he have to wait until the following year, January 1, 2024, to start being taxed as an S Corp?
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TaxGuyBill
Level 15
06-11-2023
02:48 PM
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They can elect S-status immediately when the LLC was formed (July 1st, 2023).
So yes, the self employment income from January through June would be on Schedule C, and the LLC/S-corporation would file starting July 1st (a "short year" return, assuming they use a calendar year).
