Form 2553 (2017) Checklist for S Corporation Election

tax purposes. The 2017 instructions provide comprehensive guidance on shareholder eligibility requirements, filing deadlines, and procedures for requesting late election relief under Rev.

Proc. 2013-30.

Eligibility Requirements for S Corporation Election

Any eligible corporation or entity can make an S corporation election regardless of when the business was incorporated. You must file Form 2553 within the prescribed timeframe to establish S corporation status for federal income tax purposes.

The corporation must meet specific tests, including shareholder limitations, stock class restrictions, and domestic corporation requirements, as outlined in the Internal Revenue Code.

These eligibility criteria determine whether your business qualifies for pass-through entity taxation under Subchapter S.

All shareholders as of the filing date must meet S corporation eligibility criteria under federal tax law. Eligible shareholders include United States citizens, resident aliens, estates, and qualifying trusts as defined in Section 1361 of the Internal Revenue Code.

Non-resident aliens cannot hold shares in an S corporation, and their ownership immediately disqualifies the entity from making an S corporation election. ESOP trusts qualify as eligible shareholders under Section 1361(c)(6), a provision that has been effective since 1998, while grantor trusts maintain eligibility under Section 1361(c)(2)(A)(i) for 2017 tax year determinations.

Filing Deadlines and Election Effective Dates

IRS Form 2553 must be filed no more than two months and fifteen days after the beginning of the tax year for which the election takes effect. Alternatively, you can file at any time during the tax year preceding the year the S corporation status should begin.

The effective date you enter on line E represents the beginning date of the tax year for which you intend the S election to apply. This effective date typically falls on the first day of the current or next tax year for timely elections.

Late elections filed after the standard deadline require relief procedures under Rev. Proc.

2013-30, which consolidated multiple prior revenue procedures into simplified guidance. Relief becomes available when you demonstrate reasonable cause for the late filing and show diligent corrective action upon discovering the missed deadline.

Shareholder Consent Requirements

Each shareholder who owned stock on the election date must provide written consent to the S corporation election. You must obtain signatures and dates from all required shareholders, and the Form 2553 instructions require explicit acknowledgment that shareholders consent to S corporation treatment for the entire tax year.

For elections filed on or after the effective date, all shareholders who owned stock at any time between the effective date and the filing date must provide consent. Each consent must include the shareholder's signature and date, and you cannot use retroactive consents dated after the filing date.

Community property spouses must both consent when they hold a community interest in the stock or its income. Minors require consent from the minor, a legal representative, or a natural or adoptive parent if no legal representative has been appointed.

Completing Form 2553 Part I and Part II

Part I requires precise entries, including the corporation’s legal name, employer identification number, principal business address, and the effective date of the S corporation election.

Accuracy is essential, particularly for the incorporation date, which must match the corporation’s records filed with the state. Any inconsistency can delay IRS processing or cast doubt on the validity of the election.

Part II is completed only when a fiscal tax year is selected by checking box two or box four in

Part I, item F. This section applies to corporations requesting a natural business year, an ownership tax year, or a Section 444 election for a fiscal year that differs from the standard

December 31 calendar year.

When a business-purpose fiscal year is requested, supporting documentation must be included to justify the election. If a non-calendar fiscal tax year is desired, the form also allows the filer to indicate an intention to make a back-up Section 444 election. The Internal Revenue Service assesses a user fee for business-purpose fiscal year requests submitted through Part II.

Part III and Qualified Subchapter S Trust Elections

Part III serves exclusively for Qualified Subchapter S Trust elections when stock has been transferred to the trust on or before the S corporation election date. This section does not relate to late election procedures or general shareholder consent requirements.

The income beneficiary or legal representative of the QSST must complete Part III to make the required trust election under Section 1361(d)(2). You can use additional copies of the form or attach a separate election statement when multiple QSST elections apply to different trusts holding corporation stock. The deemed owner of the QSST must also consent to the S corporation election in column K of Form 2553 Part I.

Late Election Relief Under Rev. Proc. 2013-30

Rev. Proc. 2013-30 provides simplified late election relief for S corporations and has been effective since 2013 for all subsequent tax years, including 2017. You must explain the reasonable cause for failing to file on time and demonstrate diligent actions taken to correct the mistake upon discovery.

Provide this information on line I of Form 2553 or attach a separate statement detailing the circumstances. Relief is available when you meet objective requirements in sections 4.01 or

4.02 of Rev. Proc. 2013-30, which specify conditions including intended S corporation status, failure to qualify solely due to late filing, and consistent tax return reporting by all shareholders.

The corporation must file within three years and seventy-five days of the intended effective date to qualify for relief under this revenue procedure.

Filing Locations and Documentation Requirements

Mail the original Form 2553 to the Internal Revenue Service center designated for your state based on the corporation's principal place of business. The Form 2553 instructions list specific addresses by state, and selecting the correct filing address helps prevent processing delays that could affect the election’s validity.

Keep copies of the filed form, all shareholder consents, and evidence of timely mailing, such as certified mail receipts. This documentation protects the corporation against Internal Revenue

Service challenges to the validity of its election during examination procedures. Corporations converting from C corporation status must maintain complete records showing the transition date and all shareholder acknowledgments of the election.

Medicare Surtax and S Corporation Status

The 3.8 percent Medicare surtax under Section 1411 applies to certain net investment income and has been in effect since 2013. An S corporation election does not suspend or eliminate

Medicare surtax obligations for shareholders.

This net investment income tax remains separate from the S corporation election process. It continues to apply based on individual shareholder income levels and modified adjusted gross income thresholds established in the Internal Revenue Code. The tax law maintains this requirement regardless of whether your business operates as an S corporation or a C corporation. Businesses previously operating as C corporations should review how the election affects their shareholder-level tax obligations for 2017 and subsequent years.

If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.

• Full IRS transcript retrieval (Wage & Income + Account)
• Professional tax form review
• Preparation & filing support
• Tax relief options if you owe the IRS