IRS Form 2553

A corporation or other entity eligible to elect to be treated as a corporation must use Form 2553 to make an election under section 1362(a) to be an S corporation.

Understanding the S Corporation Election

An entity eligible to elect to be treated as a corporation that meets certain criteria will be treated as a corporation as of the effective date of the S corporation election and does not need to file Form 8832, Entity Classification Election.

The income of an S corporation generally is taxed to the shareholders of the corporation rather than to the corporation itself. However, an S corporation may still owe tax on certain income.

Eligibility Criteria

You may elect for a corporation or organization to be recognized as an S corporation only if it meets criteria such as:

Being an eligible organization.
Having no more than 100 shareholders.
Having only individuals, estates, certain exempt organizations, or certain trusts as its shareholders.
Having no nonresident alien shareholders.
Having only one class of stock.
Having or adopting an accepted tax year.

If you have questions about IRS Form 2553 or about how your business can benefit from this filing, you can reach our experts here.