What is Form 2553?
Form 2553, Election by a Small Business Corporation, is used by qualifying corporations and limited liability companies (LLCs) to elect to be treated as an S corporation for federal tax purposes.
Why Elect S Corporation Status?
S corporation status allows business income, losses, deductions, and credits to pass through to shareholders' personal tax returns. This avoids the double taxation that C corporations face, where income is taxed at both the corporate and individual levels.
Who Can File Form 2553?
To elect S corporation status, your business must:
- Be a domestic corporation or eligible LLC
- Have no more than 100 shareholders
- Have only allowable shareholders (individuals, certain trusts and estates; not partnerships or corporations)
- Have only one class of stock
- Not be an ineligible corporation (such as certain financial institutions or insurance companies)
When Must Form 2553 Be Filed?
To elect S corporation status for the current tax year, file Form 2553:
- No more than 2 months and 15 days after the beginning of the tax year, or
- At any time during the preceding tax year
For new corporations, this deadline is 2 months and 15 days after the first day of the first tax year.
What Information is Required?
Form 2553 requires:
- Corporation's identifying information (name, address, EIN)
- Tax year information
- Consent statements signed by all shareholders
- Information about the corporation's stock
How to File
Form 2553 must be filed with the IRS Service Center designated for your state. The form can be mailed or, in some cases, faxed.
Official Source: IRS Form 2553
