When should my S-corporation election be effective?

Asked over 1 year ago - Santa Ana, CA

I formed my corporation on May 1 of this year. I just got around to issuing shares to myself on June 1, 2013 (I'm the only shareholder).

I just filed my form 2553 (S-corporation election) yesterday, and one of the questions was "Election is to be effective for tax year beginning (month/year)." Since I became a shareholder on 6/1, I used that date as the effective date. Did I mess up? Should I have said January 1 instead?

Attorney answers (3)

  1. Michael Charles Doland

    Contributor Level 20

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    Answered . Much depends if you wanted a "calendar year" or a "fiscal year". I am not sure your question required a month but rather a year. You will want a CPA on a go-forward basis anyway, and this would be a good first question.

    The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may... more
  2. Phillip Monroe Smith

    Contributor Level 18

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    Lawyers agree

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    Answered . The instructions to form 2553 state that A corporation making the election for its first tax year should enter (a) the date of incorporation, (b) the date the corporation first had assets, or (c) the date the corporation began business.

    Hope this helps.
    Good luck!
    Phillip M. Smith Jr.
    Los Angeles Tax & Business Attorney
    Licensed in the United States Tax Court
    www.culvercitytaxandbusinesslaw.com
    www.corporateattorney.com
    www.worlclasslawyers.com
    Main: 323-292-4116 ❘ Cell: 562-505-1004

    THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can... more
  3. Bruce Givner

    Contributor Level 19

    Answered . Mr. Smith gave you the correct answer in terms of the dates you can select: (a) the date of incorporation, (b) the date the corporation first had assets, or (c) the date the corporation began business. You can't select January 1 of 2013 since it didn't exist on January 1 of 2013. So whether you pick May 1 or June 1 sounds fine.

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