- 16 -
corporation election can be made for any taxable year at any time
during the preceding taxable year or on or before the 15th day of
the third month of the current taxable year. Sec. 1362(b)(1). A
taxpayer who elects to take advantage of the benefits of being
treated as an S corporation must comply with the requirements for
making the election. Garrett & Garrett, Inc. v. Commissioner,
T.C. Memo. 1993-453. Congress imposed time limits for making an
S corporation election so that a corporation must make the
election before it can predict its profitability for the year
with any certainty. These time limits serve to prevent taxpayers
from using S corporation status solely as a tax avoidance
mechanism. McClelland Farm Equip. Co. v. United States, 601 F.2d
365, 367 (8th Cir. 1979); H. Rept. 95-1445, at 104 (1978), 1978-3
C.B. (Vol. 1) 181, 278.
In addition to being timely filed, to be effective for a
particular year, an S corporation election must be complete,
properly filed, and in compliance with statutory and regulatory
requirements. See Brutsche v. Commissioner, 585 F.2d 436, 439
(10th Cir. 1978), revg. on another issue and remanding 65 T.C.
1034 (1976); Garrett & Garrett v. Commissioner, supra.
Section 1377(c) requires that any "election under this
subchapter * * * shall be made in such manner as the Secretary
shall by regulations prescribe." To make an election a small
business corporation is required to file a Form 2553 containing
all the information required by that form. Rockwell Inn, Ltd. v.
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011