-7- audit and litigation procedures generally are not applicable to a “small S corporation”, defined as an S corporation with five or fewer shareholders each of whom is a natural person or an estate.3 On the other hand, the regulations permit small S corporations to elect into the unified audit and litigation procedures. Specifically, section 301.6241-1T(c)(2)(v), Temporary Proced. & Admin. Regs., 52 Fed. Reg. 3003 (Jan. 30, 1987), provides: (v) Election to have subchapter D of Chapter 63 Apply–-(A) In general. Notwithstanding paragraph (c)(2)(ii) of this section, a small S corporation may elect to have the provisions of subchapter D of chapter 63 of the Code apply with respect to that corporation. (B) Method of election. A small S corporation shall make the election described in paragraph (c)(2)(v)(A) of this section for a taxable year of the corporation by attaching a statement to the corporate return for the first taxable year for which the election is to be effective. The statement shall be identified as an election under section 301.6241- 1T(c)(2)(v)(A), shall be signed by all persons who were shareholders of that corporation at any time during the corporate taxable year to which the return relates, and shall be filed at the time (determined with regard to any extensions of time for filing) and place prescribed for filing the corporate return. (C) Years covered by election. The election shall be effective for the taxable year of the corporation to which the return relates and all subsequent taxable 3 This regulation is effective with respect to S corporation tax returns due on or after Jan. 30, 1987. See sec. 301.6241-1T(c)(2)(i), Temporary Proced. & Admin. Regs., 52 Fed. Reg. 3003 (Jan. 30, 1987)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011